First Interstate Bancsystem Inc (FIBK) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the First Interstate BancSystem Inc. Q2 2023 Earnings Conference Call.

早上好，女士們、先生們，歡迎參加首屆 Interstate BancSystem Inc. 2023 年第二季度收益電話會議。

(Operator Instructions)

（操作員說明）

This call is being recorded on Thursday, July 27, 2023.

此電話錄音於 2023 年 7 月 27 日星期四進行。

I will now turn the conference over to Andrea Walton. Please go ahead.

我現在將會議交給安德里亞·沃爾頓。請繼續。

Good morning. Thank you for joining us for our second quarter earnings conference call. As we begin, please note that the information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those expressed by those statements. I'd like to direct all listeners to read the cautionary note regarding forward-looking statements contained in our most recent annual report on Form 10-K filed with the SEC and in our earnings release as well as the risk factors identified in the annual report and our more recent periodic reports filed with the SEC.

早上好。感謝您參加我們的第二季度收益電話會議。在我們開始之前，請注意，本次電話會議期間提供的信息將包含前瞻性陳述。實際結果或結果可能與這些陳述所表達的結果存在重大差異。我想指示所有聽眾閱讀我們向 SEC 提交的最新 10-K 表格年度報告和我們的收益發布中包含的有關前瞻性陳述的警示性說明，以及年度報告中確定的風險因素以及我們最近向SEC 提交的定期報告。

Relevant factors that could cause actual results to differ materially from any forward-looking statements are included in the earnings release and in our SEC filings. The company does not undertake to update any of the forward-looking statements made today.

可能導致實際結果與任何前瞻性陳述存在重大差異的相關因素已包含在收益發布和我們向 SEC 提交的文件中。該公司不承諾更新今天做出的任何前瞻性陳述。

A copy of our earnings release, which contains non-GAAP financial measures, is available on our website at fibk.com. Information regarding our use of the non-GAAP financial measures may be found in the body of the earnings release and a reconciliation to their most directly comparable GAAP financial measures is included at the end of the earnings release for your reference. Joining us from management this morning are Kevin Riley, our Chief Executive Officer; and Marcy Mutch, our Chief Financial Officer, along with other members of our management team. At this time, I'll turn the call over to Kevin.

我們的收益發布副本包含非 GAAP 財務指標，可在我們的網站 fibk.com 上獲取。有關我們使用非 GAAP 財務指標的信息可以在收益發布的正文中找到，並且與最直接可比的 GAAP 財務指標的調節表包含在收益發布的末尾，供您參考。今天上午，我們的首席執行官凱文·萊利 (Kevin Riley) 與管理層一起加入我們。我們的首席財務官 Marcy Mutch 以及我們管理團隊的其他成員。這個時候，我會把電話轉給凱文。

Thanks, Andrea. Good morning, and thanks again to all of you for joining us on our call today. Again, this quarter, along with our earnings release, we have published an updated investor presentation that has some additional disclosures that we believe will be helpful. The presentation can be accessed on our Investor Relations website. And if you haven't downloaded a copy yet, I encourage you to do so. I'm going to start today by providing an overview of the major highlights of the quarter. And then I'll turn the call over to Marcy to provide more details on our financials.

謝謝，安德里亞。早上好，再次感謝大家今天加入我們的電話會議。同樣，本季度，在發布收益的同時，我們還發布了更新的投資者演示文稿，其中包含一些我們認為會有所幫助的額外披露。您可以在我們的投資者關係網站上訪問該演示文稿。如果您還沒有下載副本，我鼓勵您下載。今天我將首先概述本季度的主要亮點。然後我會將電話轉給馬西，以提供有關我們財務狀況的更多詳細信息。

We performed well in a difficult environment during the second quarter reflecting the strength of the franchise we've built while we see pressure on deposit costs, balances performed as expected, benefiting from the strength of our markets and the diversity of our client base. We have not had to take any extraordinary measures around liquidity. Credit continues to perform well. Our capital is strong, and importantly, we are beginning to see some stabilization in net interest margin, which has remained flat around 3% for May, June and July. Though we expect the environment to remain challenging for the banking industry for the remainder of the year, we are well positioned to play offense.

我們在第二季度的困難環境中表現良好，反映出我們建立的特許經營權的實力，同時我們看到存款成本的壓力，餘額按預期執行，受益於我們市場的實力和客戶群的多樣性。我們不必針對流動性採取任何非常措施。信貸繼續表現良好。我們的資本雄厚，重要的是，我們開始看到淨息差有所穩定，5 月、6 月和 7 月淨息差一直保持在 3% 左右。儘管我們預計今年剩餘時間內銀行業的環境仍將充滿挑戰，但我們已做好進攻準備。

We generated $67 million in net income or $0.65 per share in the second quarter, which includes $0.01 of severance expense primarily related to the strategic repositioning of our home lending business, which we will discuss later in the call. As we indicated on our last earnings call, we did not see any meaningful disruption in customer behavior following the bank failures in March. During the second quarter, it was very much business as usual in what we would characterize as a relatively normalized operating environment.

