Columbia Banking System (COLB) 25 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Jacquelynne Bohlen	executive
Clint Stein	executive
Ron Farnsworth	executive
Frank Namdar	executive
Torran Nixon	executive
Jon Arfstrom	analyst
Christopher Merrywell	executive
Matthew Clark	analyst
David Feaster	analyst
Brandon King	analyst
Jared David Shaw	analyst
Jeff Rulis	analyst
Christopher McGratty	analyst

Call transcript

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Operator

Welcome to the Columbia Banking System Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised, today's conference is being recorded.

I would like to introduce Jacque Bohlen, Investor Relations Director, to begin the conference call. Please go ahead.

Jacquelynne Bohlen

Thank you, Lisa, and good afternoon, everyone. us review joining results. second for you as our we quarter Thank earnings are columbiabankingsystem.com. presentation and on The corresponding at available release our website

During and make to today's harbor provisions covered will which securities safe call, subject laws. federal are by forward-looking the risks intended are statements, uncertainties of to be and we

factors SEC cause please list actual the to For filings. refer differ contained to of disclosures a our results that may within expectations, materially from

the non-GAAP I We review will encourage financial materials. earnings and reference provided also you reconciliations non-GAAP measures, our in to

I will President now hand over to the and Columbia's call Stein. CEO, Clint

Clint Stein

Jacque. made enacted pricing, the in increased past we the afternoon, evaluate to you, cost Thank the in which resulted of discussed Good we everyone. deposit changes considerable progress initiatives improve in on months We stabilization the over deposits. We customer April. way X and

realization the net identifying We than cost This result operations. the I in When also work company's the we that quarter spoke work to after annualized is what we the from first of effectiveness during combined $XX reductions more the began quarter, you expense for and communicated a April. of achieved year quarter. improvement observing last of million in during anticipated the opportunities reductions outlined operational

resulted that reinvestment revenue-generating overlapping to profitability support us are a not include to cost-conscious elimination positions These limited reinvestments organizational They the opportunities but a growth and in franchise opportunities our our lower expense culture and and redundant make our of given headcount outlook. structure, have simplified and just long-term enables cuts.

basis basis. $XX on equate gross million our from year-to-date and operational expense Annualized work effectiveness a to on million net $XX a reductions

goal net $XXX slated enacted are gross remaining million related $XX $XXX These quarter, million have merger. of to on $XX in annualized the million of initiative last a million and us get expense million savings third We to net in to addition and year's to our the $X savings be reductions which will basis. in gross roughly savings

past We have future with achieved $XXX million $XX million growth the reinvested the company. in already savings our of XX months, over annualized into

be $XX will We savings in the allocated previously or for million end that and with the the the of over our execute the million months gross next of have didn't the net $XXX earmarked first of initiatives million so. resulting third of franchise XX at our million date, $XX growth of of near-term merger. half expense original the in will of occur announcement of for future of merger reinvestment, mentioned reinvestment $XXX reductions 'XX quarter, on $XXX the at We $XX or achieved the competitiveness company. commitment reinvested already the to At above our expense million detriment reductions million cost either or XX%

taken the our evaluate performer. expense executed not well were so we on we of base, high and delivering with into survivors mindset, our thrive future steps while this initiative the a These will being promise continuously can

include of quarter's rate million, second mentioned the reinvestments run fully of the quarter are the operating quarters. does will roughly come savings Our quarter. second during sources are other planned $X third savings as from remaining of the reductions The headcount In million up expense reflected coming They end. normalized which not operational outlined $XXX wrapped expected not in the in during quarter. were previously I

quarter the run our expense we in we made planned adjusting reinvestments. given that progress outlined are update, we substantial annualized While guide these fourth rate have toward March not

fully intact. expense ability our services base, rightsize to work our our and of invest products our the down in to and our wind people, franchise we As suite remains

out operating the continue a to it and behind with for with running heavy any we future. long-term us, and very the revenue-generating making We're lifting lower these is in here. to set it, expense resilient additional will we're XXXX believe is The environment. optimistic merger create base, drive shareholder we're to The We along franchise investments, value.

quartile on long-term, placement repeatable success we near-term top Columbia's early drive as focus not initiatives Our bank consistent, has on performance. diminished our toward a as laser regaining

the to over Ron. I'll now call turn

Ron Farnsworth

All reported return right. GAAP refer and average reconciliations details operating the at $X.XX of metrics. Thank and related the $X.XX our was provided operating EPS of equity our We PPNR presentation earnings release non-GAAP was while for tangible second to you, and operating quarter our the Please Clint. million. EPS calculation of of operating and on to end XX% $XXX

approximately billion. in the traditional cash noninterest-bearing distributions. levels balance had related corporate $X.X taxes limited we more deposits, interest-bearing On sheet, of to we growth demand and Within to a decline reduced had target and seasonal

