Glacier Bancorp, Inc. (GBCI) Q4 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Altabancorp Q4 Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, speaker, Mark Olson, Chief Financial Officer. Thank you. Please go ahead, sir.

Thank you, and good morning. Thank you all for joining us today to review our fourth quarter and yearend 2020 financial results. Joining me this morning on the call is Len Williams, President and Chief Executive Officer of Altabancorp. Our comments today will refer to the financial results included in our earnings announcement and investor presentation released last night. To obtain a copy of our earnings release or presentation, please visit our website at www.altabancorp.com. Our earnings release contains forward-looking statements. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and beyond the control of the Company. We caution readers and listeners that a number of important factors could cause actual results to differ materially from those expressed in or implied or projected by such forward-looking statements. These forward-looking statements are intended to be covered by the Safe Harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they were made and we assume no duty to update such statements except as required by law. With that, I’ll now turn the call over to Len. Len?

Thank you, Mark. Happy New Year and good morning. Welcome to our call. Altabancorp reported solid earnings for the fourth quarter and for all of 2020 demonstrating the strength of our organization to respond to difficult economic conditions. Despite the negative effects of the pandemic and near zero interest rates, we reported net income of $11.1 million for the fourth quarter of 2020 compared to $11.7 million for the fourth quarter of 2019. Diluted earnings per common share were $0.58 for the fourth quarter of 2020 compared with $0.61 for the fourth quarter a year ago. For all of 2020, net income was $43.5 million, or $2.29 per diluted common share compared with $44.3 million, or $2.33 per diluted common share for the same period last year or a year earlier. Our net income declined by only 1.9% year-over-year despite the negative economic effects of the COVID-19 pandemic and interest rates near zero. I believe this performance speaks to our entire team working together to respond to these negative events and working diligently to solve our clients’ financial needs during this difficult time. Our return on average assets was by 1.52% and return on average equity was 12.44% for all of 2020 compared with 1.93% and 14.14% for 2019. As we begin this New Year, we reflected on what our team has accomplished over the past few years. We’ve spent considerable time, money, and effort to address significant shortfalls in processes, controls, and technologies. So we could maintain and build market share, enhance the cloud experience and stay competitive in a rapidly changing industry. We believe that it’s imperative that we improve our ability as a company to execute and to innovate. It’s also critically important that we improve ownership, accountability, and skill sets in our culture as we decentralize leadership in order to operate more effectively in a larger evolving community banking organization. To assist us in this endeavor, we’ve made a three-year commitment to retain a renowned leadership development and culture change management company to help us strengthen and build our culture that is accepting of these necessary changes. We’ve also contracted with the large national commercial banking training organization to sharpen and build world-class value-added technical and consultative banking skills. We’re driven by our passion to enhance our clients’ experience with better processes, newer technologies, and a skilled workforce. We continue to proactively manage credit and concentration risks to ensure the organization has the capacity and ability to safely grow our asset base. We also separated the production and credit functions of the organization and improved our underwriting processes and procedures. Additionally, we promoted and hired qualified credit administrators to fill roles in our new credit department. These credit administrators have thoroughly reviewed our existing portfolio and actively managed out clients with higher risk profiles than we were willing to assume, particularly given that we were nearing the end of a credit cycle. Lastly, we continue to transform the organization from a primarily asset-based lender that is focused on construction and commercial real estate lending to a business and real estate bank with high-touch relationship management professionals and support staff who have value to our clients by providing creative, timely, helpful business solutions. The strategy has provided many opportunities for growth among our existing team, while also attracting high-performing talent from outside the organization. Recent talent acquisition to complement our existing lending professionals include multiple experts from several regional and national banking institutions. Keep in mind that while we’ve been making these major changes, our loan originations have exceeded $1.4 billion in each of the last three years. As a publicly traded company, we know that we must adapt and improve to earn our independence every day. We believe that we have the people, processes and systems to safely grow our loan portfolio and expand our market share in Utah. Over the past three years, our total assets have grown organically by approximately $1.2 billion to over $3.3 billion, a 19.5% annual growth rate. Total deposits have grown by approximately $1.1 billion to over $2.9 billion, a 20% annual growth rate over the same period. Altabancorp has grown to hold the six largest deposit share position in Utah. Over the same period, we have aggressively built a fortress balance sheet to weather economic uncertainty. We believe our balance sheet strength is reflected in