Ladies and gentlemen, thank you for standing by and welcome to the Heritage Financial’s second quarter earnings release. For the conference, all the participant lines are on a listen-only mode. There will be an opportunity for your questions. The instructions will be given at that time. (Operator instructions) As a reminder, today’s call is being recorded. I’ll turn the conference now over to the Chief Executive Officer, Mr. Brian Vance. Please go ahead, sir.

Thank you, John. I appreciate it. I’d like to welcome all who called in and those who may listen later in a recorded mode. Attending with me here in Olympia this morning is Don Hinson, our Chief Financial Officer; Jeff Deuel, President and Chief Operating Officer; Bryan McDonald, Chief Lending Officer. Our earnings press release went out yesterday morning in a premarket release and hopefully you’ve had an opportunity to review the release prior to this call. I apologize for a Friday conference call, but yesterday was our annual meeting which was delayed as a result of the special meeting earlier in the year to approve the Washington Banking Company merger and we just did not have time to hold the conference call yesterday. Please refer to the forward-looking statements in the press release and as we go through our presentation and as well as we entertain questions and answers following our formal presentation. I’ll begin our discussion this morning with highlights of our second quarter. Heritage completed the merger with Washington Banking Company on May 1, 2014. Diluted earnings per common share was $0.16 for the quarter ended June 30 and compared to $0.18 for the prior year quarter ended June 30 of 2013. And unchanged from the least quarter ended March 31st. Excluding merger related expenses incurred as a result of Washington Banking Company merger, earnings per share was $0.31 for the quarter ended June 30. Heritage declared a cash dividend of $0.09 per common share, an increase of 12.5% up in the prior cash dividend. I’ll turn the call over to Don Hinson now who will take a few minutes to cover our balance sheet and income statement changes. Don?

Thanks, Brian. In starting with the balance sheet, the balance sheet saw significant increases due to the Washington Banking merger. As a result of the merger, the investment portfolio has become a more significant portion of the balance sheet. Total investment securities increased $513 million to $691 million as of June 30, $458 million of which was due to the merger. The company used the merger event to restructure the portfolio obtained in the merger. Approximately $110 million of investments were sold during the quarter for a net gain of $87,000. In addition, approximately $176 million of investments were purchased during the quarter. These purchases were primarily mortgaged-back securities, minutes for [ph] bonds. We plan to continue to focus on these segments for future purchases. U&I [ph] cash position at June 30 was approximately $70 million. This balance will fluctuate, some depending on low in deposit activity but we are seeking to be near that cash level in the short-term. Moving on to some credit quality metric, non-accrual non-covered loans increased $2 million from the prior quarter. The increase was due to $3.9 million of additions to non-accrual non-covered loans partially offset by $1.3 million of net principal reduction from $623,000 of charge-offs. Potential problem non-covered loans increased to $137 million at June 30 from $58 million at March 31. Again, the increase was due to the Washington Banking merger. We consider potential problem loans, those loans that are graded special mention or worse and are not classified as impaired loans. The reason for the significant increase in the potential problem loans and a corresponding lack of increase in impaired loans from the merger is due to account earnings for purchased credit impaired loans. Loans previously considered impaired by Washington Banking or accruing income based on the accretion of the…

Thanks, Don. With the purchased accounting treatment of bringing the Whidbey Bank loans under the Heritage balance sheet, we wanted to provide some additional detail on organic loan growth adoption. Some of my comments under the premerger performance and in this case, I am using the independent results of the Heritage Bank and with the Whidbey Island Bank. For the first quarter, Heritage Bank and Whidbey Island Bank independently had 6.8% and 20.7% originated annualized loan growth respectively. On a combined basis, originated loans increased $40,391,000 or an 8.66% annualized rate. The primary difference between the growth rates was the consumer lending platform at legacy Whidbey Island Bank. For the second quarter including Whidbey Island Bank’s eight originated home loan [ph], the combined companies had $18.2 million of growth which results in a 3.82% utilized rate and combined with the growth in the first quarter at 6.3% annualized rate for the first six months of the year. During the second quarter, the commercial lending team closed $120 billion of new loans which adopted $100 million of new loans probably [ph] on a consolidated basis by [indiscernible] commercial bank and the first quarter [indiscernible] banks. So for example, large construction we disclosed during the second quarter which we’ll be funding now into the next year. I’m committed [ph] to search [indiscernible] from the first quarter [indiscernible] in due bonds disclosed. Commercial team pipelines ended the second quarter at $295 million.

