BY - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to Byline Bancorp's First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I'd now like to turn the conference over to Mr. Tony Rossi of Financial Profiles. Please go ahead.

Tony Rossi

Nick. you, Thank and the everyone, for us joining Good Bancorp's thank First for Byline Call. Quarter today morning, you XXXX Earnings

be Byline's Investor presentation slide website for this the using the of Relations and will presentation. to Events of discussion visit morning. as page Presentations access our Please We part a

risks with the like of future Various different factors are which statements. the the expressed performance of by could be financial condition pandemic. I'd in cause actual to this filings, forward-looking begin, from or available to you to results on we that such including call These materially discussed SEC respect results conference factors Bancorp the and are any that the COVID-XX Company's involve Byline Before future Company's impact remind contains uncertainties, forward-looking statements and implied website.

The measures. Company on to made statements non-GAAP the and supplement, as press any most available GAAP for of measures. any during GAAP comparable contains to well refer obligation which the information discussed today the the but are non-GAAP The other to be to update may the the financial reconciliation quantitative website to intended substitute as release measures, Management forward-looking disclaims not call. directly

the And CEO. Alberto Alberto? with call to that, I'd Paracchini, like turn to over President and

Alberto Paracchini

you you, Good us morning. joining of call. this welcome, morning, appreciate everyone, and We to Thank all Tony. earnings our first quarter

your and families For all healthy and of circumstances. you are you call, on under trust these the safe I unprecedented

Lindsay Beacom, Chief our today Joining me Owen on Credit the Corby, our and is CFO; call Officer.

careers, as of for became typical one to the the atypical as a quickly that remember fairly will this will what and fair quarter out that be it's think extraordinary result say started I rest pandemic. a of our quarter, we first

COVID-XX, to providing the business are the that, providing color call call up we some our Given on in most questions. our by on overview the will time After brought our our loan and an for seeing discussing open impact the operating spend we today, on of portfolio. want the of on changes environment response, additional we

you reminder, find Relations in the comments with website. of deck a Investor As our section an can of you investor follow our can the help

you of I first Before we want quarter. at provide Net into the COVID-XX an the quarter in overview the income discussion, to share. $X diluted $X.XX or with for get came per million

our by a Our disruption a fair conditions, allowance government-guaranteed a to impacted significant significant despite increase leading for to and market bottom in in an results line asset in reflect prepayment slowdown provision, were loans the servicing weakening the to speeds. our write-down value economic

of asset earning revenue to quality impacted quarter lower income yields. million evident from and mentioned earlier. funding The sale to by $X.X charge quarter our as excluding servicing we I fee accretion value XXX gain from income, stable basis prior declined our component deposit the was prior revenue primarily by of their The that fair and assets declines in our net on offset franchise to reflected which, margin, at costs points, remained was were able our in reduce interest the and

by given efficiency XX%, to basis. levels revenue entirely flat Our increase ratio increased driven the with expense a quarter-over-quarter on lower

crisis. was at driven outpaced for the grow loan portion particularly quarter. Balance of increased lines, by growth holding X.X%. portfolio saw that their of steady loan on deposits. deposits growth growth and million the total healthy XX.X% for with growth flat growing was sheet commercial the quarter slightly as at annualized of remained loan-to-deposit ratio or A noninterest-bearing X.X% the start customers the XX.X% deposit $XX.X at Total by by The essentially

loans Provision of $X.X allowance during loan million million end The that three times, acquired the loan X.XX% one by covered resulted quality, to status quarter. increased commercial which and of by the nonperforming increase for than was loans construction $XX.X nonaccrual million $XX.X loans asset primarily the the charge-offs losses In or X increasing driven, government-guaranteed quarter. the by terms fell for at more in into of expense of quarter.

Turning I safety all of made of crisis the than been technology while maintaining employees, the day overview want how Since an of concern service XX% productivity the The levels. our high and employees past primary of one employees, the allow COVID-XX more X. business our quickly to and health few provide platform we've to Slide to of our our over to investments XXX crisis, our them communities. to customers work-from-home support responded in customers. continuity, protecting we've or to years us and environment, non-retail and workforce, a has of transition

and put customer activity and and have our retail expanded our has dealing a very number for COVID-XX, place has of treatment. providing in to We've time-off cover the COVID-XX this family, support standpoint, or during of time, paid From with remained personally employees including environment a programs benefits been within the manageable. testing either anyone their stable, cost to health

as We in closed branch of digital customer use our reduction corresponding delivery we significant the base. traffic, have some experienced seen of channels increase temporarily obviously by a our have in a locations and and alternative