the level of allowance for credit losses held by us and our strong liquidity and regulatory capital position. These results could not have been achieved without our adaptable client-centric associates. I’m proud of the financial performance our strategic plan has shown to date. While maintaining a strong balance sheet, we have consistently achieved above peer returns. Despite near zero interest rates and a significant amount of liquidity we hold, our net interest margin is in the 96 percentile and our return on assets is in the 91 percentile among our peers. We believe the combination of a fortress balance sheet above peer returns and strong stock price, currency value, places us in a unique position to aggressively grow organically and to compete for mergers and acquisitions throughout the Intermountain West. With historically low interest rate, the market is forcing bank management to look at strategic combinations to improve operating leverage. We believe this will provide us acquisition opportunities. Over the past three years, our tangible book value per share has increased by just under $6 and almost 16% annual growth rate. We also paid dividends totaling $1.46 per share over the same period. When dividends paid are combined with the increases in tangible book value per share, our shareholders have earned an annual return of over 20%, totaling approximately $140 million in total shareholder return over the same period. We’re fortunate to operate one of the strongest States in the nation from an economic perspective. Utah’s economy has consistently performed better than most States and the nation as a whole. The unemployment rate for the nation was 6.7% at December 31, 2020. While the unemployment rate for the State of Utah was 3.6%, which is one of the lowest unemployment rates in the nation. Nationally, total jobs decreased by 2.4% year-over-year at December 31, while jobs in Utah were flat. This was the second lowest year-over-year change of any state. Despite the negative effects of the – that the pandemic has had on the overall year-over-year change in jobs in Utah, at the end of the year, construction jobs actually increased by 4.4%, which we believe is a leading indicator of an economic recovery locally. Utah continues to experience net in migration as individuals and families are able to work from home for an extended period. We believe that Utah will continue to outperform other States and the nation as a whole. Lastly, that COVID-19 fatality rate in Utah is the lowest of any state in the nation, which we believe will also mitigate the negative effects of the pandemic. We then provided substantial financial relief to our clients through participation in government programs, as well as our own payment relief programs. We are participating with the second round of the SBA Paycheck Protection Program, although the demand has been muted compared to the first round. We believe this is partly due to the stronger economy in Utah. We will continue to work with our clients to provide financial solutions to assist them on their path to recovery as we all work together to overcome a pandemic. Altabank funded over $85 million in PPP loans helping over 333 small and medium-sized businesses. To date 45% of our first round PPP borrowers have filed for loan forgiveness with the SBA and 81% of these have had their loans forgiven. As of yesterday, we have processed $16.3 million in second round PPP loans for 60 borrowers. The company also offered a temporary loan payment relief program to borrowers impacted by the pandemic. We offer payment relief to 415 businesses and 105 individuals totaling approximately $320 million or 19% of total loans, excluding PPP loans to address borrowers cash flow challenges. To date, the deferral period has ended for 439 borrowers or 80% of loans deferred totally $278 million. This leaves 81 borrowers with loans totaling $42 million still on deferral. There are only three borrowers with small balance loans, totaling $185,000 who have not made a payment for 30 days or greater after their payment deferment agreement expired. We have entered into another loan payment deferment agreement with two borrowers with balances totaling $8.4 million. As we finished 2020, [indiscernible] with our overall asset quality trends, total delinquent loans were only pointing at 1% of total loans. Non-performing assets to total assets was only 0.27% at the end of the year. Total net charge-offs were only 14 basis points or $2.4 million for all of 2020. We finished the year with our allowance for credit losses as a percentage of total loans at 2.43%. If we exclude SBA PPP loans and other government guaranteed balances from the total loans, this percentage increases to 2.8%. With continued government relief programs and our expectations that will continue to see more government stimulus programs, we have to pay that potential negative credit events will be muted or postponed until the stimulus programs in. Nevertheless, we believe our allowance is adequate to cover our current expected credit losses. We’ll continue to monitor closely macroeconomic conditions and the overall performance of our loan portfolio to determine if we should adjust our expectations of credit losses. As we look forward to 2021, we believe that we are well positioned with our fortress balance sheet to take advantage of these market conditions to grow organically and through acquisition opportunities. The Altabancorp Board of Directors declared a quarterly dividend payment of $0.15 per common share, the dividend will be payable on February 16, 2021 to shareholders of record as of February 9, 2021. The dividend payout ratio for the earnings for the fourth quarter of 2020 was 25.5%. This continues are over 50 year trend of paying dividends by the company. I will now turn the call back to Mark to discuss more specifically our financial performance for the three and 12 months ended December 31, 2020. Mark?