Excuse me. This is the AT&T operator. My apologies for the interruption. We’re hearing some distortion from the speaker line. Is it possible for the speakers that aren’t talking to the handset, why not mute perhaps?

Yes, they are on mute. The other lines are. This is Brian. Is the distortion coming through?

Mr. Vance, your line is coming across good. And please continue, we’ll see how it sounds.

Commercial team pipelines ended the second quarter at $295 million, up $285 million at the end of the first quarter. For the second quarter, the bank closed 20 SBA 7(a) loans, totaling $5.4 million and ended the quarter with $17.2 million in the SBA 7(a) pipeline. This compares the first quarter with 13 loans closed for a total of $5.1 million and a pipeline of $14 million at the end of March. Consumer production remained strong for the second quarter with $30.4 million of new loans closed. This compares to $26.5 million of new consumer loans in the first quarter. During late June, the legacy with the Island Bank consumer platform was rolled out to the legacy Heritage retail branches, and we’re already seeing an increase in application activity in our direct business. The mortgage department closed $26 million in new loans in the second quarter compared to $16.9 million for the first quarter and $26.8 million in the fourth quarter of 2013. The increase during the second quarter is primarily attributable to new volumes generated by the legacy Heritage customer space. But we did not previously have access to an internal mortgage platform. The mortgage pipeline ended the second quarter at $21 million, up from $19 million at the end of the first quarter. Brian will now have an update on capital management as well as some closing comments. Brian?

Thank you, Brian. And I apologize to folks out there for some sound quality issues we apparently had. We have a new system we’re working on and we apparently need to work out some bugs to it. So, John, I would appreciate if anytime during the call that we’re getting distortion, please chime in and let us know. As Brian indicated, I’ll talk a little bit about capital management. First, we have increased our quarterly cash dividend 12.5% to $0.09 per share. While $0.09 exceeds our normal guidance of 35% to 40% payout ratio of stated earnings, it is well within this guidance after adjusted earnings from merger related expenses. In fact, $0.09 represents a 29% payout ratio of our adjusted earnings. We believe we have flexibility on opportunities for future regular dividend increases. When we announced the Washington Banking merger on October of 2013, we suggested pro forma TCE or Tangible Common Equity above 9% and closed this quarter with TCE at 9.8%. This higher TCE level gives us sufficient capital for future organic growth, but also more flexibility for various capital management strategies including, but not committing, to M&A opportunities, increased regular dividends, special dividends and stock repurchases. I’d like to speak for just a moment on adjusted performance metrics. In addition to the adjusted performance metrics, Don mentioned earlier of EPS at $0.31 and an efficiency ratio at 65%. It is important to also note our Q2 adjusted overhead ratio was 3.08% and our adjusted ROA was 1.13% and adjusted ROE was 8.54%. We believe as we continue to optimize our capital position in our operating efficiencies, we can achieve double digit ROE. Well, we’re optimistic about our Q2 adjusted performance. It is important to note we are very early in a significantly transformational merger. And we’ll update several courts [ph] to develop and optimize all of our performance metrics including net profit. I’d like to spend a few moments on comments in the outlook that we aim [ph] for 2014.

Excuse me Mr. Vance, can you come across to start again?