X.XX% QX, in month our net X.XX%. for to June. within Both it of margin X.XX% increased range of was the to estimated X.XX% though Our interest were

X Asset rate offset costs. liability pricing in more interest-bearing point than a basis increase

of deposits cost bearing of the and interest Our X% month for was June. quarter for the X.XX%

prepayment the from benefited in for higher higher portfolio. also accretion discount securities which resulted quarter speeds, The

towards income expect Looking forward, quarter's level we the to second level accounting as more closely of end release. quarter's the earnings to the detailed the align than first purchase

Our up. and projected to shock we those the on deposit liability-sensitive interest And down rate experienced our expect sensitivity in approximate a position. betas way scenarios under remains rates both ramp

million. related declined the credit portion Our XX% $XX for loss was this provision for quarter our to quarter. The to portfolio $XX leasing million

at allowance of losses quarter robust, loans closing X.XX% discount. the when for remains overall Our remaining the including or credit credit total X.XX%

at nonrecurring normalized included was quarter, our the from million million was normalized Absent the from the Included operating one-off operating $XXX.X And for of in discussed $XXX.X level operating both a QX, the $X.X expense Total this the was Clint this, restructuring million, GAAP quarter million, million nonoperating down efficiency expense expense credit. I level down while $XX earlier. quarter, expense. expense reflecting million initiative X% discussed first in charge $XXX first last $XXX we've quarter in peg quarter. of in the as

excluding rate run $XXX operating CDI run rate to After expense QX range. end QX annualized at was amortization. that of be normalized our adjustments, our million, expect in to to range the lower of $XXX the continue We million

higher, run position. offset commentary cost initiatives. reinvestment our rate As related we drive about regulatory with to additional near-term capital partially Clint noted, close I'll to expect by the franchise savings

ratios in as QX. Our expected capital risk-based increased

We enhanced provide expect future flexibility. which build will targets, above for capital all long-term

I'll And call turn now Frank. with over to that, the

Frank Namdar

Thank typical of quality. robustness a the as you, a Ron. continue and sponsors through-the-cycle The prolonged stable even caliber our borrowers performance of period environment our portfolio underwriting the of and to we after of transition more credit underscores loan exceptional the process our

This $XX the delinquencies mortgage the XX-plus day COVID-related rise within quarter, to with in to the of residential delinquencies XX% improved designations we resulting million, from portfolio. saw XX- expiration XX-day primarily

decreased portfolio. $X balances These Nonaccrual approximately classified in stable. to mainly loans loans reduced due million the overall FinPac remained

reviews or by complemented and Our detailed monitoring proactive geographic industry office like has no revealed various multifamily of of categories the asset regions. specific across and sectors systemic properties portfolio targeted issues

nonowner-occupied specifically charge-offs with is quality XX effectively our FinPac in highlighted basis investor in multifamily the in bank XX points were the office an rate detail satisfied charge-offs entire the for which at the and of the directionality for X category. remarkably either company are and diversified greater Overall, our low at X in and there remain our delinquencies end basis of quarter, no portfolio and points very contributed Notably, of points of presentation. net stood basis basis roughly office quarter, total at and portfolio, the of points. which granular portfolios within properties, delinquencies We the annualized XX with loan

I will call over to turn Tory. now the

Torran Nixon

our discipline to teams a during resulted renewed price, contributed service, their part interactions. the you, with in Thank our lead around deposit core interest-bearing continue control in tighter first customer of Frank. the stability quarter and and rates Targeted in through second in enacted the directly first the changes quarter deposit actions quarter the pricing. -- taken as latter to not

X,XXX new to Our generated accounts late up small X-month $XXX in branches which recently the wrapped business April, campaign in and deposits bank. million a nearly

Importantly, those campaign to in million roughly April. over the new the these balances and noninterest-bearing, million in since in June bank campaign new $XX increased A launched XX% $XXX mid-July. have was coming ended money accounts by through of collectively were with

As diversified and of the summer time over spring products for includes grow and pricing bundled products. we base or without to businesses special campaign provide the already services. relationships numerous opportunities with granularity as solutions The fulfill with their promotional enhance and accounts deepen campaign, additional our deposit the customers new needs

increase interest-bearing XX of deposits quarter second basis increased cost by point basis actions. first of our points quarter. Our a the following during the significantly to pace X X.XX% slower during compared highlighting a increase to

