Banner Corporation (BANR) Q2 2014 Earnings Report, Transcript and Summary

Good day and welcome to the Banner Corporation’s Second Quarter 2014 Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mark Grescovich, President and CEO. Please go ahead, sir.

Thank you, Denise, and good morning everyone. I would also like to welcome you to the second quarter 2014 earnings call for Banner Corporation. As is customary, joining me on the call today is Rick Barton, our Chief Credit Officer; Lloyd Baker, our Chief Financial Officer; and Albert Marshall, the Secretary of the Corporation. Albert, would you please read our forward-looking, Safe Harbor statement.

Certainly. Good morning. Our presentation today discusses Banner’s business outlook and will include forward-looking statements. Those statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook for economic and other conditions. We also may make other forward-looking statements in the question-and-answer period following management’s discussion. These forward-looking statements are subject to a number of risks and uncertainties, and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ, are available from the earnings press release that was released yesterday, and the recently filed Form 10-Q for the ended March 31, 2014. Forward-looking statements are effective only as of the date they are made, and Banner assumes no obligation to update information concerning its expectations. Thank you.

Thank you, Al. As announced, Banner Corporation had another strong quarter of performance, reporting a net profit available to common shareholders of $17 million, or $0.88 per share for the period ended June 30, 2014. This compared to a net profit to common shareholders of $0.60 per share for the second quarter of 2013, and $0.54 per share in the first quarter of 2014. Earnings in the second quarter included $9.1 million gain related to the acquisition of our Oregon branches which net of related expenses, added $0.23 per share to earnings. Exclusive of that gain, Banner had a very strong quarter of $0.65 per share. The second quarter performance continued our positive momentum and further demonstrated that through the hard work of our employees throughout the company, we continue the successful execution of our strategies and priorities to deliver sustainable profitability to Banner and expand our balance sheet with strong organic loan and deposit growth, coupled with opportunistic acquisitions. Our return to profitability for the last 13 quarters, further demonstrates that our strategic plan is effective and we continue building shareholder value. Our operating performance again this quarter was very solid when analyzing our core key metrics. Our second quarter of 2014 core revenue was a strong $54.4 million, despite lower year-over-year mortgage banking revenue, due to a reduction in refinanced activities. Supported by an improved earning asset mix, our net interest margin remained above 4% and was 4.06% in the second quarter of 2014. And our cost of deposits again decreased in the most recent quarter to 21 basis points compared to 29 basis points in the second quarter of 2013. This overall performance resulted in a solid return on average assets of 1.51% in the quarter. This quarter’s strength is reflective of the continued execution on our super community bank strategy that is, reducing our funding costs by re-mixing our deposits away from high priced CDs, growing new client relationships and improving our core funding position. To that point, our core deposits increased 19% compared to June 30, 2013. Also, our non-interest bearing deposits increased 26% from one year ago. The predominant portion of this balance growth is from the generation of new client relationships in the acquisition of the new branches previously mentioned. Our net client growth in these product categories is 72% since December 31, 2009. It’s important to note that the major portion of this growth is organic from our existing branch network. Further, our loan portfolio expanded 14% from one year ago. In a few moments, Lloyd Baker will discuss our operating performance in more detail. While we have been effectively executing on our strategies to protect our net interest margins, build client relationships and deliver sustainable profitability, improving the risk profile of Banner and aggressively managing our troubled assets, also has been a primary focus of the company. Again this quarter, our credit quality metrics reflect our moderate risk profile, and our non-performing assets have been reduced to another 8% compared to the first quarter of 2014 and 27% compared to June 30, 2013. In a moment, Rick Barton, our Chief Credit Officer, will discuss the credit metrics of the company and provide some context around the loan portfolio, our success in aggressively managing our problem assets while at the same time, increasing our loan portfolio. Given our successful credit management, our reduction in non-performing loans and our moderate risk profile, we did not record a provision for loan losses in the quarter despite our strong loan growth. Nonetheless, Banner’s coverage of allowance from loan losses to non-performing loans is a strong 376% at June 30, 2014, up significantly from 292% in the second quarter of 2013. Banner’s reserve levels are substantial and our capital position and liquidity remain extremely strong. At the end of the quarter, our ratio for allowance for loan and lease losses to total loans was 1.97%. Our total capital to risk weighted assets ratio was 16.5%, and our tangible common equity ratio was 11.8%. In the quarter and throughout the proceeding four years, we continue to invest in our franchise. We continue to add talented commercial and retail banking personnel to our company in all of our markets, and we continue to invest in further developing and integrating all our bankers in the Banner’s improvement credit and sales culture. While these investments have increased our core operating expenses, they are resulting in positive revenue growth, strong customer acquisition, 15% year-over-year growth in the C&I portfolio and improvement in cross-sell ratios resulting in deposit fee income growth of 11%. Further, we’ve received marketplace recognition of our progress in our value proposition as this small business administration made Banner bank the Community Lender of the Year for the Seattle and Spokane District for the second consecutive year. And Forbes magazine, ranked Banner Corporation as one of the top 50 most trustworthy financial institutions in the United States. Finally, the successful execution of our organic growth plans and our persistent focus on improving the risk profile of Banner has now resulted in 13 consecutive quarters of profitability and our tangible book value increased nearly 8% to $28.57 per share when compared to June 30, 2013. I will now turn the call over to Rick Barton to discuss the trends in our loan portfolio. Rick?

