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Glacier Bancorp Inc  (NASDAQ:GBCI)
Q1 2019 Earnings Call
April 19, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Glacier Bancorp First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference Mr. Randy Chesler, President and CEO of Glacier Bancorp. Sir, you may begin.

Randall M. Chesler -- President & Chief Executive Officer

All right. Thank you, Joel, and good morning, and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Barry Johnston, our Chief Credit Administrator; Angela Dose, our Chief Accounting Officer; and joining us by phone is Don Cherry, our Chief Administrative Officer.

So, let me first thank you all for joining us today, and let you know that we'll try to keep -- we'll try to avoid scheduling this call on a holiday going forward. So, I'll try to keep my comments brief this morning. Yesterday, we released our first quarter 2019 results, and this was a solid quarter with a well-balanced business performance, and we announced two acquisitions: First National Bank of Layton in Utah; and Heritage Bank in Reno, Nevada. That one being one of the largest transactions in the Company's history. These transactions will add over $1.1 billion in assets by year-end.

So, some highlights and some details from the quarters -- from this quarter. Earnings for the quarter were $49.1 million, an increase of $10.5 million or 27% over the prior year first quarter. Diluted earnings per share for the quarter were $0.58, an increase of 21% over the prior year first quarter. Average loan balances increased 4% annualized from the prior quarter, and 2% annualized point-to-point.

We also had core deposit growth of $70.1 million or 3% annualized. Notably, non-interest deposit growth was $49.9 million or 7% annualized. Our net interest margin of 4.34% of earning assets was up 4 basis points over the prior quarter, and up 24 basis points versus a year ago. Our yields on earning assets increased 10 basis points from the prior quarter to 4.74% and our loan yields increased 13 basis points from the prior quarter to 5.18%.

Return on assets for the Company was a very strong 1.67% for the quarter, a 1 basis point increase over the prior quarter. We also declared a regular dividend of $0.26 per share, our 136th consecutive quarterly dividend. And right after the quarter closed, we announced the signing of a definitive agreement to acquire Heritage Bank, a community bank in Reno, Nevada. This is a great community bank. One of the best performers in the industry with a stable low cost deposit base and excellent high quality, high margin loans. We believe the growth drivers in Nevada specifically in Reno are in place for the long term. Reno strategically located near Silicon Valley, in numerous large markets on the West Coast, offers a business-friendly environment and fantastic quality of life. So this new addition to the Glacier family will position us very nicely for future growth and we're really excited to expand our presence into this dynamic market and state.

So loan production for the quarter was $650 million, which was once again well distributed among all our divisions. Loan pay-downs were $615 million which is slightly elevated when compared to past seasonality, and it was primarily due to payoffs of land, lot and other construction loans. The loan portfolio ended the quarter at $8.3 billion.

We had a number of construction projects reach completion in the first quarter and payoff their loans without starting new activity. February, in Montana was one of the fifth coldest and fifth snowiest on record, with half the month in below zero territory. This and a pay-down of one of our larger construction loans for $33 million contributed to the slower first quarter growth. That being said, we still feel very good about our 8% loan target for the year as our western markets remain healthy and active, and our business model remains very effective.

Total investment securities of $2.778 billion decreased about $91 million or 3% from the current quarter and decreased $114 million or 41 basis points from the prior year first quarter. Investment securities represent 23% of total assets at the end of the first quarter compared to 24% at the end of the first quarter a year ago.

Once again our credit quality ratios improved in almost all categories across the board. I'm especially proud of the team's performance in this area. Early stage delinquencies as a percentage of loans at the end of the first quarter were 44 basis points, a decrease of 15 basis points from the prior year's first quarter. Net charge-offs for the quarter were $1.5 million or 2 basis points of total loans, compared to $2.8 million or 4 basis points of loans in the first quarter a year ago.

Non-performing assets as a percentage of subsidiary assets, at the end of the first quarter were 42 basis points which is 5 basis points lower than the prior quarter and 22 basis points lower than the prior year first quarter. At the end of the quarter, NPAs were $50.8 million, a decrease of $5.9 million or 10% from the prior quarter. We are very pleased to see this continued reduction in the level of NPAs, and as you know and as we've mentioned on prior calls, we've been working on this for quite some time. Our divisions did an excellent job working through these difficult credits, and we expect NPAs to be at this point stable around this level as we move forward.

