PBCT - Earnings call transcript Q2 2020 | People's United Financial, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the People’s United Financial, Inc., Second Quarter 2020 Earnings Conference Call. My name is Andrew and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. to presentation like to now would turn over the Mr. I Investor Senior People’s Vice Hersom, Relations President Andrew of for Inc. United Financial, Please sir. proceed,

Andrew Hersom

afternoon for Good you today. thank joining us and

our are review David Chief Officer; Chief Jeff Planning; Financial Corporate quarter On Jeff Chief Walters, Rosato, our remember Kirk over which turn and on Please call Officer. on Relations Chairman and Slide to XXXX the is Hoyt, to results presentation, of Development this the Jack our peoples.com/investors. statements Officer; Accounting at refer forward-looking Tengel, X Barnes, Executive will and second posted With to Strategic President; Investor website I to that, Jack. call

Jack Barnes

loved Good Thank and us appreciate safe and ones healthy. afternoon. joining your everyone are We you, remaining hope Andrew. today and that you

play a crisis and in between in organizations relief customers. strive to relationships this engagement want together is businesses our community discussing and these a role Since socially said, take and We with serve ability we to during need. those to our to in we're of in past People's their as results, Before to forward crisis, to provide forge and customers employees, critical daily thank and in solidify move this our a through I and we the onset to employees and The ability and to most between the communities the strengthen truly the beyond. together. our all pandemic. perseverance and Their United has distant challenges confront for continues today many interactions the reflected the customers this have of financial further the supporting throughout communities moment individuals, health in relationships sentiment environment

a As last this we I in of crisis quarter, position strength. entered mentioned

increased and success the XX% on but net Our not basis the indicative year prior quarter an XXX revenues from from of million performance the higher also of the ongoing quarter Pre-provision second controlling of interest operating and resilience benefited income costs. only in strength, was the franchise. net

to continued to material in and to have the of evidenced leverage, a savings tangible as are of reflects recent of year by achieved net ago. book of margin year XXX in deposits the a that per a point costs. share also ratio We operating The floating from increase XX.X%. we loans helped basis pricing from to XXX of respectively, produce and deposit These the improvement reflective and basis was XX% quarters. cost and positive $XX.XX, and both increased an X% the loans compared results downward points year-over-year rate efficiency linked-quarter. X% by generate value acquisitions partially XXX Period-end mostly borrowing compression interest margin seven linked lower prior offset lower reported The meaningfully

at the decreased largely to pandemic higher planned loan significantly inflows in commercial loans from from loans, mortgages. Deposits end and lower balances. residential deposit balances payments to economy. X% PPP due Clearly, XX% to reduction XX% the reduced benefited ratio quarter. federal PPP stimulus real estate funds, strong deposit the the Excluding impacted and Notably, first municipal the of our primarily has

period. in progressed, in strong. Although, be uptick mortgage earlier see modest did to from In continued second the business as activity results lows we the a warehouse the quarter particular,

commercial ability were were utilization funding steady. and rates have C&I a originations and mortgage needs. did more banks, their to confidence of of payoffs. strength offset residential level remained experience not estate Unlike many line This expected, draws, the C&I, reflection their is originations base our of our our high but and customer and robust support real in we remain a In As by retail modest. than channel,

increasing of of lease finance Business equipment exception has subdued, been New seen with signs we the activity. and have where

While has customers. is modest, been focus new maintaining activity high of a business with communication on our level

served to virtually branch to want through serve This person in has which enabled successfully video relationship and either meetings. in and with protocols, and or continued needs. to have our manner advisors they the their customers We with personnel wealth in managers, our channels customers distancing management personal be via responsive transact be digital social to

of We top normal our and across said, our that returned the of crisis. Consistent priority with our customers. effective this and of need, our through history to navigate remains are that customers helping providing given pandemic support committed to are pleased the July With we times our trends branches all X, footprint. health operations favorable well-being in of employees

funded XX, were employees services, As XXX,XXX PPP of $XXX,XXX. across received totaling have under professional Approximately construction. loans healthcare, have us have average that Companies the an supported employees. XX% social and through include which of billion, $X.X of loans over paychecks XX Top July more Northeast. of retail, than loans we industries nearly PPP XX,XXX these funded services the

balances materially, Program than in billion loans Positively in of Main pleased businesses. loan to Lending and loan further registered to and totaling have representing accounts, from initial for $X.X and in payments XX,XXX since over granted quarter XX% more we also Street midsized request approved the deferral, $X finance in At X commercial the forbearance deferral. they X.X small appropriately trends have equipment we We retail. the and receive billion have end, the billion for We're forbearances. were of in XX% of support slowed comprised been billion

that to continue customers the may release. of also require We extended needs assess

forbearance to in business as relief requests subject the the economic as and round are more of viability new confirm environment. additional needed, this extensive a to due well diligence Second credit is analysis

the is conversations be expect approach and levels we meaningfully We and based round customers. in the than strong on relationship believe customer capital of While second our base, liquidity across forbearance to will first. process, a still our our to early the testament less reflects profile banking this

the total unpredictable on economy impact Turning to is unknown. is and duration Slide of X, it the clearly the the pandemic

diversified high-quality cycle some comprise loan philosophy will that tested confident remain once we held customers United. differentiate However, People's our portfolio long again underwriting and

