PEBO - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to Peoples Bancorp, Incorporated Conference Call. My name is Mike and I will be your conference facilitator today. Today's call will cover a discussion of the results of operations for the quarterly period and six months ended June 30, 2020. [Operator Instructions] Please be advised that the commentary in this call will contain projections or other forward-looking statements regarding Peoples' future financial performance or future events. These statements are based on management's current expectations. Exchange call, involve not and a in Securities this forward-looking fact uncertainties in Peoples' and statements number and statements which historical are are detailed The filings. Commission of risks or of result effect rates changes federal hedging impact or the and/or or strategies; standards, nature activity; procedures. LIBOR and banking reference from effectiveness regulatory conditions COVID-XX interest counterparties, of may are actual policies, the but to in the and initiatives, strategies inputs the expansion effects used model well which expected materially changes environment loss and in litigation, impact, which conditions vary interest rate of in rates, the Peoples' accounting of and and commercial limited These and governmental the rate third-party state to authorities; which pandemic and economic of related may services our or competitive of service within in model; interest estimates include lending economic and timing, actions including or credit the models, customers, other not manage business nature, the on uncertainty success, expenses curve, increased and outcomes, may on the timing ability discontinuation the legislative COVID-XX of as responses and to factors, tax of cost, financial of and CECL yield due ever-changing non-governmental and margins, of consumer to rate effects with estimate, impact pandemic other and the various the adversely interest and employees loan the and regarding demand changes current adversely as implementation market strategic impact the connection insurance providers, industry; the sensitivity; including the Peoples' interest of business and forward-looking reasonable bounds their operations. on Peoples' statements assumptions this call made of Management knowledge believes the within of the during are based

and it morning forward-looking forward-looking may question-and-answer facilitate. call any Chief end in will be call discussed differ materially will year. requirements. by And reconciliation and and available release. the as Relations. one However, statements. Thank these about update a for the results this these An following of after I be today's which will minutes for Mr. by and webcast opening include Financial legal sir is begin. Officer; of was statements call, This questions Accounting of archived required from quarter release disclaims will you. most call section except call earnings Investor Principles commentary each President Relations of financial Accepted on Peoples period, Executive to XX in non-Generally Chief applicable to second be Peoples' under Treasurer. this statements. floor the peoplesbancorp.com this actual followed GAAP A Chuck available XXXX earnings Officer Investor Sulerzyski, Rogers, or the this Mr. peoplesbancorp.com possible issued prepared Participants included responsibility during the John be financial Mr. yours Sulerzyski, is available is will GAAP directly at the at is measures to measures comparable may

Chuck Sulerzyski

continued families for colleagues. At the this and well-being wish you, time of I your

pandemic and as monitor to continue COVID-XX We the make adjustments necessary.

June branches all forward their process. in On which our XX, the opened relaxed we with of services provided being normal own business some reopening in also restrictions, have As have we hours. states operate during we moved

operational our back workforce. We also started of a portion to bring

social not allow some for distancing. as have We from that temporarily spacing limited have working continue of we our offices to associates in portions adequate home certain do

during communities this and to practice. our employees challenging plan supporting time and are We this continue

adjust monitor and developments our accordingly. will responses We

has few meaningful. been months had points have bright our the last clients the many our most for in We and execution

made to new successes have during banks nearly the in We linked with impact as them a some of total million quarter consumer growth previously a to the had the clients we PPP. the had loan significant or will of under unable to Business the annual a performance-based annualized and for new origination lending, originated could. implementation of compared cross-selling COVID-XX and remainder the income, pandemic, access. Paycheck excluding end. portfolios. Approximately had loans PPP impact Program indirect work acquired the that linked Small grew despite the households record diligently XXXX. loans commercial been teams excluding our other commissions. stick We've relationships. excludes financial consumer were quarter growth quickly and limited of Despite closed to served new the help our number system. the as This in implemented We grew non-interest [indiscernible] which We gains XX% were of Protection the X% unexpected We compared XX% timelines. loan to of other quarter, of previously had every original compared of year. Total products to focus We have X% continued to branch $XXX loan XXst, annualized This losses, be loans month Administration's number to March new production who the

mortgage of to had X% our charges. expense in XX% growth, decline quarter. account deposit had first linked commercial four non-interest service $X XXst, growth in increase This to the loan in times quarter, the was in the an with electronic compared exclude and which deposit swap March nearly performance fees, compared what nearly We we total banking core were in banking was We coupled recognized income. XXXX. decline despite best Our million which CDs

to had for during an our reduced Although the us a has compared abundance prior deposit service charges deposit the quarter, periods. growth have significantly clients been liquidity. of has This account highlight our

