Great Western Bancorp (GWB) 25 Jan 182018 Q1 Earnings call transcript

Good morning. And welcome to the Great Western Bancorp First Quarter Fiscal Year 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. would Director turn of I to conference time, Nachtigal, Ann Corporate this like the to over At Communications. Please go ahead.

Thank good morning and you, Denise everyone.

fiscal Investor Chief Chief Bass, David Executive morning Bancorp’s Peter Officer; Chapman, are, this Doug Great Officer; Officer; Relations. Michael Karels, year Steve Hinderaker, Gough, Financial quarter Credit Ulenberg, Ken and us and call Officer; XXXX Head Regional President Joining Chairman, President; Chief of conference Risk on first Western Chief

made would like may to I periodic the remind forward-looking Company’s you that Before subject presentation well to Please started, those available disclosures SEC discussed. our we future risks have materially cause the statement to as a factors. that website, today’s that contain are the results filings as get from Company’s actual of in could full statements forward-looking discussion differ and the for to our certain uncertainties contained refer on risk presentation we that

measures actual and Chief we will non-GAAP measures Additionally, within be Executive as appropriately to results. of said, financial Western Chairman, in President assist should provided such to it trends and this only Great Bancorp’s non-GAAP Reconciliations presentation. understanding over and for Officer, and turn a References measure Karels. included And be me you referenced are the let on upon performance non-GAAP today, that not Western’s call. are with now results conference discussing relied certain Great financial Ken? measures to Ken

or that call the a loans There everyone. million, want items of X.X% share, Loan million net basis. were before through annualized time with and asset taking growth was join Thank $XX.X while in for million Pete us. highlights out robust the the to excluding $X.XX shortly. run unique morning, I good But of for revaluation tax number Net $XX.X of income was increasing $X.XX adjusted deferred per you will that, or Ann, the income per few on you, the or $XXX an quarter Thank a was quarter. to share.

continued our ratio of the XX.X% will efficiency rate on and quarter tax XXth year federal XX.X% XX% we drop realized Our again and to with tax Xst. improve the reform fiscal and October dropped to benefit to September this to

Now, quarter results, over for would call Financial to the to Officer, insight more Peter our on Chief our Pete? financial first I Chapman. turn like

us Thanks, good joining today. Ken, you and everybody. morning Thank for

of of in approximately results value our our $XX.X in as a As the nature value the Ken spend mentioned, capital items the XX as by peers, during there and treat within million with made rates net points. like you. approximately the basis adjusted it reducing Like of quarter tangible many ratio the to X.X% unusual share and little few time bit our such book for non-GAAP the charge by income. item per quarter, adjustment This total is one-time our assets. we tax revisit financial We corporate recognized I us discussing would were that deferred tax lower of our

rate the we The we Next, fiscal current taxes with year. for to starting we effective fiscal September income and a approximately October because year, apply XX.X% conjunction all-in our on federal expect beginning our tax of year-end, FYXX were file X, our rate XX% with rate statutory in blended XXXX. for is tax required blended

XX% step in the statutory then down FYXX. to will We rate tax

of income Our lower taxes change. quarter provision this million this $X for approximately was because

points lower tax result was being resulting this tax on and tax less basis finally, margin we current income. interest equivalent is ratio NIM quarter, to a period rate. card of lower valuable approximately which impacted NIM credit the adjustment no to less equivalent basis basis adjustment margin calculation as change calculate net X interchange the result. The Next, adjusted a presented. for from income our the tax our a in because is impact impact and margin fully The equivalent approximately has other each as interest but non-interest And the X for to points. does interest income or reclassified total was X all This efficiency $XXX,XXX revenue net we’ve presented, to periods quarter approximately net income, reduction

there margin about trends we talked years. few no last change have meaningful the So, to is over

higher quarter, to by was growth small primarily loan income offset quarter, borrowings. compared the increase expense partially Moving the by increases $XXX.X million to and driven loan related revenue, deposits prior from to a net interest income interest for interest

