Bank of Marin Bancorp (BMRC) 20 Apr 202020 Q1 Earnings call transcript

Company Profile

Participants

Andrea Henderson	Director, Marketing
Russ Colombo	President and Chief Executive Officer
Tani Girton	Executive Vice President and Chief Financial Officer
Beth Reizman	Chief Credit Officer
Tim Myers	Head of Commercial Banking
Jeff Rulis	D.A. Davidson
Matthew Clark	Piper Sandler
Jackie Bohlen	KBW
Tim Coffey	Janney

Call transcript

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Andrea Henderson

Good morning and thank you for joining the Bank of Marin Bancorp’s Earnings Call for the First Quarter Ended March 31, 2020. I am Andrea Henderson, Director of Marketing for Bank of Marin.

During the presentation all participants will be in a listen-only model. [Operator Instructions] As a reminder, this conference is being recorded on April 20, 2020.

Joining us on the call today are Russ Colombo, President and CEO; and Tani Girton, Executive Vice President and Chief Financial Officer.

which website this call at being release found can is press webcast. our on bankofmarin.com earnings we morning issued be also Our where this

on to get results know we may uncertainties. those statements Friday, and from that I that we XXXX of is set want differ XX, such contain Before the on materially started, as statements. discussion forth Actual may this April information involve call based and emphasize in forward-looking risks

and SEC uncertainties, in risks review For the release, disclosure a these discussion statements please our as forward-looking of well filings. press earnings as our

Following our Myers, Credit Head and question. available along Tim Officer, Banking Commercial with your will be prepared Chief remarks, Russ of to and Beth Reizman; answer Tani

to And now, Russ I’d like to over call Colombo. turn the

Russ Colombo

to morning call. welcome you, Good Thank Andrea. the and

hope and the Before workers to gratitude is resources to in we express safe. local provide needed healthy essential to want I much across I communities everyone nation. California begin especially my who to continue and Northern

the challenging. As you very situation world the and know, remains dramatically changed has

of Marin is to have resources in manage Bank our and capitalized clients liquidity these help ample through we trying well times. Fortunately,

small participating plan which small check of million. received have low for estimated pay We in applications an program other to payroll business total businesses $XXX To interest protection loans expenses cover we date, are provides to and a cost. administration overhead approximately X,XXX

of meaningful the were applications receive program. We a approval to portion those and the able to suspension submit prior for SBA’s of SBA

restarted. We to program as remain as submit poised continue them internally is approval process soon and to for the applications customer

fees, CDs cancelling all on by our when ATM early financial withdrawal In an and we customers, burden for effort are to allowed law. penalties the waving and overdraft ease

interest of floors also payment are relief reduced prime-based hardship with to XXX requests, on loans. and have days borrowers rate a We providing

mostly with release XX% in loan-to-value conversion As secured by received only $XXX order. request estate deferrals. payment XX, million real are less and are by than loan of we XX% have to California’s or million approximately XXX impacted interest industries shelter-in-place ratios averaging or April to linked

Our wine-related, than industries employees Transportation, portfolio. and affected most a of loan entertainment less of The top represent the XX.X% also businesses, hospitality. X.X% and health dental, total and customers portfolio exposure retail recreation combined to X.X% properties and the X.X% includes is priority. our

strict of deployed Bank such has Marin policies. protocol enhanced social and clean as branch distancing safety

modified no have all with While have of employees furlough. layoff branch we our hours we at full or retained pay

markets home, to storm. currently employees have many helping of seasoned they are banking all clients we from dedicated our whether our are Although and working the teams in

Additionally, we are encouraging our ATM, which customers available are banking digital banking, all of telephone XX/X. to use and services,

fourth from total of net cost to deposits our Deposits loans first of maintained basis per XXXX. very diluted $X.XX. low of steady I’ll strong of Total remained our billion, were $X.X and with XX% levels up points. record at billion income of XX deposits Now, results. lending share turn slightly comprised We held quarter earnings $X.X Non-interest-bearing generated million quarter and deposits. X.X our at

well XX.X% ratio requirements. excess total in We posted regulatory of a risk-based capital of