X.XX% of total of which are deposits our deposits if our Our customer of quarter. was And in cost cost we customer the second isolate noninterest-bearing, XX% total balances, was X.XX%.

performance on environment. in continues rate relationship banking Our our this benefit focus higher to

due noninterest-bearing Noninterest-bearing were encouraging, quarter. are results anticipated While trends was to recent that the deposit impacted in customer quarter end-of-period in campaign basis balances include X% and balances also an seasonal declines payments. tax by second successful our and both pressures average on second pricing the down deposit

headwind we our be this cuts will our the as deposit Fed to see have evidenced the this customers' persistent by on regardless our down rate While key said, for past to focused account remained new moderated of proactive continues our our generating any ongoing year. and campaigns whether as pressures by the That business success bankers. to rate compared cost XXXX, has constant Fed to funds pricing Their teams offset containing from activity draw and inflation balances. are year.

Turning annualized drove remains after the in construction primary draws in to loan X% our relationship-driven quarter basis $XX a of quarter's growth lines Commercial the expansion. an million the Loan focus. increased loan for sales. portfolio. activity credit second on balances and adjusting targeted

we growth including and banking to the our year core of line steady, income fee and card, While to The ago. contribution seeing name services across few. our a was continue on international up a merchant income quarter X% commercial these items expand, management, loan treasury categories, core remains from XX% to pipelines fee pipeline are

existing predictive tremendous our seeing to additional analytics Umpqua business Smart solutions. through needs-based use our with leads base Umpqua capture our are Leads, teams help We with also traction customer Smart

a rate first time performance, notable our trends growth bottom to second between in line products up XX% and was drive the product the Our takes are while favorable and we encouraged incremental close quarters. in services. by single collective

drive deposits, fee core income Our the in that on customer growth relationship-based and activities bankers balanced remain loans. focused

turn the now call I'll over Clint. to back

Clint Stein

long-term remains at company XX.X%. expectations, risk-based financial shareholder remain total our bank, XX.X%, our We to with ratios modestly capital XX%. expand In capital the Thanks, optimizing at roughly drive to long-term our parent of below Tory. however, our ratio to value. our above The build performance of as position is line a continues committed -- target

at AOCI. Our some at adverse modest up TCE end, from XX, March despite X.X% X.X% quarter ratio from was impacts

options to ratio target considering closer capital. excess before continue X% a to We meaningful for deploying

to required is shareholders. prepared demonstrates ability prudent comments. are our The our for us I support our flexibility happy questions take to now. concludes Ron, capital and generate to Frank quarter well what longer-term organically providing returns your Chris, additional second dividend, growth Tory, to and above regular This

Lisa, please call Q&A. open the for

Operator

[Operator Instructions] Arfstrom question Jon from first is coming from RBC Capital Markets. The

Jon Arfstrom

us start but help good a margin a noninterest X.XX with like in Can see think quarter. you you Looks more a bearing. a maybe June. through accretion, have you I hear the the you. I margin less flagged you Ron, probably maybe rebound bit on in little outlook

on So good starting of you and or see help margin us some takes outlook. the through a think the point that puts

Ron Farnsworth

as change we'll And in on bearing the on be flows. deposit range. be really to in really Do not, or QX, no upper the in of from end. we we'll Good depend quarter. question. end going actually, lower middle the in see seasonal If that that last It's strength the Yes.

accretion recur So to discount don't want the flag I a a -- I in expect unless was do higher meaningful bond but markets. QX. rally that in you bit the saw to

in somewhere the the probably range. of So middle

Jon Arfstrom

Okay.

of helpful. confirm, couple cuts that your outlook. terms just comments, you looks and documents of couple would your Okay. guys then welcome but Good. you'd way of That's in in And It a a to welcome margin cuts. the

Ron Farnsworth

in interest it income. be Yes, beneficial, would obviously,

way liability-sensitive last a over year. sheet that positioning the are We balance the

for and we'll if positioned it So be it comes. when

Jon Arfstrom

Yes.

