Glacier Bancorp (GBCI) Q4 2021 Earnings Call Transcript

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Glacier Bancorp (NYSE: GBCI)Q4 2021 Earnings CallJan 28, 2022, 11:00 a.m. ET

Prepared Remarks:

Operator

Thank you for standing by, and welcome to Glacier Bancorp's fourth quarter earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your host, president and CEO of Glacier Bancorp, Randy Chesler. Sir, please go ahead.

Randy Chesler -- President and Chief Executive Officer

All right. Thank you, Latif. Good morning, and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our chief financial officer; Angela Dose, our chief accounting officer; Byron Pollan, our treasurer; and Tom Dolan, our chief credit administrator.

We closed out the fourth quarter and full year 2021 encouraged by our extremely strong loan and net interest income growth. Results were better than what we expected and clearly shows that we are in some of the best long-term growth markets in the country. The Glacier team and our unique business model enable us to build solid customer relationships and produced very strong results in all of our divisions as we continue to build one of the premier regional banks in the West. I'll touch on some of the business highlights first and then provide some additional thoughts on the quarter and full year.

The loan portfolio, excluding payroll protection program loans, had strong organic growth of $448 million or 16% annualized. The loan portfolio organically grew $1.2 billion or 11% annualized from the beginning of the year. This was a record level of growth -- quarterly growth for the company. Net interest income in the quarter on a tax-equivalent basis and excluding PPP loans was $184 million, an increase of $29.4 million or 19% from the prior quarter.

On a full year basis, net interest income was $636 million, an increase of $57.5 million or 10% over the prior year. Core deposits continue to flow into our divisions, organically growing $560 million or 13% during the quarter, and growing $3.3 billion or 22% annualized for the year. Net income for the year was $285 million, an increase of $18.4 million or 7% from $266 million in the prior year. Earnings per share for the year was a record $2.86, an increase of 2% from the prior year.

Credit continued to demonstrate strength in all measures. We ended the year with no real estate owned by the bank, remarkable for a bank with a $13.5 billion loan portfolio. We declared dividends of $1.37 per share, an increase of $0.04 per share or 3% over the prior year. The company has declared 147 consecutive quarterly regular dividends and has increased the regular dividend 48 times.

We completed the acquisition of Altabancorp with assets of $4.1 billion, the largest community bank in Utah and the No. 1-rated growth market in the country, and the largest acquisition in the company's history. In December, we transferred the listing of our common stock to the New York Stock Exchange, consistent with our longer-term growth plans and outlook. And finally, we're close to wrapping up the PPP program that began in early 2020.

During that time, we've made almost 24,000 loans for $2.1 billion, and at the end of 2021, only had $169 million of loans that have not been forgiven. We expect most of these remaining loans with $5 million of net deferred fees remaining to be forgiven in early 2022. We saw excellent loan growth in our markets with Utah, Arizona, and Colorado leading the growth across our eight-state footprint. And we're pleased to see the strong performance in commercial real estate lending, growing organically $175 million in the quarter.

New loan production for the quarter was robust with a record $1.9 billion in new loans originated. We updated our full year 2021 growth target last quarter to 8% to 10%. And we're very pleased and we are topping that range coming in at 11%. We're starting 2022 with excellent momentum and a strong pipeline of new loans.

Core deposits continue -- growth continues to be surprisingly strong across our footprint, driven by excess customer liquidity due to the unprecedented government stimulus, reduced spending due to the pandemic, and our success in establishing new deposit relationships. As a result, customers and businesses are beginning 2022 with very strong balance sheet. More importantly, the stable and sticky core deposits have a cost of 7 basis points, down 6 basis points from a year ago. Noninterest-bearing deposits increased $2.3 billion or 43% over the prior year and are now 37% of core deposits.

Total debt securities of $10.4 billion, increased almost $5 billion or 88% from the prior year. We continue to purchase debt securities with the excess liquidity from the increase in core deposits. Debt securities represented 40% of total assets at year end, compared to 30% at the end of 2020. We fully invest excess deposits, mainly in highly liquid and high-quality investments with a shorter duration, given low but increasing rates with a plan of putting these deposits to work into loans as we continue to grow.

