Glacier Bancorp, Inc. (GBCI) Q3 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Glacier Bancorp Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference, Mr. Randy Chesler, CEO. Sir, please go ahead.

All right. Thank you, Mitchell. Well good morning and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Don Chery, our Chief Administrative Officer; Barry Johnston, our Chief Credit Administrator; and Angela Dose, our Principal Accounting Officer. Yesterday, we released our third quarter 2018 results. This was a very strong and well balanced quarter, and continuous an excellent year-to-date performance for the company. Earnings were $49.3 million, an increase of $12.8 million, or 35% over the third quarter a year ago. Pre-tax income was $60.1 million for the quarter, an increase of $12 million, or 25 over the prior year third quarter. Pre-tax income of $161 million for the first nine months of the year increased $26.2 million, or 19% over the first nine months of 2017. We had loan growth of $175 million, or 9% annualized in the third quarter versus growth of $164 million, or 10% in the third quarter a year ago. We grew our core deposits $199 million, or 9% annualized in the third quarter. Diluted earnings per share for the quarter were $0.58, an increase of 12% from the prior quarter and an increase of $0.11, or 23% over the year third quarter. Our annualized return on average assets at the end of the quarter was very strong 1.66%, up from 1.53% in the prior quarter. Annualized return on average equity was 13.1% and our return on tangible equity was 17.4%. We declared a regular quarterly dividend of $0.26 per share, which is a 24% increase over the third quarter regular dividend a year ago. This was our 134th consecutive quarterly dividend paid by the company. And in September, we also successfully completed the conversion of Collegiate Peaks Bank in Buena Vista and Denver, Colorado on to our core processing platform. Loan production for the third quarter was $887 million, which was once again generally well distributed among all our divisions. Loan pay downs were $712 million, which is consistent with past seasonality. The loan portfolio ended the quarter at $8.1 billion. Organically, the loan portfolio increased $632 million, or 10% since September 2017 and was primarily was driven by growth in commercial real estate loans, which increased $406 million, or 12% over the same period. Investment securities up $2.695 billion decreased $103 million, or 4% during the current quarter and increased $153 million, or 6% from the prior year third quarter. Investment securities represented 23% of total assets at the end of the quarter, compared to 26% at the end of the third quarter a year ago. On to credit, our key credit quality ratios improved in all categories across board. Early-stage delinquencies as a percentage of loans at the end of the quarter were 30 basis points, that's a decrease of 19 basis points from the second quarter, and an decrease of 14 basis point from the prior year third quarter. Net charge-offs for the quarter were $2.2 million and were $5.7 million for the first nine months of 2018. Charge-offs for the first nine months of 2018 was 7 basis points of total loans, down 5 basis points from the same period a year ago. Non-performing assets as a percentage of subsidiary assets at the end of the third quarter were 61 basis points, which is 10 basis points lower than the prior quarter and 6 basis points than the prior year third quarter. At the end of the quarter, NPAs totaled $72.1 million, a decrease of $12.4 million, or 15% from the prior quarter. We are very pleased to see the reduction in the level of NPAs, as we've been working towards this for some time and hope to see this trend continue. The allowance for loan and lease losses as a percentage of total loans outstanding at the end of this quarter was 1.63%, which is down 3 basis points from the prior year quarter and down 36 basis points for the end of the third quarter a year ago. This reflects our positive outlook on our portfolio and markets. Our low-cost, high quality stable funding platform across our Western multi-state footprint continued to perform really well for the company. Core deposits at the end of the quarter were $9.45 billion. Total core deposits were up versus the prior quarter by $199 million, or 2% as we continue with our focus on growing relationship-based accounts. The bulk of the deposit growth this quarter was all in non-interest bearing deposits, which increased $188 million, or 6% from the prior quarter and organically $276 million, or 12% from the year third quarter. We ended the third quarter with the loan to deposit ratio of 85% essentially unchanged from the prior quarter. And we were very pleased to see the total cost to funding for the current quarter