第二季度我們產生了6700 萬美元的淨利潤，即每股0.65 美元，其中包括0.01 美元的遣散費，主要與我們的住房貸款業務的戰略重新定位有關，我們將在稍後的電話會議中討論這一點。正如我們在上次財報電話會議上指出的那樣，三月份銀行倒閉後，我們沒有看到客戶行為受到任何有意義的干擾。第二季度，一切如常，我們稱之為相對正常化的運營環境。

We continue to see healthy economic conditions throughout many of our markets and most notably in tourism in the agricultural industries where clients are performing well. In particular, Yellowstone is having a very strong tourist season with a number of visitors to the park up 19% compared to the first 6 months of last year, and we've seen sufficient moisture over most of our footprint, which bodes well for our ag clients.

我們繼續看到許多市場的健康經濟狀況，尤其是農業旅遊業，客戶表現良好。特別是，黃石公園正處於非常旺盛的旅遊旺季，與去年前6 個月相比，到公園參觀的遊客數量增加了19%，而且我們的大部分足跡都看到了足夠的水分，這對我們的發展來說是個好兆頭。農業客戶。

While deposits declined about 2% in the second quarter, this result was very much in line with the expectations we spoke to in April. Importantly, throughout the quarter, balances expressed very normal seasonality. We saw expected outflows in the first half of the quarter with broad seasonal strength until the end of June. For the month of June, total balances grew $375 million or 1.6%, which is partially a result of our success in new client acquisition. It is worth noting that we continue to have no broker deposits on our balance sheet. Our noninterest-bearing deposits showed resiliency and while down for the quarter, balances ended June modestly higher than April.

雖然第二季度存款下降了約 2%，但這一結果與我們在 4 月份談到的預期非常一致。重要的是，整個季度的餘額表現出非常正常的季節性。我們預計本季度上半年將出現預期的資金外流，並在 6 月底之前呈現出廣泛的季節性強勁勢頭。 6 月份，總餘額增長了 3.75 億美元，即 1.6%，部分原因是我們在新客戶獲取方面取得了成功。值得注意的是，我們的資產負債表上仍然沒有經紀人存款。我們的無息存款表現出彈性，雖然本季度有所下降，但 6 月末的餘額略高於 4 月。

Given the strength of our balance sheet and our reputation we have developed for providing superior level of service, we have been able to effectively capitalize on the current environment. Given our advantageous loan-to-deposit ratio, we have strategically raised our rates to provide a competitive value proposition to our current clients, which we believe is the right thing to do. At the same time, we are selectively raising rates and adding products to support new business development efforts, targeting new clients where we have the opportunity to develop deeper, more profitable relationships over the long term. As we indicated on prior calls, we continue to be thoughtful in regards to new loan production, maintaining strong underwriting criteria and disciplined in our pricing.

鑑於我們的資產負債表實力以及我們因提供優質服務而建立的聲譽，我們能夠有效地利用當前的環境。鑑於我們有利的貸存比，我們戰略性地提高了利率，以為我們現有的客戶提供有競爭力的價值主張，我們認為這是正確的做法。與此同時，我們有選擇地提高費率並添加產品，以支持新業務的開發工作，瞄準新客戶，讓我們有機會在長期內發展更深入、更有利可圖的關係。正如我們在之前的電話會議中表示的那樣，我們在新貸款生產方面繼續深思熟慮，保持嚴格的承保標準並嚴格定價。

As we expected, this resulted in a lower level of loan growth in the second quarter, but with improved risk-adjusted yield, we expect both trends to continue for the balance of the year. Excluding draws on construction lines, the average yield on new loan fundings in the second quarter was up about 80 basis points from the prior quarter to 7.1%. Asset quality also remained strong. Although we saw a modest increase in nonperforming and criticized loans this quarter, those balance make up just 51 basis points and 350 basis points of loans held for investments, respectively.