The company's net interest margin as a percentage of earning assets on a tax-equivalent basis for the current quarter was 3.21%, compared to 3.39% in the prior quarter. The core net interest margin for the quarter, less PPP, less discount accretion, and nonaccrual interest was 3.04%, compared to 3.17% in the prior quarter. Earning asset yields have decreased from the combined impact of the significant increase in the amount of debt securities and the decrease in yields on both debt securities and core loans. The yield on debt securities ended the quarter at 1.5%, compared to 1.62% in the prior quarter.

New investments in debt securities were added at 1.26% in the quarter. It appears that we are close to a positive inflection point when improving yields on new debt securities will exceed the portfolio yield. The yield on the loan portfolio ended the quarter at 4.7%, down 16 basis points from the prior quarter. We added $1.9 billion in new core loan production with yields around 4%, which drove the total loan portfolio yield down.

Noninterest income of $34.4 million declined $453,000 or 1% from the prior quarter and decreased $10.3 million or 23% from the same quarter last year due primarily to the reduced gain on sale of income from residential mortgage. The hot housing market and refinancing slowed down a bit across our footprint. Our biggest concern in the real estate business remains the supply of homes available for sale and the increasing cost of housing. Noninterest expense includes $17 million of expense from Altabank division, $8.2 million of acquisition-related expenses, $806,000 of increased compensation and employee benefits due to incremental overtime given staffing shortages at several bank divisions, $1.1 million of expenses primarily due to branch upgrades and $600,000 of increased loan expense due to strong loan growth.

Excluding the Altabank division and acquisition-related expenses, noninterest expense increased $5.3 million or 5% from the prior quarter and decreased $1.8 million or 2% from the prior-year fourth quarter. While the PPP program is in its final stages of winding down, with most of the remaining loans expected to be forgiven in early 2022, I would like to recognize all of the Glacier team for the exceptional work they did on the PPP program over the last two years. I'm very proud of how the team responded so quickly in order to help on many customers who are frightened and concerned about their businesses at the outset of the pandemic. It's a great reminder of the responsiveness of our model and our focus and commitment to mainstream businesses across the West.

Our combination with Altabancorp continues to proceed very well. We closed on the transaction October 1, and we continue to work closely with the Alta team on the planning for our core processing conversion in mid-March of 2022. We are on track to achieve the targeted cost saves in 2022 that we identified when we announced the transaction in May of 2021. Alta has a very good technology platform, and we are studying many of the products that may be a good fit for our other divisions.

Tangible book value per share for the company increased in the quarter from $19.11 to $19.33 or 1%. On a full year basis, tangible book value increased 6%. The Glacier team accomplished a lot in the fourth quarter. We had to deal with COVID in many markets and close Altabank, the largest acquisition in our history, and the team still achieved record results.

The loan growth we experienced in the quarter was great to see, and we think we are very well-positioned to grow in 2022. And in December, we were pleased to be recognized as one of the best emerging regional banks by Bank Director magazine as part of its 2022 ranking banking study, which identifies the best banks in The United States based on quantitative metrics as well as a qualitative analysis of innovation and leadership. So that -- Latif, that ends my formal remarks, and I would now like to turn the call back over to you to open the line for any questions that our analysts may have.

Questions & Answers:

Operator

Yes, sir. [Operator instructions] Our first question comes from the line of David Feaster of Raymond James. Please go ahead.

David Feaster -- Raymond James -- Analyst

Hey Good morning, everybody.

Randy Chesler -- President and Chief Executive Officer

Good morning, David.

David Feaster -- Raymond James -- Analyst

It was great to see the strong growth in the quarter and hear the commentary around the increased production. Just curious some of the puts and takes with that. How much has Alta contributed to that? And maybe kind of what you're seeing from an economic standpoint, just the pulse of your local economies and just kind of how you think about growth into '22 and the composition of your pipeline and what segments you're expecting to drive growth?

Randy Chesler -- President and Chief Executive Officer

Sure. Yeah. It was very broad-based across the footprint. As I noted, Utah had very strong growth.

This is all organic growth. So they do very well. They did very well that, as I noted as well, #1 growth market in the country. So we're seeing very, very strong trends there.

Arizona continues to benefit from the in-migration from California. So that was very positive. And so we like to see that Colorado continues -- their economy continues to do very well. So I think that David, the eight states that we're in are all doing very well.