drive-thru a buy We combination branch to have continued appointment and provide locations. of through access services

on borrowers, utilization to increased the relative draws million we're of credit rates as quarter, by our pushed line closely credit XX%. $XXX monitoring we to of utilization line saw lines prior customers' In terms which

to on support shifted the managing new period. during Our to business navigate and relief establishing help programs focus customers this focusing quarter and them through pipelines existing from

detail in provide for Turning a customers. programs more to our place the have we on support forth put Slide would X. I to like bit

active in on SBA the focus we participant lenders in with program the a of the have PPP largest existing base. one been country, customer As our an

approved more processed approximately loans. resulting have We in requests, than X,XXX in $XXX million loan

of commercial $XX,XXX. average well size and To retail a business $XXX,XXX, approximately expect in funds the as was we all our participation customers. the at was have including program million and customers PPP The covered the over date, Customer SBC, of over next loan get funded the as just to remaining with to $XXX median lines, week. in coming broad banking

fees generate $XX from approximately in million to program. expect We the

we of PPP that The granted million of of and Outside we've and have banking with of commercial principal primarily payments. deferrals, XX% relief granting the April basis. XX, for of XX-day borrowers either on have been or Through modifications clients. proactively have deferrals representing $XXX interest our the with a been over our being portfolio, working case-by-case just granted majority we program,

enterprises In Lindsay? to over turn who are crisis. to At regarding Lindsay companies. we rent how call we would terms and accommodation deferrals granted most companies, point, additional of the walk I the the through to like some service to borrowers manage today, through properties, manufacturing have industries retail food and you to positioned nonresidential information this

Lindsay Corby

Alberto. will of X, Slide a on capital position. Thanks, review liquidity our I with start and

in and Our $XXX assets. an XX.X% representing investment and liquidity remains equivalents, quarter the portfolio of strong. million cash with We ended total

addition, fund have funding and PPP In facility, availability, our utilize portfolio. we PPP to in currently $X we Fed to billion plan excluding the liquidity

sheet In the our capital, our return strong performance past balance to of of ratios our capital supporting terms at operating and repurchase share our quarter dividend. our XX.X% the XX.X%, shareholders tangible through and the at over and while levels increased and has quarterly both year, end exceed capital growth trough program steadily common Total of stock respectively. equity ratios our capital common

process uncertain capital we projected capitalized, of all planning our part scenarios several resulting and ran continuation environment, above including as capitals, our common adverse As a well dividend. the the result in of of

paused commitment have support activities our given the share and our the customers, environment we our However, uncertainty to current repurchase program. around the on

Turning X. Slide to

diversification of We have provided and some our composition the portfolio. additional information around

In at respectively. rental manufacturing represents XX% segment portfolio, and XX%, our concentrations the and terms the the loans real estate percentages segment within largest of total of and and leasing the

our service LTV XX%. coverage portfolio debt has a a estate Generally, of with X.XX% ratio real of minimum maximum

of Our debt loans carries retail XX%. to with maximum fixed of space minimum split and and loans variable of LIBOR between are rate. LTV coverage tied loans prime, rates, XX% generally to XX% a tied our are a X.X%, and office fairly service

that being is unfunded commitments. $XXX Our total of billion, with $X.X exposure commercial million credit lines of

a implemented we has proactive our to customers our assess information rate to the with credit point real-time utilization, direct get Since included line that increase management percentage risk of terms the during four and a to In XX%. contact COVID-XX. approach crisis have saw we first quarter the utilization of in started, impact

X. to Turning Slide

granted date. exposure on that loans, aggregate, XX% these the to have balances identified we deferrals impact approximately and approved To the XX% we of outstanding million to on about industries We these loans. $XX all total our early information deferrals COVID-XX. to have have of approximately our as industries provided on date, In of sensitive represent

XX% and granule government very exposure is of loans. average carries restaurants, loan amount size represents total outstanding a largest approximately our guarantee. X.X% at $XXX,XXX Our of portfolio with the the which It's

largest these to have We the representing outstanding in of total loans just The of credit with have X.X% minimal two total profiles strong this our and a and relationships million combined approximately $XX exposure sponsorship. have portfolio industry hotel loans.

