PPBI - Earnings call transcript Q1 2020 | Pacific Premier Bancorp, Inc.

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Operator

Good morning. Welcome to Pacific Premier Bancorp First Quarter 2020 Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Steve Gardner. Please go ahead.

Steve Gardner

Kate. you, Thank everyone. Good morning, you joining appreciate today. us I

morning, As earnings our this quarter you all aware, were we report XXXX. released of earlier for first the

we today. also be have published updated presentation We an speaking that to investor will

you If you classes, so our presentation. to to metrics a asset COVID-XX, our around done and disclosures have our It download response of contains Relations how to in and various of deal to manage downturn our economy. to the crisis positioned of and Opus portfolio would website additional already, loan Investor pending copy visit we we approach not encourage the a great CECL, this the well acquisition, intensifying Bank select are information through

and and to the Harbor we walk presentation Ron looking In in been have forward I in note will then which have read current results of investor Safe will those business, call the terms of earnings presentation carefully, of questions. up condition it impact financial I I our that our open that you of operations. through call our COVID-XX and we relative our release statement expanded. to the may comments would light and particularly all and how through to encourage pandemic And today,

start stress of and all our levels whole. lives of employees, the I'm presentation. in brought to change put country Clearly, our on unprecedented our of to Slide X a clients, has and going extraordinary the COVID-XX as about crisis on turn communities has

employees, acquisitions, recruited of who has the our our part extremely many, our years. operational Pacific who of of face am been who responded. high managers and the those speaks many have leaders organization enormous have through joined the It for have In and team Premier to we many those proud quality of I way challenges,

rose I to our of working other of to manage of employees, all behalf country's on through Board clients early every whom in one our the of and our and effort They each up help mornings, an serve, diligently in our each late our stepped nights, to we unprecedented weekends history. extend and through want Directors, an period the to holidays, all challenge. And thanks communities

able the COVID-XX our clients, As service continuity with acted sense level high to of execute served and threat increased The urgency planning team or advanced our employees a protect leadership the of maintained. rapidly our preparedness business team safety clients and effectively ensure and and by pandemic employees health was to bank's quickly well. of was client multiple while and initiatives on our to designed adjusting and operations a

or able of three-quarters to seamlessly staff to employees with remotely. transition the were We nearly ability XXX our work

adjusted COVID-XX shareholder do the on close track the expect the the to delays of we X, requisite schedule and Bank in Opus approvals subject and conditions. protocols. any We pandemic, closing from to various on Despite receipt our also the customary We challenges branches of acquisition. not may remain June

be during one is efforts reinforces principles The the the both time. in quickly It's key together been teams I Premier for a Pacific of an difficult firm the institution the combined its own. come extremely on Seeing teams of so will transaction. than time. stronger either amount short to their very period Opus thank approach an want and of incredible work and of collaborative And outstanding Bank

to and impact throughout we minutes moving not see individuals I do We to will end country. continue long or spend ultimately crisis how this a discussing couple businesses how it what forward. want our of know will

recession fellow of country across I stages and temporarily filed in in millions have businesses and tens As the release, early our our we of benefits for a noted earnings the have closed. we are Americans believe unemployment of already

hiring with are level of and speed the risks unparalleled positive economy. and economy uncertain the the our are that support the Reserve unpredictable. monetary to and reopening may fiscal Government have the the unpredictable increased to on economic impact Equally it recovery is lead and path The from Federal which and resultant Federal will the

may play short-term environment, for with franchise and enhance us tempered. perspective prepare position offense In This that the recovery we our last the the that when is it allow prudent will recession a expectation believe to sustained the decision in opportunities be and for to further this economic to institution subsequent period the and will making inform value arise. could and operate us

