Ladies and gentlemen, thank you for standing by. Welcome to the Heritage Financial First Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, CEO, Brian Vance. Please go ahead. .

Thank you, Ryan. I'd like to welcome all who have called in and also who may listen later in our recorded version. .

Attending with me this morning is Don Hinson, our Chief Financial Officer; Jeff Deuel, President and Chief Operating Officer of Heritage; as well as Bryan McDonald, President and CEO of Whidbey Island Bank..

Our earnings press release went out yesterday afternoon. Hopefully you've had an opportunity to review the release prior to the call. As we go through the prepared comments as well as a later Q&A version, please refer to the forward-looking statements in the press release that went out yesterday..

I'll just start with some brief highlights of our first quarter. Diluted earnings per share were $0.16 for the quarter ended March 31, 2014 compared to $0.04 per share for the linked-quarter ended 12/31/13 and $0.19 for the prior year quarter ended March 31, 2013. .

Shareholders of both Heritage Financial Corporation and Washington Banking Company approved the merger of the 2 companies during this past quarter. And also, we opened a de novo branch in East Vancouver, Washington in January of 2014..

I'll now turn the call over to Don Hinson, who will take a few minutes and cover our balance sheet and income statement changes. .

Thanks, Brian. Total assets -- I'll start with the balance sheet. Total assets increased $3.4 million from the prior quarter end and were $1.66 billion at March 31. Net aggregate loans, including both originated and purchased loans, increased $4.6 million during the quarter. .

Net originated loans increased $16.2 million or 6.8% annualized. The increase from the prior period was primarily due to increases in non-owner-occupied commercial real estate loans, $7.2 million; construction loans related to 5 or more family residential and commercial properties, $4.7 million; and consumer loans, $2.5 million..

Net purchased loans decreased $11.7 million during the quarter. Purchased non-covered loans decreased $9 million, while purchased covered loans decreased $2.7 million. .

Full investment securities decreased $21.3 million during the quarter. The decrease is due to a sale of $40.3 million of investment securities, as well as maturities and repayments of $7.6 million, partially offset by purchases of $27.7 million. A net gain of $180,000 was recognized on the sale of investment securities. .

The purpose of the sale of securities was to clean up small positions in the portfolio. A total of 178 securities were sold with an average balance of $226,000 and many positions were much smaller than that size..

Total deposits increased $5 million during Q1. Deposit retention from consolidated or closed branches last year is generally exceeding or -- meeting or exceeding original projections. .

Our non-maturity deposit ratio continues to be a very strong 78.8% of total deposits and our percentage of noninterest demand deposits to total deposits was 25.1% at quarter end..

Total stockholders equity increased slightly to $216.4 million. The ratio of tangible common equity to tangible assets increased slightly to 11.4% from 11.3% in the prior quarter. .

Our tangible book value per common share increased slightly to $13.35 at March 31 from $13.31 at December 31. .

During Q1 2014, there were no shares repurchased under the current repurchase program..

Moving on to the net interest margin. Our net interest margin for Q1 was 4.48%. This was a 10-basis-point decrease from 4.58% in Q4. The decrease is due to lower contractual loan note rates, as well as lower effects of discount accretion. .

The effect on the net interest margin of incremental discount accretion over stated note rates on the acquired loan portfolios was 25 basis points for Q1 2014 compared to 38 basis points for Q4 2013. Without the effects of incremental discount accretion, the net interest margin increased 3 basis points to 4.23% in Q1 compared to 4.20% in Q4. .

The cost of funds for Q1 remain the same at 33 basis points when compared to Q4. Likewise, the cost of all deposits remain the same quarter-over-quarter at 25 basis points..

Due to the continued low rate environment, we expect core margins to continue their declining trend in the near future. However, due to the merger with Washington Banking, we are expecting to experience increases in discount accretion..

And moving on to non-interest expense. Non-interest expense was $14.8 million in Q1 compared to $18.5 million for Q4. .

During Q1, there were approximately $793,000 in initiative costs related mostly to the Valley Bank integration and the proposed Washington Banking merger. This is a decrease from approximately $3.2 million of costs in Q4 of 2013. .

The after-tax Q1 earnings impact of these initiative costs were $581,000 or $0.03 per share..

Removing the effects of the initiative costs, remaining non-interest expense decreased $1.3 million from the prior quarter. .

As a result of prior year initiatives, our ratio of non-interest expense to average assets continues to improve. Adjusted for initiative costs, the ratio decreased to 3.38% in Q1 2014 compared to 3.63% in Q1 2013..