正如我們預期的那樣，這導致第二季度貸款增長水平較低，但隨著風險調整後收益率的提高，我們預計這兩種趨勢將在今年剩餘時間內持續下去。不包括建築額度提取，第二季度新增貸款資金的平均收益率比上一季度上升約80個基點，達到7.1%。資產質量也保持強勁。儘管本季度不良貸款和批評貸款略有增加，但這些餘額僅分別佔投資貸款的 51 個基點和 350 個基點。

Looking forward, based on our current evaluation of the loan portfolio, we anticipate a reduction in criticized balances over the remainder of the year. Charge-offs increased to $11.4 million this quarter with about 85% coming from the restructuring of a single metro office construction property that we have discussed in the past. With the recent restructure, we expect this credit to perform going forward. Outside of this 1 credit, losses were negligible.

展望未來，根據我們目前對貸款組合的評估，我們預計今年剩餘時間內受到批評的餘額將減少。本季度沖銷增加至 1140 萬美元，其中約 85% 來自我們過去討論過的單個地鐵辦公建築物業的重組。通過最近的重組，我們預計該信貸將繼續發揮作用。除了這 1 個信用點之外，損失可以忽略不計。

With that, I'd like to turn the call over to Marcy to provide some additional details around the second quarter results. Go ahead, Marcy.

因此，我想將電話轉給馬西，以提供有關第二季度業績的一些其他詳細信息。繼續吧，瑪西。

Thanks, Kevin, and good morning, everyone. As I walk through our financial results, unless otherwise noted, all of the prior period comparisons will be with the first quarter of 2023, and I'll begin with our income statement. Our net interest income decreased by $20.5 million, which was primarily due to an increase in our interest expense resulting from higher rates on interest-bearing deposits and a shift in our funding mix toward higher cost, short-term borrowings and interest-bearing deposit accounts.

謝謝，凱文，大家早上好。在我介紹我們的財務業績時，除非另有說明，否則所有前期比較都將與 2023 年第一季度進行比較，我將從我們的損益表開始。我們的淨利息收入減少了 2,050 萬美元，這主要是由於計息存款利率上升以及我們的資金結構轉向更高成本、短期借款和計息存款賬戶導致利息支出增加。

Purchase accounting accretion was also $600,000 lower quarter-over-quarter. Our reported net interest margin decreased 24 basis points from the prior quarter to 3.12%. Excluding purchase accounting accretion, our adjusted net interest margin also decreased by 24 basis points to 3.05% from the prior quarter as the 9 basis point increase in the average yield on earning assets was more than offset by the increase in our total cost of funds.

採購會計增量也比上一季度減少了 600,000 美元。我們報告的淨息差較上一季度下降 24 個基點至 3.12%。不包括購買會計增值，我們的調整後淨息差也比上一季度下降了 24 個基點，至 3.05%，因為生息資產平均收益率 9 個基點的增長被我們總資金成本的增長所抵消。

Looking to the balance of the year, given the recent trend in our deposit costs, we are now expecting our interest-bearing deposit beta to reach the low to mid-30% range by the end of the year. This outlook assumes 1 additional 25 basis point rate hike in the second half of 2023. As Kevin noted, in June and July, our net interest margin was around 3%. Under the repricing assumptions just noted, and assuming deposits remained stable through the end of the year and average earning assets approximate $28 billion, we would now expect this to approximate the net interest margin for the balance of the year.

展望今年的餘額，考慮到我們存款成本的近期趨勢，我們目前預計生息存款貝塔值將在年底前達到 30% 的低至中水平。這一展望假設 2023 年下半年加息 1 次 25 個基點。正如 Kevin 指出的，6 月和 7 月，我們的淨息差約為 3%。根據剛才提到的重新定價假設，並假設存款在年底前保持穩定，平均生息資產約為 280 億美元，我們現在預計這將接近今年剩餘時間的淨息差。

Our total noninterest income increased $27.7 million quarter-over-quarter, primarily due to the $23.4 million loss on investment securities and the $1.9 million net write-down to the fair value of loans held for sale recorded during the first quarter. Excluding these items, noninterest income increased about 6% from the prior quarter. This was primarily due to higher levels of payment services revenue as we saw the impact of greater transaction volume, driven by normal seasonality in our markets as well as modestly higher mortgage banking revenue and service charges on deposit accounts. Based on the first half of the year and the trends we're seeing, we expect quarterly fee income for the balance of the year to increase low to mid-single digits from the reported second quarter. The outlook is in line with the improvement in the second half of the year, we have been expecting.

