Docoh
Loading...

HFWA Heritage Financial

Participants
Brian Vance President and CEO
Don Hinson EVP and CFO
Jeff Deuel President and COO
Bryan McDonald EVP and CLO
Jeff Rulis D. A. Davidson
Jacquelynne Bohlen KBW
Matthew Clark Piper Jaffray
Tim O'Brien Sandler O'Neill & Partners
Tim Coffey FIG Partners
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2018 Earnings Call. All participants are in a listen-only mode. Later we’ll conduct the question-and-answer session; instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. to Vance. conference like host, to now Brian CEO, would turn over the our I ahead. go Please

Brian Vance

Thank you, it. Janice. Appreciate

So welcome may McDonald, and to me Jeff in to and, Deuel, all recorded Chief this of you course, our Chief Hinson, those Lending that morning to President is Officer. also our Attending and Bryan who version. listen Don later of in with have CFO; called Officer; Operating

had release may went And And out this opportunity answer a release in that release. our questions all would as refer call. press you morning hopefully, you forward-looking premarket prior you we release press any that prepared to go earnings that have. as an I this through review and to comments the as too Our to in we statements always, also

the I'm very were completed $X.XX Just common -- be million with Sound per quarter highlights March, our we compared merger first $X.XX January, for to some acquisition for the will Hinson And XXXX previously XXXX, few QX Bancorp our compared briefly, Don? diluted should and 'XX. for we of linked-quarter Washington. XXXX Bancorp, earnings a where branches minutes quarter. In Premier for Q the 'XX of sorry, with $X.XX company that to and QX financial in cover Commercial of announced Oregon $X.XX located a proposed a for share Puget area. Don QX six announced in statement $XXX in banking Portland, Bellevue, greater now results take

Don Hinson

the the of higher from commercial year-end. prior concentration XX.X% of Net $XX We in loans This of an at the the goodwill of from loans $XX of the loans merger million XXst to of Sound million to investment $XX.X of is increase total Puget of but C&I to on loan $X acquired asset Sound $X.X in XX deposits Puget the in the to increased sheet. loans were balance of increased growth. million Puget the funding which during renewed Due million the of XX.X% obtained $XX.X [indiscernible] in deposit percentage and QX by This the million. year-end, deposit the million annualized from million fair in growth. start X.X% QX Sound as securities including or million $XXX FHLB $XXX value CDs Thanks, is reduce Sound million Bank, growth We basis. at in the improvement $XXX increased million at below loans with the for QX prior of that of Brian. annualized March commercial is Net million in merger, $XXX loans at $XX.X liquidated QX. in This assets loans March partially grew merger, borrowings XX.X% XX.X% total in total We from X.X% XXXX. XXXX growth not XXXX. well muted merger, acquired of QX brokerage QX to Puget total total loans deposit as matured due of in slightly had in I'll the QX.

allowance loans credit healthy a ratio and to to of balance approximately two million. A end very is at loans loan at Of XXst is increased $XX.X March that Nonperforming still approximately relationships, commercial the from The increase from Moving X.XX% loans loans The on December nonperforming to XXst March to was well loans losses The primarily of increased SBA credits. secured $X.X to for credit which, nonperforming million the three XXX%. total X.XX% quality. million in of to nonperforming XXXX. XX% at $XX.X our totaling credit $X.X ag million percentage of due at stands XXst. at guarantee.

an In accounting loan purchase reduce value net needs in discounts, which carrying of purchased losses loans, addition, may on of the of the million XX.X for allowance included a loans. related the those

to QX Potential recoveries farm net million amount, acquired of charge-offs merger. in was We have XXX,XXX QX compared X.X this XXXX. Puget XXXX during XXX,XXX net and XX,XXX QX due the X.X to loans in million Of of in increased Sound in QX. loans

Pre-accretion increase QX, in X.XX% this QX to X.XX% QX basis and XXXX in basis QX interest from increase an increase points margin increased in a X.XX% in was XXXX. net QX XX net is and basis loan X.XX% QX QX from in 'XX margin and Our from for in XXXX from for was X.X% X.XX% XX XX QX Pre-accretion X.XX% yields point QX X.XX%, XXXX. point interest a 'XX.