Thanks, Mark. My comments this morning about the company’s loan portfolio can be broken down into two themes; credit metrics and loan growth. Banner’s credit metrics continue as the strength for the corporation, and definitely support our objective of maintaining a moderate risk profile. The metrics I will discuss include the loans acquired as part of the Oregon branch purchase. Net loan charge-offs for the quarter were $61,000, less than one-tenth of 1% of average loans. Total non-performing assets declined another 8% from the linked quarter and are now just 0.51% of total assets. The non-performing loan category decreased $5.3 million, or 25% during the quarter. Reductions primarily came from payments. Assets moving to OREO both reduced non-performing loans and resulted in a modest $1.1 million OREO increase during the quarter. Orderly liquidation of OREO continues. During the quarter, sales yielded a net gain of $150,000 and no valuation adjustments were recorded. Class V loans in Banner’s portfolio were $78 million versus $80 million at March 31, 2018. This is a decrease of 2.5%. Class V loans now represent only 2.1% of total loans. Delinquent loans including non-performing loans were 0.73%, essentially unchanged from the linked quarter. The loans continue as a source of strength through the company even with no provision for the sixth consecutive quarter. Coverage of non-performing loans is a strong 376% and the reserve to total loans also was strong at 1.97% even after loan growth during the quarter of $240 million or 6.8%. Having just cited second quarter’s strong loan growth provides a perfect segue to further discuss the company’s loan growth. Year-over-year, total loans have increased $472 million or 14%. $88 million are 19% of the growth resulted from the recent branch transaction. These acquired loans have a commercial real-estate compensation, but also include excellent C&I credit relationships. The balance of the year-over-year portfolio growth $384 million, was organic. This growth occurred across the franchise, reflecting an improving economy in the region as well as a more optimistic view of the future borrowers. The press release details second quarter loan growth by portfolio of segments. Additional comments about this growth include, commercial real-estate growth in the second quarter was skewed by the Oregon branch transaction. The commercial real-estate totals also include owner occupied properties. Compared to the linked quarter, this category grew $37 million. Multi-family construction loans decreased by 38% quarter-to-quarter and several projects were completed and we are being very selective in adding new commitments given the share volume of new apartment units in our major markets. Residential construction loan outstanding were flat during the quarter, despite significant due loan production which reflects the vitality of home building in the Northwest. Markets are imbalanced with low levels of unsold inventory and pay offs are keeping pace as residential construction advances. Solid growth was recorded in both C&I and agricultural loans, reflecting our strategic emphasis on those portfolio segments. I will conclude my remarks with the recurring theme that the moderate risk profile and the Banner loan portfolio along with the company’s strong capital ratios, will allow us to continue executing our strategic plans which include further growth of the company. With that, I’ll turn the stage over to Lloyd for his comments.