我們的非利息總收入環比增加了 2770 萬美元，主要是由於第一季度記錄的投資證券損失 2340 萬美元以及持有待售貸款公允價值淨減記 190 萬美元。排除這些項目，非利息收入較上一季度增長約 6%。這主要是由於支付服務收入水平較高，因為我們看到了交易量增加的影響，這是由我們市場的正常季節性以及抵押貸款銀行收入和存款賬戶服務費適度增加所推動的。根據今年上半年和我們看到的趨勢，我們預計今年剩餘時間的季度費用收入將比第二季度報告的低至中個位數增長。前景與我們一直預期的下半年的改善一致。

Moving to total noninterest expense. We saw a continued decline as we remain vigilant to control expenses with operating expenses down $1.9 million from the prior quarter. Results in the second quarter included $1.9 million in severance expense, mostly related to the restructuring of the mortgages. Excluding this item, expenses declined 2% from the prior quarter to $162 million. At this point, we would expect this to be a good approximation for the run rate over the rest of the year. This run rate does not include any impact from the FDIC special assessment.

轉向非利息支出總額。由於我們保持警惕控制開支，運營開支比上一季度減少了 190 萬美元，因此我們看到了持續下降。第二季度業績包括 190 萬美元的遣散費，主要與抵押貸款重組有關。不計此項目，費用較上一季度下降 2%，至 1.62 億美元。目前，我們預計這將是今年剩餘時間運行率的一個很好的近似值。此運行率不包括 FDIC 特別評估的任何影響。

Moving to the balance sheet. Our loans held for investment increased $18 million from the end of the prior quarter with growth in the commercial real estate and ag portfolios, offsetting slight declines in the commercial and consumer portfolios. The securities portfolio declined about $250 million in the quarter, partly due to higher unrealized losses, but also from normal monthly cash flow that is not being reinvested. We would expect the portfolio to continue to decline and have provided a new disclosure related to the expected quarterly cash flows on Slide 18 of the investor deck.

轉向資產負債表。隨著商業房地產和農業投資組合的增長，我們持有的投資貸款比上季度末增加了 1800 萬美元，抵消了商業和消費者投資組合的小幅下降。該季度證券投資組合減少了約 2.5 億美元，部分原因是未實現損失增加，但也來自未進行再投資的正常每月現金流。我們預計投資組合將繼續下降，並在投資者幻燈片 18 上提供了與預期季度現金流相關的新披露。

On the liability side, our total deposits decreased $528 million. We saw declines in most categories, which were partially offset by increases in our balances of time deposits as we see more customers taking advantage of attractive CD rates. Again, as Kevin noted, we have no broker deposits on the balance sheet. Short-term borrowings also declined from the prior quarter end. Moving to asset quality. Nonperforming assets increased $8.5 million and criticized loans increased $20 million from the prior quarter, which was partially attributable to problem loans moving through the credit administration process.

在負債方面，我們的總存款減少了 5.28 億美元。我們看到大多數類別的下降，但由於我們看到越來越多的客戶利用有吸引力的定期存款利率，我們的定期存款餘額增加部分抵消了下降。正如凱文指出的那樣，我們的資產負債表上沒有經紀人存款。短期借款也較上季度末有所下降。轉向資產質量。不良資產較上一季度增加 850 萬美元，批評貸款增加 2,000 萬美元，部分原因是問題貸款通過信貸管理流程。

Outside of these loans, the remainder of the portfolio continues to perform well. Based on current projections, we expect to see asset quality improvement for the balance of the year. Our net charge-offs were $11.4 million or 25 basis points of average loans in the quarter, driven primarily by the 1 charge-off on a metro office property that Kevin discussed earlier. Our provision covered our net charge-offs this quarter and with total loans being relatively flat, our allowance for credit loss percentage remain relatively unchanged at 1.23% of total loans held for investment.

除了這些貸款之外，投資組合的其餘部分繼續表現良好。根據目前的預測，我們預計今年剩餘時間的資產質量將有所改善。我們的淨沖銷額為 1,140 萬美元，即本季度平均貸款的 25 個基點，這主要是由 Kevin 之前討論過的地鐵辦公物業的 1 次沖銷推動的。我們的準備金覆蓋了本季度的淨沖銷，並且由於貸款總額相對持平，我們的信貸損失準備金比例保持相對不變，佔投資貸款總額的 1.23%。

Lastly, while AOCI offset the growth in retained earnings this quarter, which resulted in modest reductions to book value and tangible book value, our regulatory capital ratios all strengthened as we are proactively managing our risk-weighted asset exposure while continuing to support the strategic growth of the company.

最後，雖然AOCI 抵消了本季度留存收益的增長，導致賬面價值和有形賬面價值小幅下降，但我們的監管資本比率均有所加強，因為我們在積極管理風險加權資產敞口的同時，繼續支持戰略增長該公司的。

With that, I'll turn it back over to Kevin. Kevin?

這樣，我會將其轉回給凱文。凱文？

Thanks, Marcy. Now I'll wrap up with a few comments. Given the relative stability in our outlook from here, the strength of our balance sheet and the strength of our footprint, we continue to believe First Interstate is well positioned to play offense. As such, we are moving forward with several initiatives to further strengthen the franchise and improve our ability to generate long-term profitable growth. One of these initiatives is a shift in our mortgage business away from a mortgage loan originator model.