The allowance for loan and lease losses as a percentage of total outstanding loans at the end of this quarter was 1.56%, which is down 2 basis points from the prior quarter and down 10 basis points from the first quarter a year ago. Provision for loan losses was $57,000 versus $1.2 million in the prior quarter. This reflects our continued very positive outlook on our portfolio and markets.

Core deposits ended the quarter at $9.4 billion. Total core deposits were up 3% annualized or $70 million from the prior quarter and non-interest bearing deposits were up $49.9 million or 7% annualized. The cost of these core deposits increased 2 basis points to a total of 19 basis points compared to 17 basis points for the prior quarter and 15 basis points in the prior year's first quarter. We ended the quarter with a loan to deposit ratio of 87%, essentially unchanged from prior quarter.

Total cost of funding for the current quarter was 43 basis points up from 36 basis points in the prior quarter and 35 basis points in the prior year first quarter. The increase in the current quarter was primarily driven by the increased cost of borrowed funds needed to mitigate deposit fluctuations early in the quarter due to seasonality. We had an increase in deposits later in the quarter and the borrowings were largely paid off before quarter end.

Our 14 divisions continued to do an outstanding job managing deposit costs specific to each of their markets, and we expect to continue to outperform our peers in this area.

Interest income for the quarter was $115 million which was about -- which was flat to prior quarter and increased $19.9 million or 21% over the prior year first quarter. Both of these increases were primarily attributable to interest rate increases on renewing and new loans and an increase in commercial loans. Interest income on commercial loans increased $1.3 million or 2% from the prior quarter and $18 million or 28% from the prior year's first quarter.

Our net interest margin as a percentage of earning assets for the quarter was 4.34%, compared to 4.3% in the prior quarter. The 4 basis point increase in the net margin was primarily the result of increased yields on the loan portfolio from 5.05% to 5.18%. And the current quarter net interest margin increased 24 basis points over the prior year first quarter net margin of 4.10%. The increase in the margin from the prior year first quarter was a result of the remix of earning assets, the higher yielding loans and improved interest rates on the loan portfolio.

Non-interest income for the quarter totaled $28.5 million, flat to the prior quarter, and an increase of $2.4 million or 9% over the same quarter last year. Service charges and other fees of $18 million, increased $1.1 million or 7% from the prior year first quarter. The increase was primarily due to the increased number of accounts from organic growth in acquisitions.

Gain on sale of loans decreased $159,000 or 3% from the prior quarter as a result of real estate seasonality in the extreme cold February weather which impacted purchase activity. Gains decreased $388,000 or 7% from the prior year first quarter. Non-interest expense for the quarter was $82.8 million, which increased $1 million or 1% from the prior quarter and $9.2 million or 13% over the prior year first quarter.

Compensation and employee benefits increased $2.3 million or 5% from the prior quarter, primarily due to annual salary increases and benefit adjustments, and increased $7 million or 15% from the prior year's first quarter primarily due to the increased number of employees from acquisitions. Other expenses of $12.3 million decreased $1.7 million or 12%, primarily due to a reduction in acquisition-related expenses.

Tax expense for the first quarter was $11.7 million flat to the prior quarter, increase of $3.3 million or 39% from the prior year first quarter. The effective tax rate in the first quarter was -- of 2019 was 19% compared to 18% in the prior year first quarter. Our efficiency ratio was 55.37%, a 243 basis point improvement over the prior year first quarter efficiency ratio of 57.8%, and a 144 basis point increase from the prior quarter efficiency ratio of 53.93%. We still expect the full year efficiency ratio to be between 54% and 55%.

Well, the first quarter represents another strong performance for the Company. In addition to delivering solid performance for the quarter, the Company announced the acquisition of First National Bank of Layton and Heritage Bank in Reno. And as I previously noted, these acquisitions will add over $1.1 billion in assets in 2019.

I should also add, we received all the regulatory approvals to proceed with the closing of First National Bank of Layton which will occur as planned at the end of this month. Our 14 division presidents and their teams across our seven states, as well as our senior staff continue to produce market leading results, and I'd like to thank them all for their commitment and drive to be the best.

That ends my formal remarks. I would now like to ask Joel to please open the line for any questions that you may have.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Jackie Bohlen with KBW. Your line is now open.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Hi. Good morning, everyone.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Jackie.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Randy, I wondered if you could provide us with just a reminder and update on what the impact of Durbin will be on July 1st and outside of the two acquisitions to some of legacy Glacier?