which Our of the our favorable expect quarter income. our $XX.X a valuation full equivalent portfolio result This income net yields interchange. than liability change rate card the and additional tax and as fully value basis debit linked and was X.X%. Service cap of interest to X of $XXX,XXX, in quarter-over-quarter on declined is $X.X a in Amendment by variance we was reduction NIM the quarter, run of NIM impact adjustment margin primarily was driven million largely result the was million, fees related quarter interchange and fair is charges lower asset derivatives. don’t adjusted loan and more high reflected Noninterest points now while quarter other for to X.XX% Adjusted the compared Durbin XX% cost for offset. increase the declined the a

related were than under quarter $X.X by million million non-interest to of which our and expense and expenses was offset just with processing for quarter, in fiscal expectations. A X% increase by our more reduction the lower primarily salaries benefits, data non-interest the a driven prior costs. compared items $XX.X to year-end line and in was Finally,

tangible annual as marginal salary salary in than this next ratio these comfortably the reform. about Tier some and quarter. remain and earlier ratios run with common regulatory approximately XX.X% items, levels, the per quarter, mentioned. text strong by expense our Efficiency of rate this to broadly with be improved increases announced relation the All quarter, Other Ken equity for X We ratios and line driven expect capital primarily ratio XX.X increases at X.X%. we adjustments expect remained month also has result XX.X quarter at in well-capitalized total capital we to in and respectively to $XXX,XXX as a our

$X.XX sheet payable call approved Board Finally, XX. to Bass on again our to the quarterly I’d Doug February the over balance to dividend, has now discuss like our turn activity.

Pete Thanks morning everyone. and good

of of finished quarter in were as commercial to $XXX Of coming million $XXX real million market. strong growth growth a X%. refinancing nearly the December We used secondary growth we to portfolio. Dakota as XXst basis. Unfunded the loan segment construction quarter, during are despite rate we footprint by quarter million consumer a some stressed continued Therefore, believe approximately customers outflow this than $XXX commercial small our growth. and estate, purposes. compared million Loan months Deposit increased planning growth calendar each represent fourth which robust of was tax of by which net segments was growth. offset annualized the XX and agriculture to advances quarters, nearly happy quarter balances with into projects the early report consecutive commitments of owner-occupied of year We XX, occur in compared September the in an we prior. most of in These many second loan $XX Growth typically the distributed were declined South approximately more our construction short-term was expect had growth advances on exception for exiting a slightly January. Geographically, across deposit the result in deposits of relationships. a dairy during see million $XX agriculture repaid agriculture

Our loan ratio of just to targeted within over XXX% our remains range. deposit well

Let’s take through quality turn Officer, Michael? Credit Chief developments. call Gough, our who the to over will asset now us Michael

Doug morning good you, and all. Thank

attention previous basis. asset quality. was on for now basis $X.X quarter, were compared to quarter. Net $X the or million to for quarter slight our loans Turning annualized the an charge-offs loan the Provision million points the of losses XX a decrease average on for slide

from what’s percentage during provided charged basis XX XXth, total was quarter. despite off ALLL down the the basis loans of one points, we Our than more as fact point September

In credit loans September points XXX credit coverage, on fair portfolio value accounting to and long-term purchase related XX, comprehensive total XXXX, we Our basis adjustments marks, loan our portfolio at credit, upgrades sound rating we which of worse grain compared includes classified are performance line our modestly expect with $XX of commercial the number the have these farmers’ Watch XXXX and increase million approximately were Substandard credit which loans. space, of small $XX deterioration estate in maturities reduction risk increase that Watch each in general, in largely early saw non-accrual credits, a also December producers. in primarily with credits million In driven changes completed primarily real of drove downgrades. remained January, in our of in which by the outpacing report XX% to expectations and was minimal and reviews November, happy annual we in with agricultural on I’m and

We in There plans trend in continued also to to downward unwilling light grain prices grain portfolio of months. are their additional recent business producers closely the a has continue credit to those remain extend to and resistant monitor in adjusting lower prices. that been milk

have some portfolio. With segment the dairy call let’s of closing but closely that, to Ken portfolio We of monitoring remarks. widespread with are for that don’t our back the the segment turn concerns

you, Thank Michael.

margin for we of GWB. had loan can ratio see, benefit strong managed growing. you our and is pure credit optimism As great reform, strong well, maintained pipelines consumer are our the quarter quality, growth, this efficiency lean and was Besides tax the

continued the positive questions. call profitable As we you look for your will GWB. in up forward, we we’re can safe, now, growth. And achieve for open we very Thank interest