Okay. We’ll make a couple of other adjustments. I apologize. And again, remind me if you get any further problems, John. We continue to see general economic improvement across the Pacific Northwest region and we continue to believe 2014 will show improvement over 2013. Washington State unemployment currently stands at 5.8% compared to a national average of 6.1%. Sierra Bellevue and Everett unemployment rate stands at 4.8% for June. We have previously given loan growth guidance for legacy Heritage originated loan growth. Continuing to give guidance on originated loan growth no longer has any relevance as the legacy Heritage originated portfolio is less than 50% of the total portfolio because the legacy Whidbey loan portfolio is now technically an acquired portfolio. As Bryan mentioned earlier, we are still working through all the various loan portfolios as we now have roughly 50% of our current loan portfolios accounted for via purchase accounting rules on a discounted basis and four FDIC assisted transactions which are still running off. As a result, we are not yet comfortable in giving loan growth guidance until we fully analyze the most advisable methodology of reporting loan growth going forward. However, we remain optimistic we can continue to achieve strong loan growth as a result of the merger with Whidbey Island Bank along with increasing confidence in our local economies. The efficiency improvement initiatives undertaken in 2013 along with the projective scale and efficiencies of the combined company are beginning to generate expected results. As stated earlier, primary efficiency metrics such as efficiency ratio and overhead ratio improved substantially on an adjusted basis. And we believe additional improvements in the various efficiency metrics of efficiency ratio, overhead ratio and assets for employee are likely to improve in the next several quarters. Future improvement of these ratios are likely to come from additional FTD reduction following conversion which is planned for the fourth quarter – elimination, consolidation of duplicated technology platforms; elimination, consolidation of duplicated vendor contracts; elimination, consolidation of non-branch facilities. We believe we will achieve the previously stated 20% cost reductions and are optimistic we can achieve previously stated EPS accretion of 24% for 2015. And finally, we are pleased with our ongoing integration processes. The teams are working well together to create new procedures, processes and synergies. I continue to be quite optimistic about the synergies of our new combined footprints and the company. And that completes our formal remarks and we would like to open it up to questions and answers for any that may be out there.

(Operator instruction) And the first on line, we’ve got Jeff Lewis with D.A. Davidson. Please go ahead. Jeff Lewis – D.A. Davidson & Co: Thanks, good morning.

Hi, Jeff. Jeff Lewis – D.A. Davidson & Co: Hi. I guess the margin discussion came in a little choppy. If you could sort of recap the – or discuss the core margin trends kind of what – it declined this quarter with the combination I guess kind of near and medium-term, how do you see that core margin sort of playing out especially as you maybe deploy some of that excess funding?

Okay, Jeff, this is Don. As I said, again it sounds like it was coming through and I don’t know if I’m coming through okay now. Jeff Lewis – D.A. Davidson & Co: It’s okay.

Okay, great. That the core margin was down about 15 basis points quarter-over-quarter to 4.08% from 4.23%. I think that again there’s two factors. I think again we’re still at a low rate environment and so that core margin of 4.08% is still going to be somewhat challenging. At the same time, I think we’re hoping to – our loan deposit ratio right now is down about 77%. We hope that we can actually get that up and start increasing that back up so that will offset any kind of low rate situations we have on a low rate environment. So I think it will be obviously challenging to keep that core margin up. But I think again as we put more earning assets to work in loans, I think that also helps that out. Jeff Lewis – D.A. Davidson & Co: So if I read you right, you’re sort of suggesting that still pressure but perhaps mitigating that not at the size of the drop this quarter?

Correct. Jeff Lewis – D.A. Davidson & Co: Okay. And then on the loan growth, could you review sort of the origination numbers and organic loan growth and I don’t know if it’s possible to kind of break it out by Whidbey versus Heritage legacy.

Well, I think, yes. And Bryan has those numbers and I think that we did break that out by legacy Heritage and legacy Whidbey originated. So Bryan, maybe you could go over those numbers again?

Sure, Jeff. In terms of – and you’re just looking at Q2 or also Q1 because obviously so we had a merger event on May 1, so really my numbers were under kind of the old originated basis. And on a combined basis, the company had $40 million in loan growth in the first quarter as they’ve been combined and then the originated loans increased $18 million in the second quarter, again as they’ve been combined for the full second quarter. Obviously, when you look at the balance sheet, the legacy with [ph] loans were brought across the covered loan accounting, so the reserve went away and then we had that at a discount and other purchase accounting. And then on a production basis, the commercial teams had out $120 million short [ph] of production in Q2. Again, that’s the full Q2 and not just the two months the companies were combined. And that compares to $100 million again just looking at the commercial teams, have they been combined in Q1. And so production was up in the second quarter. And the pipeline is at $295 million at the end of the second quarter and that compares with $285 million at the end of the first quarter. So the production in the quarter was good. The loan growth moderated from the first quarter because there was a significant number of larger construction loans included in the Q2 production numbers that will be funding out here over the rest of the year. So we do expect some catch up on both the loan growth – originated the loan growth percentage, at the same time as Brian Vance mentioned, will be reevaluated in the account of how do I put on this metric going forward. So much of the balance sheet is not in originated loans. And tying it back to pre-merger analysis is quite cumbersome at this point, so. Jeff Lewis – D.A. Davidson & Co: That is helpful. I appreciate it and I’ll step back. Thank you.