Our is advantageous, challenging model economic business conditions. in conservative the especially

a is portfolio of not to of running One expose risk of business. line does the bank diversified strategic single the a objectives management that our overly

our of enables trained the remain our and the managers All lifecycle significant highly and knowledge force through relationship customers of conversations with sales each develop to loan. facilitate with entire This detailed credit are of relationship borrowers.

focus background quarter, these our mind, on business the As in restaurant in stress, empathetic by included new of such, sectors needs retail, provided is significantly capital economic from with of that times a have again to once the to hospitality and quickly to us have that relationships transition exposure deep With the COVID-XX. preservation mindset a customer. impacted X, Slide sectors. to last we we Similar allow

crisis disclosure underwriting to only As we estate an our view enables loans lending $X.X refined us our CRE-retail metrics the in are position have this conservative strength. commercial by of billion. strong each to Credit levels. including update It's in this portfolios, portfolio important teams. Balances our display sectors these real enter of across retail managed a the to are of quarter, at reiterate very

locations. essential do portfolio. retail pharmacies, not big half stores, malls and include of tenants These have approximately home Importantly, comprise and material grocery improvement to box the exposure enclosed we

approximately but In at for collection we rent addition, to customers improvement in have trends to retail a declined near rent deemed XX% Pre-pandemic collections we see by been XXX%, risk. meaningful pleased were by quarter with we end Deferrals July. were portfolio. May. customers, Based rent XX% expect to on for of collections conversations the end $X.X of the end the billion CRE-retail be at

in by round. of significantly is Given midscale Balances of to lending by will than managed teams. requests the the concentration of be is expect CRE tenants, less comprised the upper economy our major we properties. portfolio's are portfolio The essential the XX% of initial and portfolio brands $X.X majority billion, second deferral hospitality flagged hotel which

of terms occupancy, than these upscale the properties luxury fared in across better In properties have industry.

extensive CRE sponsors hospitality Each clients over XX XX% XXX and at are tested, are People's end. portfolio total million our customers Deferrals tenure exposure. these experience of of the for top have cycle Our quarter were long hotel account for United. hotel of

a of franchise for end have coming another million of portfolio is of especially only within vertical. Majority C&I expect industry the deferral. in of managed in where to first Deferrals steadily onset the experienced degree the through including relief. the second and restaurant of Remainder presently which While, traditional specialized have segment's round improved restaurant disruption, $XXX portfolio requested drive we approximately managed C&I in franchise of the at few Balances an traffic portfolio. customers and the quick portfolio our Equipment $XXX occupancy the remains has strong. lesser XX-day are service are a pandemic, restaurants to were is which customers a apply since end Finance. million, most finance for the the deferrals, quarter Many XX% of are total

multifamily moving worth portfolios. is the collection range in for the high Before XX rates high and in on, building and loans our XX% also high multifamily for The collection it's range loans. rate top office building in average continued office the top noting our XX% rent XX our

Looking the mind pandemic every of are for bank impacts forward, top team. undoubtedly near-term the of management

long-term. services ever-changing us that the However, and ways for will years further investing meet our our remain of In look and is capabilities past, different enhance actively needs the of from in coming broad on the and pursuing the to already we to customers. we it clear to products franchise array strengthen focused keenly much particular, are digital therefore offerings

successfully us had ahead by the needs, recent we're team formation our re-conceptualize customer advance business our is our other to introduce that office, FinTech plan will responsible automation provide by product of The stay strategic is of competitive further and unlike advantage business partnerships. our excited As innovate AlwaysChecking the the month. which we ensure any earlier also this drive theme have and enabling strategy, meeting of needs, not such, franchise. United but customer are for office will process management, pleased we offerings. and This with only Consistent to ability transformation digitization, to group People's at transformation

customers. is this core protection are AlwaysChecking This franchise. to account offering We differentiate further offering retain of we bank. proud customers will and United protection service People's identity this are personal level digital attract digital free and on throughout all our and proposition provide further will the the that of value to checking confident identity builds premium service benefits protection

has Berry, instrumental Officer, to more concluded your to the we this many, earlier Thank the month our Dave his discuss David Before the contributions. wish more I thoughtful People's second well with detail. now dedication in years His Chief turning as bank all wanted congratulate for many retirement former who's you, Dave planned over XX best. been than you quarter Credit United. to call results the leadership and to

conditions. years will Barry was he risk Connecticut of proven from the KeyCorp Officer. us footprint Rich including President our joins Officer. that welcome to he brings deep times working of our banks, excited peer XX of are And more role as with during His where at includes significantly him Market adverse David. at businesses, which Citizens of Rich knowledge Credit Chief managing Credit larger northeast holding and growing experience We than and new People's here's benefit United With also experience Chief