While The pandemic. we when to March the board and situation our directors plans board monitor program program well-capitalized, XX the closely repurchase of on suspend response appropriate. in are share our precautionary the indefinitely decided to very reinstate to

to will the in still or X.X relative the impacts The to or by increased of were COVID-XX loan. Classified X.X% Mostly, the credit XX.X increased million X.X total materialize. quarter non-accrual of from effects the of coronavirus time million the take the to unrelated first quarter down loans to million to prior XXXX. first by million crisis X.X in quarter loans

quality performance. lending not immune to conservative philosophy are with historic confident the associated pressures pandemic, Our but in we asset our the bank is economic and significant strong

dividend profitability Finally, declared share the Bank cash April consecutive board of This of dividend quarterly Marin directors our represents by because XX, XXth our XXXX. per continued on paid a $X.XX of of Bancorp.

that, insights financial our over I will Tani to on results. With for turn additional it

Tani Girton

you, and morning Russ everyone. good Thank

noted, of diluted in $X.XX earnings day and the interest As to totaled $X.X the respectively we XX.X [Indiscernible] one income exceeded production. compared and share rate and first quarter. prior in money quarter, base, million interest prior XXXX, net market of earnings investment X.X the first quarter. compared XX.X generated million a in the to accretion accelerated net a asset due to Russ the in income security large of in deposit and fourth last quarter million in $X.XX XXXX income per quarter million on Net called the quarter, that

X.XX% the in the the the tax-equivalent basis X.XX% was quarter. on Accelerated quarter security interest added margin investment prior compared in X to called first margin. to first The net quarter points accretion

adoption provision first. in postponed of with to CECL allows or occurs banks Act the current emergency accounting accounting until whichever XX, end the the release the have delay CARES the of We loss national in accordance implementation standard December expected the that credit or

million XXX,XXX the XXXX, in income due increase model. for provision Marin of prior and Bank first X.X the million the million raised was Non-interest primarily gains the first up an from security. This to qualitative factors $X.X sale the the for in economic quarter in under recorded uncertainties adjustments by quarter the unusual We of was loan a reflecting XXX,XXX quarter of loss in incurred previous investment to loss quarter, on COVID-XX X.X pandemic. from

quarter. related due The for expenses XX.X of on the year this totaled XXXX criteria. X.X XXXK taxes, bonus which first was to January expense accrual quarter expenses exception. and resets prior compared included and and bonus no in primarily to payroll XXXK and true-ups, matching compensation, million to participants seasonal benefit eligibility some million, increase matching Non-interest retirement higher typically was The includes salary stock-based meeting million payments, XXX,XXX XX.X

commitment. off-balance included on The four Bank quarter a of of for delivered first staff increases XXXX. equity the equivalent of X.XX% and in return assets sheet on provision Other a a additional return X.XX% and full-time $XXX,XXX

during are and COVID-XX the continued to prepared with We our pleased strength of crisis. our our operating customers in profitability leverage support

share Russ some like with you. Now, to comments would closing

Russ Colombo

Tani. Thank can severity on impact pandemic one lives its of the local the and our of extent No economy. predict length and the you, or

capital a base. of a Marin with loan and high quality deposit Bank excellent has position, strong low-cost portfolio However, credit metrics, a

For factors years customers good have our times these communities more and us than XX in to support allowed bad. and

the in through same navigate crisis will way We together. the

We I Paycheck before program of numbers Marin launched SBA questions, loans since close the XXX to fund we applications the to open provide over which Program. accepting million. more than most collected stopped of for Before for Bank Protection X,XXX closing it our wanted latest the applications, today. has will processed $XXX

open Now, up for questions. we will the line

Operator

line Rulis of with Your first D.A. go ahead. Instructions] from Please question Davidson. [Operator the Jeff is

Jeff Rulis

morning. good Thanks,

Russ Colombo

Good Jeff. morning,

Tani Girton

Good morning.

Jeff Rulis

I guess. industry Could of view guess industry can those the exposure within the and to cannot thanks for more categories. maybe you kind is how on detail operations what’s I on – you guess or walk others unique just wine that – in the business wine-related segment a those the the and continue the your of I portfolio sort progresses? through little that kind of

Russ Colombo

things business you and Club] members, to. of kind to grocery business of happening because upon [Wine know, fine its know, that. sale Sure, who just stores sales, is their Clubs] its It’s interesting nothing part its to – and like still winery, that I’d is are tasting business like know, still and [Wine of room and of happy things there’s the going depending the that’s direct still which and – not restaurants be because you part type bars you premise in sales, course is on is, shipments

that’s obviously So XXX% off [indiscernible].

one. know good business, – most businesses. I certainly PPT their of You know, and because them the the to we significantly and back normal off off they’ve – pretty those – in going wineries open whatever number we wineries have back are you restaurants have to that we applied to once XXX%. again, of have we they're and be new feel off and we back wine-related is, get Once had sales They’re are a for wineries about

not the sure. unique, – rooms, in eventually, the is struggling, will start business the And, but part and that is So, you this meantime, zero. it back come completely wine tasting for that's is country of visiting but it's and line to the tourists know, the