[Operator question Bank. go Rochester Please will of Dave Instructions] come Deutsche The ahead. first from

might about? On in you what those guys. next just you line you thought of grow? run the expenses know through highlight be some roughly in are you the outlook, quarter. morning, you But rate thought go and talking increases this the quarter would could details that Good just again, with you I can said expense

to benefits quarter, I about on was net couple salaries offset so, mentioned and bit think, will employee bit by of say and a get basis. a was Look, think I that down flat benefits, of basis, back by smaller a lines or sort quite data largely of a salaries this as XXX,XXX across processing probably stuff. I’d sort I to there increase of other a and up be year-end because

wondering It just if color those given the talk rate just deposit NIM, on are the you looks in contained the the the any March for are about front. to quarter. guys had would but quarter And switching there could NIM just seeing you great. be this trends like you well hike, are pricing what in you we what just And costs expecting then,

really any we get from a December Yes, the expect didn’t benefit sure. small quarter, Look, obviously Dave, this hike benefit. in

up as to point to And on obviously, flat So, look, little a seeing would or Bass, Doug bit of a are to more margins cost expected more well? Certainly, a front, color competition be there sort bit if the like deposit so. there. out provide you

Yes. you can we options look Dave, at I think, overall in as have when strategy, funding a that we as number far of markets different at. our look

seeing are slight We for some pressure of increases. in those

of material fundings amount of However, go consistent we overall at a as well. we looking be on a and targets forward, the to loan very also as of NIM as are variable are basis spread result

And know I to then, just capital, grow that to switching continues here.

end prospects M&A, thinking last does specifically something about year. that buybacks bid-ask in are year? call? this you seeing wondering the calendar you about still if And, capturing on the are this done or guys that you you just a are spread what talking think just get deal smaller don’t do how then, you’re that dividends, And We were up

manage Yes, that. first. maybe capital intent It’s to always on our

first is preferred continue banks that’s started in capital said, capital That will we dividends, if price; But at starting use the accretive we and And whether some to not look the levels at. are also where quarter. whether project look right to our excess in stock stock to near preferred or the shareholders our come stock on of at we shortly execute one dividends too. obviously XXXX, where along, either do a acquisition just acquisitions the first acquisitions be Board that definitely, opportunities that. repurchase manage we It’s continue capital. probably of now it But the is difficult a repurchase. on to pipeline access to because of opportunity the we still -- every we discussion our use dips As here see to there is in or we’ll we’ll to little standpoint at from are with raise really, will and

spread bid-ask were you Are as saying bit more about you last favorable what little on quarter? there a to the still M&A front, talking

on, just into yet the the and much been both -- that’s hasn’t and that buyers think baked difference how it’s will part that’s and of reform tax much I by how digested being sellers. make I that yet, think prices a still

question next Poonawala will The ahead. go of Ebrahim Bank America of Please be from Lynch. Merrill

you much if quarter loan loan first would that of this could year? saw in terms for when helpful? we of terms mid your color most could more, expect XXXX, the advance think, of you how start towards just we growth be single do I I you out high like of the I’m any sorry you digit And the growth. that about outlook loan had move off outlook then, running Ken, be in like But, on And think sort this. And just to more seasonal feel digit fourth missed if do the we year-end will in relative single balances? of on

I’ll and ahead start, go Dough, and finish. then

our pay saw And we think a already down when on in dairy January. March-April, as down into in about the we run more been what early take first a as think look later I planning we market. We January, of tax I rate experienced and softer term many longer ag result we in the we on at about draws, million first, is of activity in experienced see pay work robust typically the run, a and only Midwest as we that’s quarter, little year-end $XX construction February down spring side, the pick March. X% a on side up in of economic head pay

the mid to and range I at in think year, single-digit as full we going be look upper the that single-digit we’re of to growth.