Okay.

some deposit and really you're obviously, initiatives. Tory worked overall Okay. on cost Can success then you well Good. And deposit pressures? what's or in terms talk about the decent Clint of seeing what

Torran Nixon

a maybe think and there's in to and Jon. that on Sure, think really worked the Chris this. add mentioned of in well, Tory. This I call, things is I say, -- want I would can we couple

product kind just And work knowledge, I kind being other of it's small -- within retail, infrastructure results of as has really just a company just special can relationships process outbound. having do over. and do the some or think energy I branch mean had think and that. we job and what an presenting a businesses any we system and the just and getting deployed group their hitting is the for in the company through all energy they pricing our of business entire pricing doing outbound. without out great we Bank any And it's outstanding small Umpqua within ton done been of kind bring I can years deployed the of being without commercial that's gimmicks, street to customers value for the what

So added a accounts and ton lot a balances. of of

we've On a I continue pricing I with employed has think outside within And we've seen We've on on done kind cost that conversations that basis there's the bit, little X. really footprint. some many been pressure track nice pressure has the pricing back constant I we customers think the from think front, of additional lid the And X point, the I our keeping cost. a up. think at XX, X, points this X restrictive this as institutions job -- -- by rates bankers of been any don't by XX kind since had down bring very to in

if Chris, have else I don't you anything add that? to want you know So to

Christopher Merrywell

it's John, Chris. Yes.Thanks, Tory.

single I which I leading about think has that conversations those not on that every day of having for, conversations looking each with I we go, going our rate by been calmed of down. that. into what our what them, about think, It's little get there's is, be the easier. the there lot our how day it, if what are environment bit it's ready money we'll that conversations we cut, customers, ton work current every competitive as out frantic. -- what a Tore environment using with part they're competitive is. for see makes saying hard they're where definitely if And bankers and bankers and customers a are doing And of the there because and with our the customers directionally the a that working will a have long think happens. environment

So...

Operator

will coming from Piper Clark And Sandler. from our next question Matthew be

Matthew Clark

like as to plans deposit or to that for you rates on deposit early first your of been cost I I you doing the speak guess kind categories looks lowered of can consumer and my in question, it not? retention you've July. more some and guess, do

Christopher Merrywell

the pricing. campaign came nature, XX% of excuse on in, still balances. balances, time XX%, lowered or Chris, and Yes, back all months. them maintaining, actually to it, thanks Tore extremely for February in -- they're And then and me, retaining I'll and point the July that has good. last been the we piece throughout the of look the was those few -- really Matt, question. Retention mentioned of that When that the of stand at X started new but frame. without extra promotion accounts really late CD you those growing things portion that we're

the really forward that is competitive market thing. still make closely. our rates course, pay And things we the to And CD lost exceptions for yes, anything? and it? following as opportunities And piece add Commercial we'll Tory, We'll that if on what look we extremely we're continue do then, our to same where make think is. work and the attention working of to in to experiencing exceptions want to continue can. you of have that again, down are, flexibility of But I posted sense. and it's it. so pricing

Matthew Clark

Can start were down the coming then on not asset for flat overall they to CDs and the trying of level. and quarter. pace whether sense relatively in both speak a get might or and just earning magnitude you brokered those just to in your Great. And borrowings, kind the

Ron Farnsworth

Matt, this is Ron. Good question.

been And the other the over taken If with Fed back $X.X on level you what spring around this look that's of we've in flows. with deposit billion. cash wholesale down and based right really couple to loan we quarters, funds the do last collapses now on the the

the and seasonal cash going see around loans, be is see second over So those deposits, right offset the drop. we the deposits and But or the to from broker of $X.X X months billion always above if And balances wholesale structured to, advances, at Bank in in on wholesale of half interest call million, XX the Fed. it, on those year anywhere growth net they're you'll targeting Home X out.

year. to of of opportunity So course we've the over the plenty got that drop

Matthew Clark

But Okay. for I Great. to of X done gave impact. charge-offs. can math wanted XQ? net to I for charge-offs think haven't back And to FinPac bank the I charge-offs speak of see points, how I the check double just but in Frank FinPac know maybe the I relief basis more the trended expectation what half, And on then X an but just you second there. you end in didn't there's isolated.

Frank Namdar

about of all turn seeing And charge-offs. our delinquency to came FinPac on XXX those from and Yes. down Nonaccrual We're charge-offs. down delinquencies last as the percent at the expectations. quarter. they're about XX% of were portfolio are into through the right to of track in XX% improvement balances definitely over future XXX-day bonds. Notably, total a XX%

to so seen significant more quarter. course the the improvement I we've to year, we're going over rest And of than see throughout think the the of last

things So as progressing are planned.