cost for New a on in QX is X.XX% of QX X.XX%, to XXXX. XXXX use rate decrease the of and a increase curve. X.XX% decrease an in source. The in and QX from rates yield The average advances result from originated also XXXX which a QX increase upward in of of in funding decrease in loans originated QX X.XX% the shifting FHLB This is of for QX X.XX% QX was funds weighted loans continuing due the XXXX. X.XX%, from of a from was an the increase

net to X.X QX QX to XXXX due from for Noninterest that XXXX. decreased stable of QX X.XX% relatively of million the fees in prior remain cost QX in XXXX QX at swap gains sale gains or compared XXX,XXX Our decreases addition rate XXX,XXX sale the occurred X.XX% total and in quarter. in in XXX,XXX income four to loan deposits from interest X.XX% of in on buildings QX branch

Year-over-year, Moving Noninterest from in XXXX as an ongoing prior merger-related expenses well XXXX of as expense from well the an increase compared on average change XXXX. from QX to year QX X.X% X.XX% to expenses to quarter amortization as expense X.XX% to X.XX% was million related of merger-related also Sound substantially assets in QX as due deposit Included in noninterest tangible in core in Puget in Removing acquisition QX XXXX X.X to core control. increased XXX,XXX to X.X expense XXXX, QX noninterest QX over XXXX. costs in was expenses Bancorp, for increase QX average XXXX. expense expense. in noninterest amortization, improved and QX noninterest of deposit tangible assets XXXX million to

from from rate the X.X million assets reduction metric, XXXX, to expense the addition in impacted pretax effective of million per Bryan in in X.X in income XX% and QX decreased of lower to merger-related have was impact QX revaluation expenses QX XX.X% amount a the update XXXX. QX million production. QX XXXX tax XXXX. in rate In share will tax McDonald in $X.X in Year-over-year, to XXXX. QX XX% combination expense The on Income an from on of decreased in earnings to in from in the and in deferred tax corporate due by XX.X% now XXXX QX net in $X.XX tax QX loan QX. the QX the to decrease QX XXXX the X.X million

Bryan McDonald

at first XXXX Thanks, new from In to lending in commercial detail with area on at the the starting production the teams of and Commercial up from XXXX $XXX quarter quarter is down quarter million in by quarter, the XXXX. of $XXX.X of which and which our million Don. ended down $XXX pipelines the of going results closed million XXXX. quarter $XXX.X quarter fourth million quarter end I'm closed team up commercial million, loans, group. $XXX.X the is first from at in provide our million the first $XXX.X first first fourth lending closed from of

Brian we quarter quarter loans production department The quarter $XX.X closed new million first of rates. and ended to the The of average and in quarter $X.XX slightly quarter ended $XX.X XXXX the interest of the million XXXX. million. average for to to to I first in pipeline commercial XX loans $XX.X million, totaled loans, million comments. $XX.X million from quarter XXXX. of as turn Don compared closing the of closed first the quarter first was quarter the first quarter for and XX% new update of XXXX. pipeline X(a) This Current $XX.X million the $XX.X fourth as well capital $XX total in quarter quarter first XX% in on now loans. million, of the mortgage compares down first the the Moving construction XXXX fourth X the for mentioned, where refinanced refinanced as loans of was XX% the new rate million last last fourth at in loans from first rate from first and purchased back SBA but $XX.X pipeline during in to up million million up ended quarter at $XX.X for loans quarter This million $X.XX for business during of And XXXX X%. comprised the call $XX.X from quarter's to and the pipeline million. will pipeline up XX%. Consumer the compared in of is the owner-occupied $XX.X fourth interest first quarter quarter X.XX% loans the when mortgage was the loans compares quarter management at averaged an production quarter The in XXXX. X.XX% in some XXXX