Yes.

as we it through So, are year, think last seeing lower flagged loan up. the I we tick growth,

mid think high said, it into So, year. digits probably as is can this Dough what single looking I for to we’re up go at

hiring sort of or few terms hiring Ken, there Understood. of talent, or in new you over at any anticipate that of is you’re months? next And markets that opening lending the pipeline offices looking a

talent be of started, our to part probably strategy. number getting look we’ve continue communications or We that working a of we’re three the hired, year, of in obviously, on some two opened next markets, of at with, some and could having them definitely, those but

loan which at markets eventually those we’ll hire then can start service continue So, production with we in to offices expand look branches. full and to to markets talent to start

expect And your to one to XX Understood. XX through XXXX? then is year, this sort just September of I fiscal guidance which just housekeeping for want Should be rate in tax question. make tax rate sure fall we and to understand XX% clearly. the ongoing I

No.

drop the Ebrahim, the next year, rate. is XX rate will XX.X% So, based on this then And all-in the statutory statutory rate to effective XX% year.

or so next that or year. So, XX.X percent so in fiscal the

Okay. XX.X%? So,

number, yes. That

Alexopoulos Steven from come JP will ahead. question next of Please Morgan. The go

year this for I that growth benefit? expense some tax you on should expenses. start impact What wanted as reinvest anticipate of we to guys

a really result month announced quarter, is benefit salary of earlier only that $XXX,XXX a of around that as significant that a increases change change, living a Steve. result the we as around Not wages. The this tax

look And the you ended which at is then, really when efficiency XX.X, we good. at ratio,

I What think, realistic target the XXXX? the below say target. on now are thoughts you here we for safely sub are well a more could XX

depends NIM on lot a think, I Look, base, Steve.

would it hold NIM. with up certainly, So,

little in As the quarter. hopefully, bit we of NIM we next a said, get benefit with

course of based So, But think sort we seems of we said, what X% be expense on perspective, upon are that over from to inflationary, lot where have manageable, the I year on now. a look, happens the of base depends as sort spread.

first flat seems such point, to you said that we which limited NIM, a in the basis how light the only Why little X up the given on benefit quarter a late And saw hike. quarter? in

Really, there, things there of Steve. is couple

We’re seeing pressure deposits. on a bit little more

on well the increased costs there. contained is So, well not and Certainly, spread compression deposit There maybe quarter, spread we then are so there were as bit little very base. a loan still seeing front. this

only there. So, to little cautious reasons that’s the a be

estate at the in commercial and look around last grow strong. that at guys good. growth your final detail, And And quarters point? point, thoughts just you were real CRE, looking growth loan know pretty I slowing one Have you changed CRE as Okay. then, this one your was appetite few

Doug or Go Michael. ahead Yes.

we think I are businesses, is even sometimes what are looking lower. the at opportunities borrowers, are of with high a XX%, capitalized majority very loan-to-value XX%, the

provide of some revenue borrowers with secondary as opportunity assets trended seeing long-term a that areas. in positioned are capital we source then our streams, repayment So, some of and metro strong strong very

look opportunistic at and borrowers. strong look that taking take credit sense to make an strong So the in a markets we are opportunities

it’s quality So, your that’s on changed higher view what credit, CRE?

so, again are to of I because loan taking would yes, a we lower say value. some posture

increase of other of you and I occupied XX% well, to growth was those in the relationship look are into piece of acquisition. probably at about and our the construction think the new owner C&I XX% acquisition XX% of seeing some is some to both well our C&I going as ties about the relationship increased forward. continues pipeline, as of owner-occupied,

limits Steven, everything loosened way, underwriting are any items. add a just book. not policy loan a I absolutely one, consistent, that and our it’s Doug over guidelines composition when within form a of at two shape not changed the in are I range, doing other this Michael. loan would concentration we or we and or well also look said. with Number echo would

of will next ahead. D. go from Rulis come question Jeff Please The A. Davidson.

quality the, few questions Just side. on the maybe credit on a

loan there, one the So, added. was was I what loan may it was missed of have that Was CRE related? ag that Mike, type the --

the ag been really One hotel, one space; had we that so not couple -- would at all. related another were a big nursing was care the in mentioned. a actually Actually, have

Okay. What ag bucket, flow the the NPA the in you through maybe in look then the just increase kind to OREO? both the you at migration, was of accruals, Did just if have year the bucket? versus this non-performing of any And of balance loose last sort fiscal a the were where on kind levels guidance one-off, for provision year? of the if year, you

Yes.