Operator

Our James. Raymond David will be next coming question from of Feaster

David Feaster

for progress some you Could about reinvesting expectations. you in savings. that from road time great to of team that initiatives? the line in, guys see and talked dive those talk you It's of savings maybe But you're deep on and cost made exceeded have significant map what the the about the those some reinvesting

Clint Stein

in prepared the -- new here in might it. on up number I'm then that last years Chris of over But and about my that about off to and the occurred we original the already didn't the -- to million. that's net I talked expanded year get comments, missile in ago that's and million with that $XXX coming start, and geographies that's spoken into that tracked want talked clean that I'll add couple of we a that and about Tore sure reinvestment we where to we've what's Yes. $XXX we've table

in opened we last still some branch Phoenix We have area month. first our Metro So things. the

we're some second a have couple here of we in We have And where Scottsdale X a in. opening in locations other weeks. putting

So banking the And activity reviewing yesterday, new market those teams within we all was capabilities have a pretty from can new have it's me perspective in what accomplished those markets. geographies. and Tory service the full commercial with impressive of

so is that will we And that produce them and helping continue our to in grow they to invest them if markets. commitment perform those

that's like. some so what that of looks And

thing other The really, attract continue really organizations. talent is good from other to we

give we're But away it's are the people, our pretty any revenue I'm we long going not of fill We've opportunities seeing it's the and facilities, the so got flight Chris, the that in in so to it's for -- listen help that some that in mention teams. any technology Tory, it's to call want over all will think playbook And grow don't our I to geographies. technology, competitors haul. because certain might our platforms team. to anyone? strengthen are exciting in. us things on that

Torran Nixon

with of in X for had it's think, that branches flight, great commercial I mentioned, think we Clint, markets that mean, got said. are proud well X banking. you retail We've really is -- I they're we're new really us. I think we thing partnered some and good we I offices

And really and and Napa are ahead in substantially the the and have We to great Utah profitable Bay Valley Area. black, team see. and wine budget well in Colorado all Arizona, of in a

to and excited tools really of company serve really customers. And continue we our be this confidence advance products that organization. some technology our really future think ability them ton and to the it give about attract I successful. just continue can that, to of going some it's a gives the can we're folks So We've talented I as you mentioned, think the all hire certainly to we put to in marketing and and us them got

Christopher Merrywell

help to add then want emphasize Washington do going flag, in It very Yes, full now say, us be the markets across retail wealth. grow in Dave, offerings. markets. those will just that would in there. Oregon. what looking branch will I branch-light It while are is like kind and it be It's is give just look be in this we commercial. It full have mortgage we look commercial not of just a us grow service service and It Chris, and to our will I'll will to successful other we're teams more plant

David Feaster

optimize Are market You book as balance be selling a guys now? -- in transactional the the interested books other you right to you that any sheet mortgages resi also secondary quarter. open there pretty the maybe transactional sold is of may further in just help

Clint Stein

is The June, we we there's the We talked need the and had yes. anything success hand transactional short transactional with We would really the And anything that. we've see that, spoken it, conversations to just before last into past market. that we on terms from amount immediate. optimizing the stuff the any real I we're relationships. lot in We that merger over there's a to after kind come convert of down first then of balance to expect. think, the quarter July. portfolios. the I about trying we've about there's cleaned sheet the And levels the could answer last them year. of that. certain that in but off lower In don't up about execute shortly during that where meantime, full extent to of need year, rates we estate some But

a transactional some opportunities resi that $X.X we we've was Columbia market the with of billion little sold itself as down then those just presented taken these it to think of loans of And portfolios as out on I over portfolio. well.

Ron Farnsworth

That's correct.

David Feaster

in loan the nonoccupied is Okay. growth thinking maybe Obviously, And growth in just construction. quarter side. CRE, some about declines then this

business. like investing pipeline? hires you're looking? of demand you loan talked think do how about the new are the about in of seeing of is curious I'm What's that pulse you growth bunch markets? opportunities? where you where your the side a How made You've And

Torran Nixon

at This last That's I consistent quarter, very there's quarter. I pieces this. a there. think end was amount steady. last of about increase you just consistent in pretty the total I'll a pipeline the And And pipeline was can lot like to dollars there and that recall, talked little except a that reduction Tory. it a with There C&I what is with like QX, CRE pipeline. is held was The shift. pipeline a in bit terms -- in of start in the QX was the if has