Brian Vance

expenses impact impact management, was to Adjusted which ratio XX% Thanks, QX QX. to merger-related of expenses, the guided payout regular XX% per over Bryan. XX% share QX. with our dividend the ratio for capital payout is for Starting payout our ratio XX%, due was $X.XX for merger-related in our of

our sufficiently M&A. both and our to our capital position continue risk, supports sheet growth, potential We organic balance believe future and growth internal

for you. Just general observations some

the economy. We construction values continues, continue Northwest is of are in growth brisk. And and valuation in and rates to highest valuations nation overall high competition population be residential region single-family robust, some the at growth about banks Pacific with continue the optimistic among the CRE

caution been segments of prudent. why an stronger was is all are the so. be Northwest are QX tends real 'XX, years commercial the on to than in Loan bit certain Don for during currently estate bit above Pacific quarter. in few past cyclical the slower in growth in management of a has This due QX 'XX we in positive, as but to focused growth noted. or we Northwest, have loan our growth economic QX in the growth concentration the generally in While Pacific climate general, a And is first

concentration CRE are this believe we our in that of loan continued a management our cycle. we growth our XXXX, action will point approximately CRE concentrations discipline and prudent in over While is the mute likely anticipate at XXX%,

Bank We growth. to Sound refocus Puget half in and completed but growth latter not the lenders closed, on are acquired of augment recent in believe Community conversions QX continue XXXX and as Premier acquisitions, closed announced will Bank,

organizations both Bank will with and Premier for believe early the both Sound to pleased is cultures is we continue similarity in we well, Bank organizations. of Puget and May going QX Community with X, are in conversion QX. Our of conversion scheduled for close Integration

As as mentioned in expenses. our increased to QX expected call, due expenses overhead our merger-related

anticipated While Portland. also growth our our of continued merger-related increases overhead Seattle some we to expenses, had attributed as Metro due increased and regions initiatives to in

We with are of particularly but pleased the XX%, at following Bank deposit in our CRE improvement steady, our Puget composition. ratio acquisition hold loan-to-deposit Sound pleased the

note while the deposit at will increased DDA time, the same improvement to market total of money percent You deposits and in XX%. non-maturity total

Additionally, as stable QX to Don remain in compared cost our to deposits 'XX. X.XX% of at X.XX% noted, relatively

to to banking by increasingly loan deposit the space. leverage is to important quality deposits measured community to believe We deposit cost important levels as continue composition, and and us to

Also, the overall maintaining, quality margin. even strong We pleased and net Don base focus noted, interest improvement as to we in the on continue deposits. our improving hopefully, of are our our with funding

to We baiting also book forward. likely the our I attention going equally improving draw would experience but like and industry increases is not NIM the loan only function our acquisition Bank. Puget to Sound tangible of pricing, believe likely minimizing maintaining your value to of following is also a

in less net acquisition per And during to interested of the Bank. and in completes for additional release you would again our value than we Our a our only of M&A welcome you at would X.X% I we $X refer call in 'XX, book press activity remain questions. have current continue and QX, the to Sound active billion which, M&A. you and QX questions to any course, constant once by of as XXXX and remarks, questions? includes may would statements Puget TCE tangible share expect our banks remains X.X% prepared the QX answer finally, Janice, forward-looking from and of That open your decreased any

Operator

Our line first comes Jeff Instructions] of question D. Rulis with [Operator Davidson. from A. the

Jeff Rulis

maybe to you I backout and top. of was are about the maybe hoping you $XX What we through be if the next you and Commercial some that and rate little could that guess, a progress expense with the run Puget the what about but -- number? as adjusted for over bit, of kind costs, just walk million. line of get puts guess merger there from Premier I of I takes deal timing and now, the the could talk kind There conversion. Sound the quarters, couple in exclude

Donald Hinson

-- Jeff Don. Well, it's

the I'd we've Bank say, rates, Puget just much included of pretty whole So Sound the operations. -- run that's quarter

So got -- you've factor we're in. to that

one rates of was In a much turn tangible out of be back to I'd is twice tax I'd due rates. out briefly And in a of We interest thing last modeled combination it is this would core deposit what initially this addition, to to that -- core we we and be summer deposit turned to again the mention modeled like the year. mention -- a initially tangible. modeled

amortization And so the CDI is higher.