COVID-XX active the In administration clients. unfolded, protocols, to our we loan portfolio, included credit is This began crisis our our of component to to efforts terms management assess has of and intensify portfolio from core segments, the the as a Payment Protection impact Plan. and individuals on such government this to at-risk crisis, begin initially programs best COVID-XX, involved SBA help as evaluate the outreach clients assessing strategizing businesses which and the support through solutions on

to maintaining structure the organizational growth. the committed a and balance been Over an resilient we sheet and years, to support company's building have

uncertain we and Our pre-tax with to the institution manage of entering are a positions, situated commitment. outcomes. are pre-provision evidence liquidity well into strong capital from By position income, times variety these this strength, of our of together solid through we a feel

are crisis. to through Turning clients to the I discuss want this some we support Slide X, to of doing things our

ATMs have and limits on we customers, and increased cards. deposit variety waived fees a daily of cash debit withdrawal our For

were able for SBA applications we As PPP. to the experienced quickly an process establish a accepting lender, for

our get we the for that funds X,XXX was million program to we has round an to thing first demand representing participant We processed as clients and These requests first of from our in another early are We to to the program being portal of existing on clients. by the loans, approximately be made do in have queue. been exhausted. closed not strategic round the overwhelming, believed active X,XXX a during were it firmly decision able the $XXX The SBA requests prior right the approximately PPP funding. through and

applications through the funding. on these of of not speak, round to portion, those second working are hopeful if as a are all and significant we We close

For loan workouts. do modifications typically those and credit know you loan followed to the who risk, managing do our or of not have company approach we

As the need pronouncements to COVID-XX accounting would crisis took understand program. implications change. and implementing to unfolded, loan the understood modification time prior We our that and legislative, to approach regulatory we

a small We have process few at processed have for we we prudent clients: commercial doing of Although consumers, three businesses this clients. point, criteria only and warranted. categories a modifications believe so we when and developed identified

these experiencing our a small stress, For large the dollar XX-day do not under we first loans deferrals aggregate, portfolio. categories will loan and businesses with In $XXX,XXX, consumers upon customers represent request. of loan portion grant two

borrowers, best the would payment coming reopening April indicated be to have them to that the gap make and asked individual together, over For to their and seeking we the the economy. bridge the way evaluating have situations out commercial months we

are cash We plans business flows, and in with operating impacted are have discussing our they the understanding their how how this forward. they for clients COVID-XX pandemic better the has environment moving

situation on are resources the will the of be that potentially a reviewed We and case-by-case from government solution help relief additional help in combination and be each basis communicating programs. terms help would a from us, of that them from

Pacific that more COVID-XX as related second our Premier a be the this in although At full to have banking move we do we to we point, quarter. are expectation relationship modifications, expect the them sharing Additionally, few with we help can so future. better only through our that we needs processed

can COVID-XX We and receive to but are of modifications either number we portfolio scope form our still Though the the in depending estimate related of in some up how the XX% to economy months direction assessing could come. clients of upon progresses. the impacted of change that to certainly the impact, range loan XX% that total

sheet X, of years. the past our discuss to want approach Turning to to Slide couple managing I our over balance

part emergence and global little has been our have of swan economic the They truly two pandemic extent are about recessions expansion years. the not. length the is a a While of the event, cycle, business past the expressing of and are for precedence we a concern this black to normal

the production completed grown and a sheet have acquisition cautious pace. we Grandpoint balance consistent have we more we our what more in regarding since mid-XXXX, become loan said Ever publicly, moderate with at

risk But throughout credit We have felt caution. with two we further years, management always and the a a organization. warranted past culture disciplined the strong framework environment operated the over the company instilled

underwriting deposit relationships In brought and that making regularly been to we that standards addition sure the reassessing our proactive off we also the weaker have risk sheet. borrowers credits to bank, moving lower focused on in balance

potential refinancing For weakening including able through several elsewhere. years that felt exit did deterioration economy. and the the of for steps, were in a have to this encouraging borrowers number loan credits a past sales we to seek We we

well-positioned are growth all that portfolio to framework, For challenging the management this management, we through and conservative these to of proactive believe we our reasons, approach manage our period. risk