Jeff Rulis

Right. there – or, is is that know a you retail? know you real thought there that you know, of know, you direct I on figure X.X it quarter premise And of there is of in portion hospitality of – Russ or is a about, have like what kind it shipments direct

Russ Colombo

Chief may the specifics every you Reizman, You different, is line more know Officer Beth can every winery she I Beth? Credit know, ask on that. maybe – have our is on who business and but,

Beth Reizman

room’s have direct; all clients have they our etcetera. they business wine No, a of actually of where many tasting facets ship the

wholesale we but direct-to-consumer, down they of have really ones specifically or I Russ it them aspect typically to that mentioned most think each haven’t in an all of So, broken part business. their – are that just

Jeff Rulis

didn't that first waving mentioned is thank Okay, quarter if you late a fee to know impact first that of you Maybe income stop? very you fees? – so guess maybe in side, what to investment much outlook fees; came booked the the in and fee of translates waving see your gears income the gains see to that expecting impact on Or the quarter part that I you. did shifting of the question you

Russ Colombo

it I’ll answer to in. ask and I’ll Yes, jump Tani

so impact was in quarter in quarter. the was the place, end be quarter know – it a in in all of second the is lot towards that You going that first the because minimal to the put not there’s the first

Second impact earnings. quarter on certainly will have an

to you our it’s point, As of income think small, to know, are so do know as But things changes. making no a interest might, the but fee have so – those it’s you at not to any relatively is point comments Tani, our the bigger margin – terms we gain in others did in you but you right make net we want spread this sales? problem know, I going on to so relative impact have

Tani Girton

sold longer rate into of portfolio – in environment even also risk, the we shorter shortened securities, also this sale, that funds approaching was to so, were from which felt duration gain interest the their the environment. duration, and Yes, further to the terms we much higher we at as and on prepayment securities high what cuts mortgage-backed lower and and rate and Bank redeploy sell then the that on yield stressed were in of subjected did or municipal we a interest duration some able we helped protects gain that risk rate were quality were credit those the those interest

Jeff Rulis

And you it pretty quarter? good chunk on kind a any thoughts took of further the sales or of security in

Tani Girton

now, Right quarter. an that not anything Yes, opportunity we’re that at was point the saw that particular. looking we at in in

We funds. if is right the want of and to other programs liquidity liquidity support we’re out have that [PPP the we you to LF] there generate know, PPP plenty and, facility running now, the

So, so of the some of quality or too be portfolio and we issues securities we won't very purposes. but for two we one sell activity. general, we we come credit close very we the eye quality that selling might sort opportunities have don't do on a also or those do keep see of just out, If credit in then a much liquidity anticipate portfolio, if credit as high

Jeff Rulis

Okay, you back. Thank I’ll great. step all.

Russ Colombo

Jeff. Thanks,

Operator

from next And the Piper question Matthew comes go Sandler. ahead. with line Please of Clark your

Matthew Clark

morning. good Hi,

Russ Colombo

morning. Good

Matthew Clark

consider you or or quarter, I'm here at able really X/XX? I know, guys at On overall were was subsequent the additional in not CECL of build deterioration reserve see it might some here builds the reserve whether least in in is getting is this a near of April knowing you to the as we what kind you economy guess delayed term?

Russ Colombo

Yes, our question. Officer, I’m answer going Chief to question. ask to Beth Reizman, Credit good that

Beth Reizman

used using existing we CECL. loss prior to of conversion we’re is incurred the the model, So, our that which model

So were as at we we looked X/XX. where of

had, take we’re so deterioration However, continued our market. model in for Russ under. that request in deterioration as relief, there adjusted was reason, will said factors that already we especially whichever client into there’s that had June, account the payment definitely We if economic numerous we indicated,

Matthew Clark

or run you what phase, potential as you then, test And you dig content for a another could if to it environment have months exposure the this around stress sense deeper be risk try have a this that are get Okay. for most to know, if that loss kind of on sticks the internally at you in three environment, so?

Russ Colombo

Again, question. I’ll answer that Beth to ask

Beth Reizman

LTV So, estate XX%. annually you requested was as our and say I’d far as than relief, less we they’re The numbers average portfolio have stress our portfolio. clients as indicative real of payment that

on clients is generally and well experiencing overall and guarantees. bank they��re portfolio well sponsorship in request but relationship very at have are we our form case-by-case we difficulty, the if if So, looking a strong are a secured or basis behind as there’s the a very financial of them credit

Matthew Clark

Okay, great.