impact of quarter-over-quarter your kind expenses. the hopefully -- So an that has on

think cost Bank more seeing work-related I again, cost bit, see, not But Maybe we'll a going saves merger. see the you we're saves. the a expenses. also from this So to little that Puget next Sound few many quarter start

much those cost another. not we're going Bank. see to offset Premier, saves see forward, -- Puget I'd going are And not say there talk counting So kick -- not obviously, going to overall, if you're to or for the But play see you're going going in one you're Sound forward. going to

Jeff Rulis

improve and post that sounds would they Okay. that could conversion. If you merger like we how just $XX -- upon sum are costs, million --

Donald Hinson

Correct.

We conversion. should all have come merger-related post the that costs, down. Once

Jeff Rulis

Right.

Okay.

Donald Hinson

the for both costs Premier ongoing not and for costs again merger-related bank those So counting all -- and there.

Jeff Rulis

Got you.

maybe are you've the an your there out FHLB. -- quarter-over-quarter diving it into quarter-to-quarter? shooting I then there, mix benefit well. a I improved QX? X.XX% And a know, guess, don't margin or the carryover thoughts on And any timing mean, on Is paydown What just the Okay. into the the I got as deposit -- adjusted. margin

Donald Hinson

higher Well, -- pretty We've loans I'm for quarter. at optimistic. the on we've new yield than still That's still on put again, our loans the X%.

that that's going optimism So me go -- up. to it's give

list, increase rates short in In to the end on addition, overall our of continue anything. LIBOR the

to going in -- have We that prime from floating additional or is -- benefit for increases. addition

but both to will up, down. deposit I lot it up. think, -- I and So the depend to it will we've that dependent I goes of to key again, think, think forward. somewhat to, I'm able going so a -- on we margin go how that been how be can hold much our But and costs We'd on a going it's much do -- will be goes, been how optimistic it's far, able margin

Brian Vance

to We're are believe add I begin information would the would add. This of betas -- ramp that effect. is to that. I I industry, Brian. I for the deposit going Jeff, to a up. lot to seeing

flat. predict deposit where have creep And some going. our remained beta pretty position loan But been in leverage I anticipating while our our betas So We're with hard position, costs it's that's we've down position. to really, we're deposit and think able up. hold enviable deposit to

And -- mute little as of end has conscious So a hopefully, everybody that we're up. year very a And now of of our today. the NIM we've can swaps, taking that on we're benefit continues was a we muted very And seeing the would I the benefits conscious in the that the so, it that But that past. which part. seeing side effort floating for last the short of effort with remind that had or bit.

Don Hinson

Don is this Jeff, again. And

thing of unusual or a days, to of first due quarter number that is is one this, calculate think the off kind more to due quarter and based I always margins the say our we will I days.

of due part that. lot, it. So to the but a increase Not was part of

to as of number more quarter, be of in long I'm slightly. get quarters. just of talking we we that as But term to impact kind get So few days aware a next that, the us

Operator

to Bohlen Jacquelynne with Next of KBW. we'll go line the

Jacquelynne Bohlen

Don, rate? of how are securities adjustable your much

Don Hinson

it's between think and I XX% XX%.

Jacquelynne Bohlen

that fairly consistent And is historically?

Don Hinson

really amount Well, few those adjustable over the last, securities been and the secured early We've of it XXXX think, in quarters. XXXX. increased I has --

Jacquelynne Bohlen

the -- if know? priced where at And today, you are

Don Hinson

again? Say

Jacquelynne Bohlen

Where you handy? have are it those priced if today at

Don Hinson

price? The

Jacquelynne Bohlen

them? on yield The

Don Hinson

buying Oh, know are have we that's there been know -- I why they're of specifically, any of on been the I We lower them one [indiscernible]. tightened. quite yielding. have -- the -- I really yield those? And don't one that the type a But just able those what recently. prices those haven't were actually, prices gone somewhere reasons it's tell you that to there that spreads is up there've on bit. that can buy prices were the -- thing on two

So much we few as adding we have have been not ago. as been quarters a

Jacquelynne Bohlen

merger have quarter? where warehouse the do in general the And of location the you charges,

Don Hinson

You mean...