X. Slide to Turning

both program our capital bank focus impact key Capital suspended a remains in capital have You unknown, company area our further holding stock a Board strength economic of the been can have company's to we the of see has light for pandemic, of and the And and the which Management. levels. much of ratios. always ratios of management strengthen our repurchase

believe have not position policy We have us significant such, this in with of dividend this at we our and to pre-provision puts income, made time. changes pre-tax And coupled a we excess strength. capital as our any

of planning employees, we will and making. can being our find of a we management capital pay integral in been Given to capital to have believe our testing and the prudent an we decision source while be serve. we part our stress strategic continue clients to communities and That environment the strength which ourselves approach today, continue dividend to said, our and

At Ron? provide the this turn details some financials. point, over on I'm Ron additional going to to to call our

Ron Nicolas

first Steve, a Note overview with results. quarter discussion. non-GAAP will a highlight good measures few in on of our morning. X start I'll my Thanks, quick financial Slide that I and

We have appendix GAAP the included in reference. your a for reconciliation

and of the $XX.X per of economic or $XX.X $X.XX income share. bill reflects the million net COVID-XX. reserve that generated implementation our million CECL to a in the We includes forecasts Day-X This impact of due deterioration diluted

interest core and another came the and We terms loans was key including XX.X% basis our flat ratio which million expense, at quarter, at our core ratio despite strong priorities, had our XX.X%. the fell with quarter points of to challenging loan managing growth efficiency From at operating number X.XX% by fairly costs. well deposit it in XX We a March of our solid on executed standpoint, our of of with in net environment first merger a deposits as in effectively $XX.X XX. net related cost deposit margin non-interest and growth, to excluding reducing

March of profile quarter basis. annualized an X.XX% points Non-performing Net charge the loans quality asset at remains strong XX. were net ended points all loans and offs X.XX% for of X quarter on basis basis and delinquencies at Our across as metrics. X the

loans and ACL of our as our of ratio, including the ended combined at was the Finally, March at discount, X.XX% XX for held X.XX%. quarter value investment fair

of X net strong Slide capital driving with and the margin core leverage, our interest operating strength generation. our illustrates earnings business in

As highlighted assets pre-tax average of our pre-provision income to X%. by

manage Slide through effectively company. on we tight a environments, XX environment highlights have been trademark volatile margin, and with the X rate the in interest and through This to net last -- accomplished able of a to both risk within a core rising X been long falling loans over X deposits disciplined which pricing our -- quarters. range has fairly

at remained XX%. base, numbers deposits deposits high As deposits I client managing on our been varied growth quartile our cycles. of model. We quality business remained as relationship Slide total non-interest deposits the our XX, deposit interest non-maturity these have at the successful rate not strength illustrated Notably, while top did as growing reflect sacrifice believe based XX% mentioned we earlier, bearing and through

liquidity with by XX Slide $X.X strong the cash securities and funded and deposits position billion. sheet our core marketable highlights principally significant of balance

we $X.X In through additional over primarily in FHLB. funding the addition, capacity, have billion

total CECL Slide This The to a our held here discounts, value in NPLs. translates our million combined QX. loss now loan compared credit Turning investment, X.XX% over allowance X.XX% for of our when in of reserves key at takeaways $XXX summarizes are adoption December into investment. increase XX, balance level held loss over with loans And the for the absorption XXX% sheet to our of on for provides current which fair loans for Xx total XX. of

for loss including which quarter. Slide expected and the evolved model current economic Highlighted end assumptions, the assumptions on following the of and further key XX deteriorated credit are reserves, forecast the drivers our

driven meaningful acquired principally of was our Our Day-X loan reserving $XX of million treatment. which the loan life by portfolios, allowance the not did prior have and under accounting construct a

weighted qualitative showed This critical Day-X the in rise deterioration were forecasts which results Moody's by baseline and GDP the forecast, using the pandemic in Not $X We million forecast. initial surprising, our benchmarked additional pandemic reserves. Day-X further deterioration unemployment. entirely an to reserves our the driven updated almost in with Moody's economic gave subsequently

our the prior Notably, March quarter. the improved asset actually to the of saw mix we XX, quality largely at slightly based loan relative profile the of upon portfolio portfolio