Russ Colombo

think opposed I that will came a case. I’ll bank when those of a last just the that, our you the you they low as loan-to-value our problem, I’ll if bit the to real the – the know, our because borrowers Beth liquidity of inheriting to there say just and hallmarks through continues the was just we add and well have guarantors a that it real commitment problem, loan-to-value that we of that you secured the estate be back add to by quite the fixed to Matthew, – on really property, portfolio look I mentioned problem to to have is estate, recession, portfolio and the and low and our know one

As Beth the and – the loan-to-value you that – know of the portion XX% the of that asked that because for modifications we strength of loan did rest portfolio the know, total that’s help, on strength the part mentioned, our not. indicative stress of is those the on to portfolio the portfolio you gave of

So, about very going feeling it I’m forward. good

this to but problems how is I'm goes in out course, write the going long and I’m everyone position about to pretty you this we’re good have the upon know, depending ability will crisis. feeling problem our Of intensify sure, on,

Tani Girton

add I comment a to that? may Russ,

Russ Colombo

Sure.

Tani Girton

in $X.X factors to very for Marin Bank incurred want the loss is even of model, large emphasize there not a a said, a projection, the as that million factor in do associated Beth unknown the for projection, I provision So, a and qualitative with is but COVID-XX.

don't took, – which there significant forward-looking we is is of that large. is while the with aspect why provision a was it is embedded COVID-XX CECL it the model of the uncertainty we associated So, have that chunk so incorporated, in that

Matthew Clark

you it $XX.X decide really is unload submit on balances get you but I a not, this know, million questions Got then, you to imply origination if could it. loan of alone, program, the assuming know, SBA and I of assuming would through X% is which around origination probability fees geography the $XXX kind it’s bit – some those but that could little of an answer should or million mean I origination these to you for paid think under, that what know just it’s about funds, which, degree, to I the fully $XXX,XXX you be average size maybe my about help does that, on you life with of would getting would use a don’t but fee you it [PPP] whole of and you know and of know, loans think help the the you to question those the timing a of timing to as fees them out kind back? the them and have

Russ Colombo

in are on [X% most I loans seems to First all related. hold that there fee is appealing the] to have holding, of a – them, to you of try terms

if what averaging You an don't in probably case, it’s but X%, as more [XXX, know, income that point. a It’s spread guess, hard it’s a we’re just to big – of was know – know range but average we anticipated – number this that had to opposed you having at be. you that’s We know that XXX] determine fee kind more was across. still X% the in the will here of of such loans exactly

banking been work. in going at jump to ask whole in. to this shepherding You point is at this and been really hard commercial Tim through Tim program very know, am have have Myers I

So, issues. let me in those ask Tim jump address to

Tim Myers

of income, Thanks entirety. application the calculate terms we its that gone volume on I think fee of haven’t in each to and Yes, trying size Sure. to individual in the Russ. of part really the based the of

As books these do. if on going the stay Russ at also they X% to pointed out, are

application and we our our the forgiveness and to go intent how have think to, waiting submission, tracking, we from you get SBA help on documentation, know, So, we’re take to to to for once that, depending additional allow guidance acquired to certainly, start but able to I with, [cam]. or end intent the time a at we’re the application the where process you up is, is this forgiveness as somewhere through about customers, how the all we follow is be with they know, or our guidance phase, is more platform we for proceeds and intent the spent processing money how that the that view our there place forgiveness I think may but on is use

Matthew Clark

you your that but assume on come any Okay. is I it? confirmation is And – going sense would, and do it through to

Russ Colombo

going to what? That is

Matthew Clark

your Is when fees and income you that the expectation come through sorry, not fee your the, naturally? pretty origination revenue expectation do is and will spread – realize then those

Russ Colombo

not on you I’m answer I – could one, that? that Tani sure

Tani Girton

Yes, yes.

expectation forgiven, same we the initial because point that’s with Our probably loans. these of come yes, maximum years the will those happen we maturity be, of this net if about what what we through them fees forgiveness. will is at other life two time on time interest do that, we income [indiscernible] then, And because run the the through forgiveness it would is the they interest timing fees get accelerate income way will and are in net that will

Matthew Clark

and if have for not And us of that lowering for that it, guess know, give sense the as I percentage floors, me floors guess magnitude floors all? the just mentioned move one might, of I can lower, I you you you a then, okay. last loan Got on the

Russ Colombo

you Sure. to want Tani, answer do it?