Moving to We'll our lending government-guaranteed business. XX. Slide discuss

pay XX% new and to government-guaranteed loan was in portfolio.Under the saw loans commitments that which The Act, the quarter for disruption loans the our coming SBA to total September and closed largest well manufacturing mentioned SBA essentially loans we regular as between will status manage with continues interest earlier, total existing to services, CARES this in prior months the and first six in portfolio we retained XX. of be all servicing loans level principal our Alberto the in quarter, disbursed production As for impacted and on trade the retail unchanged the food balance each account XX% of in of all as million. at loan concentration $XX.X

have the As of initial a absorb such, our SBA impact to breathing will of COVID-XX. bit room borrowers

look we margin. Turning to Slide net XX, our interest at

We help crisis have put group, this on some that peer to we consistently will offset us our areas. interest margin which, of believe, other the above will revenue-generating impact generated net

that quarter cuts to Fed we of yields, this a While full number us a continue offset will there impact asset pressure. portion help pressure be factors recent earning believe will of rate of our the will the

by able in deposit cost the quarter. repricing the declining mix, deposit CD rate We occurred have during our pricing proactive of been benefiting being to reduce from our deposits environment our steadily with the and improving first that

this points continue lower of With to of in deposit compared basis average points deposits the decline deposits the costs came March quarter. first a XX cost we at Our in in basis to an starting average should of point, see second quarter. XX for cost

have of XXXX, rate of we $XXX rest maturing million an at CDs the in X.XX%. average Over

As these lower costs. deposit CDs further declines in our expect we rates, at renew see to

result X% NIM. Yield a compression initially cause on the PPP program, the loans the will for to the fee the at of addition, over In processed we X.X% of income as be life. estimate loans

future the However, as income and are quarters in our the interest our the processing of repaid. quarter. quickly see net on interest fees will or net loans the third recognition fees positively forgiven We impact these well, depending may possibly accelerated margin during how

turn call At this I back will to Alberto. point, the

Alberto Paracchini

to Slide areas you, And a XX, Thank I of current wrap Lindsay. want about turning the focus on comments up few environment. to with

and safety eventually business expense with focus the maintain will discipline a protect to and a of for utmost the work to normal to be our safety mind. in immediate return Our and the environment, as plan particularly continue we employees more soundness customers, operate

efforts the On on the coming our a that helping we difficult will through period. clients front, navigate during be business centered expect quarters,

this COVID-XX and during and unprecedented standpoint liquidity positioned a of to the pandemic support the capital we're duration from severity is period. our and clients uncertain, well communities Although

to open I'd that, up questions. With like call the for operator,

Operator

Please question ahead. [Operator first Instructions] of Ebrahim America. Poonawala go Our from of Bank comes

Ebrahim Poonawala

I I just sectors, COVID-impacted X Slide the could guess. all lay where guess to sort the if back out go of you you

the your talk what what around may these the looks your type service versus us, just Just sort of and restaurant borrowers who the these Alberto, visibility dining, the around sponsor book like restaurant finance guarantees, like borrower how portion casual to and navigate comfort of around just ex around lockdowns? of guaranteed the some quick just base

Alberto Paracchini

Sure.

kind of I small the So, the component. a EB, say that the the I total, me conventional let the you business there's just number of piece. at kind believe give is look I you in would what is just breakdown, would when categorize it

So, you see about that million really $XX.X there kind million of is of small capital. $XXX.X that business

essentially we quick smaller restaurants, as sorts of government-guaranteed the exposure, the Midwest So, well would I as that's of the originate mixture franchises is that very generally in granular. loans within operating a the and of that say That's the footprint service restaurants all bulk different in. there typically

multiple financing and that more is restaurants, more not or so limited, conventional call see balance The much what that's quick book. fall I that's as as financing difference, the the rather just that restaurants of we as And from as the the cases, you In service we're some our other financed in more In cases, provide owner essentially there restaurant. established building typically own can but facilities. necessarily would we're franchises restaurant restaurant. building, of for for the we've restaurant some not operators tours, the financing just the well

a So, that that bit you you color little have hopefully, of that terms in gives in category. what of

Ebrahim Poonawala

also you from just on? When capital see reserves, terms as model, adequacy. be reserve credit we And second that here bigger about ratio in a think us you're expect evolving stress build Like, to in think you will talk of a mentioned, of this beyond some that measuring the migration you point? and how about you this do factor to that ran reserve the and incurred informing quarter still on see the loss Lindsay, you in terms obviously, test

Lindsay Corby

going I'll given think. a give Yes. our terms on terms this, to in we We're going We on have it's COVID-XX of guidance in here, and depend just not to but what's severity related Right on uncertainty everything exact believe what the the the going here did that's unknown, really now, ahead. reserve obviously increase to first you duration we quarter. of frankly, that in and the give the and

future provided. to will robust in But to of much, time So think what's how EB, terms be the of we going tell. be will be in that do terms needed

Ebrahim Poonawala

one. just it. if Got may, And last I one

potential through If getting the few you model of over next and understand like eventually serving acquiring which you created I within being customers just dislocations is on your can on footprint, months. your Do by to this Sorry, talk smaller to see, this, focusing focus your feeds rolling that, banks? business up, Alberto.