However, though the this see of of increases based are the and recession, on magnitude provisioning, the we time. duration increase any loss unpredictable depth reserve expected the credit higher leading and at to requirements timing could

this At to turn Steve. going to point, call back the I'm

Steve Gardner

and Thank I XX Great. not quantitative about loans our you, am and In each classes. through about On detail framework. and information credit highlight of management loan key significant to specific I have concepts Instead, going of various asset time, portfolio, provided speak to slide. Ron. risk want categories the Slides we XX, to qualitative amount our a of interest

a I joined compromised paramount organization and Our bank XX for of quality culture growth. ago. strong has credit over Credit since been the is the years underpinning foundational is not

has will and focus estate or always Our real their holdings. cash be borrowers, and underwriting flow businesses of been global on

construction not on does cash and rely from loans, actual flows. approach projected or results Aside utilizes our improving

partial majority We our are and/or exceptions require or loans guarantees guarantors. personal of and make to limited the the full policy recourse

portfolio credit. number relatively loan and to amounts are standing a the to of coverage diversified loan discipline of reflective our Loan comes is granular strong, extension of long attributes. average value across are low, it service ratios debt when while ratios Our and

we risks, allow inherent which wherein understand appropriately. price for structure specific the focus We and to risks us asset classes those on

feel national across from managed of industry just XX.X Overall, actively into times the shared end. and position By proactively through no institution have at million these loan to and trip the to a well-prepared portfolio sectors. we loans we are credits Importantly, prudently leverage totaled uncertain quarter entering strength, challenges our underwritten, credit diversified come. manage we is

utilization XX, rates. and C&I summarize line construction Slide Turning we to

We have activity. of normal Both of line between we stable on monitoring several not for the first relatively increase categories and signs utilization been any of quarters, lines have are XXXX seen the commercial close we although from the seen any closely some for quarter. and past excessive end loan draws deviation have the

have Notably, end XX and summarize came currently of already quarter. down at in On outstanding low both ratios to and first decline and loan of in quality were begun at categories quarter stand Most the the we commitments asset lines the XX.X%. first Slide relatively C&I credit remain at XX, trends stable and levels.

provide acquisition. XX Turning to update on XX, Opus we the Slides through an Bank

October on As for conversions June close and I X weekend we on of mentioned to earlier, the acquisition expect the scheduled with remain XX the XX. system track and

line communication in overall with flows, Opus, monitoring liquidity, and operations. utilizations We regular their performance, loan have deposit been

resulting have of We aligned COVID-XX. been bank's light each our from of to in towards operations integration terms approach in changes the

extremely compelling. As and remains when we economic and the deal, announced is talked rationale this about strategic we

XX and diversification the in the our presence enhance sources As attractive and strengthen scale in markets, through value fee create and improved Slides increased to shareholder ability loan will future. larger the income XX Western U.S. strong our show franchise the

Importantly, more lowering this expense combination provide to earnings, will opportunities impact costs and deposit levels. us positively including with managing

Furthermore, thoroughly given had previously the in change economic be value reviewing fair since projected. dramatic announcement, we environment the marks we the will

be banks, all pre-provision quarters. interest being key coming rate the our combination of able With synergies environment income impacting the a realize from this over low pre-tax will the to driver

of starts about Turning the our I our to with organization. want wrap thoughts a to Slide with few It up XX, DNA culture.

operate decisions having success right how how our the of the our challenging knowing both culture. good deliver fundamentally making important, all culture perform shareholders. transparent and improve; execute, being hard how our on right are sense way actions; the are people have intentions work the we communicating for your built externally; we the urgency. our that and and company understanding a attitude, of clients, When colleagues are for about during over we and and times, our to we Premier, the It's always and with right Pacific accountable internally sound things articulate are but rely tested For we have attributes and pillars we measured; to room doing results with

more (sic) our XX], financial efforts. providing as community nearly hours. On In ESG work promoting X X,XXX take charities in community volunteer on our efforts employees our with to organizations bank, their with obligation a assistance to summarize to we [Slide boards our roots company, XXX donated our Slide we a from communities missions. to and than supported seriously. With we of community $X more million the variety development capacities, technical support than and serving Across XXXX, local