Thanks, Len. Total assets grew $960 million or 40% year-over-year to $3.37 billion at December 31, 2020, which is primarily the result of a significant increase in total deposits. Total deposits increased $860 million or 42% to $2.92 billion at the end of 2020. Non-interest bearing deposits increased $320 million or 45% to $1 billion at the end of 2020 compared with the same period a year earlier. And interest bearing deposits increased $540 million or 40% to $1.9 billion at the end of the year compared with the same period a year ago. Non-interest bearing deposits to total deposits increased to 36% at the end of the year compared with 35% a year earlier. The increase in total deposits is primarily the result of both governmental and bank relief programs, and businesses and consumers actively conserving cash to try to counter the negative effects of the pandemic. Last quarter, we mentioned that we anticipated deposits to decline throughout 2021, the most recent stimulus program and additional programs proposed by the federal government, we now anticipate that our deposit balances will continue to grow throughout 2021. Loans held for investment grew $15 million or 0.9% to $1.7 billion at the end of the year compared with $1.68 billion a year earlier. We originated over $1.4 billion in loans during 2020. However, we also actively managed out approximately $100 million of loans from clients with higher credit risk profiles that we are willing to assume, particularly given our concerns about the economic cycle that we’re in. We anticipate strong loan growth during 2021, given our strong balance sheet and available liquidity. The allowance for credit losses increased $9.8 million or 31% to $41.2 million at the end of the year, compared with $31.4 million for the same period a year ago. The allowance for credit losses to total loans held for investment was 2.4% at the end of the year, compared with 1.87% at December 31, 2019. Non-performing assets increased $250,000 to $9.1 million at the end of the year compared with $8.8 million at December 31, 2019. Non-performing assets to total assets declined to 0.27% at the end of the year, compared with 0.37% a year earlier. Cash and liquid investments securities grew $942 million or 152% year-over-year to $1.56 billion or 46% of total assets at the end of the year compared with 26% at December 31, 2019. Shareholders’ equity increased $38.8 million or 11.7% to $371 million at the end of the year, compared with $332 million a year earlier. The increase resulted primarily from net income earned during the intervening periods changes in accumulated other comprehensive income resulting from changes in the fair market value of investment securities available for sell and reduced by cash dividends paid to shareholders. The company’s leverage ratio was 10.4% at the end of the year compared with 12.7% a year earlier. Total risk-based capital ratio was 19.2% at the end of the year compared with 18.4% a year ago. The decline in our leverage capital ratio, despite a double-digit growth in equity is primarily the result of significant positive inflows of normal operations and from governmental relief programs. Turning to the income statement. Pretax pre-provision income was $14.5 million for the fourth quarter compared with $16.3 million for the same period a year earlier. For the year, pretax pre-provision income declined $4.8 million or 7.5%, the $60 million compared with $64.8 million for the same period a year ago. The decline in pretax pre-provision income was primarily the result of lower net interest income and higher non-interest expense offset by higher non-interest income, primarily for mortgage banking activities. Net interest income decreased $2.2 million or 8.1% to $25 million for the fourth quarter compared with $27 million for the same period a year ago. The decrease is primarily the result of net interest margins narrowing 152 basis points to 3.18% for the same comparable periods. The narrowing of net interest margins is primarily the result of the federal reserve reducing benchmark rates to almost zero and an increase in the average amount of lower yielding cash and investment securities held by the company stemming from average core deposits, increasing $747 million or 36% for the same respective period. Average cash and investments securities increased $816 million or 136% to $1.4 billion for the three months ended December 30, 2020. Cash and investment securities as a percentage of total average assets – average interest earning assets increased to 