Sorry, Jeff.

the you’ll in Q. that Just comes end that ag perspective, when But were they in NPA see out would quarter-on-quarter on ag. from -- it piece, the

was down. Ag

down was that the sorry, NPA I’m bucket? within

were NPAs yes. bucket ag in the Correct, down.

these some service of expect And that then, you, we did point? could that at growth you got to and Pete, that mention presume you while fully kind now charges bottomed now have

In was. about Durbin. that current to that million the was Yes, $X quarter a due

So, will quarter-on-quarter, go. that

expect So, that would we growing to start again.

And going getting maybe what I On XXXX last so of for quarter tax saw we XX% -- for XX%, I ongoing It’s full correct? given in had we forward. I just almost is the average one. just the this effective blended a rate, guess right. In one not XX%, we’re be guess the that will get like fiscal fiscal year QX, each that

Yes, ex the DTA.

this that’s DTA the for adjustment So, quarter. ex

that assuming our is the effective for forward We’re XX% next rate three going quarters.

from next Arfstrom Markets. Capital go of Please question will come RBC Jon The ahead.

on back the just Pete, margin.

we little XXXX. to if guess one in interest because , NIM of the I maybe that’s maybe do than I things to clarify to increases expect sensitive you over rate asset implying? get higher migrate few you’re thought wanted I hypothetically, Just a a more you’re able time? the be

Look, I we would, of a get rate couple Jon. if more rises,

variable side our of or variable. seen, two-thirds is loan into on book the As you’ve swapped about

to the we of margin rises, loan deposit then if would outpace growth. more expect get So, I couple rate

the what’s erratic expectations? growing real maybe maybe bucket. you bit little commercial if there kind you more and demand been your straight a estate not talk of Can about in little happening it’s the commercial, lending bit -- Doug, like of a category, just the and terms commercial

are bulk are that probably commercial to non-real bucket estate in real structured component down, Yes, originations than again, bucket. pipeline -- of break be of seeing the into going the think relationships. being of the Sure. the XX% C&I more estate had bulk is we that of I the the and the that a XX%, And probably when then, half are that you we

seeing up profits slightly. are will to indicate this average which those driving think what probably in significant flat a would But that and again, be So of down retention are flat, slightly. lot I we line probably that relationships usage are

of we flat good, C&I as indicate we acquire new first up and just most to which in relationships indicate, quarter will the So, would very that segment that profitability slightly. pipeline probably is would see

Ken, And in And changes, CapEx purchases. you is or a or from my kind it And just of pipelines are maybe you impression equipment law the seeing changes. sentiment moved wondering favors heavy kind any country. in of are some some are you of those part if with tax of I’m for of change the obviously,

definitely Yes. the is I there optimism mean, there.

to are others sorting they still use benefits. going think through how are tax exactly I the

we start we more gathering are in have We’re and just C&I don’t seeing our in they what totally been just our completing the spending survey from going I results. yet are bankers think to customers, from capital.

I dollars think the spent general although will they intent to we committed yet. or seen haven’t be, big do is that

I So, we things. higher demand. certain are we some certain increased led that our But next loan this doing growth to that through one-offs can and reason customers the of is for see benefit year generally, and part will we’ve fall say thoughts would loan get

it up. somewhat numbers And settled think for news continue the you for Michael, is you creep I feels is follow-up on good to ag just the like nonperforming one credit. but

in bigger out have Just give I when you might that. or your terms of some it’s NPA curious could you feel a Just move do crest. steady on you pieces mean, think thoughts if state? that any do balance of like you this thoughts us have

stabilized, great Proteins, as Overall, months, off the nonperforming a we certainly look bit. little hogs, Overall, mentioned improved; and level I I dairy, before couple Right you last now, grains, cattle, to things recent and has it times yourself book could far at historic norm. compared stay at year, mentioned assets certainly a even is would lumpy. think the not think that you down ag not down. nonperforming as I stabilizing somewhat a describe but been

are big that in observation -- have the or has of do your is we outpace are have going chunks what we trend not is this do Again, downgrades. improvement. say the progressed we some are the downgrades seeing loan hope to one to but And overall, But and of there overall another expecting going high. in frustratingly book accurate, that stayed to out year. get never some to there upgrades we is We way reasons any