Thank you, Rick and good morning everyone. As Mark has already indicated and as reported in our press release, our second quarter operating results reflect solid revenue generation, driven by significant balance sheet growth, additional client acquisition and compared to the preceding quarter, improved mortgage banking activity. This strong performance follows a solid first quarter for 2014, as well as two very successful years in 2012 and 2013, and continues to demonstrate that our value proposition and the strength of our balance sheet are producing consistent earnings momentum and adding value to the Banner franchise. Our net income available to common shareholders was $17 million or $0.88 per diluted share in the quarter ended June 30, 2014, compared to $10.6 million or $0.54 per diluted share in the first quarter of 2014, and $11.8 million or $0.60 per diluted share in the same quarter a year ago. As noted, the current quarter’s results were augmented by $9.1 million bargain purchase gain, related to the acquisition of six branches in Oregon, which added $0.23 to earnings per share. Adjusting for that gain and the related cost and taxes, our earnings per diluted share increased to $0.65 for the second quarter 2014 compared to $0.54 in the preceding quarter and $0.60 in the second quarter a year earlier. For the six months ended June 30, 2014, our earnings available to common shareholders increased to $27.6 million, compared to $23.3 million for the first six months of 2013. Excluding the bargain purchase gain and related costs and taxes, earnings for the first six months of 2014 were $23.1 million, nearly unchanged from a year earlier, as increased net interest income and increased deposit fees and other service charges were essentially offset by decreased mortgage banking revenues and increased operating expenses. However, as I previously noted, our mortgage banking revenue improved meaningfully in the second quarter compared to the first quarter, as originations from home purchases increased, in large part, as a result of additions to our mortgage loan production staff. Our first half results is encouraging as they are, continue to reflect the difficult challenge presented by the prolonged period of very low interest rates, which again pressured asset yields and our net interest margins. Our net interest margin was newly unchanged from the preceding quarter, primarily as a result of strong loan growth and a resulting change in earning asset mix. Loan yields continue to decline, and despite further small reduction in funding costs, our net interest margin was 14 basis points below the same quarter a year ago. Nonetheless, as a result of significant loan growth, our net interest income increased by $1.6 million compared to the second quarter a year ago, and coupled with $700,000 increase in deposit fees, allowed revenues from core operations to increase by $1.3 million, to $54.4 million for the quarter ended June 30, compared to $53.1 million for the same quarter in 2013, despite a $1 million decrease in mortgage banking revenues. In addition, for the sixth consecutive quarter, we did not identify a need to reduce net interest income for the provision for loan losses as nearly all of our credit quality indicators continue to improve. Also reflecting the strong loan growth for the six months period ended June 30, 2014, our net interest income increased by $2.9 million or 3.5% compared to the first six months of 2013. And deposit fees increased by $1 million or 8%, more than offsetting a $2 million decrease in mortgage banking revenues. As a result, our revenues from core operations increased to $105.8 million for the first six months of 2014, compared to $104 million for the six months a year ago. As Mark noted, our net interest margin remained strong at 4.06% in the second quarter, compared to 4.07% for the first quarter, but not surprisingly declined from 4.20% in the second quarter of 2013. Importantly, however, none of these periods has Banner’s margins or net interest income been augmented by any acquisition accounting yield adjustments. Although our success with client acquisition strategies have resulted in significant core and loan – core deposit and loan growth, which has offset much of the declining yield pressure, it remains clear that the low interest rate environment will continue to adversely impact the margin going forward. Deposit fees and service charges were particularly strong at 7.3 million in the second quarter and a 11% increase compared to 6.6 million in both the first quarter of 2014 and the second quarter a year ago. As I have noted before, continuing increases in these fees and service charges are a direct result of the success of our client acquisition strategies and resulting core deposits. However, in the current quarter we are also experiencing increase in these fees as a result of our decision to move our debit card relationship to MasterCard. While this change resulted in some one-time income recognition which impacted this revenue in the current quarter and will also boost third quarter revenues modestly, there are also will be a ongoing positive impact on our revenues as well as continuing benefits for our clients from this changed relationships. As noted in the press release, we had another outstanding quarter for loan growth, particularly with respect to targeted loan categories. Including the loans acquired in the branch purchase, total loans increased 7% compared to prior quarter and 14% compared to a year ago. These increases reflect solid growth in commercial and agricultural business loans and commercial real-estate loans. Agricultural loan balances experienced a normal seasonal increase in utilizations, while the aggregate total of construction and development loans decreased during the quarter, as a result of significant pay-offs and the completion of certain multi-family projects. Primarily as a result of the branch acquisition, total deposits increased 6% during the quarter, and reflecting significant organic growth as well as the acquisition increased by 13% compared to a year earlier. Importantly, deposit growth continue to be largely centered in transaction and savings accounts, including non-interest bearing accounts which increased by 26% compared to a year earlier. As a result, at June 30, 2014, our core deposits increased by 19% and represented 76% of total deposits compared to 73% a year earlier. I have noted before does not come with our costs, and that was again true for Banner, as our operating expenses also improved compared to the preceding quarter and corresponding three and six months period a year earlier. The increase in expenses compared to prior periods, principally reflects additional compensation as we continue to invest in our human capital. In addition, expenses related to the branch acquisition were approximately $2 million. However, we are pleased to note that the six branches and more than 10,500 new client relationships have been fully integrated into the Banner systems, and we are very optimistic about the prospects for his new market. This concludes my prepared remarks. In summary, I think it’s fair to say that Banner Corporation has clearly had a strong first half of 2014, and is well positioned for continued success in future periods. As always, I look forward to your questions. Mark?