Jacquelynne Bohlen

compensation, Whether services, kind that just professional stuff. of

Don Hinson

do. Yes, I

the -- about some of So the to was say been But of in out about categories. million in the data most some rest and I -- other compensation would that processing million, all the of services $X.XX $X.X with million have professional $X.X in spread this area.

Jacquelynne Bohlen

And Puget Sound if And one release, were deposit If one In we close? that, and mentioned just press of following little loan color if a on seeing drove exits, what me, kind could Puget on bit loan operations. both I'll you're back. there then payoffs basis you then maybe it the of last step from Sound. a get behavior merger then just customers, had relationship just was the three what from and normal from

Brian Vance

you not -- to payoffs when Sound Puget loan three say I'm from you're where referring the sure Jackie, Bank.

Don Hinson

the discount -- part that to the of really -- we this [indiscernible] discount, received.

Brian Vance

anything those. don't I think there's Jackie, with unusual So

kind they I were payoffs. of just think some

on little our those. we're in be little can discounts to we some seeing. why overall, of higher. accretion what was But discount one Bryan a to reason so That's larger, I think have a the speak it brought Some

Bryan McDonald

transition Yes. growth Sound closed deposit And the merger and since teams and loan In not loan general, Bank so seen large, smooth we've it's growth been January. a far. seen out of deposit in Puget the very but

Brian Vance

point, think Jackie, merger-related that pretty to any and And I this think I activity. is typical in

has and understand bit merger. existing and just the in terms little making Your of everybody's sure relationship internally relationships managers folks about the helping on a comfortable focusing become focused

I start we sheet. become the I and really we're as that think accessing maybe can Premier basis. those working the the half year able our and in balance both again and said folks base externally growth my for larger then looking comments, are through get Puget stronger they And that's why latter customer focused prospect externally once in and conversion, focused of on reengage base once Sound both to

Jacquelynne Bohlen

up Okay. And folks in other about conversions the to or the one the to before week quarter, and so 'XX? and long will of the it fourth that say there fresh, that understanding will with just be Puget be XQ running XXXX timing a on and everybody based happening the happening in is start off ready fair Sound

Bryan McDonald

so. they're Jackie. now, would actually, strong say I strong. the right at Yes. They're And looking pipelines,

we're today. optimistic So

Jacquelynne Bohlen

Okay. Great.

Brian Vance

I that, CRE comment my add, up that. managing And comments the dead on Jackie, this picked serious hope would about to pipelines. concentrations, is we're folks I Brian, another on about

lot we're -- of there have our nonowner we focused because management. folks growth And that point is saying loan are I'm the those and maintaining risk on number is paying from concentration especially you, credits current will new have one concentration And booking occupied real. on of it it that an view. a but our governors sourcing or I'm think we things industry very on risk I just these of discipline concentration I muting that, days, of sure attention to different tell not of a piece intentionally is

Jacquelynne Bohlen

new you a that are Brian, nothing having levels discussion quarters and limits your in teams? when And teams why the understand being these this on understanding we've reaction been what's put from they these for do in several put place? is now,

Brian Vance

them, buckets this manage teams, we the to And limits well. managing as -- those to then a way as messages source start we When as speak recent certain comment of is messages portfolio. within -- we buckets. say begin to on to increase, Bryan lenders to pre-described then their sent the to to sending variety the Bryan by you within might reactions. we to the buckets ask in this and And necessarily credits not limits get we've as don't I'll

Bryan McDonald

at best in the try deals levels, current only concentration hard to we pipeline. not in we our our very the to obviously, not an impact but Yes. on keep eye we adjustments, And our process. make And what's as do

in we've lots working strong. The field the that think adjust But that's very to our so tighten in much high of as trying do lots concentration opportunities a been the construction, I There's market bankers as that stay hard helps strong. commercial efforts. number and the to their So then opportunities and of segments of activity, real segment. And certain always in really up to balance. challenges market categories is is are very in due lots quality There's that that. lowering calling they're we're still very estate said, of Brian

we a point so ran do in or in hotter or we of teams, sit from the to focus. as area time. new another, The best a It's bit just where just the work changing at messaging with shift question to our any And isn't quarter-to-quarter. we one little