unchanged from the prior quarter at 36 basis points, and up only 1 basis points versus the prior year third quarter. Once again our 14 divisions continue to do an outstanding job, tightly managing deposit cost specific to each of their market. Interest income increased $5.2 million to $123 million, or 4% from the prior quarter and increased $26.4 million, or 27% over the prior year third quarter. Both increases were primarily attributable to the increase in interest income from commercial loans and rising interest rate. Interest income on commercial loans increased $4.8 million, or 6% from the prior quarter and increased $20.7 million, or 34% from the prior year third quarter. Our net interest margin as a percentage of earning assets for the quarter was 4.26%, compared to 4.17% in the prior quarter. The nine basis point increase in the net interest margin was primarily the result of increased yields on the loan portfolio and it also included a two basis point increase in loan discount accretion for total of eight basis points attributed to discount accretion. The current quarter net interest margin increased 15 basis points over the prior year third quarter, net interest margin of 4.11, and would have been an increase almost 30 basis points if the same federal tax rate in effect 2017 were in effect today. The increase in core margin from the prior year third quarter was a result of the remix of earning assets, the higher-yielding loans, improved interest rates on the loan portfolio and our very stable funding cost. Our non-interest income for the quarter totaled $32.4 million, an increase of $588,000, or 2% from the prior quarter and an increase of $1.2 million, or 4% over the same quarter last year, driven by increased accounts from our recent acquisitions. Service charges and other fees of $19.5 million increased $700,000 or 4% from the prior quarter and the increased $2.2 million, or 13% from the prior year third quarter. The increases were primarily due to the increased number of accounts from organic growth and acquisition. Gain on sale of loans decreased $886,000, or 11% from the prior quarter as a result of some housing seasonality and decreased $1.9 million, or 21% from the prior year third quarter as a result of some seasonality and timing of loan origination. Other income increased $1.5 million, or 56% from the quarter and was primarily due to a $2.3 million gain on the sale of a branch building and increased $767,000 or 22% from the prior year third quarter due to the branch sale. Non-interest expense for the quarter was $82.8 million, that increased $1 million or 1% over the prior quarter and increased $14.3 million, or 21% over the prior year third quarter. Comp and employee benefits of $49.9 million increased by $904,000 or 2% from the prior quarter and $8.6 million, or 21% from the prior year third quarter primarily due to the increased number of employees from acquisitions. Occupancy and equipment expense increased $1.4 million or 22% over the prior year third quarter and was also attributable primarily to our acquisitions. OREO expenses increased $2.5 million from the prior quarter and $1.9 million from the prior year third quarter, with the increase driven by a single property which we wrote down $2.2 million in the quarter. Other expenses decreased $1.9 million, or 13% from the prior quarter and was primarily driven by a decrease in acquisition related expenses. Acquisition-related expenses were $1.3 million during the current quarter, compared to $2.9 million in the prior quarter and $245,000 in the prior year third quarter. Tax expense for the third quarter was $10.8 million, which is a decrease of $837,000 or 7% from the prior year third quarter and was attributed to the Tax Act. The effective tax rate in the second quarter of 2018 was 18% compared to 24% in the prior year third quarter. Our efficiency ratio for the quarter was 52.3%; it was 318 basis point decreases from the prior quarter efficiency ratio of 55.4%. The decrease was a result of an increase in interest income and the sale of the branch building combined with the company controlling operating costs and a decrease in our acquisition related expenses. In closing, the third quarter of 2018 represents another excellent quarter for the company. We finalized the integration process plan for Collegiate Peaks at the end of the third quarter and now we've successfully integrated both our First Security and Collegiate Peaks Bank acquisition that we closed at the beginning of the year. Our 14 division presidents and their team across our seven states really rose to the occasion in the third quarter and delivered some very strong results across all aspects of the business. That ends my formal remarks. And I'd like to ask Michelle to please open the line for any questions that you may have.

