Banner Corp Q2 FY2021 Earnings Call

Thank you, Riley and good morning everyone. I would also like to welcome you to the second quarter 2021 earnings call for Banner Corporation. As is customary, joining me on the call today is Peter Conner, our Chief Financial Officer; Jill Rice, our Chief Credit Officer; and Rich Arnold, our Head of Investor Relations. Rich would you please read our forward-looking Safe Harbor statement.

Sure Mark. Good morning. Our presentation today discusses Banner's business outlook and will include forward-looking statements. Those statements include descriptions of management's plans, objectives, or goals for future operations, products or services, forecast of financial or other performance measures, and statements about Banner's general outlook for economic and other conditions. We also may make other forward-looking statements in the question-and-answer period following management's discussion. These forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and a recently filed Form 10-Q for the quarter ended March 31st, 2021. Forward-looking statements are effective only as of the date they are made and Banner assumes no obligation to update information concerning its expectations. Mark?

Thank you, Rich. First of all I hope you and your families are well as we all continue to battle the COVID virus, its variants, and its effects on our communities and the economy. Today we will cover four primary items with you. First, I will provide you high-level comments on Banner's second quarter performance. Second, the actions Banner continues to take to support all of our stakeholders including our Banner team, our clients, our communities, and our shareholders. Third, Jill Rice will provide comments on the current status of our loan portfolio. And finally, Peter Conner will provide more detail on our operating performance for the quarter. I want to begin by thanking all of my 2,000 colleagues in our company that are working extremely hard to assist our clients and communities during these difficult times. Banner has lived our core values, summed up as doing the right thing for 130 years. It is critically important that we continue to do the right thing for our clients, our communities, our colleagues, our company, and our shareholders to provide a consistent and reliable source of commerce and capital through all economic cycles and change events. I am pleased to report that is exactly what we continue to do. I am very proud of the entire Banner team that are living our core values. Now, let me turn to an overview of our second quarter performance. As announced Banner Corporation reported a net profit available to common shareholders of $54.4 million or $1.56 per diluted share for the quarter ended June 30th, 2021. This compared to a net profit to common shareholders of $1.33 per share for the first quarter of 2021 and $0.67 per share for the second quarter of 2020. This quarter's earnings were impacted by the allowance for credit losses recapture, a continued inflow of liquidity coupled with very low interest rates, our strategy to maintain a moderate risk profile, continued good mortgage banking revenue and production, and the acceleration of deferred loan fee income associated with the SBA loan forgiveness of Paycheck Protection loans. Peter will discuss these items in more detail shortly. Directing your attention to pretax pre-provision earnings and excluding the impact of merger and acquisition expenses, COVID expenses, gains and losses on the sale of securities, and changes in fair value of financial instruments, earnings were $57.3 million for the second quarter of 2021 compared to $48.6 million in the previous quarter, an increase of 18%. This measure, I believe is helpful for illustrating the core earnings power of Banner. Second quarter 2021 revenue from core operations increased 6% to $149.8 million compared to $141.4 million in the first quarter of 2021. We benefited from a larger earning asset mix, a good net interest margin, solid mortgage banking fee revenue, good expense control, and the previously mentioned acceleration of deferred loan fees associated with PPP loans. Overall, this resulted in a return on average assets of 1.36% for the quarter, and a 6% increase in tangible common shareholders' equity per share compared to the second quarter of 2020. Once again, our core performance this quarter reflects continued execution on our super community bank strategy, even with the challenges of a pandemic that is growing new client relationships, adding to our core funding position by growing core deposits, and promoting client loyalty and advocacy through our responsive service model. To that point, our core deposits increased 16% compared to June 30, 2020, and represent 94% of total deposits. Further, we continued our strong organic generation of new client relationships. Reflective of the solid performance, coupled with our strong tangible common equity ratio, we issued a dividend of $0.41 per share in the quarter, and repurchased 250,000 shares of our common stock. Our branches are fully operational and we have begun phasing in our return to the workplace policies that provide a safe and flexible working environment for our employees and clients. To provide support for our clients through this crisis, we made available several assistance programs. Banner has provided SBA payroll protection funds totaling nearly $1.6 billion for approximately 13,000 clients. Also, we made an important $1.5 million commitment to support minority-owned businesses in our footprint, a $1 million equity investment in Broadway Federal Bank now City First Bank, the largest black-led depository financial institution in the United States; significant contributions to local and regional nonprofits; and have provided financial support for emergency and basic needs in our footprint. Let me now turn the call over to Jill to discuss trends in our loan portfolio and her comments on Banner's credit quality and loan portfolio. Jill?