The Western United States continues to benefit from lower cost of living, business-friendly environment, high quality of life. Those things continue to drop people in. On the lending side, we continue to see people very confident to move forward with plans for buying properties in our markets as well as expanding their existing businesses. So all those things have really kind of combined and led to the type of growth that we were able to post for the quarter.

David Feaster -- Raymond James -- Analyst

OK. That's helpful. And then we hear a lot about inflationary pressures just kind of weighing on expenses for the industry. You somewhat have a luxury of the Alta deal, which provides some flexibility.

Could you just maybe walk us through some of the puts and takes with the expenses that we had in this year with the upcoming conversion and some of the synergies from that as well as other investments that you might have upcoming. Just what you think a good core run rate is? And how you think about expense growth, just cognizant of seasonally higher first quarter?

Randy Chesler -- President and Chief Executive Officer

Yeah. And I'm going to ask Ron to comment on expenses. You're right, there's a lot of moving parts, especially this quarter with the acquisition of Alta. And I think we have a good view of what we see that expense run rate looking like.

Ron, do you want to comment on that?

Ron Copher -- Chief Financial Officer

Yeah. Hey, David. So when you saw that we had $134 million noninterest expense. And as Randy said in his remarks, $8.2 million of that was acquisition-related.

So if you get that out of this, then we're at $125 million, $126 million. And so we are estimating for the first quarter run rate, the expenses would be, say, $128 million, maximum would be $130 million, but I think it will be closer to the $128 million. And so that's the run rate. Just recognize in the first quarter, in mid-March, we're going to have the conversion for the Alta onto our system.

And so there will be some elevated merger-related expenses that we'll identify. But putting that aside, the run rate for the first quarter is $128 million.

David Feaster -- Raymond James -- Analyst

OK. That's helpful. Thank you. And then just kind of touching on new loan yields in the competitive landscape.

Just -- how is pricing trending on new loan yields? Do you think, I mean, has add-on rates started to trough or even potentially improve just given the move in the tenure. It sounds like we're seeing it on the security side. And then just any other comments from the competitive landscape? Are you seeing more pressure on structures or standards? Or is it just mostly on the pricing front? Do you kind of find yourself maybe passing on more deals?

Randy Chesler -- President and Chief Executive Officer

Sure. Let me just comment at a high level on loan pricing, and then Tom can provide a little more color to your -- some of the other parts of your question. Overall, so loan rates are under pressure. So what we see happening, we anticipate rates going up as expected.

The five-year where we price a lot of our loans is a fulcrum point. It really hasn't moved. It stayed relatively flat. We're hoping to see some movement there.

But we also think with the excess liquidity in the market and the level of competition out there that any kind of increase, it's going to be -- there will be a delayed ability to get a full -- take full advantage of a rate increase because of the amount of competition out there with the amount of liquidity that people have to put to work. So we feel that we're going to see those -- that improve. It's just going to take longer than it normally does when rates start to go up. Tom, did you want to comment on loan pricing and some of the second part of David's question.

Tom Dolan -- Chief Credit Administrator

Sure. Yeah. The only thing I'll add to the loan pricing is the pressure seemed to be somewhat geographic now. In some of the larger markets, we see greater pricing and structure pressure.

And it also depends on the size of the deal. So the larger the deal that we're looking at, we generally see some pressures there. And then on the answer to the second part of your question on the structures. We are seeing an increase in competitive pressure on the structure side.

We -- especially in the larger markets on the larger deals, we're seeing more of our competitors offering nonrecourse and longer interest-only periods. We're just not going to play in that. We have passed on a number of deals to answer your question in the past couple of quarters that were due to structure and not pricing. So we'll continue to maintain our strong credit culture.

David Feaster -- Raymond James -- Analyst

OK. That's helpful. And just kind of following up, Randy, just on the comments on potential Fed hikes. Do you have your updated asset sensitivity handy, pro forma for Alta, and maybe how you might expect the margin to benefit the first rate hike or two?

Randy Chesler -- President and Chief Executive Officer

Sure. So I'm going to have Byron comment on asset sensitivity. We've spent a lot of time starting to look at that in anticipation of these rate increases. So Byron, do you want to comment on that?

