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A Wall Street Transcript Interview with Jeffrey Rulis, Senior Vice President and Senior Research Analyst with D.A. Davidson & Co.: Montana and Rocky Mountain Banks Avoid the Bust Are They Now Due for an M&A Boom?

67 WALL STREET, New York - February 28, 2014 - The Wall Street Transcript has just published its Pacific and Southwest Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Interest Rates and Loan-Growth Strategies - Regulatory Outlook Gains Clarity - Heightened M&A Activity - Consolidation in Regional Banking - Prolonged Interest Rate Environment Challenges - Investing in Regional Banks - Pockets of Growth in Western Banking - Recovery in the Pacific Northwest

Companies include: Umpqua Holdings Corp. (UMPQ), Columbia Banking System Inc. (COLB), Heritage Financial Corp. (HFWA) and many others.

In the following excerpt from the Pacific and Southwest Banks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are some of the trends that you're starting to see in the Pacific and Southwest banks sector?

Mr. Rulis: I primarily cover the Pacific Northwest of those regions. In terms of overall trends, I characterize the environment as an overall firming up of the industry, and as we talk about the local economies, that's probably true as well. The latest feedback from the banks is that loan pipelines are building, credit costs are bottoming and profitability is still weak versus historical levels, but on the rise. There remains a steady flow of M&A chatter. There is a sort of a good-but-not-great feel to the group and guarded optimism that things will continue to trend better.

TWST: How bad did the situation get for the Pacific Northwest banks?

Mr. Rulis: The region faced considerable strain, although was not in the epicenter of the worst hit areas nationally. We certainly had our share of bank failures and FDIC receivership-type activity. So yes, there were substantial challenges.

The Pacific Northwest and really, Washington and Oregon specifically, faced a lot of issues. Boise, Idaho, felt some pain early in the cycle and continued to deal with excess housing supply. One loan category in the region that predominantly led to considerable credit strain and therefore some capital and survivability issues was in the construction and land-development segment. We had definitely some hard-hit areas.

If you extend the Pacific Northwest view into Montana and the Rocky Mountain region, I'd say that group fared better. Those economies were somewhat insulated; the natural resource-based influence stabilized the area better than others. The real estate market there, outside of second home or resort area real estate, probably fared better on a core basis than some of the higher-growth and boom-bust-type markets throughout the Northwest.

TWST: You mentioned overall firming up. Are we seeing loan growth improving as part of that "firming up?"

Mr. Rulis: Yes. On net, I'd say it's modestly improving. If you look at the numbers, year over year our group grew loans at about a 7% pace. Just looking at the most recent quarter ended, annualizing Q4's increase came in just over 8%...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.