Thank you, Mark, and good morning, everyone. As mentioned in our press release, Banner's credit metrics have remained stable as we navigate the economic impact of the pandemic. While we recognize the possibility of future COVID-related business interruptions due to the Delta variant as of June 30, I am pleased to report that all of our markets are fully reopened and business sentiment is positive. As of June 30, Banner's delinquent loans accounted for 0.24% of total loans, reflecting a decrease of 19 basis points from the previous quarter and a reduction from 0.35% on June 30, 2020. Non-performing assets, which include non-performing loans of $28.8 million, decreased by $6.5 million during the quarter, along with REO and other assets of $780,000, representing a nominal 0.20% of total assets. Adversely classified loans made up 2.83% of total loans as of June 30, a decline from 3.11% in the prior quarter and down from 3.45% on June 30, 2020. This improvement in adversely classified loans indicates the success of our Special Assets group in managing our classified relationships and upgrading risk ratings as more borrowers return to normal operations. Similar to the last quarter, upgrades were noted across both commercial and small business relationships, including owner and investor commercial real estate. Our ACL reserve stood at $148 million or 1.53% of total loans as of June 30, down from 1.57% on March 31, and compared to 1.66% on June 30, 2020. Excluding loans held for sale and Paycheck Protection loans, our current ACL reserve provides considerable coverage at 1.68% of total loans, equating to 181% coverage of nonperforming loans and 627% coverage of delinquent loans. Loan losses for the quarter were minimal at $538,000, completely offset by recoveries. Given the ongoing improvement in asset quality, strong economic indicators, and full reopening of our markets with sufficient vaccination rates, we released $8.1 million of our reserve for credit losses as of June 30, along with an additional $2.2 million of our reserve for unfunded loan commitments. This follows a combined release of $9.3 million in the previous quarter—$8 million for credit losses and $1.3 million for unfunded commitments. As I mentioned earlier, we built our reserve early in the pandemic by proactively downgrading the credits affected by the economic downturn. Banner’s reserve methodology remains consistent and conservative. Future provisioning will be determined by a combination of loan growth rates, portfolio mix shifts, risk ratings, and current economic conditions. Although the pandemic-influenced credit cycle is ongoing, and we are observing the effects of variant strains on operating conditions, given the current market situation and the performance of our loan portfolio to date, the reserve recapture is deemed appropriate, keeping our reserve for credit losses at 1.53% of total loans strong. Examining our loan portfolio, excluding the Paycheck Protection loans, portfolio loans have decreased by 3.6% year-over-year. However, I am pleased to share that as of June 30, Banner halted the five-quarter decline in portfolio loan balances, growing by $198 million or 2.3% net of PPP for the quarter, reflecting a 9.2% annualized growth rate. This growth persists despite ongoing payoffs in the residential and consumer real estate sectors. Portfolio loan balances for investment are now flat compared to year-end 2020 figures. Regarding specific product lines, excluding PPP loans, the C&I loan totals increased by 2.6% or 10.3% on an annualized basis during the quarter. We have also begun to observe a 1% quarter-over-quarter rise in line utilization and increased loan closings across our footprint. Nonetheless, commercial credit line utilization remains down 3% compared to June 2020. Residential mortgage loans outstanding are still affected by the refinance market, decreasing by 2.7% for the quarter and 22% year-over-year. The refinance market has similarly impacted our home equity credit, which is down 1.5% for the quarter and 11.6% year-over-year. As mentioned last quarter, both commercial construction and multifamily construction totals have declined by 8.1% and 3.3% respectively for the quarter, reflecting the conversion of construction loans to permanent CRE pools once the construction is complete, with balances now distributed across commercial real estate and multifamily categories. The residential ADC portfolios continue to show robust quarter-over-quarter growth as the housing market stays strong in the areas we serve. Demand consistently exceeds the supply of available homes in nearly all the markets we cover. Sales activity on completed homes is vigorous, and single-family housing at affordable prices remains undersupplied. Our overall residential construction exposure is now 6.3% of our portfolio, and including multifamily commercial construction and land, the total construction exposure is 14.2% of total loans. The pipelines for commercial and commercial real estate continue to expand, and we expect commercial investments to increase in the latter half of the year as borrowers start making delayed capital investments and building inventories. However, we note that many of our borrowers still have significant amounts of excess liquidity and will likely use this liquidity before resorting to lines of credit or new borrowings. Briefly addressing asset quality, loans rated substandard decreased by 12.4% in the quarter, or $38.8 million, from $28.7 million or 8.4% in the previous quarter. About 75% of adversely classified assets are associated with at-risk segments, with nearly 40% in the hospitality industry. The next largest group of adversely classified loans is recreational and leisure, accounting for 20% of the total. Five percent are in healthcare-related industries, down from 10%; restaurant and foodservice relationships account for 5%; and another 5% are in the retail sector. The remaining substandard credits are not concentrated in any at-risk segment or particular business line. To conclude, our credit metrics remain strong, reserves for credit losses are solid, and our capital levels are significantly above regulatory requirements. Banner’s loan portfolio continues to reflect our moderate risk profile, and we are well-positioned for the future. I will now turn the call over to Peter for his comments. Peter?