45% for the fourth quarter compared with 26% a year earlier. Yields on interest earning assets declined 171 basis points to 3.38% for the fourth quarter compared with 5.09% for the same period a year earlier. The yield on our loan portfolio declined 80 basis points to 5.4% for the fourth quarter compared with 6.2% for the same comparable periods. Yield on cash and investment securities declined 100 basis points to 1% for the fourth quarter compared with 2% for same period a year ago. Total cost of interest bearing liabilities declined 33 basis points to 0.34% for the fourth quarter compared with 0.67% for the same period a year earlier. Our total cost of funds declined 22 basis points to 0.22% for the fourth quarter compared with 0.44% for the same period of year earlier. Acquisition accounting adjustments including the accretion of loan discounts and fair value amortizations added 3 basis points to net interest margins for the fourth quarter. I think it’s important to highlight that if we were to deploy fully the excess liquidity on our balance sheet, we need that cash and investment securities were only 15% of our total balance sheet. And we held these funds in loan at our current rates, our net interest margin would have exceeded 4.2% for the fourth quarter. For all of 2020, net interest income decreased $6.2 million or 5.6% to $104 million compared with $110 million for all of 2019. The decrease is primarily the result of net interest margin narrowing 127 basis points to 3.79% for the comparable periods. For all of 2020, our total core deposits grew $492 million or 25% to $2.5 billion compared with $2 billion for all of 2019. Because of significant increase in deposits, cash and investment securities increased $553 million or 113% to $1 billion for all of 2020 compared with $488 million for all of 2019. All of 2020, the percentage of average cash and investment securities to total average interest earning assets increased to 38% compared with 22% for all of 2019. For all of 2020, yields on interest earning assets declined 143 basis points to 4.05% compared with 5.48% for all of 2019. The yields on our loan portfolio declined 80 basis points to 5.65% for all of 2020 compared with 6.45% for all 2019. The yield on cash and investment securities declined 69 basis points to 1.45% for all of 2020 compared with 2.14% for all of 2019. Total cost of interest bearing liabilities declined 27 basis points to 0.44% for all of 2020 compared with 0.71% for all of 2019. Our total cost of funds declined 18 basis points to 0.28% for all of 2020 compared with 0.46% for all of 2019. Acquisition accounting adjustments including the accretion of loan discounts and fair value amortizations at a 7 basis points to net interest margin for all of 2020. Again, I think it’s important to note that if we had fully deployed the excess liquidity on our balance sheet for all of 2020, again, meaning that cash and investment securities were only 15% of our total balance sheet. And we held these funds in loans at our loan rates for all the 2020. Our net interest margin would have exceeded 4.7% for all of 2020. Moving to provision for credit losses. We did not record any provisions for the fourth quarter. This compares with $1.2 million for the same period a year earlier as calculated under the prior incurred loss model. The provisions for the current quarter reflected expected lifetime credit losses based on current economic conditions of the potential effects from the forecasted deterioration of economic metrics due to the pandemic. The decrease in provision for credit losses in the three months ended December 31, 2020 compared with the same period a year earlier is primarily due to $33 million or 70% decline in loans individually evaluated for impairment to $14.2 million and the related allowance for impairment of $9.4 million, offset by $37 million or 2.2% increase in loans collectively evaluated for impairment to $1.7 billion and the related allowance of $31.9 million. We incurred net charge offs of $0.3 million for the fourth quarter compared to with net recoveries of $0.2 million for the same period a year ago. For all of 2020, provisions for credit losses were just $2.8 million compared with $7 million for the same period a year earlier as calculated on the prior incurred loss methodology. For all of 2020, we incurred net charge offs of $2.4 million compared with net charge offs of $0.8 million for all of 2019. Overall asset quality trends have improved throughout 2020 and charge-offs across our portfolio remains relatively