Randall M. Chesler -- President & Chief Executive Officer

Yes, outlook is really the same. So it does start to kicking in, in this July. And then for the first -- for 2019 about $8 million impact, and then going forward, between $17 million and $20 million is what we're estimating in 2020.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

And then that just -- is that related to acquisitions or just expectations for growth at the combined franchise that jumped in, because if I doubled that $8 million against $16 million...

Randall M. Chesler -- President & Chief Executive Officer

Yes, it's a little of both. Yes.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Okay. That's helpful. Thank you. And then outside of seasonality, understanding it was the cold winter everything that happened, was there anything unusual in fees that occurred in the first quarter?

Randall M. Chesler -- President & Chief Executive Officer

No. No, we hate to bring up we had a long discussion about it, but it was just such a cold February with record-breaking temperatures and record-breaking snowfall and our customers, our builders tell us that when the temperature drops below zero, where it was half more than half the month or about half that month, they stop all activity, equipment breaks, people get injured, so things really stop at that point. And that had a bit of an impact on our volume.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Yes. Yes. No, I understood. That's not a condition anyone should be working in. And then, I guess, when you think about the go-forward volume, particularly in terms of mortgage banking, how are you thinking about 2019 versus 2018?

Randall M. Chesler -- President & Chief Executive Officer

Yes, we feel very good about our mortgage business. We're having a very strong start to this quarter, so we're happy to see that. We see refinances starting to actually pick up given the interest rates drop a bit. So, on a full year basis, once again we feel it's going to look a lot like 2018 just about the same kind of range of volumes. So, very, very stable.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Okay. And is there a possibility that if refinance volume dependent on rates obviously continues to pick up, but we might see even a little bit higher in '19 or are there other forces that might offset some of that pick up?

Randall M. Chesler -- President & Chief Executive Officer

Well, our own -- a bit of a headwind here is just supply. So, we continue to rest within, in many of our markets lack of supply. And so -- and also labor to build is in tight supply. So that's a bit of a limiter on really over-performing against the prior year. And I think when we look at the amount of refis, rates would have to drop little bit more for that to open up significantly. So, I would say there is a possibility Jackie, but we just don't see that as being a material change to the outlook.

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Okay. Yes, that's great color. Thank you, Randy. I will step back now.

Randall M. Chesler -- President & Chief Executive Officer

All right. You're welcome.

Operator

Thank you. And our next question comes from Gordon McGuire with Stephens, Inc. Your line is now open.

Gordon McGuire -- Stephens, Inc. -- Analyst

Good morning, gentlemen.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Gordon.

Gordon McGuire -- Stephens, Inc. -- Analyst

So, maybe just to start on the NIM. Ron, do you have how much the accretion in the quarter was? And then maybe also the yield on the new originations this quarter?

Ronald J. Copher -- Chief Financial Officer

Yes. So, on the new originations, that is north of 550 and that hopefully will continue. When you say the accretion, you're talking the purchase accounting discount accretion?

Gordon McGuire -- Stephens, Inc. -- Analyst

Yes.

Ronald J. Copher -- Chief Financial Officer

Yes, that's same as it was in the fourth quarter, 5 basis points.

Gordon McGuire -- Stephens, Inc. -- Analyst

Got it. And then maybe just talking around the NIM outlook for this year. In January, you sounded pretty positive, just giving your loan repricing dynamic and how it really takes kind of the second year following rates to reprice. In the same vein though, I think most of your loans are priced off the five year. So, I'm wondering just with the five-year, where it's at, if your NIM outlook versus kind of where it was three months ago, has that moderated any? And maybe if you could just talk about the repricing dynamics in your loan book and just the expectation for those yields throughout the year?

Ronald J. Copher -- Chief Financial Officer

Yes. So, there's certainly momentum and really upward bias. But you're correct, most of our portfolio is tied to the five-year Federal Home Loan Bank advances, and pulled the rates this morning. So just from 930 of last year, we've dropped through last night basically 50 basis points. Now we're starting to see that come back up, but that's one of the key drivers. So, we still feel there's upward bias, but two things we're also observing. The credit unions have certainly done part of those irrational characters, and we've spoken to it. They're not everywhere, but where they are, they act up if I may say that. But we're also seeing in some of the bank space as well. And we're not going to compete with irrational pricing.