Alberto Paracchini

question, good a That's EB.

of as terms think type fog in through right be are like the before of to there's fog we've I in as with I that plenty now. a And clears, any opportunities. situation there crisis, gone of think horizon think a likely I

in I think focus is to just as we're see right and in not our trying for business also Chicago here open yet. city what is now really your city well, the

some able we dust to environment to well. want environment will in answer go-forward a that that evident. usually we be start it's see like your basis. returning think more of themselves degree the after be on of normalcy I and what starts at the they that is looks that, present to I the But settle times point, to to, this question, of think And to around become assess what stress, I kind usually and opportunities believe as case as the do will be going time

Ebrahim Poonawala

Got my it. Thanks taking questions. for

Operator

Please comes of Next Jaffray. Piper ahead. question Nathan Race go from

Nathan Race

are Hi, all everyone. Good morning. In doing well. you're the hope

impact I'm that you along curious, the Just disclosures just details going in just guys do, space are it discussion, on things. of I to Slide active are hotel a the the near back standpoint? those your the appreciate on of and SBA exposure. the deck in early more and on all the sense X, given like in going liquidity amount capital those Curious, portfolio makes that the PPP side are industry within lines PPP scale very loans to and term guys risk based maybe provided, restaurant of at what you that terms from just operators

Alberto Paracchini

able majority x program I didn't didn't decided vast our for customers the they to make there to participate for offered of that really strive mean, exceptions them program. to were get really our want the the and get in for that were where the I y then to us Nate, allocation program qualify the and and would in opportunity the be they say or So hopefully, in for an sure reason. customers, program participate We to participation unless customers that

think we able were I to that. do

PPP participants broadly say, the of you categorized speaking, were on here, So those they Slide vast in I the including all that customer X, the majority would see for there program. base

Nathan Race

new Got whatnot. side seasonal curious, seems the were and along could sold And of SBA help near PPP that the it. then But just to of just hear. get thoughts, generally of trend be and But as volumes to things, obviously That's your these kind in on current focus of lot both be some through how given just to gears SBA extent? just any term down kind of changing XQ and funding, volumes loans some time. great quarter this into a small those turbulent clients, speaking, and XQ to non-PPP well

Alberto Paracchini

the we the interesting then of kind the March. during quarter the there the about is in month We two a quarter the of pre-March had mean kind that I of obviously, had, and we the Yes. massive happened of thing cities. like environment tale change

can through slower building, both So little tell side on typical a you, February. essentially pipelines SBC side, we first was the know, and had bit the I SBC during as the month quarter. the quarter you a We seasonal were more quarter of the is

But March. had active and into an the going pipeline month of building we pipelines were there,

of we'll external. the and of the eventually can a and secondary April in bit. was after those continue about the market of onset really loans. as fund market in earnest, the talk But the loans secondary resume but during kind we crisis, month state the internal Some more of of will focus will to and clearly, opposed And those the

That mean have And continue. there we'll develop there's being said, things think I how see here. business, a I there's to will pipeline that from

July until Protection but a Program not tied appropriation potentially Payment funding run that whereby X. potential the and this That seven current out, there's be appropriation point. funding could a with out is the run at know, you reestablished the hasn't would As funding

through what PPP with before. We of happens we'll program. the ultimately funding will the see see. periods We've And those gone

bill additional language that is, rumors could discussed thing another for in in program. expand being existing There's potentially as Congress. other language bill guarantees stimulus there's you the in that The that's know, or the

environment how as Express hopefully changes don't the available. a happen But I become So before eventually what becomes have see for as the and we to for the law. the well as bill, certainly to lot of funding to a don't programs. programs that seven or and programs language that have can pertains we'll a the stuff it SBA for visibility into any

through out been here fair out said, of that financing and the are conventional that, in is that of It that coming a That stressed And time. months different. be crises programs SBA providing And have environment. to companies past, will able is going very and ahead. that the at come being in useful of environment we borrowers particularly the in expect be financing a ultimately, we periods say environment as access the believe will quarters certainly that number to that this to environment not we no difficult