Thank you, Jill. As mentioned earlier and noted in our earnings release, we reported a net income of $54.4 million or $1.56 per diluted share for the second quarter, an increase from $46.9 million or $1.33 per diluted share in the previous quarter. The rise of $0.23 in earnings per share was due to an increase in net interest income resulting from PPP loan forgiveness, higher earning assets, and a recapture of the loan loss provision. Core revenue, which excludes gains and losses on securities and changes in the fair value of financial instruments, grew by $8.4 million from the last quarter, primarily driven by increased PPP loan forgiveness activity and growth in average core deposits. Core expenses, excluding M&A and COVID-related costs, decreased by $380,000, mainly because of lower compensation expenses, partially offset by higher professional services costs. Regarding the balance sheet, total loans dropped by $357 million from the end of the previous quarter due to a $492 million decline in SBA PPP loans and a $63 million decline in loans held for sale, although this was partially countered by an increase in loans held for investment. When removing PPP loans and held-for-sale loans from the equation, portfolio loans increased by $198 million owing to greater portfolio loan production, higher line utilization, and slower prepayments on fixed-term loans. The reduction in held-for-sale loans was attributed to a quicker pace of multifamily bulk loan sales and fewer residential mortgage loans available for sale at quarter-end. Our ending core deposits rose by $122 million from the previous quarter, driven by a growth in average deposit client balances and new client acquisitions. Notably, average core deposits increased by $713 million in the second quarter, primarily due to strong deposit growth at the end of the first quarter. Time deposit balances fell by $24 million from the prior quarter to $889 million, as high-cost CDs were rolling over at lower retention rates. On the income statement, net interest income rose by $9.9 million, driven by higher loan yields from increased PPP loan forgiveness activity and a $675 million rise in average earning assets attributed to core deposit growth. Compared to the last quarter, loan yields improved by 27 basis points because of the acceleration in unamortized loan processing fees associated with forgiven SBA PPP loans. Excluding the effects of loan forgiveness prepayment penalties, interest recoveries, and acquired loan accretion, the average loan coupon went down by 5 basis points. While the decline in core loan yield has moderated, there are still slight challenges, as new fixed-rate loans are being issued at lower rates and adjustable-rate loans with floors mature. The total average interest-bearing cash and investment balances rose by $793 million compared to the prior quarter, financed by deposit growth and PPP loan payoffs, while the average yield on these combined balances decreased by 7 basis points due to a shift towards lower-yielding overnight funds and higher prepayments on mortgage-backed securities. The total cost of funds fell by 4 basis points to 17 basis points due to lower deposit and borrowing costs. The overall cost of deposits decreased from 11 to 9 basis points in the second quarter, attributed to lower interest-bearing retail deposit rates and ongoing repricing of the CD portfolio. The ratio of core deposits to total deposits stood at 94% in the second quarter, marking a 1% increase from the previous quarter. The net interest margin increased by 8 basis points to 3.52% on a tax-equivalent basis, driven by the acceleration in PPP loan forgiveness but partially offset by increased liquidity from excess deposits still invested in lower-yielding overnight securities. In the upcoming quarter, we expect a slowdown in the rate of PPP loan forgiveness and a corresponding decline in the net interest margin. While we believe the core loan growth seen in the second quarter will carry into the latter half and positively impact earning asset yields, future guidance on the margin will largely depend on deposit liquidity outflows and fluctuations in the yield curve. In the short term, we plan to gradually allocate excess deposit liquidity into the securities portfolio, while remaining adaptable to changes in loan demand and market conditions. Total noninterest income fell by $1.9 million from the last quarter. Core noninterest income, excluding gains from securities sales and changes in the fair value of securities, declined by $1.5 million. Deposit fees rose by $819,000 due to increased card interchange income and higher service charges on deposit accounts. Total mortgage banking income dropped by $4 million because of lower spreads on residential mortgage loan sales. In residential mortgage production, the share of refinance volume decreased to 34% of total production, down from 46% in the previous quarter. Multifamily loan sale income remained stable compared to the prior quarter. Miscellaneous fee income grew by $1.7 million mainly from gains on the sale of closed branch locations. Total noninterest expenses decreased by $900,000 from the prior quarter. Excluding merger-related costs and pandemic-specific operating expenses, core noninterest expenses decreased by $380,000. Salary and benefit expenses fell by $2.9 million, primarily due to a reduction in severance pay, payroll taxes, and deferred compensation. Typical merit-related salary increases expected in the second quarter were offset by staff reductions effective at the end of the first quarter. The credit for capitalized loan origination costs reduced by $928,000 in the second quarter due to a significant drop in SBA PPP loan production as the program's final phase concluded at the end of the first quarter. Information services expenses declined by $600,000, largely due to decreased expenses for data processing and software related to former Islanders Bank and SBA PPP loans. Professional legal expenses increased by $1 million mainly due to a settlement in a recent litigation case. Miscellaneous expenses rose by $647,000 due to higher loan expenses in portfolio loan production compared to previous quarters. Merger expenses decreased by $492,000 following the completion of the Islanders Bank subsidiary merger into the Banner Bank subsidiary. In conclusion, the company is well-prepared for rising rates, benefiting from a low-cost, granular core deposit base with significant liquidity on the balance sheet to support increased loan demand, while core operating expenses reduced due to prior branch consolidations and streamlining of administrative and support functions. As Mark mentioned, during our ongoing capital management, the company repurchased 250,000 shares during the quarter. This wraps up my prepared remarks. Mark?