Brian Vance

risk this loans those I of be concentration-focused or to side. There's side but going even turn banks side industry security issues asset create just some just of Even on to in in this that good management. its attention to if of the in whether if could were of bad we're these bank an these love to, And are think have, is the suggest back not failures many self-imposed loan failures, some we'd we it's loans road. the XXXX, that the down aren't the view, something disciplined we concentration to put failures that from away. loans as paying that or most point very is

the management cycle. point in so is I this think risk important at this concentration And

of around got deal that. so discipline we've And good a

Operator

the line of next Piper Clark, question And Matthew comes Jaffray. from our

Matthew Clark

to the net coming first about of to net I not couple a going charge-off might wanted try forward. ask where or you to at a zero and whether rate get isolate normalized just sense recoveries charge-offs in be could you large

Brian Vance

some really we think large Yes. Don, I any get details? don't can recoveries. you had

came I had few just think we in. that recoveries a normal

-- for activity just a been about our last a a quarters and you our -- course, hard the that's pretty the normal that's, I think think I I of forward. several just big overall predict thing has to And comment, portfolio. level good good or quality picture pretty from going But clean. have continue Don? to confidence

Donald Hinson

think Yes. to that's unusual without I any have really net us don't for a a quarter charge-offs.

always able And in single we're recoveries this, think a we have I have that out. few we some to charge-offs.

think to on pattern unusual if time of over would the going necessarily or unusual so this. not guidance change don't the as Obviously, -- year an give doing in look or our see rate. and we've over what I area. that's anything look far charge-offs, that as the But last think I I been we're you at

Brian Vance

But Matthew, in recoveries did size or specific your question maybe misunderstood of terms your question. I get to

Matthew Clark

that's I just unmask any the are the wondering there's quarter -- if if just was all. net recoveries lumpy that I can yes, there in was -- charge-offs,

Brian Vance

no. I Yes, so, Don. think think I don't no.

Matthew Clark

gears just then And to average the shifting asset Okay. expensed ratio.

well of in deal the goals progress flat charges, a Premier the improve as on to do you year-over-year. mind with any if excluding the as kind commercial you're X.XX% coming I'm into want ratio you think that's you year merger even upon. have the numbers? sure through I But

Brian Vance

a end big still similar to to Yes. picture again. level in confidence end the 'XX. year confident I'll that level a -- said run high I to rate the We around detail. can of this at be give Don that. have of fill rate run hope on fairly we around at you a the have --

the expense tell markets think as well in of be both you a do we metro the have I will to management of continues that and growth initiatives Portland. Seattle Company. I that focus

And there to be lender speak does markets. It's person -- those we're those initiative, markets. think to continue it's very We but staff while And I growth there. about and positive might support a two not it be that Bryan adding teams, to that's But here to expenses. impact here, able that.

And that our maybe continue to some overhead ratio. of But in that kind think otherwise the have hope of we we improvement show is improvement. so would I that the masks -- would

Donald Hinson

we're look and always to going overhead -- think a higher bit ratio. I little have if -- you

think at in the QX -- just you up way due any that of I to in years, from to look they QX if kind -- prior occurring QX QX. bumps expenses

So I core it call ratio we we're -- to might on -- average you see say -- the improvement overhead over but the think assets. expense going that core call noninterest

the and higher, savings of combination just cost forward -- through merger conversion Going going of the the some QX being to that once these, the we're occurs. again getting get through Puget Sound Bank

Brian Vance

to Seattle, might little Portland. speak to a bit want you Bryan,

Bryan McDonald

Yes.

make been staff did last and of additional staff in in a We recruit County a we down out right at the King timing And Portland addition sales And hoping we year. we're difficult continuing of is quarter, we recruit. providing adds. continuing to to But predict. -- to made to the other good have grow continuing to couple recruit end teams really and hope The make are opportunities for growth. and they're as in one we're to first those