Tani Girton

Sure.

the home the already apply the of on loans mostly to somewhere loans that floor and that’s, but we some business were XX% because higher so and the – lower level, equity were some floors those know, reduction loans of reduced prime between floors the at have not. We portfolio, XX% were you at

but I $X – it could the terms you year, on can't somewhere net can it of I interest and know, between applied it be, net what So, know a for you full is we impact $XXX,XXX tell in like margin would if you income. million what be, say that interest looks

Matthew Clark

thank Okay, you.

Operator

with of ahead. And from your the go KBW. question Bohlen comes Please next Jackie line

Jackie Bohlen

everyone. morning, good Hi,

Russ Colombo

Jackie. Hi,

Jackie Bohlen

of Curious positioning light about on a that premium expect some rate through, of the quarter? sense amortization, in in yield have how next overall expectations made little would bit just did avoid this do of you a to coming environment and for purchases I portfolio you quarter, know next but what then you quarter XQ you’re about thinking and security you the

Russ Colombo

Sure. Tani question. answer to I’ll that ask

Tani Girton

Yes.

– points I’d related say the basis accretion. are other the that security So that basis to for X the stable much – yes, yields pretty the than X points

wasn't or of maybe up]. flows sold You know [them a too that, think it more less the even it redeployed, you of yields pumping portfolio we portfolio significant the opposed is the than a the as portion does actually that and decline of but as portfolio eighth what the to I know, on

Jackie Bohlen

happened be just and for Okay. quarter? for second And first quarter amortization do would maybe between what sense you any that in have delta expectations your what the a the expectations,

Tani Girton

don't the to answer question. I know that

transactions premium You on and portfolio between pre-transactions the post mean amortization? the delta

Jackie Bohlen

rate of that? know? XQ end you you somewhat know, you like pay-offs quarter? expect things you given pick happened, soon that know, it the amortization do just, the you to movement Or expect is to in some Do premium up too later Or towards general, with the just in know,

Tani Girton

all, know mean place of got too orders it's side, I Jackie, it, with see what's were in to did we bit, realize shelter think something we think slowing projection to pre-payments hard on, you a that I’ll you to full people we will. some it's little but before place were the I the Yes, we make on there a can noticed be increase I seems before at really to have so started – and in know. a – there's in look mortgage things share on and that, the but going that anecdotally soon little if impacts that

Jackie Bohlen

Okay.

are in impacted the just booking know, realizing, Okay, activity terms that and ongoing shelter that the, yield versus then loan know, by you the is how are in loans you seeing orders of place you new yields, portfolio? in

Russ Colombo

actually going I'm ask question. he’s to line on so the answer to that good Myers a Tim because That’s question.

Tim Myers

expect I banking Russ. think much relationship so last approach [I it believe] thank although you not and know, much as to, overall I as know, down as they you, this we maintain Yes, you get we’re come best somewhat our the doing think, can. potentially as we quarter,

taking know, do for that beyond question you fair no have advantages averages. there are but We’re know, continue the rates the environment so, but offering banks of rates our dropped would, there's question, no deem we’ll both you best, there's below competitive, parties, I and to portfolio

Jackie Bohlen

sense have Do Okay. much for you how dropping? averages a are below the

Tim Myers

I I for to can with have you, for arrogant don't work you. get but Tani an that number

Jackie Bohlen

incurred loss Okay. you And last to or one related provision comments to the then whichever you. national your CECL you operating of the XX of possibility look know, a prior emergency whichever Beth, one model you that made first? the looking you is adopt and at end Thank there comes to said under, December would CECL, one, versus about just those

Beth Reizman

alright Russ, I if answer? it is

Russ Colombo

Yes, go ahead Beth.

Beth Reizman

we deployed the because we really just focus client. we’d kept implement for, our CECL the on difficult under it national forecast. very very, the adopt really it before difficult almost you changing that’s and quarter just daily, emergency. know, our as internally stay was very, was variables what as to model, that’s to so resources very of the to depend. try makes We, well will difficult The it to would first incurred would I to discuss I loss believe, something so It doubt end but

you So, not see. know, but, perfect answer, we’ll a

Jackie Bohlen

is XX, say let’s you. I’m a thank an so you date, no. helpful ends October nonetheless, then national September X, would that’s soon? on No, what So, know, adoption But have of just just is it say don’t on emergency And how that works? I your how picking understanding the