Thank you, Peter, and Jill for your comments and color on the company's performance for the second quarter. That concludes our prepared remarks. And Riley we will now open the call and welcome your questions.

We will now begin the question-and-answer session. Our first question today will come from Andrew Liesch with Piper Sandler.

Hi, everyone. Good morning.

Good morning Andrew.

Just one quick question on the loan growth, certainly encouraging this quarter. And I know your guidance had been for balances to be flat through year-end. Is that still a good guidance to be using? And I guess what other things are you hearing from your clients? Anything specific to make you think that growth will come back or will continue to accelerate from this point?

Good morning, Andrew, this is Jill. Yes, we're still holding to the flat guidance for 2021 for the balance of the year, although given the uptick we saw in the line utilization that started this quarter and the positive business sentiment we have everybody being reopened, we do believe that we will have low single-digit growth for the balance of the year, which is what will get us to a flat landing for 2021 after the PPP paydown. In terms of what we're hearing from our borrowers, it's very positive in our markets, because we finally just reopened. So everyone's feeling really good about that. That has to be countered a little bit with what we are seeing in terms of the Delta variant and discussions now about masking up inside and where does that take us. But as we ended the quarter, things are feeling good in the markets we serve.

Got it. On the presentation, I believe it's Page 22 with the $23.7 million remaining of unamortized fees. Do you have any sense on the timing on how that's going to be realized? Will it all be done this year, or is there going to be any spill over into 2022?

Yes. This is Peter. I can address that. It's really a function of the pace of remaining loan forgiveness on the balance of the $825 million that existed in the portfolio at the end of the quarter. In the second quarter, we forgave $558 million, which was a significant amount. I expect that the rate of forgiveness will slow down a bit going into the third quarter. Based on what we're seeing early in this quarter, I anticipate that we'll see 30% to 40% of the remaining $825 million balance forgiven in Q3. After that, I expect a gradual decline in the pace of forgiveness as we move through the rest of this year, ultimately leading to a small residual amount of the PPP portfolio that won't be forgiven and will mature over five years.