low, continued stimulus programs announced by the federal government we anticipate that correlation asset quality trends will be delay and some government stimulus and loan payment relief programs end. We believe the allowance for credit losses is adequate to cover our current expected credit losses. However, we will continue to monitor closely macroeconomic conditions and the overall performance of our loan portfolio determined if we should adjust our expectations of credit losses. Non-interest income increased $2.7 million or 71% to $6.5 million for the fourth quarter compared with $3.8 million for the same period year earlier. The increase was primarily due to a $2.5 million or 153% increase in mortgage banking income to $4.1 million compared with $1.6 million for the same period a year ago. Total mortgage loans sold increased $61 million or 99% to $122 million for the fourth quarter compared with the same period a year ago. We also experienced wider margins on loans sold as we improved our overall loan pricing on such loan products. For all of 2020, non-interest income increased $7.2 million or 48% to $22 million compared with $15 million for all of 2019. The increase in non-interest income was primarily due to a $5.9 million or 88% increase in mortgage banking income and $1.4 million gain on the sale of investment securities. Total mortgage loans sold increased $120 million or 54% to $341 million for all of 2020. Our mortgage banking division in 2020 provided pretax income of $5 million for the year. This is the first time that our mortgage banking division had positive results in a year. We expect to continue to see improving non-interest income as we expand our mortgage banking operations, both in Utah and surrounding States and reap the benefits of significant investments in the technology used in our mortgage operations that improves operational efficiency and enhances our client’s experience. In addition, we expect to see improved fee income from treasury services as we roll out a new commercial treasury management mobile application to our commercial clients this quarter. Non-interest expense was $16.8 million for the fourth quarter compared with $14.6 million for the same period a year earlier. Our efficiency ratio was 53.7% for the fourth quarter compared with 47.3% for the same period a year ago. For the year, non-interest expense was $66.1 million compared with $60.3 million for the same period a year earlier. Our efficiency ratio was 52.4% for the year compared with 48% for the same period a year ago. The increase in non-interest expense both for the three and 12 months ended December 31 was primarily the result of higher salaries and associate benefits resulting from higher incentive payments, particularly in the mortgage banking division. In addition, we incurred higher data processing expenses due to investments made in new technologies for the mortgage banking and commercial banking divisions. This includes costs for a cloud-based mortgage and commercial loan origination applications. In addition, data processing costs included automated processes for smaller ticket commercial loan applications, costs for the implementation of a Salesforce CRM solution, costs for a new cloud-based commercial client treasury management solution and cost for new cloud-based construction budget draw and inspection management solution for both commercial and consumer clients. We expect to continue to make significant investments in new technologies to enhance the overall client experience and to empower our clients to transact more businesses on our mobile platforms to lower the overall cost of our operating platform and to become more scalable as we aggressively evaluate acquisition opportunities. We anticipate overall interest rates to remain near zero for the foreseeable future. As a result, we continue to review our overall operating costs to determine how we can better leverage our platform, while retain our high-touch client experience. We anticipate making changes over the next several quarters to improve our operating leverage. Income tax expense was $3.5 million for the fourth quarter compared with $3.4 million for the same period a year earlier. The effective tax rate was 23.9% for the fourth quarter compared with 22.5% for the same per year ago. For the year, income tax expense was $13.7 million compared with $13.5 million for the same period earlier. For the year, the effective tax rate was 24% compared with 23.4% for the same period a year ago. Turn the call back to Len. Len?