-- So amount slight kind pipeline we the C&I. CRE decrease continue a to number see and in in matching of increase a dollar

feel very not throughout and But side the lending a of There We a benign. commercial demand their pockets ton customers of about front. with market commercial a a So for just and did business on C&I optimism and C&I contrast between relatively West progress some did this small on customers. smaller focus continued of demand optimism. the is There's good survey real significant customers anywhere. opportunity versus or recently are middle

needs And focused I good are kind market we're deposits and full small demand. opportunity really the to to The some bank. electing but the fee cash use provide we income is it. We're relationship the market lower -- than but on deployed. West loan people, borrow They're services side, loans middle create make last mean, I still about teams are -- investment we're rather want companies want And on if mean in the some then so money. strong. for of Geographically, banking. to there's just terms I middle still to going performing opportunity for and their is well. of the business in to we feel This

and the we're So to loan I the of ready get opportunity through and good. that there feel we'll really the great more sure terms us low I feel single-digit year. customers out But to new feel go for in probably exists number a be providing make when and bank. in we're growth I our think demand, -- balance service of names poised for we're the bringing to I

David Feaster

C&I, are relationships Or opportunity to at customers? Within -- helpful. new that are these you're That's deepening bringing are with seeing existing the these you relationships more bank?

Torran Nixon

a emphasis have. I on relationships would say both. expanding that major There's we already

new fee about the pipeline I those look big commercial products, for card those services, activity. the of right services, in income part in new at that us. talked lot of fee there if pipeline. mean fee and I mean had products I X a solutions in treasury banking, a lot income lot production -- So of -- We've business. seeing of management, international I are growth a We're the income and just itself. merchant

there. really So good

idea tougher in make serve products really they new we effort the going them the here also we've We're that going to company. a we're for that and And customers. road, provide whole have, outbound our New names sure we're good markets. and but having are success everywhere. focus of services some had well, is but then the there's to really on success in to bring some an to names our de novo needs can

Operator

And Brandon coming next will from of King question our be Truist.

Brandon King

targeted takeaways amount hear. other But So in could and quality surprises regards elaborate reviews, and that any any that mentioned you other credit of I to X you -- you will to great just further know your reviewed? the be portfolio on loan delinquencies.

Frank Namdar

for environment no kind rate duration Brandon. the higher how everything expected. No, I high moving longer. surprises, we of The I is think mean

of higher least carry -- delinquencies at for of though portfolio, of in success we so real and and and a those our smaller us. that's a the me, was most form sort impact to, ticking HELOC delinquencies estate that the would our higher biggest the commercial I performing than guarantee point But typically loan charge-offs of just the for a customers just some SBA would kind portfolio of portfolio is that up, see government You see mitigant fantastic. just some are experience higher continues are within -- to absolutely

on out and first business. management teams are portfolio for going The additional repricing kind of are potential and I say, any ahead is second And looking of would staying there laser focused, maturities. and

And already by If address on identified. see time opportunities to so and of opposed it talking as ones -- not them. and these so as them, surprised it They're the we out, horizon, tight, repricing being we we're ahead proactive. they're to the first looks

as proactive reactive. to are me. being Excuse opposed We

Brandon King

did on was reviews, what of any looking value Or LTVs? Okay. a... reappraisals updated it or mainly And is in at just your you include kind it's

Frank Namdar

downgrade of But kind there unless rolls Yes, we of current we form rent that we not into do, what will, for is evaluation. evaluation, internally, maturity a is value that a or you the if we more we at reappraise classification and look any would from a length type extrapolate of and a of status. update do

So kind we've we the current value, we seen and good the in as obviously, upon about can that as posture of make them leverage the some always numbers accurate information have decreases, of there we can feel but employed throw the out make portfolio position to in investor we a we based that as they're as and adverse presentation, underwriting. the them

we some in values have the of see really the to the event don't forward, feel these portfolio about as we so... move to which so And good we things presently loan that restructure we and

Brandon King

me, There your outlook the of in beyond? kind and for income. lastly Could line strength year fee just half the you And those some fee . items particularly helpful. the Very there. momentum over on speak what's back income, to Okay. just and of good core was

Torran Nixon

is this Sure. Brandon, Tory.

up every can fee going think And would X management, mentioned help categories they're commercial merchant the of do X at success well And I efficient, positive leads bankers grow products more to than they to categorize out them a terms more those what or It's a lot cost-effective. on really bankers base to the pipeline of banking. a are Crestmar single see leveraging it's as and will real and received movers they're our and then of by in better look commercial card product big it's and certain warm for I ability business about gives to them and percentage them. XX%. and income -- the helpful up customer received pipeline, a that support way, well and services base, the kind international about, kind provide customer it card, this and by banking, it our help to and very continues that for So customer this service solution analytics that. We've international very see treasury a X% kind And their a services I day about I through real them of The lead. and and a I collectively, even biggest predictive to walking that quarter-over-quarter. had talk of year-over-year, mean, become even and

sale. easy pretty a it's So

it's day. lot a just line bottom just mean, I hits pipeline why these growth reason so And just up and to that. growth of picking reoccurring The of just kind no there. there's single the of strong. this activity and kind every can't about the seen is keeps numbers optimistic very with eventually because continue