[Operator Instructions] Our first question comes from the line of Andrew Liesch with Sandler O'Neill. Your line is open. Please go ahead.

Hey, guys. Good morning. Just to provide some color around that the margin outlook this seems like with the impressiveness of the funding base and the cost of funds there staying pretty flat in the inflows to your non-interest bearing account but then stronger loan yields at the margin would have to continue marching higher. I'm just wondering if you can provide some color around your outlook on the margin.

Yes. We're very, very pleased with the margin results this quarter. I think the very positive underlying trends that we see this quarter should continue. I'm going to ask Ron to make a couple comments, if he would. I know he spends a lot of time looking at the margin.

Yes. It really is a continuation of what we had said in the second quarter release, and that is the --it's really the focus the divisions have and my hats- off to them. They're really focused on getting the non interest-bearing accounts. And you'll notice that we've had some slight increases in the interest-bearing, but when you can continue and I expect that we'll continue to have great growth in our non-interest bearing that goes a long way towards increasing the margin. So I'm optimistic on that standpoint. And then the loan production yields, the growth in that likely to continue so we're pretty optimistic. The core is running pretty well.

That's great. And then just looking at the long pipeline where it stands now and normally you have a little bit of slowdown here in the fourth quarter. Is that normal seasonality? What would you expect on the year?

Yes. We see it every time this year generally the third and fourth quarter is a little slower than the first and second so yes nothing out of the norm there.

Got you. There is one last question. The --have the cost saves from the acquisition this year; are those all in the run rate right now?

For the most part, yes. Both acquisitions are - have now been converted and there's always a little bit of a time after the conversion where are some of the expenses are still there, but then they begin to drop off. And we finished our last one at Collegiate Peaks in September. So there may be a little bit of trailing expense but certainly for Security Bank having done that one earlier this year, we --most of that is out of it-- most of the saves are reflected. There's a little bit of --there'll be a little carryover but not much.

Our next question comes from the line of Jackie Bohlen with KBW. Your line is open. Please go ahead.

Hi, good morning, everyone. Zeroing in little bit more on loan yield. I wondered if you could provide us a refresher with how much of your portfolio, number one is variable and number two, how much of it reprises on a quarterly or shorter basis.

Ron do you want to take that?

Yes. Jackie here, Ron here. So the loan portfolio and the variable part is about 64%, just call it two-thirds if you will. And then that the other part is that the fixed portion. And then I don't have the quarterly that would reprice but we would tell you it's 45% of it would be repriced within a year. And that's been pretty much the historic pattern. Remember, from asset liability perspective, we price a lot of our loan up to five year, and we always have a rolling book and so we get more lift in the second year after the first year of race. And that's what you're starting to see as these loans are starting to reprice both from a maturity standpoint and certainly from the variable part. That's what's giving us that lift.

Okay. And that 45% is that 45% of the total portfolio or 45% of two-thirds of the portfolio?

It's the two-thirds of the portfolio.

Okay and just generally speaking when those are repricing, what rates are they repricing off of prime, LIBOR, a different metric?

It's largely off the - we index to the predominately index to the five year Federal Home Loan Bank of Des Moines rate. And then we had a spread to that, and some of those are contractual, but then if they're variable we get a chance to lift those occasionally so.

Okay, that's helpful. Thank you and I apologize if I somehow miss this in your preferred remarks, but I have in my notes from last quarter that new generation was around 520 and I know that you said that it's increase this quarter and I wondered if you had that number?

You're talking about new loan production yields?

Yes. So it's moved up quite nicely. Right now we're right around the 530s for new production. So it's moved up, commensurate with the increase in rates.

Okay and then just one last one for me. Obviously your bank divisions are doing a fantastic job of developing non-interest bearing balances. I guess number one, do you expect that --how much longer can it continue to keep funding costs flat basically as rates rise?

When we look - we spend a lot of time looking at this quarter. I mean when you think of our position as a commercial lender, we feel like there's still a quite a bit of room to grow there, of our penetration of non- interest. If you look at our non-interest balances of only about 31% of the total. We think there's good room to grow we're also seeing now that we have over the last year really focused on looking for that relationship with the loans we are making. That's paying dividends. We think our product is very strong in the market that we offer. We are picking up some businesses, the bigger banks kind of move away from our target market of smaller companies. And so all that, we feel is our very good trends for us going forward.

Our next question comes from the line of Matthew Clark with Piper Jaffray. Your line is open. Please go ahead.

Hi, good morning. I want to talk a little bit about the construction development portfolio. I think it's up to about little over 13% of total loans. Just want to get a sense for whether or not you're seeing any slowdown in production activity given what REITs have done and just kind of general housing slowdown in a nationwide? And how you might manage that portfolio going forward?

The construction piece.

Yes.

Yes. So Barry and I would --we have-- we talk a lot about that. So I'm going to let Barry give you a little insight there.