The Piper Nathan will Race go come next of question Jaffray. from ahead. Please

morning. expect here? terms Good Question from just the it thoughts you absolute portfolio, securities any of here, shrink on on to on in from basis going forward

Relative Nate. step. to balance side, will size, it say, expect sheet pretty I’d be probably Absolute a I’d shrink little, to steady

And expectations then kind growth on that expect shake you where XXXX. for just deposit thoughts on out? to Any just guys of

from it’s single the to upon think side. to growth be predicted first on loan think that’s quarter digit range. And it’s be the expectation in we loan funding going I the in with of up to I going part-in-part and the demands upward what mid saw be going

grow. to that expect We

well. funding expect deposit, as core increase We side the

go The next ahead. Please from question Erik come will Stephens, of Zwick Inc.

I for ask retaining of in on geographies your driving of could First, construction relationships the maybe seen permanent buildings, you’ve and portfolio. expectations the terms in the what transition you ultimate the are any the Can if loan as what’s just color financing? that, the provide use to nice growth

Sure.

as be a as I structure in whether it’s at or say be half place of construction about we key segments, probably those number hospitality. It take you on a far would would in the growth, long-term been have trajectory, in XX% metro when virtually XX% all located multifamily, look are think that variable. a areas. the rate interest about it I dozen

and be to a loans long-term, those The typically I a a component retained, and would And repayment flow a versus So, would market investor sides impact. secondary be from positive in generally are environment, the would sector owned. current probably will owner more there be are increasing that will retained. rate think on a NIM that the because be multifamily senior housing it

the Colorado Dakota, it’s South Arizona at as balanced state Just by across looking and Nebraska, there. main the states pretty breakdown,

just loans maybe to market. a you the today these replace secondary kind adding does potentially that pipeline the And one, given of that Okay. follow-up new balance on that sheet? number those flow expect continue look to of the to How would leave to

Yes. markets are plus. exact next that A that sector the X A backfill. X years growth the in be lot the that of projects see take months sector happened that net to in be stabilized. projects pipeline is and we same over would the would and majority pipeline built, And again, these of XX to the a originations in seized

the would to XX So, XX be But, increase. be increase impact next net a in XX over months Economics, probably the continue will it to I’d say months. the change be. to probably out net position the would net the near-term, as will what

quarter-over-quarter. Was deposits market a on costs moving about basis did more something this that X one deposits. overall time on just response customer more proactive or to on maybe Obviously points to And deposit demands were competition controlled maybe well rate or increase quarter. year-end? The

base, certificate in Midwest alternatives at being and market our look to component, CD still as with core there focused It’s rural a retain we the was as I comparison think in last base in to the the non-time we of more for a with reflect necessarily to customer markets customers and rural lot the years, account set last continue in the a couple between Company material metro don’t investment with money the continue segmentation metro. different The rate increasing of markets interest we A working in work the growth markets dealt those customer core I grow. again have have time, And deposit. to and that change think highlighted of it is quarter, market reaction our customers in or over changed would but and long core deposits, checking growth more has metro had. which are what the dollars is

ahead. come will go KBW. from question of Please next The DelMonte Damon

Just the quick couple quick off you Could update those ag some working you the balance of a sheet? of where follow are that give a to ups. relationships as stand of in you

anything Michael, do add? have you to

we and overall, with got credit, Damon, called I’ll certainly that a loan charged is chime services in. rehabilitations start, have strategic SBS, business workouts. anybody group within can

grain when with a cycle know, are you you As year. specifically ag, one dealing producers, it’s

have, bit them longer of work on you a those so, And tail out will, if to the a bank. of

one have on able We helping the the we larger naming names, the of quarter, and hope chipping possibly couple them been coming elsewhere. a over to to find without away be hope financing rehabilitate. We ones, pretty -- also sizable balances, hope to upgrade see that

relationships, the non-ag combination do. a when it overall, well. And in we So But they get severe larger elsewhere sometimes can can of combination larger some they you them slower those deals bit look really than get of cases, liquidation. as and or refinanced take are little it’s involuntary they voluntary the rehabilitated, a time we a it’s are do more

So, with three really it’s of the with problem strategies larger combination -- a any all credit. really and

Yes.