David Rosato

Jack. you, Thank

Our point ratio. improvement in second year were by quarter net the operating in highlighted a increase pr-provision quarter the prior to efficiency compared results basis revenue XX% and financial a XXX

linked-quarter increase million We share continued as of of of in average per forecast. COVID-XX. weaker which Operating million also by the driven XX.X economic million, provision common maintained to The $XX.X charge provision asset at a included excellent net a eight or loans the impact basis $XXX total by offs evidenced points. loan reflected was quality, earnings $X.XX

expected contraction C&I, first quarter times XX charge XXXX. of by first Our second timeline baseline of unemployment, net $XXX longer the the quarter it XX losses our portfolio up represents significant and points economic higher Total the break include addition declined at end allowance of more allowance at linked-quarter each loans. of a down forecast of X, which than due modeling credit as which segment recovery million Slide and of into to Notable quarter, to offs of GDP reflects million, to On the to provides as changes sharper a compared XX XXX end weakened points June from late annualized the more first XXX% XX given both allowance a half ratios PPP for segment. the non-performing basis coverage June we scenario, and to economic current adverse loans. the basis loan

increased allowance highly XXX long-term flows Equipment C&I and the basis to revert The points to scenario dependent the XXX portfolio's XX loss shorter historical CECL Finance makes on life model. points. XX Finance two of PPP, portfolio the basis rates duration which average and approximately is is allowance the years, them most under do points loans. not Excluding the cash of economic Equipment total equals basis reflective

X.X X% of net from interest by The million interest Moving to quarter. the million increased Slide income net impacted first portfolio XXX.X million. income X, unfavorably loan or XX.X

addition, and borrowing million securities interest $XX.X net $X $XX.X from by lower interest In in note, deposit These Of during by the in respectively. benefited by reduced headwinds income million lower approximately interest million net $X reflects portfolio than income more income were X.X costs, yields PPP million. offset related and million $XX which interest quarter, million net fees income. benefited the in net and which

driven net portfolio margin than basis negatively downward the impacted seven was the interest the floating basis X, by XXX Side The on by loan points of of displayed quarter. lower re-pricing XX margin loans. points As rate first

and second period. on books costs improved in PPP the the XX our costs basis in were pricing same our the deposit XX borrowing from points leaders lower. basis and impact Average points respectively. basis the the costs, job borrowing compared business XX the the Partially managing the continued deposit was first quarter, points XX seven working basis by a margin which these while the months. effects second favorably margin full on reduced in by yields security points of XXX lower points basis with quarter, over and as franchise, negative to not in for line did deposit points. discipline customers margin offsetting quarter, negligible three was lower managing addition, impacted Across basis the loans were In costs The remarkable net the

a Looking approximately ahead, in basis margin point three we next on the of the expect will unfavorable quarters. two have PPP impact each

X.X warehouse basis conversion the the the and in an on due first also growth of owner to commercial by Turning or to addition driven properties billion secured Growth important from loans increased C&I and benefited system to concentrated loans PPP It on X% with note period-end from Slide or Finance, X, period-end while early approximately in loans X.X Bank both in mortgage April, to in up quarter, average Equipment were balances X%. balances of was billion portfolio, average United were real C&I. loans million Average commercial is prospectively results. occupied reclassified the in $XXX estate connection lease. by core continued strong

the a X%. decreased $XX average or X% balances declined and driver of portfolios. loans period-end largest X.X Average period-end $XXX basis. or yielding Excluding first the period-end on in down sheet less PPP, residential an to decline loans than continue was both a remix The were million loans reduction the in higher on million with from quarter, while mortgages as billion we focus balance

linked-quarter $XX year-to-date. in XXX middle million, based York runoff $XXX adjusting and Balances lending portfolio, the while in for at portion XXX over which declined XXX C&I addition, balances quarter million respectively. million down the is XXX asset mode million, down was New In reclassification, the CRE million and and the ended approximately of transactional market multifamily million

to of XX the year off million, for loans a million for March XXX the XX XXX million addition, chosen was balance we since United have decline run end. period-end In and

million of We to the portfolios continue full million for year. XXX to expect for of each off run XXX these