Donald Hinson

$XXX,XXX the term, Don. have on the when charge-off Matt, C&I. or a We And recovery I that one of have this did was did we this look did follow-up just it out, on loan -- charge-off. as -- is

did them one. the pretty kind that, were larger of a We X rest other small. than So of have

Matthew Clark

down Okay. Great. And revenue then item on linked-quarter. the other fee line

is kind during $X.X build something million this have rate to of prepared your But comments. may called I think do feel out good you fees a like run you from? of all-in

Brian Vance

to Bryan, think down And fee income speak to a maybe on might that loan that. in on I some QX were side you area. bit little the we want

Bryan McDonald

kind Yes. was But swaps that down. as bumpy. of be to looking that will confident 'XX here be we're in it tends bumpy. 'XX. were pipeline, They in good fairly Again, The the tend to be at were that, -- there

Our more business mortgage than market. business, we're portfolio secondary much seeing

the impact there. will that So gains

do As XX%. pipeline market for portfolio the to the And business that I But That's is comes X very that loan-by-loan down on the sell -- the to second SBA. is most that. up those -- is the strong. strong will current And almost the a now more then relationship a good a a those of us. going secondary question our is mentioned, loans? business best judgment less but look just Is pipeline, quarter make we decision. question financial the And on and at pipeline into that we be business,

Brian Vance

But Don, in maybe little maybe QX guess and just a forward I go so... light

Donald Hinson

going it's in think to I quarters. future improve

Matthew Clark

Great. me kind updated of just the think rate. bit. Okay. just Any it's Commercial to little with the tax then thoughts quarter? one then rate tax up going Premier, the bump outlook. And I on last And a second your on from on But thoughts updated

Donald Hinson

also like as the and quarter, I think we was larger it is think because affect such I be I to XX% think tax that impact. is for lighter when XX%. pretax a But number. Premier, expenses tax of I was and I the the quarter quarter in that around it's to on would Therefore, we could get we can QX still next think overall this income Well, usually, bigger a XX% rate -- -- close have tax It going I rate drop to making -- mentioned closer last income and a still effective -- have as the But run rate in maybe predicted. I the expect call, again. our Things good I we think down. close, -- the exempt

So...

Operator

with Sandler O'Neill to go & Tim Partners. we next O'Brien And

Tim O'Brien

So on risk. Brian, appreciate the concentration we focus

said a targeted you of XX%, comments those and you Given about the do growing CRE for -- kind something full said needle underwriting have year, segments? towards concentration? given that. previously other what Or make view and like other growth in places that the ground up the Does there, move

Brian Vance

just bankers concentration That's what conditions the picture Bryan been to see likewise, growth. latter has risk so region, see of Yes. plus pick do as for in reality more our that that, focused to market I mute and externally going I'll what in the become in thing and going Puget I'll here again, going growth, believe honestly profile -- the can year. we the I on the to a then mute Sound borrowed but big like bankers a Premier management Northwest, give general. volume in my Having will and of it, detail. they up -- on half CRE think the continue while and to us sense Sound that going see said is Puget come [particularly] is current you do we're whole were prospects is I management -- -- and to in and online the and I follow side,

additional muting in they how in add but growth predict to will be similar 'XX. rates continue hard will were what thoughts? I that it's So to much they effect versus just 'XX CRE, the of Bryan, to our believe

Bryan McDonald

is it's expectations. position second first really of quarter million good there, on compared indicator going $XXX the best the I with $XXX a year track at agree. at that the quarter. the to at end The the production if that of pipeline on our million into you portfolio right look of And coming in businesses Yes. consumer out

pleased So pipeline first actively And we're of the at got we've staff of quarter. the end the a with -- out calling. lot we're pretty

Tim O'Brien

the Or then you for have Okay. second but I you the quarter? Don, for a missed budgeted you have for Great. mentioned do did have might you it. -- us I know call? update conversion number this, on And that do have might costs

Donald Hinson

thinking for QX two around million it. update ballpark, in range. million, of that but around banks $X going didn't the be between a we're it's there. going That's to it's kind be $X -- to I I'm

Timothy O'Brien

And that cost? with it include associated close the of -- any costs pending as conversion as well Premier the

Don Hinson

Correct. Yes.