Nathan Race

various And quarters, if moving if NIM. bunch a ask But one we that's deposit core I could occur the few over on pieces. is core of strip kind growth more pretty out the PPP I to the of just Obviously, impact strong. next guess going

costs well. as down quarter brought guys You pretty the noticeably in deposit

done good I nearing loans. should job think know just won't point? floors a over rate just at amount about of lot recent are getting how core curious context, those the maybe curious the loans So, And and several that quarter? floors But we help. the cuts maybe of quarters NIM floating within Obviously, Fed a what guys into second the last you this have

core yield the to bring down costs growth costs I'm coming the deposit So deposit funding deposit improve exists strong also again, and more just mix asset in sorry, headwinds? opportunity just of the down earning much or core deposits corner, given curious, how kind the and with

Lindsay Corby

Sure.

to with the the some directions help March. the general gave the I'll on with that be that can We're what's just specific around help color the of terms terms of giving I what all you I earning described. that. PPP giving given Nate, going and you So, Pricing on offset think NIM, on And parts the see But on guidance everything moving in that I should we should going pricing in deposit asset and we'll compression side that of give sense take not of balance in our you gave we're you seeing. some a where ended deposits. sheet. of some side,

now. So, it's I And on just that see compression are do the side, given rates right where think just asset earning you'll tough.

my terms the program think on add think the some outlook that will they I do I of the just in So, X% have. of that's sort PPP drag yield NIM.

then you'll offsets you'll and think through. see some of loans comes as as obviously there's I and So, repayments some forgiveness those drag see that there

it's murky. again, So,

So, like in past giving the guidance complete the have around not we NIM. we're

floors, So, the have about billion in terms variable of in loans. we $X.X rate

and at of million those almost is currently that have loans $XXX half floors, approximately floor. of So, the

Operator

next Stephens. of is from And question go Terry McEvoy Please ahead.

Terry McEvoy

of credit. me let non-government-guaranteed loans What just these past NPLs? than modified? more with contributed the then couldn't start to and I XX that were the at in Were XXXX due guess increase end days be

Alberto Paracchini

to Different it's One lost haven't find able a property. on was to They tenants. one, circumstances commercial been unable were the the simply They each tenant. they Terry.

just just they they And past payments little quarter. earlier a could not that bit basically and due. the in So, happened went make

was Another acquired situation were loans. restaurant these and But situation another a was operator. essentially from

to and different concept. operator. year. case, the going the restaurant a the In closed restaurant repurpose was restaurant this it into struggling They particular a They multi-restaurant the into wanted was

restaurants global We pandemic from quickly. of the near However, coming asset started work was after opportunity the sufficient. cash an rest out had the the into play very nowhere flow the to

on that. opportunity that took we So

loan, facility really of is there. more situation side. think were loan this is other The we government-guaranteed storage value on the a Construction construction and the a is

They collateral specialized It's trouble had facility. a leasing it. have refrigerated had They leasing. value. trouble We

make So they were struggling to payments.

and nonperforming. nonaccrual decided it So put we just to in

very one the three cases. each circumstances So different of of in that's set

Terry McEvoy

will is of gain business-as-usual on following supply today Could longer-term once SBA then economics one or come back commitments recover? kind sale the margins either on its questions. side? will from of lending the your likely demand Okay. of that and system, And it and through up loan Nathan's PPP change just PPP its works view And way

Alberto Paracchini

multiple me parts. question, into unpack Terry, that try Let to

institutional as So doing I we realized think got is one and in certainly lending. lot a we the to knowledge liquidate how to the that understanding in And how that with loans SOPs, thing of accordance comes originate document, work I guidelines. into knowledge deep service and understanding PPP into we to and SBA the and expertise program, think, how there's understanding, out have agency,

felt lending the lending. that that, typically would to never that leg we think PPP others certainly that or going an as SBA up approached I we not really really We into was were and is done program be going had a from did normally SBA realized SBA we And very what loan. it approach little

lot quickly program that an to grant SBA businesses. eventually this the get in that financial And program as agents of are less really the small what money think to you're a like institutions is transfer was to really of program became details that and government, acting designed to that the a facilitated going more guidelines, a I almost involved of So find protocols, business. from the by adherence

it So would coming want sure lot that will. didn't that I cycle now I SBA to to of, about weeks, we're going lending it We to have I'm lending thinking to landscape tell. some change some too this experience change with PPP still it had it do background, forgiveness of be the through that's it's all do that and encourage up go in now work. that would I try in But SBA terms or is doing because program Perhaps that SBA a to I that's and think not of say the early is, don't they've the going six next would people that it. think to know lending. people do what