Thanks, Jeff.

Our next question is from Jackie Cameron [ph] with KBW. Please go ahead. Jackie, your line is open. You have to take yourself off mute. Jackie Cameron – KBW: Sorry, I was on mute. Good morning, everyone.

Good morning, Jackie. Jackie Cameron – KBW: As I look out, I just want to make sure that I’m thinking about this properly. So what’s in the non-covered portfolio is legacy Heritage – legacy originated heritage, the non-covered FDIC deal and legacy Whidbey and then the other acquisitions that have happened recently. And then what’s in the covered portfolio is the two covered portfolios that came over from Whidbey plus the one covered heritage portfolio, is that correct?

You’re correct, Jackie. Jackie Cameron – KBW: Okay. So as I’m looking at the covered portfolio, if I strip out what came out on the date of acquisition, it looks like it was down more substantially than it has been in past quarters. Is that on any sort of an accelerated runoff mode if we near the expiration of loss share or was it just quarterly fluctuations?

I think it is quarterly fluctuations. Sometimes there’s more runoffs than others. But I know that we are – on the covered side, FDIC asset is only of another year on the commercial side. So we’re obviously working through anything at the problem, that kind of get through in the next few years. Jackie Cameron – KBW: Okay.

[Indiscernible]. Bryan has some – a couple around that as well.

Yes, Jackie I can – we just covered this earlier in the week. And I do know just the Citibank and the dispute [ph] to the bank – the North County Bank, now this is customer balances. They were down about 33% from the year-end through the end of June. And yes, the team continues to work those down but that’s certainly been the case since the acquisition. Jackie Cameron – KBW: Okay. And Bryan, can you remind a time the hospitality when sort of have some problems in the past? Would this work through or is there are still some account that you’re trying to manage through the end of the loss share?

Yes, there’s been good success on working out those. There are still a few that remain but a number of them have been worked out since last spring which was really – when we have a number of larger hospitality loans on the legacy website that we had increased concerns. So a number of those that have been worked through, we have a few out and really much of the reduction here since the year-end has been in that workout portfolio hospitality loans. Jackie Cameron – KBW: Okay, great. And then Don, just one quick margin question for you. Looking to the amortization on the trust deferred securities, is that a pretty good run rate in 2Q or will that increase as we have a full quarter in 3Q?

That will – well, we’re since are going two months of that. Yes, it will go up. I mean the rate will stay quite the same. Jackie Cameron – KBW: Okay.

But the – it is an adjustable rate instrument, so if rates do go up, that will also change. But again, as far as with the – the cost of funds for that should stay about the same in the near term. Jackie Cameron – KBW: Okay. So it has the two months of the amortization and the next quarter will have the three months?

Correct. Jackie Cameron – KBW: Okay, great. Thank you. I’ll step back now.

Thanks, Jackie.

And we move to Tim O’Brien with Sandler O’Neill. Please go ahead. Tim O’Brien – Sandler O’Neill: Can you guys me hear me? Am I echoing?

No, you’re fine, Tim. Tim O’Brien – Sandler O’Neill: Okay, great. Just a follow up question on something comments that Bryan about construction commitments. What was the dollar amount of construction commitments that you guys made in the second quarter, Bryan, that are going to fund out?

I’d say it might didn’t bring that detail, but there were three large projects in excess of $10 million each. One was loan income housing project and there was a couple of owner occupied commercial real estate projects. And those were kind of the outliers. We had a number of what I call normal construction loans both on the quarter as well. But those were the three that were deferred than what we might have in the normal quarter. Tim O’Brien – Sandler O’Neill: And then, I lost something on the call. My understanding is that originated loan growth this quarter, net growth was nominal, at best was very small relative to the portfolio you brought over. Most of the growth in non-covered loans this quarter came as a result of the acquisitions. Is that right or am I missing something?

Well, it’s a little bit of an apples and oranges comparison. Really, we’ll have to compare non-covered loan growth going forward because as you brought the legacy web portfolio over, we lost the allowance and then had an additional discount. Tim O’Brien – Sandler O’Neill: Yes.

So that’s why you’re not seeing the growth. There was also the right [indiscernible] on all the fees which are normally amortized going forward. Tim O’Brien – Sandler O’Neill: So I guess, let’s leave that out. So I guess, maybe a different way to approach it that might be helpful as this. What was combined for the quarter net originated production. Is there a way to look at that and ex pay downs and payoffs from the existing books. Is there a way to exclude the discount aspect of it, just look at net production, net growth on a dollar basis?