Thank you, Lloyd and Rick. That concludes our prepared remarks, and Denise will now open the call and welcome your questions.

We will now begin the question-and-answer session. [Operator Instructions]. We have a question from Jeff Rulis from D.A. Davidson. Please go ahead. Jeff Rulis – D.A. Davidson & Co.: Thanks. Good morning.

Good morning, Jeff. Jeff Rulis – D.A. Davidson & Co.: Question on the loan growth, just a broader question. You get the sense that this was more a function of improved demand in the footprint or taking market share?

Jeff, this is Mark. It’s a combination of both. I think the value proposition that we’ve demonstrated, I think we are taking market share – significant market share gains for our company as evidenced as I said by the significant client growth we’ve had. But without a doubt, the regional economy I believe is performing significantly better than other parts of the country. So it’s a combination of both. Jeff Rulis – D.A. Davidson & Co.: Okay. I guess to further make it more granular, I guess sequentially you’re getting a sense that may be just separately demand is increasing. Do you think that, that I mean you’ve got some seasonal factors in there, but certainly it feels more positive quarter to quarter?

Yeah, I think adjusting for seasonal impacts yes, it is getting better quarter-to-quarter. Jeff Rulis – D.A. Davidson & Co.: Gotcha. Okay. And just to clarify on may be this is for Lloyd, but just was interested in the amount of costs and taxes that you netted against that gain so the 9.1 million gain, what did you account against that?

Well good morning, Jeff. We accounted against it all of the related expenses which is we’ve identified in the release roughly $2 million. Jeff Rulis – D.A. Davidson & Co.: Okay.

Most of that in the current quarter with first quarter, there was a small amount in the first quarter. And then the marginal tax rate on that would be 36% which is a combination of state and federal, tax impact on the marginal dollars. Jeff Rulis – D.A. Davidson & Co.: Okay, great.

That marginal rate in that large contribution from the bargain purchase gain is also the reason if you looked at the press release that our effective tax rate for the quarter was up about 1% over the prior – in recent quarters, and that’s driven by more fully taxable stuff at the higher marginal rate. Jeff Rulis – D.A. Davidson & Co.: Got it. Okay. And then may be just one last one just interested in the yield I guess the yields on the loans you acquired in the branch deal relative to the legacy book, and may be the impact on the funding costs as well what you’re bringing over so I guess loan yields and funding costs expected impact?

Jeff this is Lloyd. The yield on that portfolio was pretty comparable to our existing portfolio. As Rick noted, there is a little bit of a bias towards commercial real-estate in there which generally is going to be a little higher than C&I loans, but it’s pretty comparable as we’re the consumer segments of it. The deposit costs were also reasonably comparable to ours, and it was a very attractively priced deposit portfolio. So as a result of that, when we went through the fair value mark-to-market on both the loans and the deposits in the purchase accounting activities, they were very small marks. Jeff Rulis – D.A. Davidson & Co.: Got it. And are you seeing any run-off subsequent to quarter end or any expected?

Not at this point in time anything meaningful and I don’t think we expect it either. You got to be optimistic.

Jeff, this is, Mark. We obviously modeled in that as part of the purchase, but we are actually very optimistic we are going to grow into market share down there. Jeff Rulis – D.A. Davidson & Co.: Okay. Thank you. That’s it for me.

Thanks Jeff.

The next question is Jackie Chimera from KBW. Please go ahead. Jacquelynne Chimera – Keefe, Bruyette & Woods: Hi. Good morning, everyone.