Thank you, Mark. [Indiscernible] 2020 was a challenging year for all of us. I’m very proud of our team and how we responded to the pandemic and focused on addressing our client’s needs during this unprecedented time. These were the financial performance we achieved this year, despite the headwinds from the pandemic and their zero interest rates. We build a fortress balance sheet that will withstand the negative effects of an economic downturn over pandemic. As we look forward to 2021, we’ve put into place that people, processes and systems that will allow us to safely grow our balance sheet and expand our market share in one of the strongest economies in the nation. As I mentioned before, we earned our independence every day, by the way, our team executes our strategic plan. I believe we make good progress and that we’re well positioned to succeed. Thank you so much for joining us today. And at this point, I’ll turn it back to the moderator to open up for analyst questions.

Thank you. [Operator Instructions] You have a question from the line of David Feaster with Raymond James. Your line is open.

Good morning, David.

Good morning. Hey, growth was stronger than expected. It is great to see despite a challenging backdrop and I appreciate the commentary in the release, talking about focusing on more aggressive growth going forward. Just curious, the strategy to deploy the excess liquidity in the loans and accelerate that growth, whether it’s – is it the new hires that you’ve mentioned to facilitate the growth or the new technology investment allowing for more origination capacity. And just start from the growth trajectory and a strategy for it?

Anyway, that’s a great question. And actually, the answer is a combination of pretty much everything you’ve brought up. We’ve spent the last few years trying to get the credit underwriting process management system in place. We’re there. We’ve also done the same thing on the loan origination system and the automation to make the process consistent, smooth, manageable, measurable, that is now in place. And then over the last two months, it’s been incredible. We had – we’ve got like 40 positions, we have open 50% of those are new apps to staff to support the growth and its adds from both the commercial banker perspective to complement who we have already. And in the last month-and-a-half, we’ve added, I’m not sure the exact number seven to 10 people who have come to us from other institutionals and brought portfolios and pipelines with them. So our current lending pipeline as of this week is 30% higher than it’s been at any time since we’ve been here. So we’re very – this has been a very kind of slow consistent process building for that, but safety has got to be first in this business, as you know, and those processes are in place. And now, we’ve been fortunate to be able to be an organization that people believe in and have been joining us as one of the individual or a new leader in Salt Lake was the prior head of commercial banking for a large organization for a couple of States. And he joined us just two weeks ago and already has an eight-figure pipeline. So we’re pretty excited about where – what the future looks like right now.

That’s terrific. I guess, just in light of the – it’s obviously challenging in light of pay offs and pay downs. What kind of growth trajectory do you think you can have? Is this a high single digits or is even the low double digits possibility here?

I’ll let you run your models on that. I will tell you in the past, we’ve talked about numbers and we’re pretty confident about those numbers.

Okay. And then just thinking about the margin here in light of the likelihood for additional liquidity builds, just in close with the acceleration in loan growth. And it sounds like you’re staying – you stayed pretty short on the securities front. Has been NIM trough here exclusive of PPP? And should we expect core NIM expansion just in light of the improved during the asset mix as we look forward?

It’ll take a little while to get that asset mix completely changed, and we’re not necessarily short on those securities, but they’re income producing securities. We’ve got - Mark can speak to the…

Yes. No, David, we’re receiving about $50 million a month in additional cash from the securities that we’ve purchased. And we purchased amortizing securities specifically for that reason. We wanted the cash to come back to us, so that we could redeploy it in loans as we were ready to turn on the spigot there. So we’re excited about that. And frankly, to the extent that loan growth is stronger than we anticipated. We - right now, we have a $15 million unrealized gain in the portfolio would be – would love to sell some of that, if the growth is there. So we’ll look at that. The other thing that we’re doing, David, is that our mortgage banking group continues to grow at rates higher than what we anticipated. To the extent that they beat their budget with their volumes, we’ve worked with them to try to retain as many of the loans that we’re comfortable with on balance sheet to help grow our loan portfolio as well and provide a better return. Obviously, going out and buying government guaranteed securities, when you originating here, it’s just a lot cheaper to do it, if we cut out the middlemen. So that’s our thought as well.

That makes a lot of sense. And then just, on the commentary about driving operating leverage that you mentioned just, and doing so while retaining the high-touch client experience, you’ve done a great job investing to stay ahead of the competition with nCino and other automation initiatives. But as we look forward, kind of contemplating the additional investments that you talked about, inflationary pressures, but opportunities to reduce costs. I mean, how do you think about operating leverage? Is it more cost reductions or really leveraging your expense base for revenue growth?