for basis or deposits was and federal inflows the and Moving of increased up as quarter, was as average billion the well while increase June at first of XX, higher on XX% balances balances. non-interest-bearing period-end largest non-interest-bearing were by X.X on of from the quarter. average deposits the of X.X total At primarily period-end Notably, quarter. XX.X% both Slide balances period-end average balances, billion than a XX% from PPP on higher close municipal deposits billion an Growth to in accounted payments, first the more XX%. driver funds $X.X driven up X, the in stimulus deposits or

federal forward, deposit stimulus as the half further abate balances the we customers Looking utilize and second in bonds PPP anticipate of year. payments, to

loans. at capacity in Federal Our Bank liquidity secured capacity, of X.X borrowing Unpledged Home X.X XX.X quarter and of billion a comprised Bank funding Federal in X.X Loan end, pledged billion and Securities remains with Reserve strong, billion in billion profile

income net down driver results. XX.X million million XX% first of X, largest or a Looking million was in of gains on sale at non-interest quarter the was The lower loans. of strong decline Slide $XX.X XX.X

the reminder, million the first $XX.X a acquired related quarter the loans sale included in a United to transactions. As gain of

Excluding COVID-XX gains relief activity on income the related waivers decreased and levels to net driven sale primarily loans, was by of non-interest fee lower XX.X customer million and measures. of

bank swap a inclusive million waivers, seasonality commercial in insurance decrease $X.X primarily commercial reflecting in Slide the interest million reflected million of fees expense in customer $X.X income lower fee XX.X service $X.X prepayment in X.X the charges net X.X of rate XXX was renewals Equipment in insurance lending XX, decline fee million Finance. from linked-quarter. reduction non-interest and income, On this lower fees revenues due impact approximately million million. to non-interest lower banking million quarter waivers Specifically, on the loan second Overall, in of declined

of million quarter, The occupancy in included and XXX,XXX closures X.X in and million professional expense, second categories; and up compensation were transaction, driven cost, non-interest X branch million outside XXX,XXX non-operating $XX.X in in other and and following benefits equipment. primarily the by million related XX.X the United services, to the quarter in from first

compared by this X.X improvement related non-interest X.X due of equipment you impact compensation collectively year interest favorable costs, of the in X.X lower a Briefly benefits to and million, the costs. decline as is our was ability million result and $X.X driver of A timing. prior due non-operating and related XX, Occupancy million Excluding realize first ratio costs by and services leverage professional million, generate projected meeting see net the positive X% takeouts a in largest primarily expense to of million. acquisitions. to decreased and healthcare COVID-XX. Travel cost lower from to and were were payroll and down efficiency quarter. The XX.X% quarter. to was expense XXX.X million costs compared XX.X the a by ratio or of on particular promotion efficiency Slide operating primarily improvement can advertising And product outside and the expenditures

of quality As a in answered the excellent strength. pandemic earlier, asset sustained position we referenced and

points a As eight quarter. charge loans average percentage net two of XX, total basis of loan the Slide assets basis This XX of C&I the loans REO were represented displayed which improvement by from prior higher and XX first driven offs to points basis accounts, experiencing an as pandemic. points, one a to two account, was linked-quarter. primarily on points increase was basis was difficulties Non-performing

other The loan. acquired real was an commercial estate

second Slide equity XX, return were or average these of to and provision COVID-XX. compared on common to on The points basis X.X% resulting were was operating XX an XX down basis average on in primarily on assets an impact the points tangible operating elevated by the basis from recent quarter decline the basis of Turning driven return returns in of quarters. X.X%

the on structure of history be balance at business Finally, be PPP period-end we bank. pro mix and the for diversified capital X XX, continue X.X% risk for the long Capital strength. our to and It's Tier sheet loans, exceptional company remain and given our for ratio strong leverage note forma important to with would ratios Slide adjusting holding X.X% comfortable management.

answer may you ratio the ready Operator, remarks. prepared the for reported would PPP to Additionally, This our happy any X.X% TCE be have. X.X%. excluding We'll questions concludes questions. be versus we're

Operator

lines the open question. with to up Stanley. for ready your Zerbe from are question the [Operator comes of we first Ken And Morgan gentlemen, our line Instructions] and Ladies

Ken Zerbe

Good thanks. evening, guys. Great,

Jack Barnes

Ken. Hi,

Ken Zerbe

assuming amortization past pay like no next negative in loans. obviously you're you're due PPP point anything year is not a NIM of two other over But of even there, just than these full the loans, terms I guess to correctly, there's if heard guess first loans. I'm I to the I off, assumptions, couple assuming of roughly of called expecting hit NIM probably kind stellar quarters the PPP basis three question this those X%. under your or

accelerated is is other banks hearing on yield understand they yield X% most in negative of a is I'm think you why like what the just full low resulting in I amortized fully Thank these to assuming like NIM? house. Like this say, yields terms of house loans any such Tier you. something trying that hit? we're the kind over of from, or are the a or a assuming loan

Jack Barnes

Sure, Ken.

was basically I the is made few assuming loan two we're the for correct, those go and quarter, a in that second say XXX third all statement reason will for in it you're end. small negative. not difference between just and weren't we that would negligible average the the be will only loan the those be on under but yield. quarter The the loans the years. second loans is majority on average mean, quarter, first – I QX. assume quarter, assumptions, the difference quarter vast at real of So in only sorry, about a The first QX, fourth I'm the they QX by could that books we There's versus possibly tail

Operator

line our of from comes the Thank you. next Rochester And with Point Compass Dave question

Dave Rochester

Good evening, guys.