Okay. That's very helpful. Thanks for taking the question. I’ll go back.

Thank you, Andrew.

Our next question comes from Jeff Rulis with D.A. Davidson.

Thanks. Good morning.

Good morning, Jeff.

I would like to get an update on the expenses. I haven't really reviewed them in light of the branch consolidation and the administrative changes you've made. Can you provide some insights on the current expense levels, excluding compensation adjustments? Also, can you share details on whether you are aiming to maintain a certain run rate or if you are looking at potential cost savings from previous efforts? Have those savings been realized, or are we primarily focused on limiting expense growth now? Thank you.

Yes, it's Peter. As I mentioned in my prepared remarks, we saw an increase in our professional services expenses this quarter mainly due to the settlement of some recent litigation that came up late last year. Additionally, we are still dealing with severance and restructuring costs related to some recent downsizing. As we move into the second half of this year, we are exploring opportunities to reduce expenses through branch consolidations and staff-related cost reductions that we have already implemented. These will help improve our operational expenses for the remainder of the year. Looking at our $92.4 million expense figure for this quarter, approximately $2 million to $3 million of that reflects our core run rate, which I would consider a benchmark. However, there is always some variability with the timing of professional services costs and ongoing restructuring expenses that add to that figure. Overall, we are seeing the benefits of our previous actions, and there are still additional cuts planned for the second half of the year that should positively impact our core operating expenses.

Okay. It seems that the core run rate might approach around $90 million, correct?

Yeah. Yeah. That's fair. And I think the other piece here is the capitalized loan origination cost. That obviously has a big effect on that number. And that's a function of loan production. And we – again, that's been volatile because of the PPP program we had a very big quarter of originations in Q1 in the PPP program. That's effectively ended. We just had a very small amount of originations in this quarter. And so that's the other element to the expense basis. The pace of loan production going forward should it continue or increase, we'd see a bigger benefit from the capitalized loan origination costs on our core expense number.

Great. Thanks. And Mark, on the kind of the capital management front the buyback has continued. I want to just check in on the appetite going forward on that front as well as I think in recent months you've talked about M&A interest there – obviously there was a lot of activity in Northern California. But just an update on how you feel about the buyback as well as M&A appetite for now? Thanks.

Yeah. Thank you for the question, Jeff. I think our view of capital deployment has not changed. If anything with the pullback in the market, it probably is more consistent than where it's been in recent history. So if you think about the authorization we have of 1.7 million shares, and we've repurchased 750,000 we have plenty of room there. Obviously, the waterfall of capital deployment does include the core dividend itself, stock repurchase and/or special dividends. Obviously in this market, repurchase tends to favor any kind of special dividend, and continued investment in the franchise as well as M&A opportunities. On the M&A front, look conversations continue. We – our style has been very consistent and that we do negotiated transactions. We don't do auction transactions. So as we enter into the second half of the year and into 2022, it really comes down to who is the right partner and what's the right franchise combination that's going to help Banner continue to be successful over the course of the next three to five years. So the conversation continues, but you know as well as I do those have to be opportunistic and timing is always in question as to when those can happen.

Great. Thank you.

Thank you, Jeff.

Our next question comes from Jackie Bohlen with KBW.

Hi. Good morning.

Good morning, Jackie.

Hi, Mark. I just wanted to start off with the improvement in criticized assets this quarter kind of look forward. If I understood correctly, it sounds like roughly 40% of that relates to hospitality. And I realize that, this is somewhat dependent on the geography of the hospitality loans. But it sounds like anecdotally, we're off to a really good vacation season this summer. And so I'm wondering, if that is in fact the case, what kind of migration trends you would expect from those risk grades? And how that might impact forward reserve necessity?

Good morning, Jackie. Certainly, we are off to a great vacation season. And as I think I indicated last quarter, we were expecting to see our hospitality numbers pick up starting with spring break and run forward and we have. So we are running now approximately, on whole at a 60% occupancy rate for the portfolio with – and this is as of I think May numbers, we would be down in the – on the low end you'd have people still running at 20%, and some fully occupied. And it really is a function of where they're located and from where they started in terms of the increase. And we've kept that portfolio adversely classified, because of the impact of the primary repayment source. So do I think we're going to see it improve? Yes. Can I guide to where that's going to go? I'm not prepared to tell you how quickly those will roll off, but we are continuing to see improvement in the portfolio quarter-over-quarter. As you look – as you think about that and the reserve, we don't give guidance as to where our reserve will be. But one could expect that with continued economic improvement, solid credit metrics and loan growth, you'd expect the reserve level to – as a percentage of total loans to trend downward over time.