Byron Pollan -- Treasurer

Sure. We are optimistic about the rate environment. We are asset sensitive and we are more asset sensitive than we had been in the past, also moved us in that direction, given their shorter duration and their greater concentration of time-based loans. If you look at our overall loan portfolio, roughly 25% of our loans will mature or reprice this year.

In addition to that, we have a lot of cash flow coming off of our securities portfolio. And that will give us the option to either remix that cash flow into the loan portfolio or ready to work in the higher-rate environment that we anticipate. And so there's not a question, higher rates will be helpful to our bottom line complemented by Alta and our expected loan growth.

David Feaster -- Raymond James -- Analyst

That's helpful. Thank you.

Operator

Thank you. Our next question comes from Jeff Rulis of D.A. Davidson. your question, please.

Jeff Rulis -- D.A. Davidson -- Analyst

Thanks. Good morning.

Randy Chesler -- President and Chief Executive Officer

Good morning, Jeff.

Jeff Rulis -- D.A. Davidson -- Analyst

Looking at the mortgage gain on sale, maybe a little lighter than I had expected. I was wondering if Alta had been running around a couple of million a quarter. Was there any strategic change with that platform? Or I'm just trying to get the sense for what Glacier legacy came in on gain of sale versus Alta and if there were any pivots to their book of business as you brought it in.

Randy Chesler -- President and Chief Executive Officer

Yeah. No. They've got a very, very good mortgage business. The change there, Jeff, is really just a reflection of what's going on in the overall market.

Originations just were down. And in Utah, a lot of it is the issue of supply. We are just getting to a point where the housing is very difficult to find [inaudible]. We have more realtors than houses in most of our markets right now.

So that just gives you some idea the level of houses on the market. It gives you an idea of the level of the market. So really, nothing more than we just saw a downturn and we have -- the platforms are up. They're doing great.

It's just the amount of business that's out there to be done as it was significantly off in the fourth quarter, and that's primarily supply driven.

Jeff Rulis -- D.A. Davidson -- Analyst

Randy, any thoughts on '22 backdrop for gain on sale?

Randy Chesler -- President and Chief Executive Officer

Well, we like our mortgage business. We really like the Alta mortgage business and how they're positioned. Some of that technology they did deploy, we are going to roll out to the rest of our division. So very excited about that.

We still, at this point, look at the MBA forecast. They're calling for the market to be down about 30% year over year. We'll probably fall in line with that, maybe do a little better. We think we're in better markets than the overall United States.

There will be eight states we're in are leaders in terms of the amount of activity in the housing. They are also leaders in housing appreciation, price appreciation. So that's been -- that goes back to the supply and the number of units that come on the market. So refis are probably going to be dialed back a bit given rates are going to move up and purchases.

We're in strong markets, but limited by the amount of supply that are going to be out there for sale.

Jeff Rulis -- D.A. Davidson -- Analyst

OK. And then just wanted to touch on credit. You had a decent-sized 90 days past due balance that increased -- I think you referenced what you brought over for Alta added to that. So first question is, does that balance you see a quicker resolution with that? And then the second part, credit related is you did see an increase in the 30 to 89 days of the early delinquency.

So any color on that bucket?

Randy Chesler -- President and Chief Executive Officer

Yes. Tom can cover that. There's really two things happening there. The movement in NPA, which was really related to the acquisition and delinquencies.

So Tom, do you want to comment on that?

Tom Dolan -- Chief Credit Administrator

Yes. The over 90 increase in 30 to 89 was predominantly due to one relationship, multiple credits on one relationship that I expect to be resolved this quarter. It's more of an administrative past due, and we're in the final stages of resolving that. So I would expect that to be resolved here a bit fairly quickly.

Jeff Rulis -- D.A. Davidson -- Analyst

OK. So I think about $25 million in the 30 to 89 days and then even the 90-day past due that brought over from Alta, again, resolution expected in the first quarter?

Tom Dolan -- Chief Credit Administrator

Yes.

Jeff Rulis -- D.A. Davidson -- Analyst

OK. That was it for me. Thanks

Tom Dolan -- Chief Credit Administrator

You're welcome.

Operator

Thank you. Our next question comes from Brandon King of Truist Securities. Your line is open.

Brandon King -- Truist Securities -- Analyst

Hey, good morning.

Randy Chesler -- President and Chief Executive Officer

Good morning, Brandon.