Jack Barnes

Dave. Hi,

Dave Rochester

the Any Just on retail your encouraging really gives one what the of confidence there weekly wondering getting I like hearing a or end hear that expectations from effectively, collections. these if heard collection would it's else? Are great. double from by rate the guys are was seeing correctly you cash your you going just guys you anything CRE quick customers July. I is that on be to to credit, data color flow

Jack Barnes

you of want Estate having that, particular that across lot and any our area, a those Jeff information Group of was in and with we're from that conversation to collected I differently. tabulated, having, data with we're businesses kind carried of describe customers customers don't know all Real and conversations forward. Yeah, if our

Jeff Tengel

commercial particular that's estate retail. No, having been real of focusing in doing real robust places customers What our with on all is right, Jack. we've think I conversations like

trends back kind is And so seen making They we're we're increasing comments a hearing collection. the the from collection our rent have of information in of all customers.

the but predict to second it's the sit steadily looks they've increasing today, the like, since start course, we what here the as of difficult been of pandemic. year half Of

today a So currently months than position were ago. three in they better much

Dave Rochester

in Yeah, definitely. seeing are book? acquired either Dave, metrics book and originated you activity underlying difference collection or just one any between quick your follow up, your

Jeff Tengel

Hi, this is Jeff.

out think that break – difficult don't answer haven't I is it But I to it's way. intuition short so. a think like we I know. it is analyzed don't that the My

David Rosato

Yeah, would we're non-performers, we're if our add, that et I just cetera, still really at on impacted but you look very not something, low. not delinquencies, yet

up there's that So showing changing in required are our portfolios nothing those numbers.

Dave Rochester

Okay, great and maybe just one good Obviously, expense last there's one on some expenses. this quarter. control

what charges for if wondering the all and the puts were forward thinking run and rate, a you rate expense good whatnot. the takes is Thanks. just and Just excluding about of going this run

Jack Barnes

take I'll that. Dave, Sure.

So would expenses around X.XXX billion billion. is you Guidance the gave about was way guidance a to as a in I know, we think January. X.XXX

is today of we'll the said lower done. right and thinking year time around that be all is Our end the that by the guidance

Dave Rochester

right, guys. Thanks, All great.

Jack Barnes

Dave. you, Thank

Operator

Shaw question next Jared from line Fargo. with And comes the Wells you. our of Thank

Jared Shaw

everybody. Hey, Good evening.

Jack Barnes

Hey, Jared.

Jared Shaw

enjoys hope retirement. Dave, wanted to to Just congratulations say he his

Jack Barnes

Yeah.

Jared Shaw

starting credit, July? what seems you on most or on are stand with levels numbers substantial seeing we any from an pretty deferral in here today update either fixed have It deferrals like declines. Maybe Do entered updated you're as where seeing other could places recently? you give

Jack Barnes

described and to number we speak, the We've in pretty we we We XX% how mentioned were across certainly taken Most just the it think those have them people conversation we're March, the significant phase. to right we last to think definitely we're level, cautiously in a I in Jeff described place definitely accommodative will initial that need and the deferrals. deferrals and that and as the Yeah, overall anticipate of we'd our hospitality And gauge second, businesses, having say When an talking includes been them. for XX very got good we'll we're optimistic. and guess the now we'll so many regularly very I accommodate in customers customers. to as be be they're reflected to late comments, long-term it. trying which were we April are early days a there's group deferral asking granted and as conversation – of try the

level in the want we the at and we to broader think it's portfolios, we're going all. would So below terms of of second XX% the meaningfully request, them not kind Jared, of properties. say, anticipating a be other I in And lot much

Many, us operation now the and of for have have been their So they've second told gotten initial that and the through shock deferral. won't there. conversations a impact positive. reevaluated be the people they've kind asking many They

it. So would I say pretty feel good we about

Jared Shaw

more deferral type that longer formal of a Or end? utilize and of restructuring to move some Okay, with be longer-term would that may that's to concerned you more ones it year that need you allows? or off the great would color. look inclined be that at by come you're about up Act the duration deferral a the deferral, When inclined you more to try CARES