So, I'll borrow the word Randy said, the headwinds are there, but we really feel that with the addition of Layton and Heritage, that we will see expansion on our net interest margin. In fact, collectively they'll bring 2 basis points to the margin. So we still feel good about it, but I don't want to hazard a number. It's too early to do that.

Gordon McGuire -- Stephens, Inc. -- Analyst

Got it. And then just on taxable securities yields, I think, they were up 19 basis points this quarter. I'm wondering if anything changed as far as your strategy around the investment portfolio, with the change in rate outlook this quarter, maybe can you talk about what you're buying at this point? And whether maybe that investment was early in the quarter, late in the quarter, or just how can I think about maybe any carry over into the second quarter?

Ronald J. Copher -- Chief Financial Officer

Yes. So during -- on the taxable investments, we've been buying selectively commercial mortgage-backed securities. And then just going out a little bit longer with the duration, but nothing meaningful. And so the impact of that was really during the fourth quarter last year. We started buying the securities that we thought we want to have and decided to put them on. And so we're having for the full year. So that's really, really the impact there.

Gordon McGuire -- Stephens, Inc. -- Analyst

Got it. And then just lastly, the tax rate guidance. Are still thinking around a 20% level, just given you come in below that this quarter? Is that still good?

Ronald J. Copher -- Chief Financial Officer

Well, I went back and looked at the transcript. So, what I said was, for the full year 20% would be the rate, and truly that's in connection with the fact -- when you bring on that much income from Heritage and Layton, they don't have a big unit portfolio, and so our municipal investments are trending down. We actually sold some of the lower yielding ones in the first quarter. So, 20% for the full year, and then you could ramp up -- quarter-over-quarter, that's just going to get steady, higher to where it'll average out 20% for the full year.

Gordon McGuire -- Stephens, Inc. -- Analyst

All right. That's all I have. Thank you, guys.

Operator

Thank you.

Ronald J. Copher -- Chief Financial Officer

Welcome.

Operator

And our next question comes from Jeff Rulis with D.A. Davidson. Your line is now open.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Thanks. Good morning.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Jeff.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Just wanted to touch on and not to focus too much on the weather, but the -- and you did reiterate the target for loan growth of 8%. But any sense that there was a little bit of pent-up sort of potential that may be translated or pushed into the second quarter, given weather kind of a lumpier. I guess, early returns on the second quarter, you're seeing some pretty good activity on that front from a loan growth perspective?

Randall M. Chesler -- President & Chief Executive Officer

No, I wouldn't call it pent-up demand. I actually think that what we're seeing is a little digestive capacity. The projects have been built. They're being utilized, they're being filled, they're being sold, but the economies are still good. But, I think, the velocity, and now there's a bit of a digestive period, and that I think is what we see a little bit now with our customers, and that -- that's why I say, we still feel good about the 8%, but I don't think we're going to overachieve that.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Okay. So, it was more -- I think, you said $615 million in pay down. So maybe just timing, it was a kind of a lumpy. Okay, fair enough.

Randall M. Chesler -- President & Chief Executive Officer

Yes. And the construction loans paid off, and because of that both the digestive capacity and the weather we didn't see a lot of new activity start-up.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Got it. Okay.

Randall M. Chesler -- President & Chief Executive Officer

We see some of it now. We're seeing some of it now, but I want to give you the right color. I wouldn't call it a surge of activity.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Got it. Okay. Other income, that line item was up a little over $1 million sequentially. I don't know, if that was a function of Q4 being a little light, but anything in that line item to note?

Ronald J. Copher -- Chief Financial Officer

Yes. Gordon, it's just (Multiple Speakers) I'm sorry, Jeff. Forgive me. Just gain on sale of our OREO income, we had some income coming from our equity investments, and that can vary from time to time, but nothing -- nothing that really sticks out.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Okay. Maybe just one last one for Barry. On the provisioning level, wider net growth, credit certainly trending well. Just any thoughts on the provisioning level. It's a wide range, but any commentary on that front?

Barry L. Johnston -- Chief Credit Administrator

You know, as always we look at it every quarter end, and depending on our credit metrics and growth in the portfolio or non-growth, we make the adjustment accordingly, and given some improvement in NPLs and minimal loan growth. We adjusted the provision accordingly.