We do to give to are proud a citizen. our of the corporate communities work and back model we being

reasons Finally, the discipline we summarize framework. our credit to manage believe this sound well-positioned never Slide through we deviated management we XX, are fundamentally our We crisis. risk culture or from

Our communities our will us our new well-positioned stakeholders. franchise, to of take are or for advantage that continue our of owners. on and opportunities transactions strong emerge core of allow strategic Because means employees, from whether clients and build crisis, clients, value that all this support to strength to of capital ratios earnings our adding executing we that the

brighter talented other work with again work of incredible clients. me employees am of and and our their the for all fortunate all us. thank to an future truly a forward let look Lastly, and I for hard I each team dedication incredibly to to

any would into please explain that, callers get queue? Kate, the to questions have. happy you answer how could to the be we to may With that you

Operator

ahead. Instructions] D.A. Tenner is Our question first Go [Operator Gary Yes. from Davidson. from

Gary Tenner

guys. morning, Good Thanks.

Steve Gardner

Gary. Hi,

Gary Tenner

have couple of a I Hey, questions.

the to specific provisioning at the June the on XX, coming accurate? loans talked irrespective and about model the sheet. XX, CECL of So that I legacy comment assumptions on potential where that just balance higher portfolio assume was and the for slide OPB Is you

Steve Gardner

correct. That's

Gary Tenner

want just I that. to confirm Okay.

if about, take of their a which come is you're kind So would suggest mix, that then to talk as higher bit CECL loan were OPB, than of relates you numbers loan about and overlay X.XX% Opus, methodology loans segment at as XX. about the their in those it ACLs ACL Can about that were a thinking your ACL with relates little that how to -- kind you what you have that over? March to of the

Steve Gardner

will revisit fact all value here those top that particular how in and the And then on with take Well, and the will to in in place the value the are in unique has to months. be a prepared loans. And fair how reserves first, say. need reserving is the estimated. coming aware, of is quickly had will CECL our result Two, ends where factors, one the economy alluded that economy that we I my framework the had hard up accounting, of number we'll a originally we in Obviously, of we ACL marks it fair of transformed, conjunction of of comments. those and to marks as the aspects level others you Gary, given transitions

it's difficult of to just say So given uncertainty. the level very

Gary Tenner

fee in And regard that could the also with and the loans the you you loans? what that. how weighted expected average or tell us appreciate approved the is have you've then funding anticipate the pipeline Okay, PPP, on to

Steve Gardner

working still Yes, that. are through so we

we were we X,XXX loans the the are that round under first As -- we and right processed had now. working government funding had said, already I of

dent In night a all big remaining the fact, and had X,XXX loans. we folks put working in

have the everything fees shakes see the the of information will here. where and end we are So quarter that out at when

plenty excess balance as the the far sheet As of today. liquidity on we have funding,

liquidity contingent well. of as plenty have We

on We'd those we if we end a here liquidity on whether a We are one hold pledge decision secondary and ourselves we the funding make not whether into develops, quarter sheet, it. loans or loans about sell and the expect those market, to assuming the before forms loans those still of balance thinking avail to Federal them. Reserve's facility or

Gary Tenner

helpful. Okay. deck. Thanks on loan additional It was lot the a the slide detail for in the portfolios

Operator

question from Clark next is ahead. Piper Matthew Jaffray. from Our Go

Matthew Clark

any thoughts seen Ron, together good still on updated basis, core NIM of a outlook level when put quarter transpired on Is you two have based come what the Hey, banks X.XX%, and you've a on X.XX% good to how morning. kind the that date? things full XQ?

Ron Nicolas

in really we Yes, haven't mirrored Matt, on refreshed else going been that. our so we've everything been view that's on,

I change juncture no this real at say, there. So would

carve update when course no we this PCD Of to value that out. at and impacted we be number. it the fair marks get will the final loans to But that point,

Matthew Clark

the just a foreseeable sense until degree the in you're standards tightening or the Okay. the outlook, balance we growth flat potentially most this like future Can give shrink? And outlook, to sounds you then standards where sheet tightening growth expect fully reopens kind economy on overall and not it to should or for of hold you're us loan sheet of some whether the relatively balance here the environment.