Brandon King -- Truist Securities -- Analyst

So I first wanted to touch on loan growth. You had a strong year in 2021. A lot of your competitors are now expecting even stronger growth in 2022. So I just wanted to know how confident you are in achieving a similar growth of 11% in 2022?

Tom Dolan -- Chief Credit Administrator

Yeah, Brandon. This is Tom. We're looking toward low double digits for 2022 pending some headwinds that ourselves and the industry as a whole is really facing right now, supply chain, increase in construction costs, elevated payoffs compared to historical averages. All those things are still headwinds, but we're fairly confident in low double digits for '22.

Brandon King -- Truist Securities -- Analyst

OK. And just within that, with the CRE specifically, I know higher rates could potentially mean lower payoffs. Is that kind of reflected in that outlook as well based on what you're seeing with your customers?

Tom Dolan -- Chief Credit Administrator

Yeah. I think there's a component there that certainly has an impact. Rates are so low today. I'm not sure what difference 25- or 50-basis-points increase would may have on that.

But there's certainly an element of that, that should help slow those payoffs down.

Brandon King -- Truist Securities -- Analyst

OK. And then deposit growth was also very strong in the quarter. Just wondering what sort of deposit growth assumptions you're currently anticipating in 2022? And if you think loans will outpace deposit growth in 2022?

Randy Chesler -- President and Chief Executive Officer

Yeah, we do. We think deposit growth is going to be probably in the high single digits, where we see loan growth in the low double digits. So yes, we think the things will slow down. It's been an incredible year with the amount of deposits in every quarter when we think it's just got to stop, it continues.

But we're starting to see some signs that that's going to throttle back. So probably around -- probably in the high single digits in 2022.

Brandon King -- Truist Securities -- Analyst

OK. And then I guess all that put together with that assumption, I guess we would see not much growth in the securities book, correct? Is it you're deploying that cash more to loans. Is that a good assumption?

Randy Chesler -- President and Chief Executive Officer

We hope so. Yes. I mean we're still going to see our investment portfolio grow. There's just enough cash coming in to do that.

But yes, our hope is that given the strong growth rate we've seen in the fourth quarter and in the full year '21, we carry that into '22. And as Byron noted, we've got the investment portfolio fully invested, but short and high quality. So as those things roll off -- as those investments roll off and as new deposits come in, we would love to put those to work at the higher-yielding loans. And that's the plan.

Brandon King -- Truist Securities -- Analyst

OK. And then lastly, regarding M&A with closing of the Altabank transaction. How likely could we see another deal this year based on what you're seeing in your appetite currently?

Randy Chesler -- President and Chief Executive Officer

Sure. So we are -- so we continue to talk to folks. We always keep the door open. Our focus right now, though, is to get Altabank closed and converted.

We've closed it now. We want to convert it in mid-March. And the EPS lift we get from doing that well is significant. So we're going to stay focused on that.

I wouldn't expect that to see anything in the M&A at the earliest and announcement toward the later part of this year, late third quarter, fourth quarter, if at all this year. So we're keeping the conversations going. We are pushing the timing out because we want to make sure we get Alta done right. It's going really well.

And there's a lot of earnings there for us to recognize. So we want to get that behind us. And then if the mechanics work out for us, the -- probably the earliest you would hear an announcement, nothing would -- I don't see anything closing in this year, but the earliest you would see an announcement would be kind of in the late third quarter or fourth quarter.

Brandon King -- Truist Securities -- Analyst

OK. And nothing has changed as far as what type of potential targets you would consider?

Randy Chesler -- President and Chief Executive Officer

Absolutely not. No. We're still out. We've got a wide range of prospects that we look at from $300 million to $3 billion, as we've said.

We went very large with Alta, but that was a great opportunity that's put in front of us. So I would expect our traditional -- our historical wheelhouse around $750 million to $1.5 billion is where we're going to be focused. But again, if something larger comes along, that fits our strategic view, we're going to take a hard look at it. And if something a little smaller comes along that, that we think we can do very well with, we'll take a look at that as well.

Brandon King -- Truist Securities -- Analyst

All right. Thanks for all the answers.

Randy Chesler -- President and Chief Executive Officer

You're welcome.

Operator

Thank you. Our next question comes from Kelly Motta of KBW. Your question, please.