Beth Reizman

intent to but couple to not like We I might ready, is be ready we’re that. know That’s that, to for be our defer our intended have it so internally. to want you going on be – and Tani be end don't to a scenario to ready there. – tune And basically of and again, was we uncertainty issue a because by that just various constant things. with We it the in had changing the almost the economy just of entities. fine was real forecasting projection were the the the

Russ Colombo

You too. going to to to know, think when you’re day I’m emergency Jackie, national add a that have I going don't the ends.

can is difficult to to to and we in, it’s say gradually pick come okay, a I all This and have to we’re to so need to it's – we’re don't be hey] is understanding, going this. don’t normal. think don't I is I a period get date my time know think [when, we going a implement you I the over, from this back because – going time now day think

nine So, months, going I be to gradual new the a is. think that to to over next whatever it's return normal the six very

see happening project time it's what to this this difficult before right. And markets frame. really are It’s new happening know, just adoption so, don't – just I the – we you that normal, to get during this

Jackie Bohlen

what going the long normal know figure Okay, you that us of to well new mean that's as is out that – time take is. understood. to very to And assumption for a I my all

Russ Colombo

sure. Sure,

Jackie Bohlen

any mind of of there's trigger get sounds the we before a your sort XX that CECL's would that it in to scenario December is the end likely like declaration emergency more the implementation? So of

Russ Colombo

Correct.

Jackie Bohlen

Okay.

Tani Girton

chose I adoption of will out the adopted this for terms And in how CECL. Jackie, is don't If can add, you of have FASB this clear be Tani. guidance delay that of institutions we to actually

the haven't what's come of we of but we and mechanics can on with obviously, do, know clear that need know, now, guess you sort influence out guidance, what actually we So, adoption they if still, are forward. will do what they to going based the the best

Jackie Bohlen

taking questions be thank all and my you, helpful for and Okay. Tani. please That’s everyone Thank you well.

Russ Colombo

you. Thank

You too.

Tani Girton

too. You

Operator

go question And next Janney. of from ahead. your is line with Please Tim the Coffey

Tim Coffey

everybody. Thank you. morning, Good

Russ Colombo

Tim. morning, Good

Tani Girton

Good morning, Tim.

Tim Coffey

Hey, to staying use please? what for [Q what loss I Or Were compare they quarter, mean Recession to you the this there you Q-factor, provision during you that used the factors] moment, recession? help experienced do Great cast do a experienced in the some great on comparable? during the the they that set color the ways

Russ Colombo

Beth, like to would that? answer you

Beth Reizman

Sure.

in historical was and occurring So loss the shown looked the historical the pandemic. touch. due is are model, figure. that not that is It’s – are is our for set losses on to – or we history a that’s incurred which based calculated a can't what used adjust in two to figure Q-factors, market qualitative what adjusted today in the factors economy that’s today the we our losses, our and by what so, the we at occurring for Q-factors

is helpful? that So,

Tim Coffey

does. it Yes,

of quarter? point kind of Q-factor or from Great as starting for a this base the experienced any a Recession use the didn’t you losses So, the

Beth Reizman

into baked model. are They our

Tim Coffey

understand. I okay. Okay,

Beth Reizman

a model. losses calculation our in Historical are

Tim Coffey

Okay.

Beth Reizman

of Q loss factor the accounts for what’s outside calculation. occurring historical kind

Tim Coffey

Sure, okay.

Russ Colombo

minimal, you Tim, I’ll most related look the development you back in of losses also relatively loan, residential I’ll what know, one and experienced, development. were our we track that add know, were – if thing to, add them frankly Great Recession, which back you

and it’s really it’s tied have industry don't different we mortgage so so, because and homes that all at And this the residential of compare. the at not anymore so and to to to so is hard it development comparable all was that

Tim Coffey

percentage those the the relief that to what have that COVID Okay, exposed of identified either And or PPP people asked course. I for situation, application? of payment then portfolio you loan loans you have the on details a appreciate submitted

Russ Colombo

[indiscernible]? is asked got for PPP that as loans, we that the we loans made modification of – What for percentage what we loan that you

Tim Coffey

No, that’s hotel, retail exposed, of deferment? what portfolio your like the that requested percentage XX.X% of

Russ Colombo

I I know. don't Oh! see.

have Tim, Let do think you the I one. to that one? answer me I see, know that don’t

Tim Myers

a a that. have crossover of precise don’t the number. I an have significant There I don't percentage the payment between is release, and modes PPP but release, for exact different payment