David, it’s more leveraging the platform with the growth than cost saves. We want to get more efficient. And to the extent that we’re able to do that and that happens through growth, that’s definitely the best way to do it. But we’ll have to evaluate that overall. Obviously, we are not going to make cost reductions in the front face scenario. That’s our bread and butter and that’s critical, but we do want to be efficient on the back-end and frankly, we want to grow, so that we just grow that platform a little more slowly. To speak to your point a little bit more, David, the expense and the technology growth we’ve implemented in the last few years has – it’s made us scalable. So it even makes the attraction of either picking up a portfolio, a lift out an acquisition, we don’t need to add backroom people to do that. We’re pretty well equipped with the technology. So as Mark stated, we’ve just got to leverage that. And we’ll continue to look and compare ourselves to the industry on those costs. But it’s a lot more fun to grow yourself into prosperity versus to save yourself into it.

Yes. And frankly, David, we were fortunate that we had implemented nCino when we had, because with the pandemic, that gave us opportunity to be able to use that – use our LOS anywhere, whether at home or with our clients and not miss a beat. So, obviously, more than we spend on technology to make it easy for everybody, I think the better off we’re going to be.

Absolutely. That’s great color. Thanks, guys.

Thank you.

Our other question from the line of Andrew Liesch with Piper Sandler. Your line is open, sir.

Hey, good morning, guys. I think, Mark, your reference maybe you managed out of $100 million of loans last year with some higher risk profiles. Where does that stand? Is it still more back to come? Or do you feel comfortable with the portfolio right now? And it’s just going to be growth from here on out?

Yes. We’re comfortable with where we’re at. It should be growth from here on. We spent a lot of time looking at the portfolio. And Judd Kirkham, our Chief Credit Officer and his team have done a fantastic job and cleaned it up and making sure that we’re ready to expand and not have to worry about those credit issues. So we’re done and we’re ready to grow.

Great. Great. And then just on the optimism around non-interest income and mortgage, so is the growth - is a lot of it going to be from market expansion and just expanding your operation because obviously there the seasonal factors. And I don’t know, if anybody’s expecting the same refi volume that we saw last year. So is it really just from a market expansion that’s going to drive that?

That’s a great point. Actually, the mortgage group has been built Andrew to be able to expand and contract based on market demand. I agree with you that we’ll probably see some shrinks at some point, we’re going to have to, I would think in the refi market. The flip side of that in Utah and the builder – the cooperation with our builder finance group and the in migration of the area, we still have an above average demand and opportunity for the new business in the mortgage arena. But that said, the other part of our non-interest income expansion opportunity really is through leveraging the treasury management system that’s going into place this quarter. It’s not been measured in the past. We spent the last year and a half getting that put in place and that’s ready to go. And frankly, the new bankers that have joined us are a little bit more up here from a market perspective from a size of loans that demand those treasury management services. So having those in place now with the bankers coming on at the same time, we think there’s going to be some significant treasury management non-interest income growth as well.

Just to add, Andrew, when you look construction jobs in Utah are up 5% year-over-year, even during the pandemic. We’ve got inventories that all time low. So we believe there’s going to be a lot of opportunities from the mortgage side, both with construction as well as term financing.

Okay. Very good. That’s encouraging to hear. Thanks so much. Covered all my other questions.

Thank you, Andrew.

[Operator Instructions] The question from the line of John Rodis of Janney. Your line is open.

Hey guys, good morning,

Good morning, John.

Hope you guys are doing well, interesting times. Actually, I guess, Andrew basically asked my question on fee income. I mean, I guess just maybe just to say it another way and given your comment in the press release about improving net interest – I’m sorry, improving non-interest income. So is it – I guess, just to be clear, is it your expectation that you can – that you think you can increase non-interest income year-over-year in 2021?

Yes.

It is. Okay. And again, that would be the new treasury management and some combination of mortgage, I guess.

Yes. This is the time of the year where you normally see mortgage start to decline and we haven’t seen it. So we’re hopeful at least for the near-term in that area to continue at their record breaking pace.

Okay. That’s helpful guys. Thank you very much.

Thank you, John.

[Operator Instructions] There are no further questions at this time. Presenters, you may proceed.

Great. Thank you very much. And again, happy new year to all who have joined us. We appreciate the support and we look forward to a fantastic 2021. Thank you so much.

Goodbye. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.