Timothy O'Brien

you're know the how you for conversion specifically Do Puget much anticipating conversion? just cost Sound

Don Hinson

was it to think $XXX,XXX somewhere between I $XXX,XXX.

Operator

to go Partners. we with next FIG And Tim Coffey

Tim Coffey

Was expenses? there in seasonality any line the comp and

Don Hinson

Don. it's Tim,

bonuses that quarter, In where more. the as little some further going Just bonuses, through [indiscernible] impacts QX somehow all as -- be are in little first the the are year. always a paying some there the our are tax full We a or dissipates true-ups higher. we -- bit far as bit. We're have head FICA always tax the to there

the it just lot lot already, activities. had -- other numbers but I of was of I've due those -- that, like a than So end and a some to again, were mentioned merger-related

Tim Coffey

hasn't have CRE what back from really pulling pipelines. on correct? then I And really the on -- pipelines are understood outlook that of that even Was your impacted -- your -- kind the

Don Hinson

Yes.

Tim Coffey

portfolio beefing concentration, Have purchasing of or thought loan business even loans reducing non-CRE to perhaps, you the up alternative ways loans? mortgage about of

Brian Vance

That's own -- pretty Brian. belief loans. strategy. held We we produce a and our flat production That's is out. drives what it's don't We internal been growth. -- Tim, buy what long

on I mortgage of think maybe models shifting. more in of that in changing taking a terms little terms

but we're I a we more we And I heard why some opportunity, again, any Bryan? mortgage, don't or the of management, pretty we Bryan's variety can little single-family in our think held of way to concentration risk were holding these do that comments, one all closely bit time. you putting portfolio, long of that just big quality see here another all beliefs that -- reasons portfolio those that to offer in at look swings I there points. Bryan management, got an the and that. being have management, see things are if there's -- a management, of detail choose

Bryan McDonald

period is significantly. will since won't maybe And up, the in that raise than we'd into bank portfolio but long I'd say, Yes. activity, mortgage we XX%, we over construction And much XX% of That's to growth so move number like consumer at a to commercial that true. like one we the of which rather you those more time. the totals to -- seeing look that up needle lines, moving are consumer index sectors, if stable

focus to of X are maintain come And say, we also other continue of out significant So But tend which more those relationships, management, Brian often to on funding think, organic transactional it, just concentration regularly deposits, important we those more owner-occupied for I than, continue to as just classes, including noted, the are the in the asked. relationships options. the side C&I purchases. and us. owner-occupied relationships to is isn't It looking also we're the C&I -- there's and and the

Jeffrey Deuel

but Jeff have we right growing to actually the Tim, It's is line from just us now best for one this Deuel. business a two stable this or be at that's transaction standpoint, time new point. Also initiatives, not fairly growth embarking going practical on. not on a

Timothy Coffey

good it And was and missed your what That's brokered comments then I'd question, But runoff that. the prepared last remarks. in in I deposits? my a point. the consider

Brian Vance

X million.

it think and was -- brokered... I not necessarily

Donald Hinson

Well, brokered CDs.

Brian Vance

CDs. Soft

Yes. Okay.

Operator

Instructions] [Operator Please further questions. have And we no continue.

Brian Vance

Well, call. hosting thank the you, for Janice,

Jaffray Coast. and We conference of the you Davidson be will at see by that will call conference many coming East that on Piper a then at up followed the on are the

So in you. we your look continued you of company. seeing forward Appreciate many then. to interest Thank the

Operator

through gentlemen, available be XXXX, will p.m. ladies after at XX, conference And and midnight. for this replay X:XX today May

AT&T for access may AT&T (XXX) conference code at replay and X concludes executive service. that for entering your dialing Thank the by participation using and system you You any our for And the teleconference time access XXXXXX. XXX-XXXX today. teleconference

You may now disconnect.