Yes, basically this past quarter we saw a reduction in custom and owner occupied single-family residential. I think that's a little seasonal, saw 14% growth in presold and stack, and that's a reflection of just --we've got a lot --some builders out there trying to fill the demand for affordable housing. The inventory is pretty tight across our markets, not a lot of supply, so we're --if we see some increase there, anticipate that will probably continue. Then on in regards to the total land, lot another that grew about 6%. Some of it is in land development. We're seeing a few more loans there where we're financing borrowers who's going to build homes and sell us, nothing really large increase in absolute dollars, nothing big but percentage -wise pretty good. Other construction which is - price is the bulk of that portfolio is $487 million that stayed relatively flat this quarter. Again, I think seasonality. That portfolio is comprised of various commercial, primarily commercial vertical constructions, about a 100 some million it's multifamily of which the biggest part of that is low income housing tax credits projects that we finance across our footprint. We have them all the way from Montana down to Colorado. So it's really good product. We have about $80 million in there of educational dormitory properties that we are financing at various colleges and universities across our footprint. And then we have some medical offices buildings in there about another $71 million are in there. So outside of those three classes there is spread out across all other office buildings, warehouses and that sort of product. So usually for the bulk of it, it's owner occupied or owned or managed, very little outside investment properties for the most parts. Did that -

Yes. So there's, it sounds like there's still capacity to grow? It doesn't sound like you're pulling back necessarily?

Given the class of product kind of our bread and butter. So I wouldn't see us limiting production. They're the only two classes that we have put a limit on is hospitality and their conventional multi-family. Just the --that's- we're at our max limit there about 200 some million in each one of those classes.

Okay, great. And then just shifting back to deposits. Can you give us a sense for-- where that growth in non-interest bearing is coming from competitively? Whether or not the big banks or not?

Sure. A couple things about that. Number one is when we look at all the divisions it's pretty well spread out among all the divisions. So we're seeing it across the footprint. A lot of it is continue blocking and tackling. We kind of up the volume on this whole area over a year ago with some enhanced training around our product offering, and really, Barry and I was really kind of in asked for total relationships quite a bit more. And I think that's working for us. And if there's one thread, your question on big banks. A number of the divisions report Wells Fargo is continuing to kind of lose some relationships. And so I think we're benefiting from that in the markets where they're with us as well. And I think in general if the larger banks are in the market, we tend to be benefiting from that.

Great and then did you happen to have the spot rate on your interest bearing deposits at the end of September? Just wondered if it moved much at all relative to the quarter?

Let's take a look. So that is on the release I believe. If you look at the core deposits, you have a quarter-over-quarter, looks to be --if you look at it over this quarter versus a year ago were up three basis points in the core deposit. And it moves around between DBA savings money market and CDs. The bulk of that increases on the CD side.

Right. I guess I was just looking for the end of September not the quarter, sorry.

Okay. End of this September from the --you mean beginning of the quarter to the end of the quarter?

Yes.

So let's see, pretty much the same like it's up about one basis point.

Okay and do you - I guess that's great, it doesn't seem like you anticipate any meaningful pressure here in the near term to have to raise deposit rates?

That's right. We're - we talk to all our divisions. They were just not hearing that.

Our next question comes from the line of Jeff Rulis with D.A. Davidson. Your line is open. Please go ahead.

Good morning. Question on the --just looking at that commercial loan balances and I guess is the - in the regulatory classification, some fluctuations in those balances. Is that a product of payoffs? Is there's some seasonality going on? Just wanted to kind of dig into that CNI category a bit?

Yes. Generally third quarter starts getting colder will have a lot of revolving lines that paid out. We also have some agricultural production lines but as they-- as our commodity producers sell their crops, they will pay those down. So generally that's-- we see those reductions this time of the year.

So, Barry, as you've grown the AG portfolio, could you see potentially more seasonality than you've had in the past?

Right now the portfolio is split about 50/50 between term real estate and production. My guess is that we will continue to grow that portfolio, but the variances probably won't be that much difference than what they've been traditionally because we'll probably be adding more total to offset any variability to pay down in operating lines.

Got it, okay. And then on the gain on sale, just interested in your view on maybe a broader view on 2019 if you're looking at that kind of outlook or budget where do you see that revenue stream, I guess year-over-year in 2019 versus what you've seen this year?

For the - so the gain on sale primarily driven by the residential real estate business. Right now when we look at our total origination year-over-year, we're running pretty close to even. There's some variability and how the gains get recognized due to when they come on onto our platform. So I think the tailwinds that we have are in many our markets they're still a housing shortage. And we think that's going to continue. We see good demand. We're still seeing good in-migration which is driving the housing demand. The headwind is just really interest rates as they move up. Question is what kind of impact that will have. So at this point, we're really looking for continuation of pretty much the same level of business that we had this year going into 2019.