Yes, if we look at it and assume the merger accounting have not occurred, as that was the $18 million number of originated loan growth. So that’s looking at it on the independent basis essentially, adding back the core value discount that was carried at the end of the quarter. So that’s the closest proxy in terms of what would have been originated loan growth. Again, I think as we look at the future quarters we’ll need to come up with a different metric to measure loan growth because the originated portfolios that include such a large segment purchase loans which will – moving on. Tim O’Brien – Sandler O’Neill: And then it was $18 million in net growth and a $120 million in production?

That’s true. Tim O’Brien – Sandler O’Neill: And so, what – can you account for again what the payoffs and pay downs were given any color on what was behind that?

So we have normal pay downs, we did have some additional larger payoffs in the quarter but the primary driver behind the drop in the growth rate was really those untimely commitments on those few larger construction loans for the quarter although the payoffs were a little beyond with probably might have in a typical quarter. They weren’t well outside the range. And the majority of the [indiscernible] that would attribute to these three larger construction loan on top of the dollar production. We’re estimating the – we’re estimating the replacement production that’s somewhere around $32 million per quarter to replenish normal run off. So that would get you to $90 million and we got $120 and $18 million of growth. But again, it’s early on the process, we’ve just combined the two companies and just had it two months. So we’re looking at it every month. I’m trying to find exactly what you’re looking for here with your question. This is the closet we could at this point. Tim O’Brien – Sandler O’Neill: What’s that Brian?

Yes, I just wanted to offer some apologies to you and the other analysts on the call in terms of trying to get your arms wrapped around loan growth. I understand, fully understand what your issues are. But I hope the folks will understand that we closed the transaction May 1, the quarter ended June 30, we needed to go through a massive process of revaluing the acquired portfolio come would be on marketing and market which takes several weeks to do that. We still are operating under two systems, so we’re pulling data from two systems. We have the [indiscernible] because of acquisition from both organization, both covered and uncovered and open bank and the complexity and the fact we doubled the size of the company with this particular merger. Hopefully, you’re going to appreciate all of the moving pieces to this in terms of us trying to get our arms around with the loan growth and you got the discount issues and all these other things. So I do understand the difficulty you’re having and then, and we will have much better color on this and data for the third quarter. Tim O’Brien – Sandler O’Neill: Thanks, Brian. I appreciate that. I think all the analysts appreciate what you guys are undertaking right now and no apology necessary at all. I apologize on my end for asking the questions but just trying to get some clarity so that we can talk about your bank in the marketplace. Here’s another question for you that might be worth asking is, do you happen to have June 30th, the utilization rate on your C&I book, where it stood at that point kind of as a baseline going forward?

I think, we could probably give you some estimations of that. Again, we’re pulling information from two separate systems. I think, Bryan, you can comment on that.

Yes, I do with that. Just under 47% which has been fairly consistent the last several months. We did look back at both companies independently uncombined and we’ve had a pretty stable at that level. Tim O’Brien – Sandler O’Neill: And then my last question is, it looks like other fee income saw a pretty noticeable like a $1.1 million jump sequentially from $484,000 if I’m reading this right in the first quarter to $1.6 million, in the second quarter. Do you have any color on what that was?

Yes, Tim, it’s Don. A variety of things but we have to do it with the – can you hear me okay? Tim O’Brien – Sandler O’Neill: Yes.

Okay. Having to do with the combined orientation now. Again, Heritage legacy was not doing – has been low on sales and mortgage loan sales but that’s part of it about $276,000 of that and then, of course we have 100,000 of the BOLI income which was brought over in the merger also. There were also some annuity sales that were brought over. But a big chunk of that, about half of that, was due to the some recoveries on previously acquired charge off loans and this is kind of a situation where these are older loans that came across. There’s no allowance associated with them. It’s kind of almost like it looked at it as almost like a gain or a disposition. So these are some acquired loans that basically, because again, we bring them over and everything comes over new, there’s no allowance, there’s nothing to charge off an allowance against, so [indiscernible] cross as a gain so – Tim O’Brien – Sandler O’Neill: So, that was $600,000.