Russ Colombo

properties, – restaurant retail one have most know we can a Tim, of loan, don’t – industries, you retail at kind it, have challenging know on any make you the payment has modification a have – mean look we motel, we say have a let’s as that modifications make the make that drugstore, who – I know, typically, and about we although guess some borrower You we we that talk you center there. might same do. hotel, yet properties, has didn’t doing we just is we when have we which borrower – a has fine, something a that is so in owns you potential

it’s every – of know, the their it upon and borrower strength situation so property also depending you that liquidity type the So kind the of the of – the has, the is depends. borrower, different – and

Tim Coffey

just you kind pay-offs expect were but guess experienced quarter the given in lower current of your you the I you then, Russ, to And the of would on that rate elevated, uniqueness Okay. with what’s this you pay-offs, know, perhaps situation environment, mean see not, the more outlook that?

Russ Colombo

I but as see [indiscernible] little more Tim, are of ask the the wrong Yes, last going the – be you’re as business this certain – and know side. be just quarter quarter, you to address because activity because pay-offs to going going pay-offs don’t maybe is what to – third I focusing it can bit know, I will we’re the that – a we’re to give see I don't I not I start you know because to the completed, think a right going but an on opposed construction pay-offs their there, were pay-off of him related of don't quarter. kind I on their color this people we don’t pay-offs but, frankly – was to think substantial you financing think environment lot had Tim now of could activity you day-to-day more

Tim Myers

properties. project construction and Yes, of assets what commercial we between completion look Sure. just you that and just sold, at split if others pay-offs you good know, kind if a sold off, quarter, with of assets chunk relatively underlying sized pay-offs, of was pull you deemed HELOC selling asset paid at type and loans, the look and is just you or fairly loans an TIC sale know, evenly it plant that out a the

of we On large the clients. – construction that you was planned, chunk know some significant have a

had that we proposing to manage We are the we and of construction number the exposure you would project negotiated some focus they just loan. borrowers, and had, group elsewhere would We a loans to a of we, construction our same large loans term of or know, terms to on those that so, borrowers. refine entertaining

made, know, of the really that that. So bulk you up

bit in of home trend refinance, are low and over more the year aimed that which we're interest-only on been There out one interested parks not where very taken half seen what by with you many third-party like for was aggressive and areas think years, you I at a out a a probably terms material very mobile and last there we’ve lenders is level know, rates, and aggression. in you non-recourse, participating that, of non-bank just, now, that things

go sorry up that of the ahead. really So bulk makes it,

Russ Colombo

Tim, thinking say, color point? you’re a this why to number, at what know, on the was just but quarter, not I forward little don’t going going you give You next the pay-offs over him

Tim Myers

that number I I a situation. going is was planned think to That mean Yes, unique subside.

think I sales, expecting decline. I'm to

You this projects I I this of will up we get level pay-offs – expect going was but wrapped elevated have don't know an number. forward. successfully, construction

Tim Coffey

anything Well, pressure course, if there non-interest back pulling seasonal the of all planned that And then, we kind on that not investments downward any be for this year or you. stuff? number, great. the you the look expense number, had the appreciate Thank expenses, you at of Okay, that might put I from that are core color.

Russ Colombo

have, the we happen May, have relatively frankly going we that’s minor so moving that. was we Its we and built to know expense that’s you obviously, pretty in expenses You we’re anyway. because well – – we have know, out location that branch the had

the situation in now. for new know of expenses right through anything otherwise, most You whether we’ve or put kind terms this focusing on of of new just technology kind on projects, part, its hold getting the we’re

You now expansion see want you big terms of elsewhere, because in careful any been project know very this know, right to how we’ve goes. just not doing we about,

You a in know Hallsberg. being built that’s branch we out do have

So, that’s to continue. going

project, right not entertaining we’re a crisis. now table have big but in this get new didn't lot we terms certainly through we So, of the ideas until on

Tani Girton

add social conference postponed, events of events that, those expense. would travel to restrictions I cancellations we put been Tani. or is to those downward fair do, that any you and obviously, canceled the this due going on Tim, And and know, distancing amount a and of non-interest have are pressure

Tim Coffey

you were Thank my all your for great. time. Well, Okay. Those very questions. much

Russ Colombo

Tim. Thanks

Operator

go question ahead. from of line with KBW. Please [Operator Instructions] Jackie the We Bohlen another have

Jackie Bohlen

Hi, my thanks taking follow-up. for

meant through quick do to any overtime Just noticeable one, one you ask PPP? with I run expect to