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Okay. Thank you.

Operator

Thank you. And our next question comes from Michael Young with SunTrust. Your line is now open.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Hey, good morning, everyone.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Michael.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

I wanted to start with a quick follow up actually on the provision question. Just as we look forward to maybe 2020 and kind of a post-CECL environment, when you guys are still at over 1.5% reserve, and now the NPA is being so low. It just doesn't seem like there'd be any upward pressure from kind of the implementation of that in terms of the one-time hit or even hit maybe your provision run rate going forward. But I don't know if you have any early indications that you're willing to share at this point just qualitatively?

Randall M. Chesler -- President & Chief Executive Officer

Well, so CECL, we're still -- you know, we're proceeding with it, we're pulling it all together. We were starting to do our run. So, I think, it's a little early to tell. But I think, at a gut level, I think, you're probably directionally correct. But I can't tell you that we have the numbers to support that at this point. But that feels about right. We feel -- we're very well positioned, very well reserved. We don't expect a lot of surprises to come out of CECL.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Okay. And then just maybe switching gears to the deposit front, you guys have very good demand deposit inflows this quarter. That's been pretty light, I would say, generally across the industry with a lot of people having demand deposits go down. I know you guys obviously stayed focused there. But I was wondering if there were any additional benefits from just some of these projects that did pay off. And on the loan side with some cash flowing back into the bank from those or was it really just kind of core growth?

Randall M. Chesler -- President & Chief Executive Officer

Yes, it seems to be pretty spread out. And I'd have to say more core growth. I don't think there was any particular kind of one source. So, it seemed to be spread out and pretty much just consistent with our long term strategy of building those kind of brick by brick. And increased, I think, Barry has turned up the discussions around loans and making sure deposit relationships follow.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Okay. And then last one for me, maybe just Ron on the duration kind of on that five-year loan book, is it pretty close to five years or is it much shorter more like a three-year kind of duration? I'm just trying to think about the vintage and pricing of the loans that are running off versus as you make these new loans at higher pricing dynamics like kind of when the shift in the five-year rates is going to actually starting to flow through into loan yields?

Ronald J. Copher -- Chief Financial Officer

Yes, it's closer to five years, and anything, it's come down a little bit. But it's hovering around five-year duration.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Okay. So, even with the decline in the five-year rate over the last six months, as you mentioned, I mean, we still got multiple years of repricing higher on the loan front going forward. Is that fair?

Ronald J. Copher -- Chief Financial Officer

Yes. Very fair.

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Okay. All right. That's all for me. Thanks, guys.

Ronald J. Copher -- Chief Financial Officer

Welcome.

Operator

Thank you. And our next question comes from Matthew Clark with Piper Jaffray. Your line is now open.

Matthew T. Clark -- Piper Jaffray -- Analyst

Good morning.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Matthew.

Matthew T. Clark -- Piper Jaffray -- Analyst

Just on deposit rates, do you happen to have the spot rate on your interest bearing deposits at the end of March, relative to the 34 basis points in the quarter?

Randall M. Chesler -- President & Chief Executive Officer

Interest bearing. The overall core was up to and most of that was in money market and CDs. So, I don't know, if that's giving answer to your question.

Matthew T. Clark -- Piper Jaffray -- Analyst

Yes. Ron, I guess, what I'm thinking about is just with the Fed on hold, from here is there less pressure to price up at this point. And may we start to see some stabilization of deposit costs, and do you feel that because you're still below the market you're just going to need to continue to kind of play a little bit of catch up here for the foreseeable future?

Randall M. Chesler -- President & Chief Executive Officer

(inaudible) whole -- in all our markets we're at a very interesting point, where, yes, the Fed has signaled stable, probably no change to possible decrease. Yet at the same time, banks in the market are -- many of them are loaned up, past the 100% loan to deposit and need deposits. And so that's a bit of a headwind. But our core -- what we're seeing is our core deposits remain very, very good, and especially our transaction accounts really not subject to a lot of pressure. In some markets, and in this quarter, it's really -- we price individually the 14 divisions. Two in particular had a little more pressure, where they decided to make some changes to their pricing. And I think we're -- it will depend on the actions of the Fed and kind of where I think loan demand goes in the industry to really tell us where -- if there will be continued pricing. We don't expect a material change. I think, it's more degrees of pressure on it.