some to in on is and space they through after think that long-term that the basis. hard really cycle, we long a think pursue something to folks are that want if I So going get

even any part they come the programs. your will Now question back if your more programs traditional could went to those think rely the conventional the to were difficulties, that to and are going then to loans get question I of second albeit, through able to conventional this so XA go borrowers not about SBA the do programs or likely further them back past over access do borrowers. higher over see a the those bridge and be to have given the on stress the by don't have to or enhanced financing, guarantees amounts not I that Congress, able hump, from would to higher different, become coming temporarily with I provided back and we're good see get loan you. amount speak, what be of why environment therefore, here think very to in quarters. SBA

saw You different collapsed. with In terms market, would I essentially view everything other of at midterm market precedent. asset sorts We're the investment-grade say, that market in point when impacted, premiums really of levels were I that were spreads for every middle, in kind different the to that around severely near-term from historical right? the secondary happened all market I previous class or assets. think the at as of in do consistent time, in trading the not right no than what

here happened business. what circumstances have think was are unique to that I the SBA some So you

I hard pool it's really think loans to for today. people

kind is have have what's the you and you today. that essentially fundamental today, that's what loan primary So of the in buyers setting are buyers price market long-term

come more going And bit premiums buyers resumes, and back. come the think market. I in and as have So will that think a to will compress will spreads premiums do spreads pooling you're I

has latter from is during half so we've in the The quarter. seen market think already of the do first I started it certainly quarter. will second market was a and the far what better So the little than bit

Terry McEvoy

Alberto you. your thank thoughts. Thanks for

Operator

Michael from ahead. comes question next Our go KBW. Schiavone of Please

Michael Schiavone

how Mining also, give restaurant of quick. real on book us you of morning, the And deferral? collateral loans on might be Just these to have? more good detail much go book what kind the Can back guys

Lindsay Corby

some I can give of in on you on them Owen, the deferrals is the that the give collateral right terms million And of deferral book piece? detail $XX book. can you restaurant now, about

Owen Beacom

$XX secured million. And Yes. The it blanket bulk UCC lien estate real is really, business assets. of mortgages $XXX million of the

Michael Schiavone

can the of are provide Okay. CARES have like losses? And you you guys a drop SBA-related expect loans detail seven charge-offs that how guys if under a to And more quarter credit the underwritten? impacted the Act? on from they perspective you less next traditional then because already And

Owen Beacom

from payments the deferral payments this from Well, on SBA... the is

Lindsay Corby

the up asking No of months interest? you picking are and six SBA about the principal

Michael Schiavone

Yes. and how basis, And go-forward SBA then perform? the just traditional a you to how on expect

Lindsay Corby

Sure.

interest for next So, principal for is months all six the regular that servicing. the in paying SBA loans are

six there, get next to depend will in of time it's coming breath. And And then will the out severity months, going a tell that period. on the duration the emerge of how they coming. what's really, for of they So, what's from

things if okay. be we'll they then And to prolonged, go have and of more if are address more it a So, V-shaped, from things there. may are

bills think there's Alberto So, being relief I apply to them for outlined, different that as that could are additional well. as discussed,

to So for P&I by tell. next again, SBA. But the they the soon months, covered too six will have

Alberto Paracchini

doing resume perhaps position? business do we prospects it the look they need to they need do up business XX going relief? They the of for working months' and it question at before business-as-usual? What picking borrower What in some started, crisis? going at Is additional is that, of capital a How during relief I now point capital forward? add to What getting at for order so they that they you is essentially have the you so thing reassessing certainly, an you your that, After about and the think a are is for Yes. to can that a in time just government would SBA from seven and say, borrower, I started. on Or that looking it, SBA if has emerge or period? cash much hand how were Mike, that. working conceptually, get And cash this the to payments that is the need start would able some Do operating, is loan, get is the them. because to have? worth essentially just the six does borrower we'll other certainly that a that is and business defer days, the to need

in period, we're speak. an And I you crisis financing, look today. allow evaluate not, think six after businesses it, that about this, to helps you can we'll to you're have it kind that so that to that or the get if time. think environment environment flexibility is it. of payment, be shelter-in-place not to certainly hope at of, additional that through business terms But worried the call buying these think to the that there's through need additional about months hopefully, operating service for of that when in So, essentially and

Michael Schiavone

the any rationalization over Yes, once at expense that's to helpful. expense there And look to does just branch change zero, switch very With are approach And side? your like expenses. on calm the to pandemic to at starts initiatives race back that or down?