$500,000 on that. Tim O’Brien – Sandler O’Neill: That was $500,000 you said? Don Hinson; Yes, about $400,000 or $500,000 with that. Do you hear me okay? Tim O’Brien – Sandler O’Neill: And non-occurring, right?

Well, yes, this could happen. Tim O’Brien – Sandler O’Neill: I mean, atypical.

Yes. Yes, this doesn’t – this will happen periodically, but the amounts will fluctuate, yes. Tim O’Brien – Sandler O’Neill: Okay.

It’s not a consistent amount, no. Tim O’Brien – Sandler O’Neill: Thanks a lot, guys.

Thanks, Tim. I appreciate it.

Thanks, Tim.

(Operator instructions) And we’ll go to Brett Villaume with FIG Partners. Please go ahead. Brett Villaume – FIG Partners: Good morning, everyone.

Hi, Brad [ph]. Brett Villaume – FIG Partners: Hi, I wanted to ask you if you guys have a target where say a minimum reserve ratio going forward now with the combined companies and then – versus non-covered loans?

Great. Don will take it.

Did you refer to the allowance for loan losses? Brett Villaume – FIG Partners: Yes, just relative to the balance of originated loans and non-covered loans whether or not there’s sort of some guidance you can give us on what level that might be going forward.

As we build – as we kind to build up – right now, it’s 1.08 of non-covered – what kind of [indiscernible] clarify your question. Are you talking about what reserve level we might see going forward on that? Brett Villaume – FIG Partners: Yes, exactly. Thank you.

And again, purchase accounting issues here are rather difficult to work through the process and Don just mentioned we had a little over 1% of allowance on the non-covered. You’ve got the discount sitting out there from the – now, it’s the biggest portion, but discounted of course that would be from the legacy would be portfolio. Now that discount is going to bring with it accretion as we accrete that discount over the life of the loan. The difficulty is that we’re going to meet to create a process. And again, it’s 50% of the company as we move forward. We need to create a process that some of that discount will need to be allocated to future provision so that at such time that the totality of the loans acquired are that the discount is fully accreted and were at a point that we need an allowance for that portfolio, will probably need to come in somewhere, I’m going to say at the 1.5% to 1.75%. And of course, that particular number is highly depended on the economy, the performance of the loan portfolio in any variety of things. But it’s going to be over a period of two to three years to normalize that allowance to be then total portfolio. So there’s going to be some adjustments as we work through that process. Brett Villaume – FIG Partners: Okay. Thanks, Bryan. It’s complicated as that subject was, it’s pretty good explanation, so thank you.

Yes, it is complicated and I know that purchase accounting creates – continues to create issues for all of us. And then, the significant of that here is that in previous mergers or acquisition that either company did, it was the fairly smaller or much smaller portion of total company. This is complicated by the fact that that they’ve got the several clients now. Now, that we doubled the size of the company and so, it’s a very material process. Brett Villaume – FIG Partners: One final question was about M&A opportunities. Would you give us an update if you could about just – if anything has changed regarding the size of potential acquisitions, so what geographic location and what kind of banks do you still have an appetite for in your markets or outside of your markets?

Sure. As I have said several times since we’ve announced the Washington Banking Company merger is that our primary focus is the integration of this particular merger and it is going well. I’m very pleased with the results of Q2. I’m very pleased that the process of bringing the companies together. Everything is working well. But we need to continue to focus on that because that is a very critical process. And during this time period, we have close approaches with smaller bank opportunities that either didn’t fit with our footprint, didn’t fit with culture or what have been too much of the distraction for us as we are integrating these two companies. So we took a pass on them. I think going forward, we’re in a position now that that we would entertain M&A possibility. We will continue with the discipline and the focus that we’ve employed on all previous M&A activity. We will continue to look within our footprint, our footprint has expanded from Bellingham to Portland. We’ll continue to focus on the I-5 Corridor. Obviously, smaller transactions don’t necessarily move the needle for us at nearly $3.5 billion company today, so I think we need to look maybe up market a little bit from my size and an impact point of view. However, if we see smaller acquisitions, and I’ll say the smaller acquisitions might be something below $300 million in total size, our asset side – if we have an opportunity to do smaller strategic acquisitions then we will certainly take a look at those, those smaller strategic loans may be in areas where we – they will – they could be an areas where we need to increase our visibility and our scale, for instance, Seattle-Bellevue, Vancouver-Portland. As I’ve said several times too, there may be some possibilities down the road to expand the footprint further south in Oregon along the I-5 Corridor. But just in general sense, I think that’s where we extend on M&A activity at this point. Brett Villaume – FIG Partners: Perfect, thank you very much.