Kelly Motta -- KBW -- Analyst

Hi. Good morning. Thank you so much for the question. I wanted to circle back to expenses with Alta closing -- sorry, converting in March, do you expect Q2 '22 to be somewhat of a clean quarter expense-wise? Just any help with the piece of cost base realization, as well as how that kind of nets out with maybe some of the inflationary pressures you're seeing in your markets.

I appreciate the color on 1Q, but I'm trying to kind of straight away the dynamics for the year? Thanks.

Randy Chesler -- President and Chief Executive Officer

Sure. So I think Ron gave the color on 1Q. So we're expecting $128 million, kind of a ceiling of $130 million on the expenses for the first quarter, not including the M&A expenses. In terms of the cost savings, when we announced the deal we did back in May of '21, we did identify 80% of the cost savings at 17.5% of their noninterest expense.

So we're on track to achieve those. Those are going to be more weighted toward the end of the year. So I think as you look at the third quarter, we'll get the conversion done in March, and then we'll start to see some of those things start to show up in the second quarter and third quarter. So those are kind of more weighted toward the middle to end of the year, Kelly, as we see those really kind of coming to fruition.

We feel really good about achieving them. It's just we have to get through the conversion and some of those expenses take place after that.

Kelly Motta -- KBW -- Analyst

Got it. Understood. And then I believe in your prepared remarks, you talked a little bit about how Alta had some technology that we were potentially looking into rolling into some of your other divisions. Just wondering if you could speak more broadly about tech investment and kind of the appetite for what you're looking to do and how that kind of factors into that expense commentary you just gave, whether or not there could be some additional increases from some of those investments coming through.

Thank you.

Randy Chesler -- President and Chief Executive Officer

Yeah. No. We'll -- let me first start with the platform that Alta brought to us and the technology there. So we're taking advantage of a great opportunity for us, so Jack Henry Bank -- we're Jack Henry Bank with very good third-party applications bolted on to the Jack Henry core where we can see this technology and evaluate it in real time.

That's very -- that's been great for us. And so there's a number of things that we do intend to roll out. We're in the process of, a, focusing on the conversion and then b, focusing on how to take those things out to our 17 divisions -- 16 divisions, not including Alta. So there are things, Kelly, like a commercial loan origination system that automates the loan process in a way that will result in some savings for us in '23.

Those are things like a construction lending platform that will allow us to more efficiently administer construction lending. How we process payments at the teller line with a teller capture system. That's going to be something that will reduce and less staffing needs in the branch. So these are all things that we're looking at.

I would tell you in terms of meaningful investment, a lot of this is the upfront cost, is part of the M&A expense. And so we are -- because by buying this bank, we have to figure out what to do with these technologies. A lot of that expense will not be recognized as if in circumstances if we didn't have a deal to -- a transaction to do. So a lot of the -- you won't see a big cliff expense in technology.

I think it's probably what is underpinning your question. It's -- most of that has been included in our deal expenses. In terms of the benefit of the technology, there will be some expense in '23. We don't see any of that pushing us out of our 54%, 55% efficiency range.

We're very careful to maintain that. But we also think, depending on how these technologies are implemented, there's probably some pretty good cost savings that we'll -- we would see generally really starting to show in '23.

Kelly Motta -- KBW -- Analyst

Got it. Thank you so much that was really helpful. I'll step back.

Randy Chesler -- President and Chief Executive Officer

You're welcome.

Operator

Thank you. [Operator instructions] Our next question comes from the line of Matthew Clark of Piper Sandler. Your question, please.

Matthew Clark -- Piper Sandler -- Analyst

Hey, good morning, gentlemen.

Randy Chesler -- President and Chief Executive Officer

Good morning.

Matthew Clark -- Piper Sandler -- Analyst

First one for me, just on the loan growth this quarter on an organic basis within that commercial real estate. Can you give us a sense for where the larger contributions came from within your footprint or by affiliate and whether or not there's any larger deals embedded in there? Just trying to get a sense for, I wouldn't say concentrations, but just whether or not there are a few larger credits that help drive that incremental growth. Maybe another way to ask it is what was the size of the largest three loans that you booked in the quarter?

Randy Chesler -- President and Chief Executive Officer

Sure. Yeah. There was good broad-based growth, but Tom can give you a little more color specifically to your question about the makeup of the growth.