Christopher Merrywell

in is from kind the we this that so We're are positive the and Chris. campaign -- spring. in the -- up and to seeing Wealth then Brandon, sign. add our would it's be starting of division. side one the other that And now of about real a Management increase in the book, card merchant talked that's other revenues merchant business referrals the I'll

internally others space. referrals We've into we're the that company extremely built Our of lot a trust doing lot and our connections there, getting with is in new bankers more well. a and

quality growth there. So good it's

under and our James. went Raymond quarter in over and it the -- that's what what that to see throughout officially, was increasing year. Assets being business through we're planned starting back exactly -- our pivoted on we starting for this then would Group, from to we revenue in that talked fourth behind And into expect new those and we year -- space, in platform experience, platform this transition now us. the Wealth see the to second with continue and to in now management better had quarter that up are groups technology that to considerably end-user I we declare And that Advisor driven see and would are the a expected it's

Operator

[Operator Instructions]

to from is of question next Barclays. going Shaw come Jared our And

Jared David Shaw

to the in go growth you could just Maybe residential nonperformers. back

And -- separate? with switching provision protections. What that require loans that nonperforming? that is does is I think were to of you COVID that off are that that coming that? referenced associated a just now Or delinquent

Frank Namdar

that Jared, were were. what this loans to COVID. deferrals And they is Frank. Yes, them. They that's exactly started employed struggle during sometime to we we modifications,

in XX-plus today. Our the category that's the for loans. you accounting And group those flag removed subsequently see what

Ron Farnsworth

on is chunk provision guarantee. this Ron. that. Good that No meaningful of also And government is Jared,

Jared David Shaw

Okay.

mortgage seasonally, guess, sort forward, on going benefit then update you expect how any a at And got for Okay. I quarter, what banking, little looking is second going the there? you outlook maybe that but of

Christopher Merrywell

is Yes, Jared, this Chris.

a into consistent or as perm Most it, the spot. discussed it. -- of of a seeing of the a within volume, very more company into of in, driven -- the out. is remaining mortgage XX% obviously, month most since It's the settled -- the is really really being We're it's the think month product I transition nice me, still strategy mortgage of had XX% saleable we're by activity there's purchases each around about that with is is a every to and and at that in construction up little it. portfolio. of lines going And comes in there's going the the and around part we of month, remainder company. bank department bank the XX% refi XX%, bit bank make production there to the XX%. where of excuse a bank

in. settled So yes, it's I know

nice We're I activities think good internal seeing couldn't happier done a with job. it. have the teams be really referral

Jared David Shaw

million reversal incentive referenced, The were comp caused for the be me. Okay. that to that guess, $X then reversed? finally you what I And point that triggers just

Ron Farnsworth

that expense and at shareholder of overall it's in correlate terms in part did been part versus to those of revenue and driving part the some to the programs of It's future. the looking those Yes. utilizing initiative of streams in growing analysis our value reinvesting part as as we of of able compensation

there had we didn't we have terminated it. so accrual when had the need didn't to a altered or the for an reverse we out So programs, accrual, then we just

Jared David Shaw

Okay.

million, a quarter $XXX be that think $XXX this level? benefits we to closer run should core on that and rate sellers will So

Ron Farnsworth

importantly, Area, because But million With correct. be expense would more of $X.X won't that a QX, is that recurring. $XX.X level would be a that million, Ron. this excluding be normalized that for

Jared David Shaw

the for Okay. it. expenses. overall $XXX.X Got

Ron Farnsworth

For million, QX, bottom the CDI right? we're quarter $XX on Eventually, on expect basis, million amortization. second normalized going rents a $XX of for to annualized we end range get less the our that into right our

reinvestments Jared earlier. mentioned Con So the being there

Operator

Davidson. Jeff question Rulis next D.A. our coming be from will of And

Jeff Rulis

I in one income maybe on wanted at another that talk the portfolio. thought look about side. the or to line was I there an item past? minimizing mortgage fee the was question if legacy And effort to I within the point, there to that thought at effort MSR any a side. Sorry, Is something shrinking was ahead? can't in Or that minimize remember maybe thing Umpqua was the volatility that that's... or that

Ron Farnsworth

this is Yes, value we and much that to related mortgage Jeff, reduced Good very Ron. fair changes. volatility historically, question. within was have