You’re welcome. I appreciate the question.

We’d go to Peter Luber with Post Street Capital. Please go ahead. Peter Luber – Post Street Capital: Hi guys, thanks for taking the call. Quick question on capital levels, what do you think with target capital level would be to TCE to TA and when do you think you would start to work to sort of reach that target through stock buyback or sort of some other means?

As I mentioned in my comment, I think that we love the flexibility that we have to manage our capital through the potential of increasing dividends, the potential of special dividends and the potential of the stock buybacks. Not to mention organic growth and potential M&A obviously would have an impact on capital level. So I appreciate the fact that we have the flexibility to manage the capital. I also appreciate the fact that a 9.8% Tangible Common Equity is still a very strong number. I think we will continue to evaluate that as growth opportunities may present themselves I think from a stock repurchase point of view. We have been active in stock repurchases in 2013 when we felt that the valuations were at a point that were sort of advantageous opportunity for us. We have not done any of that in 2014. But we’ll continue to analyze that. I think generally speaking, 9.8% of the strong capital position and we would look to work that down through organic growth M&A and various capital management, the strategies over the next couple of years. But I think it’s just – now I think when we look back on capital management, we’ve done – even though we had a lot of capital and I realized that, we’ve been pretty active with stock repurchases, special dividends and those sorts of things and we’ll continue to analyze all of that as we go forward. So hopefully that those general comments help a bit. Peter Luber – Post Street Capital: Yes, is there like a four level where you’re comfortable at managing the business.

I think that there’s opposing forces, there’s that the regulatory side of things, there’s Basel III, there’s [indiscernible] that we need to fully analyze and appreciate the effects of the potential of that. I think that from an investor point of view, all of us would be probably rather see higher levels of return on equity. I fully understand that. Without naming a number, I would say that we’re certainly comfortable and working that 9.8% down to lower levels. But another thing is, it is issued generally economic conditions and while we see general economic conditions improving in our footprint and across the nation, recently we’ve been reminded that there is geopolitical risk out there and any variety of things can upset the status quo. So I think that we need to keep an eye on all those factors going forward. But generally, I think that working that capital level down as we have been doing is our strategy. Peter Luber – Post Street Capital: Thanks a lot.

We do have follow up from Tim O’Brien. Please go ahead. Tim O’Brien – Sandler O’Neill: Hey, one follow up. In the deck, you guys indicated that your initial outlook was to – for about a $30 million little bit less in $30 million discount on loans you’re going to be acquiring. Do you happen to have kind of a final discount mark that you’ve paid the deal at close?

So maybe I’ll have Don address that. Don.

I think it’s the non-covered piece that I think is what you’re probably referring – Tim O’Brien – Sandler O’Neill: Yes, non-covered, exactly.

Yes, it was in the other like $26.7 million. Tim O’Brien – Sandler O’Neill: Okay, thanks.

Thanks, Tim.

And to the presenters, no further questions in queue.

Well, John, I appreciate everyone’s call-in today. And once again I will apologize for sound quality issues. We’ll get those corrected for our next call. And I appreciate everybody’s interest in the company and your continued ownership. I’ll just close by saying that and repeating that our comment that are made just a moment ago, we continue to be very positive about the scale and efficiencies that we’re beginning to create as the result of the merger of these two companies. And I’ll also say that the efficiency has been improved by a number of initiatives that we put in place last year under the Legacy Heritage system. So that’s not to be lost on I think what we’re seeing now and improved efficiencies across the balance sheet. But I continue to be very encouraged by the prospects of bringing these two companies together. And just as a reminder, we’ll be meeting with many of our institutional investors next week at the KBW Conference in New York City and look-forward to meeting and chatting with you and talking again some more about the company that we’ve created. So I appreciate all of your interest today. Thank you for calling.

Ladies and gentlemen, this conference is available for replay. It starts today in 11:00 AM Pacific Time. It will last until August 8 at midnight. You may access the replay at any time by dialing 800-475-6701, and entering the access code, 330-527. That number again, 800-475-6701 and the access code, 330-527. That does conclude your conference for today. Thank you for your participation. You may now disconnect.