Jeff Deuel will now have an update on overall loan growth, as well as some comments on current initiatives. .

Thanks, Don. With regard to loan growth, during first quarter 2014, we booked a total of $40.8 million in new loans compared to $63.2 million in Q4 2013 and $59.2 million in Q1 2013. These totals represent new loans to new borrowers and new loans to existing borrowers. .

The average note rate for new loans was 4.88% in Q1 2014 compared to 4.69% in Q4 2013 and 4.53% in Q1 2013..

Loan production was down in the first quarter, which is consistent with historical experience. Fourth quarter is generally stronger as customers move to wrap up loans closing prior to year-end. .

First quarter 2013 was stronger than normal due to a special loan promotion that lifted loan production for the first and second quarters of last year. .

Generally, loan production tends to pick up in the latter part of the first quarter and our average pipeline at the end of the first quarter increased about 9% over the fourth quarter levels. So we are trending in the right direction..

With regard to current initiatives, as you all know, we had a very busy 2013, managing a variety of strategic initiatives across the bank, including 2 acquisitions, a charter collapse of our sister bank in the Yakima region, several branch closures and of course, system conversion. .

We began planning for the integration of the Heritage and Whidbey late in the fourth quarter of 2013, and representatives from both banks made extremely good progress during the first quarter.

The new organizational structure has been developed, and although there are some decisions still to be made, for the most part the heavy lifting is done and the teams are working well together. I believe our similar cultures have helped to make the integration process easier..

The conversion is scheduled to occur in the fourth quarter, and, at that time, the Whidbey core system will be converted to the Heritage core system..

And now, Brian will have an update on loan quality, capital management and some closing comments. .

Thanks, Jeff. I'll start first with loan quality comments. Nonaccrual originated loans increased $3.7 million from the prior quarter. The increase in nonaccrual originated loans was due to an addition of $4.4 million in new nonaccrual loans, partially offset by $629,000 of net principal reductions and $88,000 in transfers to other real estate owned. .

The increase is due substantially to 1 residential construction borrower relationship in the amount of $4.2 million that was downgraded during the quarter ended March 31,2014. We are confident with this legacy relationship that goes back many years, there will be little to no loss exposure with this relationship..

OREO decreased $275,000 during Q1 to $4.3 million. The decrease was due primarily to the disposition of 2 properties totaling $520,000, which sold for a small gain, partially offset by the addition of 2 properties totaling $218,000. .

The ratio of the allowance for loan loss to non-performing originated loans decreased to 199% from 329% at the prior quarter end. Even though our overall allowance of originated loans has been decreasing, we still maintain a very healthy allowance at 1.76% to originated loans..

Some comments on capital management. We have continued our $0.08 quarterly cash dividend. However, during Q1, we declared an additional dividend in March or it was -- let me back up here.

We changed the timing of our first quarter dividend, where we would typically declare in April, we declared it in March as a result of the anticipated merger with Washington Banking. .

As a result of the pending Washington Banking Company merger, it is not likely we'll engage in any special dividends or stock buybacks until we reassess our capital strategies some time after merger closing. .

As a reminder, when we announced the proposed merger, we indicated our pro forma TCE was estimated to be above 9% following closing. .

Our focus for the remainder of 2014 are several points here. We continue to see general economic improvement across the Pacific Northwest region, and we continue to believe 2014 will show improvements over 2013. .

We will continue our earlier guidance on 2014 originated loan growth in the 5% to 7% growth area. Q1 annualized originated loan growth was 6.8%..

We will continue to focus on efficiency improvements. I'd like to reiterate a metric that Don shared with you earlier. Improving our adjusted non-interest expense to average asset ratio from 3.63% in Q1 2013 to 3.38% in Q1 of 2014 represents significant progress, and we are continuing to focus on improving this important metric..

As you will remember, we are concentrating on assets per employee for 2 primary reasons. This metric focuses on growth in assets while also focusing on improvement in FTE to achieve desired levels. .

We improved assets per employee at Heritage from $3,707,000 at the end of 2012 to $4,448,000 as of 12/31/13 and further improved assets per employee to $4,644,000 at end of Q1. .

Assets per employee at Washington Banking Company at the end of Q1 2014 was $3,834,000. And by the end of this year, we would like to see the combined company back to where Heritage Financial ended 2013 in relationship to assets per employee..