謝謝，馬西。現在我將發表一些評論作為總結。考慮到我們目前前景的相對穩定性、我們資產負債表的實力以及我們足蹟的實力，我們仍然相信 First Interstate 處於有利的進攻位置。因此，我們正在採取多項舉措，以進一步加強特許經營權並提高我們實現長期盈利增長的能力。其中一項舉措是我們的抵押貸款業務從抵押貸款發起人模式轉變。

We have implemented a new digital loan origination system enabling us to push the sourcing of loans across our branch network, while the underwriting is and the fulfillment is now fully centralized. Not only will this improve our operational efficiencies for the benefit of our people and our clients but is much more cost-effective delivery mechanism for the company, allowing this product to be more profitable and more scalable in the future. As part of this restructure, we have eliminated most of our MLO positions, which contributed to the severance expense this quarter that Marcy mentioned earlier.

我們實施了新的數字貸款發放系統，使我們能夠在分支機構網絡中推動貸款來源，而承銷和履行現在完全集中化。這不僅會提高我們的運營效率，造福於我們的員工和客戶，而且為公司提供更具成本效益的交付機制，使該產品在未來能夠獲得更多利潤和更具可擴展性。作為此次重組的一部分，我們取消了大部分 MLO 職位，這導致了 Marcy 之前提到的本季度遣散費。

Going forward, we will look to leverage our network of more than 300 retail branches to generate referrals for our digital mortgage loan origination platform. And we will incent our retail staff for leads they generate. We have just launched this program, but the initial results are encouraging, and we are excited about the possibilities. In August, we will be introducing our new suite of consumer credit cards, which will offer a more robust set of benefits and a more competitive and user-friendly rewards program. We believe this new suite of cards, along with our marketing initiatives will help us achieve our goals of growing our customer base and expanding existing customer relationships, particularly in our new markets.

展望未來，我們將利用 300 多家零售分行網絡為我們的數字抵押貸款發放平台提供推薦。我們將激勵我們的零售員工創造銷售線索。我們剛剛啟動了這個計劃，但初步結果令人鼓舞，我們對其中的可能性感到興奮。八月，我們將推出新的消費者信用卡套件，該信用卡將提供更強大的福利以及更具競爭力和用戶友好的獎勵計劃。我們相信這套新的卡片以及我們的營銷舉措將幫助我們實現擴大客戶群和擴大現有客戶關係的目標，特別是在我們的新市場中。

We are also strengthening our commitment to being a good corporate steward and reducing our carbon footprint to the investment in 2 solar projects, 1 in Iowa and 1 in Oregon. The electricity generated by these 2 projects will offset a good portion of the Scope 2 emissions from our operations in these 2 states. Heading into the second half of the year, we will continue to prioritize prudent risk management and expect to deliver solid financial performance. Expect us to remain thoughtful regarding new loan production which will likely result in a full year loan growth being in the low single-digit range.

我們還加強了作為優秀企業管理者的承諾，並通過投資 2 個太陽能項目（1 個位於愛荷華州和 1 個俄勒岡州）來減少碳足跡。這兩個項目產生的電力將抵消我們在這兩個州運營的範圍 2 排放的很大一部分。進入下半年，我們將繼續把審慎的風險管理放在首位，期望實現穩健的財務業績。預計我們會對新貸款生產保持深思熟慮，這可能會導致全年貸款增長處於較低的個位數範圍內。

Finally, we are pleased to announce that the Board has approved a $0.47 dividend for the third quarter. Given the strength of our balance sheet, the prospective earnings' power of the company and our high and growing capital ratios, we are well positioned to maintain our dividend at the current level which is an important component of the total return that we delivered to our shareholders.

最後，我們很高興地宣布，董事會已批准第三季度股息 0.47 美元。考慮到我們的資產負債表實力、公司的預期盈利能力以及我們較高且不斷增長的資本比率，我們有能力將股息維持在當前水平，這是我們為公司提供的總回報的重要組成部分。股東。

So with that, we'll open the call for questions.

因此，我們將開始提問。

(Operator Instructions)

（操作員說明）

Your first question comes from Jared Shaw from Wells Fargo.

你的第一個問題來自富國銀行的賈里德·肖。

Can you hear me? Hello?

你能聽到我嗎？你好？

Can you hear, Jared?

你能聽到嗎，賈里德？

I can hear you. Okay. So maybe sticking with the -- starting with deposits. Do you think that we're at a floor for dollars of DDA here? Or is there still more pressure on sort of the dollars of DDA?