Russ Colombo

team We not will because to we this approved on SBA night get had because lender. overtime day did – we it and have have and little took were us an we when literally while a get – a working we

– background until approved, as got – got week as get we couldn't we work last we approved to when we approved, submit we doing had soon and when all So, we but to that submit didn’t anything. are

the team morning got worked literally the we till SBA speak. and these the drive, So, applications until so the submitting once the approval, well X:XX to ran to in

I we That said, team this energy next but have and the as is which approved, to that’s as happens I night seen what during is day is and once be getting – haven’t recently, understand the morning too. that I heard soon going being package same if that the will and next that – closer. focus working

exempt not there all overtime these because say, exact. a long-awaited of employees, that’s are that So to are on working some be not it some are people will answer

have of it. put don't there be can’t a will now, it on I – some I number So, right but

Jackie Bohlen

Okay. thanks. Alright,

Russ Colombo

Sure.

Operator

no this audio further at time. have questions And we

Russ Colombo

Okay.

for e-mailing us. think there questions some are I

about talked revenue So the expand backdrop, going little non-interest what that do think want run that headwinds from James. question the the forward. from do a rate just is in on all? and forward? at first you expenses challenging bit Tani, environment a good Feaster given you of going was Raymond light to rate How We about low David and

Tani Girton

quarter decent take right if pretty the first a think, time, you you out run know, now. I the So think noise that rate of we we’re at I all get

as said, overtime with do PPP. or reduced downward we new, associated being and but don't associated and on any on with social that we large the you pressure events investments So, canceled I either have have think staying some are Russ the other the know, hand, contact,

though, general if you take you’ve first a in noise, think got I quarter to the start out So, pretty from. decent base

Russ Colombo

there and customer gotten also the in the participate that year. events, we in Tani canceled terms have has of hold that for on which – that nature, things know, events for and of at being of have mentioned had that we lot put is time this a we You fact least probably

are what donations However, funds number are that redirecting different money – to made through the market taken our to couple a grants help them making to customers with committed the a we’ve to – we’re those of to non-profits. of in who and with number – of funds a – bank municipalities this – has lot through pretty We’ve active of municipalities. a those crisis a role

all-in-all, those balance extent. out so, And to themselves certain will things

than to just While maybe like that. won’t rather the we money put or something may the sponsoring we table event, non-profit give an on the

number forward, So, be the will be makeup expenses probably of pretty be similar. I but different, will consistent. The going pretty think non-interest will,

question another David also from from There's – Feaster.

Or be PPP those? the and run or flow plan fees [loan question, loans for on expect fees those will through those hold fear] up NII? you sale for though a do do how you to account should to Following it

that, that? but comment Tani, do I think any answered on you Tani have

Tani Girton

to other customers for priority be on emphasis our the say Well the you loans borrower so assist to getting Tim’s would funds I and just on can purpose the forgiven in those the forgiveness these if fact point is, uses remember top is thing intended know the that with only our loans.

the repay as then to loan the would the So, opposed SPA when that borrower. occurs

Russ Colombo

question of the More from another the COVID? likely on industry’s by million Elizabeth, on approximately effected question TDRs the effective, any are And bucket. of related most the book to Park credit is, is detail that composition the Capital. There most the XX.X

I’ll that. to So, Beth on Reizman comment ask

Beth Reizman

of So, well you and number eliminate industries. the I and it they – to loans and took a those TDRs but those of sponsorship that past good know just secured that it one industries, our There – difficult one are large is it status. It’s one look credit. in they are that is is actually various behind really at are throughout

Russ Colombo

then And question there of think David from is more Feaster Okay. Raymond James. I one

I did they from the regulators and you’re in auditors what [Q provision the pandemic? your quality, think was from curious one. hearing increased the received it factors] ongoing thought your be a curious, will that commentary what answer I high, Given Just was from estimate? given too discussion or desperate on asset the it regulators on your the Just and auditors definitely topic, conservative good to

Beth Reizman

and has spoken at with and in numerous our had we’ve the know conversations I appropriate. Tani if both this Russ. process, felt have I don’t agreement myself it So, point was or provision with Tani and time, during regulators they not where are with auditors the our was in

Russ Colombo

Okay.

If from maybe I anyone, questions. no all the I other think time morning. this there your appreciate really is questions that

– time forward appreciate and quarter. the Thanks. hopefully be but quarter, talking as be on your the obviously circumstances in communication will end look I next again next would to this to We – next morning the at of the better, you

Operator

concludes this today’s And conference call.

disconnect. now may You

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