Steve Gardner

Hard At about about to point, forecast. say you difficult just really level cash and It's understand say we're think Opus. think any any say, it's really future class, for this challenging I'd certainty Matt. to asset of we are a It's with just on cash too with the flows to flows it, level the name through the I'd as And say. this basis we of quarter, to combined moving it it difficult uncertainty. as

of substantively that the that expect seen would put and so better prepayment get over the speeds to slow would visibility we way we informs our And quarters it as would certainly that And that the we will and that loans would move viewpoint. we've evolve down the time But well. as pretty inform and months -- through much we also how in far books, expect on will thus ahead. we that

Matthew Clark

new can resolution? situation know lending was portfolio, color us the potential in franchise you only the concept there, and but some give just Okay. the the And non-performer I one on

Steve Gardner

to in That progress. was just quarter the and about that continued came fourth something

we all pursuing We credit. collections, do have we'll two loan on strong options very guarantors of on be as any our just on and that

Matthew Clark

exposures overlaid overestimate by codes those don't on on a high we but know defined [indiscernible] exposures, isolate to you the risk can and detail doing for have there's ton at those you overlaying exposures, of again, be -- well want that the that now. there I criteria categories. risk CBS-es, But just embedded stores, Walgreens And the as potential Moody's right that numbers of are in your are that that deck Moody's Okay. stuff And use grocery in and sense -- some I because some could any uses? obviously

Steve Gardner

think I think at the moment segments maybe other difficult being to couple that's mean, That I and that asset impressed just business current know current said, the how understand here quarter a better and delivery. what Amazon that to to we've adapt owners been we've the say. as don't you through few with as I than will and environment seek conversations than I move again our stress get maybe better we class isn't initiated the and mentioned under other and visibility. clients

Matthew Clark

to the just fees contribute then prepaid much item. this housekeeping margin How quarter? And did Okay. one

Ron Nicolas

from last -- think fact, different I flat materially the weren't were They quarter. to in they

wasn't material I somewhere difference. X, the basis Mat. it in So a was say it X points, want to

Matthew Clark

Thank Great. you.

Operator

from David from James. Go is question next ahead. Our Raymond Feaster

David Feaster

everybody. morning, good Hey,

Steve Gardner

morning, Good David.

David Feaster

on I just deal. the wanted Opus to start

even the strategic might some off your opportunities? level for high about items operating had you seen, strategy Given potential whether that run additional or that that a of or creating you be that some slowdown change environment the thought other change bank, accelerating at a maybe have does expected, we've the current in that

Steve Gardner

I things. all think of those rethinking we are

front, to brand you're in to your how footprint on expense whether environment, how managing at you're You we'd -- the other how managing it's looking the you're be be how various opportunities. going and this channels, have would portfolios,

those closed, getting their we converting potentially then on develops. as further are and opportunities much focused fully at now integrating right environment Although looking very Opus systems, the teams

David Feaster

think know just portfolio. the reserve lot others? I how then Okay. see I assumptions on -- on based reserve can you then builds you do a segments guess, where expected before you And your happen where you more I do it's quarter still things think do the build high about it's and that of a builds put economic end. legacy guess early, on reserve commentary near-term need in than might level, at what But in

Steve Gardner

is the that fact as an point is, is There's through country. this gone have at in and been time that -- never a we event

conceivably look crisis cumulative time, at of Federal as certainly financial government benchmark. this and the potentially know Federal uncertain could magnitude great speed You plays out. the of the same the the the and the and all again response rates the a But the loss outlook to Reserve very ensuing from recession the during at how make

sophisticated So data environment In going sound running to a better some a had than approach that on on a model. perspective given our and simple But that business we is in I forward. centered fundamentally the have is more that of a goes less. sense, process reserves are back very number years. It

at that at be stresses and will to We look that what look we We'll around reserving produces. will appropriately. continue

David Feaster

just having the program on opportunity talk additional far conversation. customers maybe light using then commentary successful deposit I an you're and And PPP that to liquidity your Okay. that I gain that the wallet share backdrop, growth and appreciate deposit loan of you of you how about as the terms been how that's growth guess of thus challenging building? plan a in growth use and you're Could excess in in to

Steve Gardner

bank to at the to we help we point and a move -- that forward. in provides excess potentially and our clients as time liquidity that bring think a new look we clients then of existing level into Well, having serve it's it optionality

perspectives from at number a looking different we're of look, So, it here.