We intend to focus on increasing our SBA loan originations. And with our knowledge and support, Washington Banking Company recently hired a team of SBA lenders and support staff. .

We are optimistic that we can achieve the cost saves we originally announced with the Washington Banking Company merger by the end of 2014. We also believe we can achieve growth synergies from the merger. .

Additionally, we believe we're off to a very positive start to our integration efforts, and are confident we can have successful systems conversions in October. .

Tomorrow, May 1, marks the official and legal merger of Heritage Financial Corporation and Washington Banking Company, and we're truly excited about the opportunities of the go forward combined company..

That completes our comments and I would welcome any questions you may have and would once again refer to our forward-looking statements in our press release as we answer any of these questions dealing with forward-looking comments. So Ryan, if you'd please open the call for questions, we'd be happy to take some. .

[Operator Instructions] First in queue is Jeffrey Rulis with D.A. Davidson. .

Brian, just on that loan growth guidance, 5% to 7% versus 7% this quarter, a growing pipeline and I guess, Washington Banking Company's 11% growth in Q1, is that suggesting that the back half or some slowing down of current activity or I guess, what's embedded in that guidance number?.

Jeff, I guess we might be a little conservative with our guidance in what we achieved in Q1, as well as what would be achieved in Q1 as you noted. I think that as we bring the companies together, I truly am excited about the synergies that I think that we will build as a result of the 2 companies coming together.

And also, I made some comments about an increasing and important SBA strategy, as we move the company together, we have those folks in place currently. So I think I would just say that I think there's a good chance that we could exceed guidance, I guess, maybe a little bit of under promise and over deliver, but I certainly understand your point.

And while I say that, I do remain optimistic about growth potential for the last half of the year. .

Great. And then, I guess, if you can, a lot of moving pieces on the expense front.

But if I were just to exclude close to the $800,000 in expenses this quarter, is that a good legacy run rate? And then I don't know if you could touch on kind of additional merger costs maybe in Q2 that you may incur?.

Q1 of last year was 3.63%, Q1 of this year is 3.38%. So that takes into account of the asset growth as well as the expense improvement initiatives adjusted for the noise that you're referring to. So I think that's an important number to keep in mind.

As I've said a couple of times now, I think it does show some very significant improvement in realizing that we still have improvement yet in front of us. So with that as maybe just a big picture comment, I'll ask Don to maybe give a little more color. .

Sure. Again, just sort of a reminder, the $793,000 that we have listed here is somewhat limited to some specific type of expenses. There are third-party costs that are related to specific retention bonus and severance amounts paid. So they're not -- I wouldn't call them necessarily all-inclusive of other maybe cost savings that we may get.

At the same time, when you're talking about a core run rate, I think that we're pretty focused on this merger at this point. I think as a standalone, I think we could possibly be managing a little bit differently if we weren't going through a merger.

So I think it's a decent proxy for a run rate but I think it could be lower as we get into a combined organization. .

I think the progress is encouraging despite the noise and I guess, given that progress and circling back to the guidance on the -- I think you had combined 10% cost saves, does that include the progress that you've made since deal announcement? I mean, you're sort of moving the bar a little bit, but do we assume 10% from completion of the merger tomorrow or is it from the cost levels on announcement?.

I think, and maybe just to clarify, the cost efficiencies -- excuse me, the efficiencies of the cost reductions was 20% total company. So just as a point of reference there, you could break that down and 10% cost efficiencies will come from either side of the company.

But 20% on a combined basis, I think that's an important number to make sure that we clarify going forward. And I think just in terms of, again, getting back to a number of the -- not only the merger-related expense but the expense initiatives that we had in place last year that spilled over a little bit into Q1.

And again, I understand the difficulties in establishing run rate. I think probably, when we -- to just go back and to clarify, that 20% was against the combined non-interest expense of the company at the time that we announced the merger, which was using Q3 data.

So in terms of that focal point and how you would calculate that expense save, I think that's where you should focus.

Don, am I...?.

Yes, I think Brian [indiscernible] we announced, I think it does include Q3 but it was a run rate, I think, by calculation. .

Our next question in queue will come from Jackie Chimera with KBW. .

Looking to the improvement that you had on the average rates on new loans booked, was that a mixed issue -- issue is the wrong word, but was that a mix generation or was it just you're booking loans at higher rates now?.

Maybe a little bit of both. Again, it might depend on what you're comparing that to. The 4.88% in Q1 of '14, if we're comparing that to the 4.53% of same quarter last year, Q1 of '13, there's a substantial improvement there. But I will note, as Jeff noted in his comments, and he can add some color as well.