Alberto Paracchini

Yes.

example, are rather clearly and channels couple branch the the call increase, our needed things through of you, but think adopt a and or people were too changed, adopting or that use. environment on Mike. technology like to people forced right to is it's that that mean, essentially now, maybe We've slowing either for the have feel in a today it before hasn't things, of before I and different for position that an on just evident the the there's digital even channels slower didn't couple or has think, that to at by use stop we're would center they I seen branch. call that, I soon tell call from wanted to they

downloaded the didn't. now or they branches don't mobile they safe, closed that before they apps so it's And feel

usage an just the seen view, we've of that's increase was what happening. So, and already our channels, accelerating, digital in in

continue as temporarily at constantly still, do you that And of So number but today, know, communicated constantly evaluating And a underlying to look and too have make terms that. this point, looking that network our locations approach in been have in we'll think, remains that we sure optimizing to bit it's closed. our that. think, regard, of early I the we've and a we'll network we're at the same, I that

company, One that one we deposits being a per out, look public about we've point you thing if I talk talked and branch. is should since average metric about,

$XX number that's million jump like today end a are And higher million, at look if see even million from, of today. the from So to the I inch average, forward. where we that we we're $XX we believe, continue year, went last you on want going over to $XX

Michael Schiavone

have on growth in do lastly, slower color this point? And And pipelines Great. any you Okay. at the commercial loan if QX? expecting like you're

Alberto Paracchini

the existing that we existing at will not be fair sure them that on going customers work that our our say, focus our be selective because look this. with can those not base to now customer Mike, this say it's and base. through we new are today should navigate to need prepared It's customer your get we through focus opportunities, to to but I think to to opportunities be I period, incredibly is on think right making

opportunities as So and quarter. really of as would to our I sure in we're period. we you selective customer I outside making second careful this going be here and growth. significant through is would I on But terms think of that can think the know, of existing and navigate just there, outside the help result I you're focus them the program a say base mean, I that of growth in projecting see PPP

Michael Schiavone

that's And Thanks, have. that's helpful. I all

Operator

question Brian comes Please go Martin, ahead. [Operator Instructions] Our next Montgomery. from Janney

Brian Martin

Hey, disclosures the good Thanks morning, all added for guys. today,

Lindsay Corby

Well, I like thought you'd it.

Brian Martin

Yes.

some Or based kind of coming and could fourth how kind benefit you're things give viewing be of in how to are guys about you realize Lindsay. on and if out in going guys quarters, The general, quarter? just, much for it you that that of PPP, couple it? the thoughts just forgivability? third to expect thinking you a is that how Just the me, Is plays it of just on

Lindsay Corby

Sure.

right still there's now a around lot unanswered questions of So it, Brian.

end So say then bulk but some seen looking you I it to loans QX. will customers how I'm how at of keep we're see I going here. But to terms want be it QX, And outstanding. come long in our it, toward what the of think caveat, of think the on these may I in to just remains

is again, time maybe to tell, So I of on will longer." "Hey, a we've financing, discussions people more it bit been a So source saying, of hang hearing low-cost little this world but could upon right becomes based on I be will depending now. it I additional as again, change the available. QX that information bulk think But the of it how see

Brian Martin

Got you.

Okay. No, that's minute. one back helpful. margin And Lindsay to for just

core had I about just well. mix that. But net look margin, or there as of funding wasn't at of on the in they when with and minimal? occurred period, that Just you the try assets what we and mitigants in on March time pretty core kind from in trying cuts, if second those loans to repriced, cuts of given side core the side, margin with mean the just bulk look change assume Fed, impact Q, the sensitivity as in mean, far talked to the understand that was the as obviously, how the assess fair the your as occurred the I felt. understand you kind earning much K do we primarily was late of it what as we the happened think the and mean, that you the I that about impact then in and at looked to rate and

Lindsay Corby

Yes.

helped going tremendously. than of the I the in LIBOR think you're to Q saw see elevated, out it second in you remained first. here us more and that

you're of that's coming impact to in here down here, think I that, so going the And now QX. see more fast

Brian Martin

question is $X.X $X.X on I Okay. to one actually you just that million next look, you as least, outlook standard had kind that. the start the The at parameters added quarter? And compare quarter your this in if pretty of this happened on accretion, was you so relative that outlined it the Or the just million what prepayments general or quarter, that there, on some guess, to it the there? comparable to disclosure

Lindsay Corby

Great no The recovery. or this that nothing $X accelerated was like payment a onetime all question. was quarter saw anything million There we that or that an basic. was

So it I'd and number, the was straight materials. to I say just it's included a in what comparable

Brian Martin

million Okay. Did quarter. hear Did you I this it I was miss I say $X.X that... thought

Lindsay Corby

$X.X million.