David Feaster

All Okay. Thanks, everybody. right.

Operator

question next Bohlen from Go KBW. from is Our Jackie ahead.

Jacquelynne Bohlen

Hi, good morning.

Steve Gardner

Good morning, Jackie.

Jacquelynne Bohlen

Is Opus Bank in participating PPP? the

Steve Gardner

to with a third-party worked to work than potentially believe maybe I assist No. Other they've them.

Jacquelynne Bohlen

Okay.

customers to -- it's they're referring not So not a it's third-party, you?

Steve Gardner

the in has There clients may be very we're we've strong been -- first. serve and two trying demand to one our existing there had, but or

Jacquelynne Bohlen

Okay.

Okay. Understood.

quick one clarify to housekeeping, another item. me on wanted for into I move And Just then one that. before

So you debt benefit have do the benefit? exact in quarter, BOLI the Ron? The

Ron Nicolas

The right debt in benefit, Jackie, that minus that plus quarter was XX, or $XXX,XXX, range. right around somewhere

Jacquelynne Bohlen

this this to tremendous we loan appreciate your thinking everything time into you've Okay. been I else. your for about just throughout Steve, slide preparing And forward, you've some the just it. through as you. quite for alluded look you've on now, go given decks recession Thank remarks that and portfolio

through to see Is cash of about stay-at-home the you of looking think more difficult, you are this about to and perform the it orders, end those stay-at-home what lifted, which has we move As you're become terms obviously flow? provide in as just of increasingly cash businesses is it ways for how in return the orders thinking that? are once clarity wanting how flow

Steve Gardner

a operator Jackie, case-by-case in basis. our classes, fashion. And asset the about different does business it's be We're various it, diversity approaches every business got given on individual portfolio across basis, an because the a sectors, owner, really thinking industry on in every to

be So the look the assessing like. prospects conversations are flows, future cash having we'll what

I this think just of number it's but in early a there are very factors, So process.

Jacquelynne Bohlen

Okay.

And Okay. then -- one. last just one

related evaluation of that realize that, Is can you're and or hold any terms you well? the as acquisition, us the I on there evaluating value assumption? fair that CDI update cost sheet and that marks provide to In that under balance saves on does for

Ron Nicolas

XXX basis certainly rate Well, now with the respect environment, with which points to lower. change that'll the is CDI,

for So certain. that'll be impacted

of at evolves, But point out. this savings don't that. I our we'll figure I as cost that think on changed know we've the juncture, that view

Steve Gardner

Yes.

operate to we expense of all that dynamic we the We the including will what we believe environment. business, are At with. aspects -- manage I all think the adapt side -- same time, quickly we're environment businesses effectively. a comfortable and And we're we in very very and announced,

Jacquelynne Bohlen

for you it. Thank added I the Okay. color. appreciate

Steve Gardner

Sure.

Operator

[Operator Tyler from Instructions] next Stafford question from Go Stephens. Our is ahead.

Tyler Stafford

guys. morning, good Hey,

Steve Gardner

Tyler. morning, Good

Tyler Stafford

couple all Hey, questions. a information the nice just for of again this clarification quarter. deck I've quarter, added got the and in thanks

First of NPLs within that the past million on million included number credit, you the of days the due, is XX-plus $XX $XX.X is that disclosed?

Steve Gardner

Yes.

Tyler Stafford

It included, okay. is

Steve Gardner

Yes.

Tyler Stafford

Okay. And acquired know $XX.X much versus value clarifying Thanks Ron, on on for that. the credit? then is that how of million mark fair do rate loans, you

Ron Nicolas

that number No, I with here, don't me have Tyler.