我可以聽見你。好的。所以也許會堅持——從存款開始。您認為我們的 DDA 價格已經到了底線嗎？或者 DDA 的資金是否還面臨更大的壓力？

Without interest, you're talking about, Jared?

你是說沒有興趣，賈里德？

Yes.

是的。

Well, we've seen some stabilization in that, but we're still projecting that there will be some deterioration as we move through the remainder of the year, but we are seeing some stabilization in that.

嗯，我們已經看到了這種情況的一些穩定，但我們仍然預計，隨著今年剩餘時間的推移，情況將會有所惡化，但我們看到這種情況有所穩定。

And so Jared, by the end of the year, we're thinking noninterest gains should be about 25% of total deposits.

因此，賈里德，到今年年底，我們認為非利息收益應佔存款總額的 25% 左右。

Okay. 25% with the overall balance of deposits still following those trends in June, still seeing an upward bias as we go through the year?

好的。 25%，而存款總體餘額仍遵循 6 月份的趨勢，全年仍呈現上行趨勢？

Yes. We -- flat deposits through the balance of the year.

是的。我們——全年存款保持不變。

Okay. And then on the loan yields, it's -- thanks for the color on loan yields ex construction. What's the balance of remaining construction loans that could be funded? And should we -- what's the timing of the funding of those loans?

好的。然後是貸款收益率，感謝建築業貸款收益率的顏色。可以提供資金的剩余建設貸款餘額是多少？我們應該——這些貸款的融資時間是什麼時候？

So there's still about $1.1 billion to be funded based on around $75 million a month.

因此，按每月約 7500 萬美元計算，仍有約 11 億美元需要資助。

The yield commitment is just over 5.3%. So as we roll forward, that yield drag that we were referencing that will lessen as the year goes on. But it's about $75 million a month, as Marcy mentioned (technical difficulty) the kind of picks up as the year progresses.

收益率承諾略高於5.3%。因此，隨著我們向前推進，我們提到的收益率拖累將隨著時間的推移而減少。但正如 Marcy 提到的那樣（技術難度），隨著時間的推移，每月的費用約為 7500 萬美元。

Okay. That's good. When we look at the securities cash flow slide, should we just assume that you said to pay down FHLB and as we move forward, should we assume that securities are smaller as a percentage of assets and that wholesale funding goes lower?

好的。那挺好的。當我們查看證券現金流量下滑時，我們是否應該假設您說要償還 FHLB，並且隨著我們的前進，我們是否應該假設證券佔資產的百分比較小，並且批發融資會降低？

As it is for loan growth, we'll be paying down our funding.

由於是為了貸款增長，我們將償還我們的資金。

Yes. And we expect loan growth to be pretty modest into the back half of the year.

是的。我們預計今年下半年貸款增長將相當溫和。

Okay. And I guess just finally for me. When you look at the rollout of cards that you're talking about, how is the proposed legislation, the proposed Durbin legislation on interchange, does that impact your timing or your enthusiasm for that product?

好的。我想對我來說終於是這樣了。當您看到您正在談論的卡的推出時，擬議的立法，擬議的杜賓交換立法，這是否會影響您的時間安排或您對該產品的熱情？

No.

不。

No.

不。

So if for some reason that went through, that wouldn't change the economics of rolling that out?

那麼，如果由於某種原因發生了這種情況，這不會改變推出該產品的經濟效益嗎？

Well, the thing is that, first of all, I'll be honest with you, I am not fully aware of the new amendment law that you're talking about because Durbin usually is on debit cards -- was on credit cards. But if you're going toward credit card, it is going to hurt the economics of the product.

嗯，問題是，首先，我對你說實話，我並不完全了解你所說的新修正案，因為德賓通常使用借記卡 - 信用卡。但如果你選擇信用卡，就會損害產品的經濟效益。

Okay. Yes, he's -- there's a proposed legislation to have the interchange impact credit cards as well. So it feels like it's a long shot, but it seems like they're trying to sneak it in on must-pass legislation. So.

好的。是的，他是——有一項擬議的立法可以讓交換也影響信用卡。所以感覺這希望渺茫，但他們似乎正試圖將其納入必須通過的立法中。所以。

That will have an impact on us and every other bank.

這將對我們和其他所有銀行產生影響。

Your next question comes from Brody Preston from UBS.

您的下一個問題來自瑞銀集團的布羅迪·普雷斯頓。

My question is on the NII guidance. So looking at that, it kind of implies flattish NII in the back half of the year. I was just curious if there are any factors or any levers you could pull that would cause it to be either above or below that?