Okay. That's good color. And are you – still are you seeing anything that would indicate or anything you're closely watching that would indicate just an uptick in charge-offs? I mean performance has just been tremendous throughout the entire pandemic.

No. I think if I had anything in my quiver towards charge-off, given how clean we were this quarter, you would have seen me take it because when we identify it, we take it. It's just our conserved methodology to act quickly on those problems.

Okay. Thank you. And then a bit of a – a little bit of a technical question. If I heard correctly, it sounds like there was a gain from a closed branch location in non-interest income this quarter. I was just wondering, if I could get that quantified.

Yes, Jackie, it was roughly around $1 million give or take. There were several that were part of that group. It was closed last year. They take a bit of time to sell and settle or gain.

Okay. And then I realize these are unrelated but it sounds like that pretty much offset the excess litigation expense in the quarter?

Yes, a little less I would say. But yes, that's true.

Thank you, Jackie.

Our next question comes from Andrew Terrell with Stephens.

Hey, thanks, good morning.

Good morning, Andrew.

Jill maybe just to drill into kind of the growth guidance from a different perspective or an organic perspective. If I assume the 30% to 40% kind of forgiveness on the remaining $850 million or so of PPP balances I guess that would imply kind of organic growth for the next two quarters steps up to a low kind of $300 million number about 13% annualized. Does that sound right to you?

You mean the – can you say that annualized again growth rate?

Yes, it would be kind of a low teens type annualized growth rate. I'm just trying to make sure I'm thinking about this correctly.

Yes, I'd have to double check the math. But I'm – if you go back and think about what we did just even in the C&I this last quarter, the annualized growth rate was 10%. So in these segments, we are seeing some decent uptick as people – line utilization has room to grow. That was up 1%, when we think about it historically. The average utilization rate as of June was 59%, compared to a 2019 average utilization rate of 64%. So when we start to see those actually come back to being drawn, residential construction up and commercial as well, again it will net out to low single-digit for the rest of the year. But I don't know if that answered your question.

Yes. No that was helpful. I appreciate it. And then Mark I was just curious, I wanted to get kind of an update on any attrition that you might have seen from the branch closures we saw late last year. I think when we spoke last it was less than 5% last quarter. But have you seen any notable kind of change in customer attrition over the past three months?

I'll let Peter comment on that. Let me just add on to Jill's comments on the loan portfolio and projected growth. Obviously, we caution everything with the new variants and whatever may happen in terms of its impact on the economy and the ability to continue to be reopened strong. So I just want to make sure we stay cautionary on that front. Peter do you want to comment on the attrition rates?

Yes, as we've mentioned before, we closely monitor and measure account attrition in closed locations and have specific expectations regarding it. We continue to observe very low rates of attrition and deposit balances, which remain around 5% for those closed locations. We notice that smaller balance clients may leave, but most larger clients, especially businesses with higher balances, tend to remain with the remaining branch. We have largely navigated the attrition from the closures last year, and it has significantly tapered off, with no expectations of further significant attrition.

Understood. Thank you. And then, Peter, one last one. Just, do you have the net kind of PPP revenue that was recognized through NI this quarter? And then, what the average balance of PPP loans was?

In the second quarter, the impact of the PPP portfolio, which includes the coupon and the accelerated deferred interest income from the forgiveness, was just under $18 million, specifically $17.8 million. The effective average yield on the PPP portfolio was 6.42%. We saw a significant benefit from the forgiveness acceleration this quarter. For comparison, the first quarter figure for the PPP program was $8 million, indicating that we more than doubled the interest income impact from the first quarter to the second quarter.

Okay. Perfect. Thank you for taking my questions.

Thank you, Andrew.

This concludes our question-and-answer session. I'd like to turn the call back over to Mark Grescovich for any closing remarks.

Thank you, everyone. As I've stated, we're very proud of the Banner team, as we continue to do the right thing as we battle the COVID virus and its variants and its impacts on our communities and the economy and one another. Thank you all for your interest in Banner and for joining our call today. We look forward to reporting our results to you again in the future. Have a great day everyone.

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