Okay and margin wise any thoughts on --sort of the margin in that business year-over-year?

Well, it's been doing pretty well. I think we did make some internal shifts to move to a little bit towards --more towards mandatory delivery. And that's helped our margin as the business got a little more competitive. So we've held it pretty flat year-over-year if you look at the number. So one offset the other so we were able to increase our gains because we moved to mandatory that took up some of the competitive issues. S I think that's another thing as we look at 2019 that should stay pretty stable.

Okay, great. And one last quick one on the NPA balances. I can't recall if there was something transitory in 2Q because you sort of reverted the NPA balances back to kind of where it was in 1Q. Was there anything kind of that fluctuated through there in 2Q that's now gone or ---

No. The only thing I would say is there was - I think we made this comment in a second quarter. There was a bit of timing. We had some things fall into NPA at the end of that quarter. That --a couple of them got resolved pretty quickly in the early third quarter. So over the combination of some quick fixes, that properties that went in and then they were resolved pretty quickly, as well as some structural because I think what I would call reduction of some of the more longer-term NPAs that are in there because we're really --I think we've talked about it. We're trying to focus on that area and identify loans and try to work them, work them out and move them along. So I think what you're probably referencing is in the second quarter we had a couple properties. One was a short-term, well it was a health care facility that went in and pretty quickly went back out. That was the-- that was about a third of that $12 million.

Okay, great, appreciate it.

Yes, little less actually than that but around there.

Our next question comes from the line of Michael Young with SunTrust. Your line is open. Please go ahead.

Hey, good morning. Randy, I wanted to just touch on the efficiency ratio. I appreciate the color on kind of the expense trajectory and the cost saves post the deals, but I think for Glacier as a whole we've kind of been stuck around the mid- 50s for some time with a core consolidation project and various things related to crossing $10 billion in assets. But it seems like now we should really start to make some progress on that going forward with an expanding net interest margin and pretty more stable sort of expense growth. Is that a fair characterization?

Well, let me just back up for a minute and point out, remember the efficiency ratio went up because of the change in the tax law. So when you say, we don't really view it as we're stuck around 55 because if you factor into where we were back in --at the end --if you take out the tax rate at the end of the year, the change we were kind of in the 54 range tax, the tax change had a negative impact on the efficiency because it reduced the amount that the impact of the tax advantaged loans and investments. So our efficiency actually went up with the new tax law, but if you look at it where it is now, it's especially this quarter, it's down nicely. Now some of that's that gain, so if you take the gain out it's more in the kind of the 50, mid 54. And so I think that's the right range for us. I don't see a big - I think it's steady grind. I think that the trend is down, but at a more measured pace. And that just comes from operating efficiencies. We're a high service business. So we're just very cautious about the cost that we take out. And just very mindful of that, but we continue to what I would call more it's a slow grinding march on efficiency. That's not going to stop, and this quarter is really good but I would look at it more in kind of in the 54 range because if you take the gain out that's really where the efficiency is this quarter.

Okay and then on the NPA's I think you've kind of talked a little bit about trying to work those down. Any sort of time horizon over what you'd expect that to kind of transpire? And do you expect any more kind of OREO marks or larger charge-offs provisions to kind of accomplish that over the foreseeable future?

No. And so on that I think we had a really good two pieces. One is just the NPA then we can talk about OREO specifically charge-offs, but we had a really good quarter down $12 million dollars. Very, very happy with that. We think there's some more downward movement there over the next couple quarters, don't know exactly when that will happen because they're --we're in the process of working those out. But don't expect to see any increase there and should see a little more improvement. Tough to put a time on it because it's all subject to buyers and when they pull the trigger, but I think the trend there is good. On the OREO, don't see another circumstance like we had this quarter. We had one a very large credit with - there is out of the 43 properties in OREO, there's only two north of a $1 million bucks. One of them we just wrote down. The other was markdown before it went in. I don't think there's anything left on that one to take down. So the one that we did Mark had been in OREO for nine years. So been in there for quite a while. Very unique circumstance and we just decided this was the - it had some interest in the property and just decided to recognize. But the market was telling us which was --what you saw in terms of the write-down but don't expect that to continue.