Jack Barnes

is second we then restructuring hitting that days, what we that Yeah, evaluating of needed. so which to use, I would kind that would XXX were during period we'd And then deferral be grant any, if we're say. if

use what kind of properties, extend would types to of we of businesses, then describe we So I would kind go to that kind and from period would of there would theory. accountants we but different restructuring say regulators do, XXX-day of types unless difficult different have probably the and

Jared Shaw

a you in be even Equipment loans to Finance to put does finally new you associated today, Finance have bigger on still right putting just on loans Equipment a you put then one? though CECL would may Or having put with for now? on look really provision any attractive less to make provision that Finance And that it at the Equipment big me, that, when day

Jack Barnes

let and I'll an answer you Jeff I Yeah. give – would David or contribute.

really that lease is be really, doesn't of the mind. that and you provisions down, doing provision. no, no industry. higher scenario Finance drives duration all, short are discourage It's isn't really the groups. Equipment will is And well. credit of period very than the higher They to Their of – history calm actually do, the me performing kind have good. a to and my core all the case going better They're if where provisions the I requirement well. in will then much with First and that that be This CECL performance at will reason recover they because things hopefully continue. to Once economic think reduced

Jeff Tengel

would just now. answer for asset, you right but similar of Equipment one we long the – perfect think we're Jack. the CECL larger I that's of nuances Yeah, with Finance than to the that's the reserve duration mortgages It's driven those say need of residential carrying opposite to, by whereas it's the

Jared Shaw

Great, thanks lot. a

Operator

Thank comes line from of Steven you. JP And our Morgan. with next the Alexopoulos question

Alex Wall

Hi, This Wall on Alex the this qualitative reserves, of economic was overlays factor for in material Steve. changes? this with good how opposed tied quarter portfolio Starting were to off quarter? specific a much reserve to build as forecast the is And evening. change

Jack Barnes

reserve I our modeling. the overlays our economic There we are as part weaker It really say qualitative wasn't not that's as – forecast bill was a essentially would just last referenced all process. a, than the of of quarter. to But in due economic comments, driver. scenario was

Alex Wall

expect on one talk Thanks continue Can mentioned. what for? million question Thanks. on that X.X And this about for how just that. you're the you doing onto you long front you and fees, waive to fees

Jack Barnes

Sure.

and accommodating So fee the given We we forbearance, be June. is still in base, this this the round, as reduction the of there were as as to late across a through period waivers tried though occurring to possible time to base our to as saw mostly them unfolded, was a our uncertainty. they first – similar quarter – economic customer as retail in help

what substantially So you saw less would impact than in expect I be the to QX. in QX

Operator

RBC And Duong our Capital from comes Thank the Steven of with Markets. question line you. next

Steven Duong

Hey, evening good guys.

Jack Barnes

Steven. Hey,

Steven Duong

Yeah, LTVs retail deferred debt your have your quick coverage do and and service just hospitality for one, ratios portfolios? – you a the CRE your

Jeff Tengel

prepared this weren't That to on share. call

Steven Duong

okay. it, Got

Jeff Tengel

Again, this is portfolio, of Jeff, conservative on pretty going commercial I our underwritten would a in say those the we pandemic, into that really, particular real estate had segments basis. all but

going real you Obviously, good in good, underwrite can as going the feel pandemic, good didn't terms felt pandemic. about portfolio. leverage the we but So a a of we the be pretty to into pandemic in estate as into

David Rosato

the call on last that about talked actually we quarter. And

Steven Duong

you. fees you much just thank guys book? Great, the in then total did on fees, And PPP how

David Rosato

X million Within the we of fees. booked quarter

Steven Duong

remaining? how and Great, is much

David Rosato

total The to it. was in upper is that XXs mid

the already Jack it's As the base Tier comments, highest that lowest which did at referenced we was loan his size has rate. what in

Steven Duong

a just are guys economic on – forecast. you last reserves then latest and Great the the one, based

the should is I So forecasts say if the it was economic it to similar your fair provisioning before. what plays economy to what the go now, then back if guess are out – economic right to forecast actual

David Rosato

loan course. Yeah, subject it of was down growth, settled to

Steven Duong

Great.

you, I great. it. guys. Okay, appreciate really Thank

David Rosato

You're welcome.