Matthew T. Clark -- Piper Jaffray -- Analyst

Okay. And then when you look at your criticized classified trends, I mean, charge-offs were low this quarter, non-performers down, provision obviously lighter than expected. But can you give us a sense for any migration in your criticized classified loans, and you know what, if there is some migration or some deterioration, what -- where it resides?

Ronald J. Copher -- Chief Financial Officer

Yes. The only challenge that we're seeing right now is with our -- some of our agricultural credits primarily hard grains, prices have moved up recently, but not to a point where those borrowers are able to clear their operating lines, depending on the location and other factors, whether being one of the biggest ones. So that's not the only place that we're seeing it. The rest of the portfolio is -- we're very pleased with the performance there, and have seen some improvement across the other product lines.

Matthew T. Clark -- Piper Jaffray -- Analyst

Great. And maybe Barry as well on just the discount on the loan portfolio that we can adjust the reserve or gross it up this quarter for acquisitions?

Barry L. Johnston -- Chief Credit Administrator

Okay. It's $24 million.

Matthew T. Clark -- Piper Jaffray -- Analyst

Okay. Thank you.

Operator

Thank you.

Barry L. Johnston -- Chief Credit Administrator

You're welcome.

Operator

(Operator Instructions) Our next question comes from Tim Coffey with FIG Partners. Your line is now open.

Timothy N. Coffey -- FIG Partners LLC -- Analyst

Great. Thank you. Good morning, everybody.

Randall M. Chesler -- President & Chief Executive Officer

Good morning, Tim.

Timothy N. Coffey -- FIG Partners LLC -- Analyst

Hey, Randy, in your prepared remarks you talked about having optimism on forward trends and credit quality for your markets. And I'm wondering what markets and/or data points you're using to kind of support your optimism?

Randall M. Chesler -- President & Chief Executive Officer

Well, two things. I'll let Barry follow, but I mean our NPAs, we continue to improve with NPAs. A lot of these projects are being sold to developers who intend to develop those properties. I think that's very positive. They're buying at a very attractive price, but then most are -- they intend to make investments into, and I think that's a pretty good indicator. In addition, you've seen our delinquency percentages drop down quarter-over-quarter, so we're showing better performance than we did a year ago. And then when we look out at our customers and see the health of the balance sheet, you know, at this point, we're constantly looking to see if there are red flags. We just see a very good environment at this point. Barry, do you have anything to add.

Barry L. Johnston -- Chief Credit Administrator

Yes, with across the markets, all the markets are still active. We have some good markets with some pretty strong growth. We're going to be coming into two new markets with -- in Utah and Nevada, which I think are going to bode well for us. So, we're staying on the positive side as far as market growth and respective production from those markets.

Timothy N. Coffey -- FIG Partners LLC -- Analyst

Okay, great. Another question was, can you remind, what the magnitude of the seasonality is within the non-interest expenses?

Randall M. Chesler -- President & Chief Executive Officer

Let's see. So, non-interest expense for the first quarter, we usually see a bit of an uptick because all the reset of the comp hits really that starts to hit in the first quarter. So, that's pretty typical. I think, what we saw this quarter is pretty much what the past pattern has been.

Timothy N. Coffey -- FIG Partners LLC -- Analyst

Okay. All right. Yes, the rest of my questions have been answered. Thanks.

Randall M. Chesler -- President & Chief Executive Officer

You bet. Thank you.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Randy Chesler for any closing remarks.

Randall M. Chesler -- President & Chief Executive Officer

Well, thank you, Joel. So, I want to thank everybody for dialing in today on what's the holiday for a number of folks on the call. We want you to all have a great day and a wonderful weekend. So, thank you.

Operator

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

Duration: 36 minutes

Call participants:

Randall M. Chesler -- President & Chief Executive Officer

Jacquelynne Bohlen -- Keefe Bruyette & Woods Inc. -- Analyst

Gordon McGuire -- Stephens, Inc. -- Analyst

Ronald J. Copher -- Chief Financial Officer

Jeffrey A. Rulis -- D.A. Davidson & Co. -- Analyst

Barry L. Johnston -- Chief Credit Administrator

Michael Young -- SunTrust Robinson Humphrey -- Analyst

Matthew T. Clark -- Piper Jaffray -- Analyst

Timothy N. Coffey -- FIG Partners LLC -- Analyst

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