Okay. And similarly you don't see any additional charge- offs to kind of move that down, the NPA level down?

Not any kind of material extent, no.

Okay and then one last one just on the deposit growth this quarter. Obviously very strong in DDA and you've already talked about is a good but any characterization about how much of that is coming from retail versus small business or larger commercial clients? Just to kind of give us a little additional color?

In the non interest-bearing accounts?

Yes.

Yes. Well, it's pretty well spread out there. When you say larger customers, they are - for us larger customers I mean with over a $1 million in one of those non-interest bearing accounts. So pretty well spread out. There is --there was no mega account that really moved that number. There was quite a few, once again we take a hard look at that. And just --there's not one account in there that kind of accounted for a material part of that. So it was very diverse and spread out among the 14 different divisions, which we were happy to see.

Our next question comes from the line of Tim Coffey with FIG Partners. Your line is open. Please go ahead.

Great, thank you. Good morning, everybody. Hey, Randy I was wondering if you could provide a little more --a little color on the growth of a commercial real estate portfolio. Perhaps not quarter-over-quarter but over say last - say five to six quarters on an organic basis? What kind of opportunities are you seeing there especially as it relates to kind of non-owner occupied CRE which seems to be growing a bit faster than owner-occupied?

Sure. I'll give you my comments on it and then ask Barry to fill in. So we see good growth. I think --the thing I would point out is our non-owner occupied commercial real estate loan in our business is different in a lot of ways than maybe what most people think of when you say non owner-occupied commercial real estate. Most of that is in market customers developing smaller projects in their community. So we feel very good about that. And that we continue to see some good activity there. Our customers are growing and making investments. And that I think is what you see reflected in the numbers, and it's very spread out in terms of product type. And just feel that there's any one headwind in that area it's just interest rates. And do they go-- do they rise to a point that they make some of the development uneconomical? Haven't seen it yet? Don't think we're too close to that, but if there's one concern there, it's that. But generally, that's been a good; I think a good segment that we're very comfortable with. Barry do you want to add anything?

Yes. One of the things we also see is with our recent acquisitions the Foothills Bank of San Juans, Collegiate Peaks. And now we'll start to see it with First Security Bank of Bozeman is after the acquisition with the increase in the legal lending loan, that those small community banks are able to pursue larger commercial real estate term loans. And we see that almost-- we've seen it historically with the 15 or 20 acquisitions that we've made. So they have an opportunity to pursue customers that underneath their previous legal lending loan that was the challenge for them. So we see a lot of organic loan growth coming from that sector.

Great, thanks, Barry. That was going to be my follow-up. If I can switch gears a little bit to M&A. I'm --is your focus still on smaller markets or are you becoming more open to perhaps looking at bigger markets?

Really, Tim our strategy hasn't changed. We operated I guess it depends on how you define bigger markets, but we operate in some larger markets, as well as some smaller markets, mainly smaller markets. We prefer to be the bigger bank in the smaller market if we can from an M&A standpoint. There's --but that sometimes there's also good community banks like Collegiate Peaks operating in a close to a very large market. So our strategy and what we look for really hasn't changed I think a good bank and a good market with good people if we can find that and we're going to take a hard look at it.

Okay and then I know you have a long term view on M&A, but has the recent volatility in the market slowed any conversations or any kind of comp slowing impact on discussions?

Volatility in the stock market?

Yes. And overall big valuations.

No. I don't --at least from our perspective; I don't think it's had much of a change. I think that the markets very active. I think our position is the preferred acquirer in our areas that we focus upon really hasn't changed at all. We continue to get a lot of limit early phone calls from people, and early I mean we're generally I think the first phone call. So that continues to work really well that for us. And I think the stock market is going to --it's going to have its moves up and down, and many of the folks that we are talking to are making the decision based on other factors in terms of age of the management team, the preference of the ownership group in terms of the bank and whether they need more liquidity. And how they're going to pursue that. So the market volatility up till now really hasn't had any material impact on any of the discussions that we have.

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Randy Chesler for any closing remarks.

Thank you, Michelle. Well, we appreciate everybody taking time out of their morning to dial in and get the update on the company. And pretty proud of the results this quarter. I appreciate your interest and as always if you have any questions just give us a ring. Have a great weekend and thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.