Tom Dolan -- Chief Credit Administrator

Sure, Matthew. On the CRE book, we're still seeing a lot of demand for industrial warehouse growth as the business moves have followed a lot of the in-migration of the population. So we're seeing that. We also saw some nice multifamily growth and construction related to CRE and multifamily as well in the quarter.

In terms of the size of the production, nothing out of line from what we've done over the past several years. Certainly, there were some eight-figure credits that came through in the quarter, but no individual credit, say, above kind of that $20 million area. So for the most part, we -- the average loan size in the CRE book is about $600,000, and that really hasn't moved a tremendous amount, and I don't really anticipate it moving that much either.

Matthew Clark -- Piper Sandler -- Analyst

OK. That's very helpful. Thank you. And then the -- Randy, you had mentioned kind of maintaining that efficiency ratio in that 54% to 55% range, I think, for this year.

Correct me if I'm wrong. But you've got a step up in expenses based on the guide. You've got the 80% of the cost saves coming through by the end of the year. You have kind of seasonally lower mortgage, I heard you on the loan growth.

Maybe that's kind of making up for some of it kind of low double-digit loan growth. And I don't know if you hit on the NIM outlook, but if any -- and I apologize if I missed it. I got a couple of calls at the same time here, but any kind of comments around the near-term margin outlook?

Randy Chesler -- President and Chief Executive Officer

Yeah, no problem. Well, I'll ask Ron to talk about the margin but you got it right. We anticipate very, very solid growth and still maintaining our target 54%, 55% efficiency range that we see staying in that range in '22. Ron, did you want to comment on the margin?

Ron Copher -- Chief Financial Officer

Yeah. Hi, Matthew. The outlook for the margins, particularly in the first quarter, is that we've had a declining margin, and we see it slowing particularly for the reasons that we've said double -- low double-digit loan growth and then with the high single digits of the deposits coming in. We're able to put that to work at higher rates than what we did in the fourth quarter.

Fourth quarter, we were able to put on the investment securities, again, high-quality, short, four to seven year in the treasury predominantly. But we brought those on, just say 125 basis points. Well, just with the rate movements in The U.S., the treasury curve, just in the last 60 days, we picked up 45 basis points in higher rate. So that is showing up that we're able to put on securities in the 170 to 180 range, and that's very incremental to our margins.

So again, we want to put it into the loan portfolio. But in the meantime, we can put it into the securities portfolio. So the guide I would give on the margin, this is a reported margin. It should be somewhere between, say, 305 and 310, somewhere in that range.

We're starting to see the [inaudible] of an inflection. And we're optimistic that this should continue, again, with low double-digit growth in the loans and a slowdown in the deposits that came across in '21. We're starting to see that inflection point, all bodes very well for us to have a good net interest income and stay in line with our efficiency ratio, 54% to 55%.

Matthew Clark -- Piper Sandler -- Analyst

Great. Thank you. And then just housekeeping on the tax rate kind of moving around a little bit. What do you -- what should we assume for the outlook this year?

Randy Chesler -- President and Chief Executive Officer

Yes, I was going to say we're glad you asked about taxes because we did want to comment on that because there was a very high -- in the consensus, there was a very high tax rate in there. So as you know, taxes are near and dear to Ron's heart. So do you want to comment on those, Ron?

Ron Copher -- Chief Financial Officer

Yes, I do. Thank you. Yeah, so it will ramp up in the first quarter. I would use 18.5%, but it's going to ramp up throughout the year to as high as 19%, 19.5%.

And for the full year, I would say it will be closer to the 19% rate, given the economies that we're in, the growth that we're seeing as we've discussed.

Matthew Clark -- Piper Sandler -- Analyst

Great. Thanks for the color.

Operator

Thank you. At this time, I'd like to turn the call back over to Randy Chesler for closing remarks. Sir?

Randy Chesler -- President and Chief Executive Officer

All right. Thank you, Latif. We want to thank everybody again for dialing in today. We know there's a lot of activity toward -- at the end of this month, and we appreciate you taking time to dial in today.

We wish everybody have a great Friday and a great weekend, and thank you again for spending the part of the morning with us.

Operator

[Operator signoff]

Duration: 48 minutes