Operator

from the comes with James. Thank our And William of next line Raymond you. Wallace question

William Wallace

Thanks for deferrals. just taking brief question. on I two have questions my

due deferral made You've rolled of that experience stated that those the payment, on or off or come have their versus have a that you're CRE then be payment a had high round? a will what percentage the gone deferrals second optimistic the rates have next and to

David Rosato

would they the that of month of most the the to – deferral, June, the just payment, payment. Well, had see activities, [indiscernible] have of of ended, opportunity would most one activity have July first say kind

William Wallace

only is what had – you're one that had loan payment, come a to up that's a saying? You've that's

David Rosato

you the loans saying if payment. I – I'm that they're had the out coming an have in second thought gone just into opportunity I'm second anyone so asked see saying made payment a deferral No, are to we that July, that and haven't just coming out

William Wallace

have what I'm that their next made payment have payment sorry. saying percent I'm on of payment, the up No, off come theirs. due coming the ones after first that to

Jeff Tengel

now. off coming just they're No,

the is this month. So first

– And XX% and yeah, were XX% loans in and – I of to pay the of [indiscernible], deferral, referenced will what's granted chose we is approximately Jack's in while though think granted what deferrals half the we comments second. probably a be to less getting deferrals. so I he even the would don't important me also the accounts of of we balances, know than that deferrals significantly original decrease deferrals he will grow – focus the but more said probably amount that And we'll

William Wallace

okay. Yeah,

Okay.

So Okay, yeah.

think think milder builds you'd would go deferral, about reserve of builds and to that you those that downgrades second those do As loans some on you you have can continued, anticipate to due reserve loans? a – do though

Jeff Tengel

Yeah.

data the econometric by economic to what scenario, level primarily a go that governed is of expense, would I lot into the one, So our of division Number levels right. back goes models.

but of Some rating, of all risk are internal on not risk them. our rating, dependent models

William Wallace

thank all you. Okay, right,

Jeff Tengel

our of But, risk as well. downside ratings just allowance some process one risk further comment, incorporate internal does lower

William Wallace

much Okay. appreciate very Thank you the color.

Operator

Thank you. And the our of next from line comes question Collyn with Gilbert KBW.

Collyn Gilbert

Thanks. Good guys. afternoon,

Jack Barnes

Collyn. Hi,

Collyn Gilbert

started or if C, but I'm you D not a sure nonetheless. with that

Just to down. start on borrowing the pay

meaningfully dramatic and down there in obviously, reduced cost. pretty a really the was pay the that quarter So

third the or And of to brought that kind the was points I margin XX decide what basis reasoning to think trigger pull how on did borrowing David, it is point what up strategy costs. borrowings? at the the paying down that setting or for quarter? you behind kind those you of then on down the like

David Rosato

good most relatively keep a tend What I question we Collyn. of book say would is Treasury It's borrowing short. our to

loan, we – we pay was that. naturally Yeah, long didn't anything it like off. extinguish it could bank have So a good home to just borrowings or

right make balloon pay a chose. the you which we just those inflows of or to let either sheet borrowings, So what kind balance deposit that down is decision

for the You the year. see is sheet, of the did Federal half lowering of can opportunities small levels is driver for balance less our pricing cash probably we QX still on books We obviously, just be will the as down costs from you in – of with cash how part them. not QX, the – as customer question, preference the biggest have not successful did due set think, it'll some deposit more I CD higher There in very margin up QX Reserve, And four have we only increase to be as the liquidity. that a but important that well were back so are QX. great in the to are opportunity from

go So the you market accounts and CD well. saw money saw checking from in – as we balances

do the side. still So natural some to deposit world positive some we there on have and tweaking

Collyn Gilbert

I the that of of the determine the kind is the borrowing timing pay in guess question just and quarter to impact might be down another what on Okay, NIM? the part that third two of

David Rosato

Yeah, it's really growth the base to of the same, in the borrowing going unless borrowing loan going if stays dependent that half deposit growth isn't change, of on I the – year. the be had mean, roughly back the level we to inflows

will even loan loan We a loan growth growth. or better growth, be There robust funding have mild need.

Jeff Tengel

during I the thought quarter. Collyn was trying paid Collyn? it to borrowings ask you how the that Was second down rapidly

Collyn Gilbert

you're first started Yeah. and borrowings it Yeah, they to points. at I dropped see – think if saving mean, is basis just this the I right? XX quarter, she XXX to where starting

So yeah, seen is savings actual that in quarter. third understand, the much – just more trying to be how should

David Rosato

back Those quarter than borrowings came down. in They were more loaded the loaded. front

driven the by Number and the there in because were Okay. loans money that by then coming PPP stimulus. sat lastly one,

that about Collyn. Sorry

Collyn Gilbert

okay. That's okay. that's No, That's helpful.

the to following it then connect I lot. at and higher. it messaging point, trying has I that And early guess to would quarter where view early to came in as while the quarter. know maybe just had look But you of comparable in with thought be just economic economy likely if the think because second I kind was was it be at yet implemented the late range going qualitatively so would quarter first I curious, Okay. actual that you And there in the credit, asked dots first perhaps thought and obviously, June, quarter as we I what consistent back the was was the just provision where your forecast probably this maybe the in – one June guys been not said the that meaningfully a was quarter June, in provision early in I'm I same just guess the as

that So input else that beyond the changed there anything economic model that viewpoint?