MSR. but MSR, the now a that didn't in on rates, For got the on hedge run-up example, prior hedge the we right? we a way have benefited up, we on from to part of the So

go front. on that in no matter all that rates way which the future precise So will

In reduced just ways. way all plans point MSR. an level this just many reducing it's move. volatility to rates value of So eye which given at the many volatility in cases, with No fair towards significantly

hedged state. going future And again, you're for see I any rates to down steady environment. got think pretty potential we've that

Torran Nixon

Yes.

anything volatility mean, are Just just implication after of that's ability a mortgage volatile. that any But lot at if just X truly thing. a I in our operation, just it's those our negative be we're hard a Business to thing. the to look I seasonality volatile to it's add quarter area. scrutiny. something going on that, take quarter I noise has is think is to consistent Really, another and get beyond part creates going cycles things mean, of and to and

Jeff Rulis

Got what some from I those a bit newer of that look figure there you in -- production comes this you. Is I at like just teased Salt taking vague of And Lake Clint, guys to dollar terms -- a newer City. -- your a have production little kind of idea in have Denver, a year-to-date put Phoenix, locations. you of that

about the total talked but those breakeven, production relative of company? a reaching to to sense for out loan You've . get the wanted

Clint Stein

don't I'd tremendous disappointed the anywhere that they'll mean, context beyond call, we've I -- thinking geography. done I you we if don't so they're if disclosed Yes. something. be specific I for job. say really of if don't if listening I a additional of other then -- But And know in And as any they've We the slippery slope they're clarify our to has terms that's Tore we all we about by a elements give know breakeven. because start can footprint.

Torran Nixon

they've good, strong, bring able strong really almost -- talented, lot just they've names a interest-bearing deposits. I into folks, No, company. No. fee income. just and people, would than good it's they've very, the so few low. the pretty balances But say and been other got is very to new solely They a that noninterest-bearing with hard-working they're balances, and base expense got C&I loan

mean in able to to great to quickly I thing. a a and of very be and quickly it's numbers. rest and from the in of put of kind in is a they've company, the efforts the from scratch in carrying a starting great a it's banking new the flag had. they've proud it's relationship number, so success ability markets in success meaningful dead number. meaningful and so go all relative start the but of the that the they're and those bank profitable smaller on stop that So and basically And to way of be have

Jeff Rulis

Got you.

looking -- standpoint? from Is acquisition on M&A, option, if at? that's but bank . you you're or outs anything imagine even look you an an Lastly, prioritized at anything if might open Clint, lift that team be

Clint Stein

Yes.

priority merger today. in when create remarks, we're I out set running my that top is we to announced Our it in company we the XXXX, prepared said the

about with on of get talked to of prove that momentum side. these So our top efforts last business company. to the the the that is that out Tore most Chris execution and quarters the X priority out. we're the the starting initiative, And expense you've hopefully, that and this seen

live it So I do, have some work every still to day. we think we but

company taking day So there of of this the the we care that we have customers. that and people strength of our quality every know are out the

our that's out, So team wine is talent. it's one whether And past mentioned we that that mentioned or of earlier top the in that X the still attracting groups so. team Tory a the lift months priority. I started we're new

were at that don't put know, But to and don't looking people we're there. from is somebody And lowest opportunity what's now I how they M&A, the process. priority going we I now the probably they the that, that happen any X. XX-plus do value. there they're say about know go market, to interviewed always to just that up organization getting that's through think I at we bank mean how so the drive criteria, just -- we're from would that It tissue our doesn't in be going out XXXX. you with to XXXX, XX-plus election. looked people healed we right open -- And would hell scar because If who was

don't that. is We've time think for never, that more and are more shareholder now think the never I got So will long I value pressing but the I just priorities over drive other say -- run.

Operator

will KBW. of question coming be McGratty next Our from Chris

Christopher McGratty

to did the expense midpoint. quarter there to side range fourth of the balancing quarter investments. as million, what on annualized for Is X this any quick us analysts reason million a $XXX just you $XXX lean either to the Ron, in on

Ron Farnsworth

at looking into makes probably the sense. this I think midpoint point, QX most

Operator

call today's go ahead. Please for ahead I to and remarks. the would over session. turn like That you. Thank closing to concludes Jacque Q&A go back

Jacquelynne Bohlen

contact rest have any good questions, Thank you, have of call. day. and a me joining this if afternoon's for Thank Please Lisa. you you the

Operator

call. today's joining you conference for Thank

may disconnect. You all

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