Good morning, Jackie. Jacquelynne Chimera – Keefe, Bruyette & Woods: Lloyd, I’m sorry if I missed this in your prepared remarks, but was there anything that happened with the fair value mark with its suddenly going positive when it’s been negative the last couple of quarters? The one in the fee income?

There was – there were actually a handful of things that happened in the fair value market field. No we took the valuation of our debt, our junior subordinated debt up changing the spread from 525 that we have previously used at 500 basis points over LIBOR. And that is well as some related assets that we have where we own some trust preferred debt issued by other financial institutions and we were just finding evidence in the market spreads have tightened some more on those products. In addition, and as part of that evidence, we own some pool with trust preferred securities trust preferred CDOs if you will, and on one particular security there was a sizeable. We were carrying it around the $0.78 or $1 and we became aware that there was a auction on the collateral, and that we would be paid in for on that security. So, it was moved to a mark of park in anticipation of that. So that tended to offset each other, the market and the rest of the portfolio was pretty modest as interest rates haven’t moved around much. Jacquelynne Chimera – Keefe, Bruyette & Woods: Okay. So going forward in future quarters we’ll go back to the small amount of amortization then?

That’s correct. It is as I as I mentioned a number of times there is a fairly sizeable mark against that liability that just the passage of time will be about $350,000 a quarter fair value charge, if you will. Jacquelynne Chimera – Keefe, Bruyette & Woods: Okay. That’s very helpful. Thank you. And then one for you Mark, just as you look to and I realize that this particular quarter was different because you’ve had an acquisition that had higher deposits than loans. But how do we think about balancing this excellent loan growth that you’ve been having versus trying to get the positive accounts to keep the loan-to-deposit ratio around the 95% level?

That’s a great question. We have set a long-term target of having our loan-to-deposit ratio between 90% and 95%. Seasonal factors will cause you to move at the higher end of that ratio given the seasonality in our loan portfolio. We have had strong loan growth. We are certainly not going to cease our momentum on the loan production side. I do believe that there is some seasonal impacts on the deposits as well, and I feel pretty confident that our continued acquisition – client acquisition strategy along with the seasonal pick up in deposits, will allow us to continue to be core funded as an institution going forward. Jacquelynne Chimera – Keefe, Bruyette & Woods: Okay. And do you, as a part of your incentive plans some of your branches or anything like that regarding deposits?

Yes it is significantly and let’s keep in mind that at the end of 2009, our core deposit mix was 50% core deposits and that’s now as Lloyd said 76%. So, I think incentive plans along with the value proposition that we’re putting in front of the client base, along with our sale structure is yielding very positive results and we expect that to continue. Jacquelynne Chimera – Keefe, Bruyette & Woods: Okay. Great. Thank you for all the color. I appreciate it. I’ll step back now.

Thank you, Jackie.

[Operator Instructions]. Our next question is from Russell Gunther from Macquarie. Please go ahead. Russell Gunther – Macquarie Capital: Hey, good morning guys.

Good morning, Russell. Russell Gunther – Macquarie Capital: Just one quick follow up from me at this point. On the loan growth, even adjusting for the branch impact, you guys showed incremental improvement from one 1Q and it really demonstrated some strength going forward. I think last quarter you remarked some cautious optimism this quarter in your prepared comments, you talked about the pipeline boding well for growth going forward. So I’m just wondering your level of confidence and ability to maintain growth momentum from here has increased? And if so, if you could just talk about what you would expect the drivers to be going forward?

Russell, this is Lloyd. I think that we have significant confidence in our loan production units and personnel. Having said that, the pace of growth in the second quarter first half of the year but the second quarter in particular, that pace of growth is something that’s probably is not sustainable on a long-term basis. So there is seasonality in there, there is uneven deal flow always, but we’ve noted for an extended period of time we’ve been investing in talent. And that talent can is gaining traction in a number of locations in producing positive results and we would continue to be optimistic about that.

So Russell, this is Mark. In summary, I would characterize our pipelines are strong, we are optimistic, but we are not more optimistic than we were last quarter. Russell Gunther – Macquarie Capital: That’s great. That’s really helpful guys. I appreciate it.

You bet.

Our next question is from Don Worthington from Raymond James. Please go ahead. Don Worthington – Raymond James: Hi. Good morning everyone.

Good morning, Don.

Hi, Don. Don Worthington – Raymond James: In terms of your broker deposits went up a bit in the quarter and I’m assuming you’re using that to kind of fill the gap until you generate more core deposit. Just curious as to kind of the term and the rates paid for the brokered accounts?