in I fairly think as has and hit pointed far as making early hard we we And growth just -- those some we out. operations. on change as their that the have weren’t a that drag been

some somewhat some out of starting we’re kind that improvement to the of and continue. bottomed expect the on that we’re number mentioned, I’ve think to as I see we

markets? what’s guys of an bit Iowa little into. we I last could update bunch strategy, market you expanded a markets on give want then, talked happening on quarter update just I the a different that. just specifically, know your And metro about of recently you get that the have in

Damon. Yes,

year. continue in will we strong in the of And will will where hires commercial first well. that as emphasize those We’ve made full-service more We’ve those quarter point with a Iowa opportunities western we markets growth production banker the quarter XXXX, here this And in probably we of have some as And markets, and that in other specifically, those other the at have or in XXXX probably economics. key we later into be time lending to convert some current those markets in markets calendar I have couple relative had got other expanding far two time, we in we’ve some here XXXX. opened a loan in. had that markets a branches. probably exist queue XXXX in states that offices. we think hires then will some some that this made to with the are As of in Iowa And staff couple couple we’ve states, hires be got

guess I for Pete. just then, And lastly

out charges is look provide service commentary for the you Durbin. I at But, the could the quarters? kind If expectation to line, of from loose the you range of couple kind of heard and on non-interest bottoming impact a and income a reasonable next what as

out. couple think, $XX of I’ve next million quarters, that I mentioned the comes obviously,

increase. service So, I would charges expect to

in wealth were back we wealth and So, to quarter this line item. have modestly; quarter. back line once next slows you pretty again the peaks it Damon, just it main two before that up [indiscernible] Other expect with down seasonally, if the soft look our as major increase trends, to mortgage, banking around items mortgage income you at continue this to quarters the out.

are they key there. say So, probably the movers I’d

come O’Brien & The Sandler go from Partners. of will next O’Neill question Tim Please ahead.

Hi.

review some this a loans, that’s decline one reflection credit the guys. in declines? follow-up, in reflection. Watch in Just ag Is those list the of annual The

answer is be And that’s Watch thing to to yes. the credits meant stress Tim, transitional. the about is that I’d only

ag movement have more in the have both maturing the can largely XX% Watch ways. Watch the Certainly, that as rating. you but upgraded worse space movement than we downgraded, we So, through ways work and both did from ag loans, of

we to just saw like So, overall criticize in numbers? some went

it sorry. again. Say, I’m

Criticized.

more But to in yes. of a did, Watch good down way out went Some certainly bad than moved way.

overall approximately, to be long, going of you. am this that another throw one end when review quarter? I think completed more How -- at you Last will do --

positively be the On should when completed more and December has would account reviewed year-end at financial prepared, absolute March statements, the or that the But answer audited especially it grain March that be than look sectors, XXst, by other XXst. be space reporting should later a we largely by be yes; grain absolutely will dairy the space, that. little

follow-up And the Jeff from D.A. Please ahead. next Davidson. question Rulis of will be go

is all guess, $X.X effective, would that is lower? on number equal, one million you range changes quarter, and anticipate a drag, the value the drift to X basis in the pop derivative back I that quarter adjustments, a net favorable the million in impact that quick, loan event elsewhere then a things Just the the million -- just X.X being on given up to or and net fair

about was There the Dave. million line related. that is this credit Jeff, $X loan was Yes. on quarter this

we release those a around that As on provide or effectively bit you as loans. know bounces provision

So, about the expect a recurring. to be not favorable loan the in would $X we million of line,

Okay.

if over So, you’re lower core time? $X.X we it’s it’s drifting -- And kind -- discuss just I guess, a pattern now as of a million on of then -- net.

Yes.

lot was the this derivatives have cost rate the And the out -- where current a called quarter. before line think we on the million that’s $X.X about I we of the of benefit hikes. under see just We’re

on will continue see we improvement to So, that.

hand his And gentlemen, remarks. the conference to that to for question-and-answer our ladies conclude back Ken would closing and like session. will I Karels

we Obviously, are another and very you. steady happy quarter with for strong GWB. Thank

positive the it. on organic looking future, on mentioned, are higher with we are we We growths as as loan forward

interest. So thank investment for your your you and

today’s this gentlemen, Thank sir. concluded. lines. time, now and you, conference has you attending At presentation. the Ladies disconnect Thank your for may you