David Rosato

perspective characterize locked call we a is my data March. economic position definitely telegraphing it open April it. in the the was for the weaker slightly Well, driver were but would in June on QX. We possibility I way I the than really is mean, up from higher here,

Collyn Gilbert

Okay.

I'm it if are X.X quarter, quarter, deck billion. release there something you and drop right, I Okay, X.X then the was theory as think lastly, it the after thought and million, was that risky. of on the the unit the And Did this like I'm like book about you and loans be indicated surprised? kind doing retail first right sorry. billion X.X math like identified may in looks within I that looks then of numbers And happen side. the the

David Rosato

in estate to alluded were retail broad Jack in CRE. definition we – of actually find hindsight And QX. was real it comment, that the commercial in – his Yeah, so of too we

by estate what was – focusing number commercial quarter the So middle we on managed There is what teams. CRE – first real is market we're the lending our numbers. some the in

Collyn Gilbert

Okay, it. tot

guess. I Okay,

Okay.

all was you. I that Okay, had. Thank

David Rosato

welcome. You're

Operator

from line And Stephens next you. Matthew Inc. with Thank Breese question our comes the of

Matthew Breese

Good evening.

David Rosato

Matt. Hi,

Matthew Breese

might Sorry were and you what characterize the if I missed year interest you NIM could for look what really could rates If it, be the like us but migrate to from unchanged did a now? in out to? medium core – the NIM both just core like

David Rosato

guidance Matt, say it would the because down question. there's NIM NIM taking clearly the Leave you. the is of I while than forces up. suspended See the What That's we've to hardest situation. more fluidity of the

the credit policy, I on in the side, quarter, gets the go of some lot quarter, a anytime really to held of pressure very aren't the The that were the there's as I to have deposit change to So NIM. costs. soon, If on tried there think able so as still volume. yield shape say economy do to answer spreads the to were going going up nearly more second gets spreads do think, the loan in wasn't it's managing we the not Fed curve, quarter. I consensuses rates in definitely to worse, but costs or questions successful situation and widen. in we we but Collyn's deposit much In are worse, up the

lend strong wider to will So customers be have to lending when opportunities that you spreads.

below So be the we time. might a point, and think this see NIM NIM the range at can but I XXX, don't to I about over yeah, obviously X% – it XXXs can type in I see, where in talk falling XXXX want

Matthew Breese

quarter this deferrals interest to income loans extent and and hypothetically out to deferral would to did contribute speaking NII? just non-performing on Understood, be net go were okay backed to asset, therefore then if of what

David Rosato

Matt, missed that sorry I I'm question.

Matthew Breese

what For NIM or loans collecting interest extent in did not principal net you're the that income, on this deferral yet you're impact interest full accruing the to interest quarter?

David Rosato

Yeah.

it So it's – NIM. in was the in

on you we we're we yeah, accruing that were interest. but as stated, deferral, So –

really on it the NIM have So in an the impact didn't quarter.

Matthew Breese

practically to process an Okay, and whether and And dividend? that impairment if into at the this that's – then there color then factor my need on goodwill last just some is ability provide would on your evaluation you pay the could speaking, impairment or take one point. not your necessary to is

David Rosato

whether path that a we there, I say – at our questions present quarter goodwill were go about driven think each are would talks that the Couple discussed for outside factors as last have obviously by goodwill it's and that there and do start time full for accountants goodwill. internally we large lot cushions the and the we've that assessment, That's of of in to necessary. to in analysis. done impairment is is go down we that us a there's impairment fact full what with The factors

not I think that's have rather It's speculate an ability happened obviously, go don't something we pay that a impact on each expecting as – sit to what quarter. – event to mean, might the through the not dividend. we we're that that so have I'd we on here, process that So so the if that

Matthew Breese

questions. I all Thanks had. that's for understood, my taking Okay,

David Rosato

welcome. You're

Operator

would you. call Thank gentlemen, further and like Ladies to closing Barnes since to queue, questions are for the turn no remarks. I the there now Mr. in over

Jack Barnes

Thank you.

strength in Our People's second and the the demonstrated of quarter United. resilience performance

a were year-over-year, many continued customers. financial Our inflows our by excellent and the of despite to asset highlighted efficiency pandemic ratio, critical the quality. sustained provide presented support level results a the growth solutions PPNR deposit perspective, high challenges financial From strong and deliver employees by to

the loan times uncertain franchise remain throughout we unknown, held safe. Stay ahead. philosophy customers evening. is all. again comprised economy on you the cycle Have once of impact long-term and will differentiate diversified our Thank our the these long high-quality While conservative a tested portfolio good underwriting confident pandemic of

Operator

in This participation conference. your Thank you concludes for today's the presentation.

You may day. Good now disconnect.

People's United Financial (PBCT) 23 Jul 202020 Q2 Earnings call transcript