Don, it’s Lloyd. The terms were actually quite short because we do view that as the stock gap measure. We may be having mentioned this enough this morning but we typically see a seasonal flatness in deposit flows in the first half of the year and most of our deposit growth in recent years have occurred in the second half. So, when we utilize wholesale funding we keep that in mind. So, in terms are really quite short. We’re also in a position where our interest rate risk profile which we’ve noted for an extended period of time is modest risk but clearly we would prefer to see rates go up and go down. So, utilizing short term funding makes sense in that case. Don Worthington – Raymond James: Okay, great. Thank you. And then now that branch deposits are up pretty strong in the quarter, how much of that was acquired in the branch deal?

The Oregon branch acquisition had with approximately 150 million of core deposits associated with it approximately 225 million I believe federal deposits and roughly a 150 like you would characterize it as core. Don Worthington – Raymond James: Okay. Great. All right. Thank you.

Thanks, Don.

The next question is from Tim O’Brien from Sandler O’Neill & Partners. Please go ahead, sir. Timothy O’Brien – Sandler O’Neill: Good morning.

Hi, Tim. Timothy O’Brien – Sandler O’Neill: First question, commitments, C&I commitments do they changed in the quarter?

Well this is, Rick Tim with loan activities that we have had there is always some expansion in C&I commitments related to that activity. There still remains a good portion of those commitments that are undrawn at this point. Timothy O’Brien – Sandler O’Neill: And did utilization rates, increase?

I would say that utilization rates increased slightly and part of that is slightly related to the seasonal patterns that Lloyd has talked about earlier. Timothy O’Brien – Sandler O’Neill: And that’s specific to C&I non-construction right?

Correct. Timothy O’Brien – Sandler O’Neill: And then, kind of going forward in the second half, would it be fair to say that seasonal factors in agra, you’re going to see the increased line usage in Ag in the third quarter or is that going to top out here that we’re through the second quarter? And sitting in there also by extension are we going to see the probably the balance of vine down from here given here on the construction book was that the right take away from the comments made on that?

I think that you need to break the construction book into different segments. When you take a look at the multi-family portion of that I think that’s a fair statement is I mentioned we’re being very selective about making new commitments in that segment currently. Given the vitality and the health of the residential markets here in the Northwest I think that those will remain fairly stable as we go forward through the balance of the year. Timothy O’Brien – Sandler O’Neill: And now on the Ag side, do we see further draws from here and expansion in the book in the third quarter? Are we going to see topping out you’re going to see more pay offs here?

There will be some continued draw downs during the third quarter and pay-downs typically occur as we move into the fourth quarter and first quarter of next year. Timothy O’Brien – Sandler O’Neill: Got it. So in other words, that’s kind of incrementally a differentiator between second and third quarters related to those two segments that might take a little bit of the edge off it strong growth you guys experience in the second quarter but relative to third quarter but all of the things being equal, growth prospects looks promising so does that sound right?

Yes. Timothy O’Brien – Sandler O’Neill: Okay, great. And then, another question just kind of trough up are there any other incidental costs related to the branch deal that you guys are going to book in the third quarter?

That’s a great question. I think we in the press release we noted that the fair value adjustments of assets and liabilities possible estimated. I don’t think they will be material, but from an accounting conservancy standpoint we have left that option open but it’s not going to be material. Timothy O’Brien – Sandler O’Neill: Not material. Great. That’s all I needed. And then one last question for you where was that, conversions completed for value marks got that I’ll step back from here. Thanks a lot guys.

Thank you, Tim.

[Operator Instructions]. Showing no further questions at this time. This will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Mark for any closing remarks.

Thanks, Denis. As I states, we are pleased with our strong second quarter performance and the reinforcing evidence that we are making substantial and sustainable progress on our disciplined strategic plan to build shareholder value by executing on our super community bank model by growing market share as evidenced by the extending balance sheet, strengthening our deposit franchise improving our core operating performance, and maintaining our moderate risk profile. I would like to thank all my colleagues who are driving this solid performance for our company, and we all welcome our new colleagues and clients as we resolve our Oregon Bank acquisition. Thank you for your interest in Banner and for joining our call today. We look forward to reporting our results to you in the future. Denise, I’ll turn the call back to you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.