我的問題是關於國家信息基礎設施指南的。因此，從這一點來看，這有點意味著今年下半年的NII將持平。我只是好奇是否有任何因素或槓桿可以導致其高於或低於該值？

The only factor would be is really, as we've touched back in the past, it's really based on our assumption of deposits right now, deposits balances have been stable since the end of April to date. So if deposits continue to perform the way we think they're going to perform seasonal through the remainder of the year or growth that should be stable.

唯一的因素是，正如我們過去所提到的，這實際上是基於我們目前對存款的假設，自四月底至今，存款餘額一直保持穩定。因此，如果存款繼續按照我們認為的方式表現，那麼它們將在今年剩餘時間內表現出季節性或增長應該是穩定的。

Got you. And then just on the -- on that metro office construction project, I was just hoping for a little more color on that, like what metro was it in? And any details you can give on that one plus. Are there any updates on the 2 CRE NPLs from last quarter?

明白你了。然後就在那個地鐵辦公室建設項目上，我只是希望能有更多的色彩，比如它在哪個地鐵裡？以及您可以提供有關該一加的任何詳細信息。上季度2宗商業地產不良貸款是否有更新？

So the metro office that we talked about today was the one that was in Seattle that we talked about. And we have a qualified new tenant going into that. We took a charge-off wrote down to level and it's -- it should -- and we had some more equity coming from the investors. So from this time forward, we're looking at that, it should perform going well going forward, but it did cost us a little bit to get it into that position.

所以我們今天談論的地鐵辦公室就是我們談論的西雅圖地鐵辦公室。我們有一位合格的新租戶參與其中。我們將沖銷減記至一定水平，這是應該的，而且我們從投資者那裡獲得了更多的股權。因此，從現在開始，我們正在考慮它，它應該會在未來表現良好，但我們確實花了一點錢才讓它達到這個位置。

So that was the one that we talked about last quarter. And so it should be resolved the one in Seattle.

這就是我們上季度討論的問題。所以西雅圖的問題應該得到解決。

Understood. And then just last one for me. On the expense base, is there any other opportunities to rationalize that outside of the mortgage that you guys announced this quarter?

明白了。然後是我的最後一個。在費用基礎上，除了你們本季度宣布的抵押貸款之外，還有其他機會來合理化費用嗎？

We continue to look at that as their staff turnover. We continue to look at the fact that are they needed? And part of the goal we had this year for Interstate we're working on, when we don't have any kind of estimates on that is that we're looking at a process to automate some manual processes in the back room, a number of processes are done and then reentered into the operational groups. So we're looking to automate that, so it goes -- flows straight through. So there are some possibilities to eliminate some staff and operations as we modernize some of the processes.

我們繼續將其視為他們的員工流動率。我們繼續關注這樣一個事實：他們需要嗎？今年我們正在製定的州際公路目標的一部分是，當我們對此沒有任何估計時，我們正在尋找一種流程來自動化後台的一些手動流程，一些流程完成後重新進入操作組。所以我們希望實現自動化，這樣就可以直接進行。因此，當我們對某些流程進行現代化改造時，有可能裁減一些員工和運營人員。

Your next question comes from Chris McGratty from KBW.

您的下一個問題來自 KBW 的 Chris McGratty。

This is Nick Moutafakis for Chris McGratty. Maybe just on the deposits. Just going back to the NIBs. Are you seeing primarily outflows from the commercial side on the NIB mix? And is there any catch-up in the retail, you think, on a go-forward basis?

我是克里斯·麥克格拉蒂的尼克·穆塔法克斯。也許只是存款。回到 NIB。您是否看到 NIB 組合中的資金流出主要來自商業方面？您認為，未來零售業是否會迎頭趕上？

Actually, seasonally, we're seeing commercial growth and the downward a little bit more on the retail side. So seasonally, that's what we're expecting, and we are seeing that our commercial balances are growing.

實際上，從季節性來看，我們看到商業增長，但零售方面的下降幅度更大。因此，從季節性來看，這就是我們所期望的，並且我們看到我們的商業餘額正在增長。

Okay. And then maybe just on the CDs, what's the duration on that portfolio now? Is it relatively short?

好的。然後也許只是在 CD 上，現在該投資組合的期限是多少？是不是比較短？

Well, most of the CDs that were put on is like 12 months or less, so the duration is pretty short.

嗯，大部分發行的CD都是12個月或更短，所以持續時間相當短。

Okay. Just trying to get a sense if the forward curve plays out and we start to get cuts in 2020 forwards, you kind of comment on how you think the margin reacts to rate cuts on the way down.