But last year, we had where -- and you'll recall that we were booking some fixed rate loans, which I think pulled that Q1 yield down a little bit last year. So had we not been booking those fixed rate loans last year, I think it probably would've been closer to the 4.88% that we experienced in Q1. Jeff, any additional [indiscernible].

Hopefully that helps Jackie. .

No, it does.

So what ratio is, I guess, fixed versus variable rate loans did you book in 1Q?.

Well, let me start first with defining fixed-rate loans. When we talk about fixed-rate loans, we do book fixed-rate loans today and have throughout the history of our company, generally with fixed rates fixed for no longer than 5-year terms. Last year, at this time, we were doing some 7- and 10-year fixed.

So when we're talking about fixed this year -- or at this point, it's back to our traditional definition of 5 years and less, and we continue to -- that's what we're doing. We're booking very few, if any, loans that would exceed the 5-year fixed. As to the split, I don't have that information in front of me, Jackie.

I'm just -- anecdotally, I'm going to probably say that it's about a 50/50 split of variable rate versus fixed of new production going into the portfolio. I could be off a little bit but I think that's going to give you a good proxy. .

Okay.

And that's probably pretty similar to fourth quarter's production?.

Yes, it would be. .

Okay. And then you mentioned that the pipeline was up 9% from last quarter.

Is that just seasonality or are some new initiatives starting to pay off in there?.

It's primarily seasonality, Jackie. .

Okay.

And I guess, is there any category in particular that you think growth may have been a little bit slow in fourth quarter, where -- or not in the fourth quarter, but all of 2013 where you think 2014 you could really see a pickup?.

I guess I would say -- I guess the only thing I can say is that we've worked really hard to get our lenders organized in the right way and with the right reporting structure and with the right focus and we continue to see that getting better and better each year.

So I think if there's some efficiency that's going to come out of it that will help us, it will come from a more mature team or a better organized team. We've been working on that for 2 or 3 years now. .

So this is the -- so that's just basically, I know Brian, in the past, you've talked about lenders that you've acquired, lenders that have a legacy and then just the ones that come over from the FDIC are just getting traction and it's all becoming one fluid team now?.

I think that's a fair statement. I would add to that and we've talked about this in previous calls is we've really focused on improving the average outstanding loans per lender a variety of ways through growth, et cetera.

And as we look at those numbers, that has proved substantially over the last several quarters in helping the efficiencies of not only the lenders and their portfolios but the overall efficiency of the organization. .

Our next question will come from Tim O'Brien with Sandler O'Neill. .

A question on -- you hinted that you're looking to do more line under originations this quarter?.

More -- I'm sorry, more what?.

Operating line C&I?.

Well, just to clarify. I think that our focus from a general production point of view with the combined companies going forward is not going to change from what either one of us have done individually or collectively. I think we've had a very similar cultures and strategies in that regard.

I think where we will see some potential of nice increased activity is in the SBA lending and that's 7(a) and 504 lending and that's typically C&I lending that could involve some lines of credit, some term credits for equipment, that sort of thing.

But I think probably the single most greatest opportunity for growth for the balance of the year might come out of that SBA portfolio. .

Remind me, Brian, did you say the plan is to retain that or would you look to monetize?.

Yes. Again, as a clarification, we have both organizations that have had active SBA origination strategy in the past, so this is not a new focus or paradigm for us. However, there is one distinct difference. Heritage would originate and keep to the portfolio, whereas Whidbey would originate and sell.

And I believe while we haven't made a decision in final form yet, I believe that we are going to adopt Whidbey's originate and sell strategy going forward, which has the potential of giving us some lift on the non-interest income side.

So I think if you were to go back and look historically at Whidbey and maybe -- and I don't know how Whidbey has stated this but they get gain on sale from both mortgage and SBA lumped together, Bryan, is that correct?.

They're separate. .

Okay. I guess it is separate. So if you want to look at what they've generated on the SBA side of things, you might look at their history and look at the synergies growth of both companies and I'll ask Bryan to maybe speak to that a little bit. .

Bryan McDonald. Yes, Tim, they were segregated separately on our income statement. So you can go and look at the history, but as Brian noted, we're expanding that strategy, which, again, both banks have had and are entering the second quarter with a really nice pipeline separately and a very, very strong pipeline together.

And we've got a great team, some new folks aboard on the Whidbey side to help continue to build out this business line. So we're optimistic. .