Tyler Stafford

rate X.XX% in of I though of a for all absorption rate kind just plus and fair related, post-CECL thinking it not this related, that mark slide want make if is fair portion correctly is of Is portion -- that XX coverage? the on a allowance that there of that about I'm loss a on be world that value sure would as

Ron Nicolas

fair post-CECL That will correct. world, income. in into the Well, to is that it say is that, accrete

Steve Gardner

credit is individual -- at happen same those time But what with that depending … upon

Ron Nicolas

Yes.

Steve Gardner

amount certainly sell else … absorption, to there say if to happen or we -- to conceivably, some or could entire something conceivable loan. that loss or were other it that for be loan that the --

Ron Nicolas

That's right.

Steve Gardner

right, could you're We believe. pretty number. there differential. get we is that But It's you minor a

Tyler Stafford

of No. of helpful. questions That’s may prepared the but just And how then at the or disclose this deferred earlier in missed from portfolio have franchise this me. you remarks, Steve. lastly much did is one point? very Thanks, I finance currently

Steve Gardner

deferred. it's of None

Tyler Stafford

from Great. me. so it That's Thank much. you

Steve Gardner

there rethink my and our and spectrum clarify the not owners this from took discussions case-by-case we material it that summarized thought-out I and credit, I remarks, make read of is we others, we've and all think but had to how the have We a of the it, reason on certainly. they wanted we've certainly history then a environment comprehensive, a across modifications approach as understand our something The that then had business to it's early approach legislative began this such, way again impacted, we recognized with basis. time we don't regulatory we've in managed in and through developed sure this little just folks doing summarized approach. way expect of modifications. Let And though, should and to outs, the slide me on in impacts, viewpoint, is, that that's on we in accounting understood we Tyler, the pronouncements, training the very is franchisees the or -- know unique done well a work was deck, that been prepared and have that

we that businesses over is restaurants expect rent and already business flows us, and time, the I points relationship. may of know, the modifications both scale some the help, However, it we of rethought same price the either help franchisees. food and support that aspect think initially, Many and cash message But some will going franchisors -- it, had do portfolio, that and/or one cash don't food, through unique of majority of we a drive-throughs given appreciate I'm is at said, quick on most lowest clients delivery offering segment those told to clients have said, or being the fast time we've it abatement, impacted, of need and said, believe offered who do benefit fact that up various been even have of the have service. and you that in royalties, to all back of need called from for have the us dining and XX% to the number loans takeout, we have pickup for in I and called options. vast which but loan of us service They called who our hey, offer

more support. well them. will conversations capital they going help well. clients and like rest the help to as the But we're we it at and providing the that the and this same business with of franchisees liquidity the we’ve is form the as So that And fact may be resources expect with the we’ve time, clarity the their will of have of additional extensive as to need some better the that in as who we approach

Tyler Stafford

I And appreciate modification procedures of I make lot That's great color, Steve. a that that. sense. think

April of was borrowers kind as it that ask those their on a modification of me Let negotiation earlier you how have did those with that handy kind tactics make status? this payments finance of them part mentioned Do you put many of actually way. you your franchise before

Steve Gardner

the of of about grace I have would We and program at applications various like, tell that. period something and dates payment the process. don’t themselves know would do roughly XX% times the the PPP do it, and -- their some because to we then expect in day various of disclose. we -- you -- it can last avail we don’t or -- have the that’s We -- franchisees

Tyler Stafford

much. helpful. Thanks so Okay. Very

Steve Gardner

Sure. Thanks.

Operator

no there time, this more is questions. At

concluding the turn Gardner are the we back So question-and-answer session. closing over for to I would remarks. to like Steve now conference

Steve Gardner

again thank Thank you, today. Kate, us everyone and for joining you

either We If would time. you to call. please with additional don't questions, Ron chat to any happy myself hesitate have be a or you give

Operator

you concluded. conference Thank for presentation. attending today’s now has The

may You disconnect. now

Pacific Premier Bancorp (PPBI) 28 Apr 202020 Q1 Earnings call transcript