好的。只是想了解遠期曲線是否發揮作用並且我們開始削減 2020 年遠期利率，您對您認為利潤率對下降過程中降息的反應有何評論。

Well, right now, we would characterize ourselves as slightly liability-sensitive, and that we would benefit on a downward rate cuts.

好吧，現在，我們將自己描述為對責任稍微敏感的人，並且我們將從降息中受益。

(Operator Instructions)

（操作員說明）

Your next question comes from Jeff Rulis from D.A. Davidson.

你的下一個問題來自 D.A. 的 Jeff Rulis。戴維森。

Question on the criticized loan balance increase, that $20 million. What segments was that in? And was that acquired legacy credits? Just looking for a little color.

關於備受批評的貸款餘額增加的問題，即 2000 萬美元。那是在哪些部分？那是獲得的遺留學分嗎？只是尋找一點顏色。

It was acquired loan. It was -- it's in Arizona. It's a commercial.

是貸款收購的。那是在亞利桑那州。這是一個廣告。

Criticized loan.

受到批評的貸款。

Oh, criticized, I thought I was talking about [performing].

哦，批評了，我還以為我在說【表演】呢。

Yes. And so criticized loans, that was -- those were acquired and largely in the senior housing sector. And so again, we expect those to improve over the long term is because we're -- as the states kind of resolve the reimbursement rate issues, we could see some improvement in those credits.

是的。因此，批評貸款是——這些貸款是獲得的，而且主要是在高級住房領域。因此，我們再次預計，從長遠來看，這些情況會有所改善，因為隨著各州解決報銷率問題，我們可以看到這些信貸有所改善。

And we're forecasting -- just so you know, we're forecasting that our criticized loans should go down from here throughout the remainder of the year.

我們預測——正如您所知，我們預測我們受到批評的貸款將在今年剩餘時間內減少。

And that, Kevin, is that resolution of some of these credits? Or is that broad-based other improvement that you see?

凱文，這就是其中一些製作人員的解決方案嗎？還是您看到的其他廣泛的改進？

It's the resolution of these credits as well as other credits that are in that portfolio.

這是這些學分以及該投資組合中其他學分的解決方案。

Okay. I appreciate it. And you mentioned the elevated charge-offs this quarter were related to the office credit. Is that right?

好的。我很感激。您提到本季度沖銷增加與辦公室信貸有關。是對的嗎？

Yes, 85% of the charge-off pretty which was the office credit in Seattle.

是的，85% 的沖銷相當多，這是西雅圖的辦公室信用。

Great. And then Kevin and Marcy, you touched on it as well, but Kevin mentioned the margin in June and July was near 3%, I believe and just wanted to clarify, Marcy, you're kind of in the guide as well. Is that the expectation that you've moderated and so for the balance of the full quarter average could be down, but kind of hugging the 3% at this point?

偉大的。然后凱文和馬西，你們也談到了這一點，但凱文提到 6 月和 7 月的利潤率接近 3%，我相信並且只是想澄清一下，馬西，你也在指南中。您是否已經緩和了這一預期，因此整個季度的平均水平可能會下降，但目前仍處於 3% 的水平？

That is correct.

那是對的。

Okay. Great. And last one for me would just be interested in the competitive -- on the deposit side, not just your own customers sort of asking rate, but just playing the peer landscape, how aggressive do you see pricing amongst peers in your footprint?

好的。偉大的。最後一個對我來說只是對競爭感興趣——在存款方面，不僅僅是你自己的客戶的要價，而是在同行格局中發揮作用，你認為你的足跡中同行的定價有多激進？

Well, it varies geographically, but I would tell you that everybody is pretty much in the same place and kind of really where the short-term rates are. So it's -- I would say, pretty much everybody has moved to the same position. So it's pretty competitive.

嗯，它因地理位置而異，但我想告訴你，每個人幾乎都在同一個地方，並且確實處於短期利率的位置。所以我想說，幾乎每個人都轉移到了同樣的位置。所以它是相當有競爭力的。

Yes, it is very competitive and really for credit unions as much as anything that kind of tend to price up some deposits.

是的，這對於信用合作社來說是非常有競爭力的，就像任何傾向於抬高存款價格的東西一樣。

Presenters, there are no further questions at this time. Please proceed with your closing remarks.

主持人，目前沒有其他問題。請繼續您的結束語。

Again, thank you for your questions. And as always, we welcome calls from our investors and analysts. Please reach out to us if you have any follow-up questions, and thank you for tuning in today. Goodbye.

再次感謝您的提問。一如既往，我們歡迎投資者和分析師的來電。如果您有任何後續問題，請聯繫我們，感謝您今天的收看。再見。

Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines.

女士們、先生們，今天的電話會議到此結束。我們感謝您的加入，您現在可以斷開線路了。