And then one other question that I have for Brian Vance. Brian, can you give us a little market color? We've heard rumblings about improvement in the economy incrementally relative to last year.

What's your take? Is the pie growing again? Is there more demand from businesses to invest in their own companies and does that bode well for you guys?.

It does. And I will ask Bryan McDonald to give some perspective from the Seattle North markets as well. I think that we're seeing good, steady improvement across the footprint, whether it be in Central Washington with our Central Valley branches, or up and down the corridor from Bellevue to port -- I'm sorry, Bellingham to Portland.

We are seeing, I won't say pockets of weakness, but we are seeing pockets that may not be experiencing the growth that we would see in Pierce and King and Snohomish. For instance, Thurston County, I think, Olympia, continues to show some softness. No, that's not the right word.

I think it's -- we're not seeing the growth in Thurston County that we are seeing in some of the other markets. I sense that the -- certainly, as we've talked before, the King County market is really strong. And I sense that Snohomish County, Everett is maybe coming back stronger and I'll ask Bryan to comment to that. .

I would agree with Brian. Certainly, our more rural markets have been a little bit slower to recover. But speaking generally, our customers have more loan demand than they had a year ago, just been on a steady improvement and Snohomish County, quite strong, King County, quite strong.

So we're seeing some very good loan opportunities coming out of those markets and some improvement in the northern counties at just a little bit slower pace. .

Our next question comes from the line of Brent Villaume. .

I wanted to ask about -- a question about merger accounting.

I wanted to ask, you mentioned that the increase in the yield accretion after the Washington Banking Company merger is going to increase, do you have a ballpark estimate as to what degree that might be?.

Brett, I don't at this point. We're going to be going through, as soon as this merger closes tomorrow, we'll start our process of fair valuing the portfolios. And then as a result of that, that will result in the calculations for the accretion. So I really hesitate to give you any guidance on that.

I made the comment that it's going to increase because, again, it's going to be fair valued. Again, Washington Banking has a higher balance of covered loans than we do, as far as the 2 FDIC deals that they acquired back in 2010 or still have higher balances than ours.

So that's why I'm bringing up the comment that there's going to be more discount accretion on that. Having a percent or a number at this point is a little premature for me. .

Okay, fair enough.

And then I wanted to ask on the purchased loans that came down, do you see that rate decreasing sequentially going forward? The amount of purchased loans that run off?.

If you look at the history, they continue to decline, although our covered portfolio didn't decline very much this last quarter, so I think they're slowing somewhat.

But I think we're also going to get to a point where some of this, if they're good borrowers, will kind of work their way through some of the more problem loans, some of the good borrowers may rewrite their loans.

The loans may be such that they can be actually put into the kind of you might call it old originated portfolio but you might see some transfers there. But I think that -- you'll see it go down, but it may stabilize and not go down as much as in the past. .

That's helpful. And I wanted to ask about the substandard construction loan, the $7.8 million loan.

Were there other changes that took place in, say, substandard loans, maybe some improvement that was offsetting to that?.

I'll ask Don, maybe, to look at those numbers, maybe give you a little more color. But while he's doing that, just I'll comment to -- again, I made a comment in my opening remarks about the nonaccrual increase to one relationship. That is one legacy relationship that goes back probably 25 years with the organization.

And the borrowers are very cooperative, the borrowers understand and agree that they need to sell some of the properties that are being held for development. And we're confident that we can work through that relationship, as I said earlier, with little to no loss. So we've got a very cooperative borrower and a strategy in place.

What led to the downgrade was new appraisals coming in with reduced valuations. But we still believe we have appropriate collateral coverage overall with the relationships.

So Don, any additional color?.

Well, just we've -- again, the one-to-one on nonaccrual as Brian just discussed that. Again, there were 2 different loans that were downgraded that made up most of the increase in potential problem loans. And Brett, I think you're discussing the one that's kind of a more construction loan.

But we've downgraded that to substandard, but we don't see any loss in that relationship. It's more of a -- just a performance. We're concerned about financials and so that's why that was downgraded. .

Okay, good. Finally, I wanted to ask I noticed that you're going to keep some branches branded as Whidbey Island Bank.

Do you care to express any rationale behind that?.

I certainly will and I'll ask Bryan McDonald to comment to it as well, he's much more familiar with that market than I. That was an agreement that we made early on with the Whidbey Island Bank, is to protect the Whidbey Island name on the island, and Bryan will discuss kind of some strategies as we are prepared to roll that out tomorrow.