Brian Martin

million. $X.X

Okay.

is comparable million $X.X million. the $X.X So to

a for to loan Okay. obviously, though back February the pretty volume, That's maybe perfect. January there. and then the Alberto March, on on decline were sounded And minute, saw a it just sale we normal. as

persists March As to mean, as we guess, that least you I decline next the has near April, at term? suggest, look more the look at least been would April for I term, like near

Lindsay Corby

So I can take that one, Brian.

obviously, the lower, in twofold the So on is lot a sale look premiums. volume, gain and terms volume In right? also I then at volume the of

was down. low bit little they talked where premiums flight a So were the Alberto the That March. came about and and premiums saw earlier, liquidity we definitely in to

in Here seeing month, of the signs April, end we the some improvement. are of toward

but they are they up back to showing they of So be? definitely signs improvement. where to are used No,

Alberto Paracchini

to to to I you're think for this. normalcy add what of things on it's be going degree said, Lindsay Brian, some Look, have asking to I to here. return think, our opinion

loans ability of really the that's market driven it's buy to a paper mean, everybody outright. whole have you of that kind wants market a in important fundamental not primarily really market for pool think at buying by the guys kind deep And to SBA-guaranteed I levels, good is secondary when the pretty I loan predetermined They'd because rather certificate. own them. are

more in in more right? So the participants more you get market, more the component it's and floating full get order facing I the the still market think the think think I participants dollars of I as asset pooling rate It's attractiveness asset. in credit, to a remains, flowing,

So certificates efficiently away, loans the attractiveness important. ability is that these to participation hasn't but sell pool gone and

Brian Martin

Yes.

what expect think areas some your in one closely portfolio. the guys and watching watched limited kind where you more short-term stress being of today? little you to guess, there you to expect could bit particular in there turned But helpful. last that are you attention that's Will guys you're could Are was view credit, look you've more potential risk? just now guess, more I more the talk can here that outlined be about for closely a going or see these you of maybe the industries. just me pertains exposure guys the you No, I to it as as just you early And Okay. to or forward,

Alberto Paracchini

Yes.

thing I contraction think the that activity. kind think given short here being growth now see the given any to industries caveat mean, here I would say we start you that just in I that think talk answer, we're in we're but that. I we right of of do still longer give to magnitude will this of think, has even specific we of we're We're changed it's it. really know magnitude is the well. outlook, normal. That I run likely a specific second very operating to that recover, on economic to do in back still don't starting about of we're semblance comment to quarter, the said, we're have not is recovery customers resumption are run, and of a I the One a the that's that watching what doing general we from fuzzy I kind see everything. quite as quickly watching the on segments think

program, we on not because don't pass need that don't it or decided doing it, about we're to certainly, them well. and too manufacturer the felt should essential And they worried other they're they benefit. businesses supplier they because They PPP and they're offered those something of an

it's just the the So close I how re-emergence, key think in and end supply get the they to but our answers circumstances, the just this those understanding are too be How in point. re-established? going disrupted? a obviously to think that But those not your business? Are to able we going we're there's at chain have know is questions current How customers to lot impact, your situations. not of produce? the is don't suppliers buyers I to else, worried really about everybody staying been

Operator

of we have America. Bank follow-up go Please Poonawala a of ahead. Next, Ebrahim from question

Ebrahim Poonawala

Just one one. quick

you PPP. on not relatively a second to on in NII given sheet Lindsay, revenue given the give guidance do balance basis, the relative appreciate, third quarters? I think see expansion stay pieces on stable wanting margin the spread moving should all we'll But So, the and just the any

Alberto Paracchini

EB. do, We fair. That's

Operator

remarks. go back This question-and-answer like turn closing now any over to conference the to for I'd ahead. management our Please session. concludes

Alberto Paracchini

forward safe healthy, Thank participating we in in more morning. you, this continue normal environment operator. hopefully, hope participating. call I I the talking Operator? just for want to to a remain next to much and again, and Thank you you to for everybody, thank, look quarter. you

Operator

is you presentation. concluded. Thank attending today’s for now Conference

You disconnect. may now

Byline Bancorp (BY) 1 May 202020 Q1 Earnings call transcript