And it's a strategy that we have some experience with. I'll remind you that we have done something similar with Central Valley Bank. When we collapsed their charter last year, we retained the Central Valley Bank in that marketplace because it's a well-known, marketable name. So we've had some experience with that.

But I'll ask Bryan to give you a little more color. .

Yes, Bryan McDonald. The original business decision was based on the bank -- Whidbey Island Bank's longevity on the island and customer loyalty and some very significant market shares that we were looking to protect with the combination of the 2 companies in the merger.

And I think as we move forward, I think we've got a very nice blend of maintaining the Whidbey Island Bank name while still making it obvious to the customers that it's part of the Heritage network.

And so when they are off the island, they'll be able to use all the other network up and down the I-5 corridor, which is going to be a real benefit to those customers. So I think we've struck a real nice balance in terms of how we're going to roll out that DBA after close. .

I hope I'm not jumping the gun here but congratulations on the closing. .

You might be jumping the gun by about 12 hours. But it's been fully approved by the shareholders and we're looking forward to accomplishing that at 12:01 a.m. tonight. .

Our next question comes from Don Worthington with Raymond James. .

Are you able to assume the loss share agreements related to cover loans of Washington Banking?.

Yes, we are and that has already been approved. .

Okay, great. And then I just noticed kind of a small item but it looked like service charges, presumably, primarily on deposits were down about 9% linked-quarter. Is that something you expect to rebound or is that kind of where you expect it to go? This would be exclusive, of course, of the merger but just kind of the run rate for deposit charges. .

Yes. I would expect it to bounce back some. We have had, again, a little bit of a runoff in some of the consolidated branches. Though overall our deposit balances are earning steady. But I would expect it to bounce back some over the course of the year. .

Our next question comes from the line of Tim O'Brien with Sandler O'Neill and Partners. .

Quick follow-up.

Brian, do you have -- what's your baseline house limit at hifwa [ph] for lending?.

Currently we're at -- in-house is $20 million. I think as we look at combining the companies, one of the things we announced when we announced the merger was the opportunity and the desire to go upscale.

Upscale meaning essentially, ticket size, especially as we really focus on a concentrated efforts in the King County markets and to maybe a little bit lesser extent in the Snohomish County markets. I think that we will be revisiting the in-house limit to increase that.

We haven't decided on a level yet that's appropriate, I think we're going to have a combined legal of somewhere around $80 million but we will be nowhere near that level.

I think that for a community bank, roughly $3.5 billion in assets, I think our ability to go upscale and pick a size, certainly our desire is there and I think that we have the lending teams, and, probably just as important, the credit administration teams in place to go up market and maybe into that $30 million-plus in-house level.

But that is something that we're currently analyzing, Tim. .

In your past, Brian, you've done those larger ticket items in your younger days, correct?.

Well, yes. And I think that probably a number of us, Bryan McDonald included, Dave Spurling, our Chief Credit Officer was with BofA for a number of years in the mid market range in Seattle and Tacoma. And so I think combining the organization, there's a good deal of expertise, Tim, that can comfortably take on increased ticket size.

But at the same time, both companies have been very steady with overall credit quality over the last 6-, 7-year cycle. And as I like to say when it comes to credit, we're down the middle of the fairway. I know Whidbey has and Heritage has and so even if we go up market, we're going to stay in the middle of the fairway, Tim. .

And at this time, we have no further questions. .

Ryan, I appreciate you hosting the call, and I appreciate everyone that has called in. As I indicated in my prepared remarks, we're very excited about what we will soon be accomplishing in bringing these 2 companies together, the synergies we create in a combined company.

And as Jeff indicated, we've done a lot of heavy lifting in bringing the companies together. We largely have our management structure in place to be implemented tomorrow. And I think both the organizations are looking forward to bringing the companies together.

I think the next time we'll see you, whether it be investor conferences or this call, we'll be a combined company and executing on our strategies. So I appreciate your interest, appreciate your support, looking forward to seeing everybody in the future. Thank you. .

Ladies and gentlemen, the Heritage Financial First Quarter 2014 Earnings Call will be made available for replay after 3 p.m. Central today until May 14, 2014 at midnight. You may access the AT&T executive playback service at any time by dialing 1 (800) 475-6701 and entering the access code 323877. International participants may dial 1 (320) 365-3844..

That does conclude our conference for today. Thank you for your participation and for using the AT&T Executive Teleconference service. You may now disconnect..