We the bank Peoples recognized previously We premium effective operate Unions for Plain work of as Finance. XXXX. in were Virginia well XXXX. announced company, Cleveland a State bank will list the part was West and Credit finance and of Premium Cleveland.com recorded top in Xst, on also number as Best a Forbes Dealer unit as which of America's Banks the completed annual acquisition as July This as one to by for the

far financial we net share months As earnings million this announced of We million of diluted our six XXXX. XXXX and the or $X.X earlier performance, generated quarter $X.XX second first diluted for as income $X of $X.XX quarterly morning. per share our for the or per

results credit Our heavily current which CECL economic impacted utilized reflect by be for model. within the continue provision outlook losses, the the to

high relatively during $XX.X credit quarter for impacted EPS the for quarter. During second the credit of quarters in the prior of losses quality, quarter which million to $X.XX $XX million year for second provision quarter. in $XXX,XXX is quarter losses recorded diluted we provision the the recorded for the current linked however credit The compared we reflective and not losses the second XXXX, by last in remained to linked quarter. $X.XX two in credit of stable compared provision The our negatively

losses As XXXX, $XX.X $X.X allowance liability unfunded for commitment our and credit of XXth, million, was June our was million.

the diluted $X.XX support for President for employees, below. non-core donations the or stock by well the reduced and that which expenses, totaled as award We negatively pantries some by which were $XXX,XXX recognition impacted and a Assistant also Pension employees remaining settlement an our impacted diluted EPS of quarter our Vice EPS that FDIC charges and $XXX,XXX credits, were COVID-XX-related positively $X.XX. made costs by our during of associated had These assistance EPS as impacting communities to of with quarter, including $XXX,XXX in diluted our to second banks including were $X.XX. food items and results

basis Our points return for return second quarter. on average quarter and assets year average XX X.XX% compared assets to XX the for second linked negative for quarter pre-provision, linked on was points basis On compared pre-tax for basis prior points a prior the the second X.XX% X quarter a for the and X.XX% the was to our year quarter.

costs. impacted heavily was $X XXXX by acquisition-related of quarter second million of The

the credit expense diluted in year in prior the $X.XX quarter losses and $X.XX second EPS negatively by quarter. For $X.XX provision linked the to for impacted in our income compared quarter, tax

prior due was XXXX. diluted linked of were by $XX,XXX losses than quarter improvement expense. and to tax to quarter. the over the the Excluding of quarter, acquisition-related which provision linked second the our for by the credit to expense, prior XXXX improved second the second was decrease a in EPS quarter The quarter Compared costs, second for compared income was year higher XX% from quarter lower non-interest the largely in total $X growth in year million driven

and $X.XX compared the For for six tax to XXXX the in months XXXX, negatively XXXX. were diluted $XX,XXX to first for half by for expense EPS XXXX. $X.XX million $X.X Acquisition-related credit provision impacted costs first compared of losses of income

XX.XX% had which linked made When improved second ratio quarter periods. improved quarter. Most in to respective XX.XX% non-interest been ratio efficiency acquisition compared result XX.XX% non-core in and by to prior efficiency efficiency in of lower the prior ratios impacted quarter expense for during the compared the the compared in was items, reduction to prior and linked XX.XX% quarter, XX.XX% year a Our the was to the of XX.XX% in the year heavily expenses. in adjusted total the we and second quarter

PPP We recognized us net of income, of pleased participation relates million the increased of interest cost to has in our amortization and deferred quarter. which We have net and it our income. fee of income with ways performance benefited the $X.X as many been interest during of origination $XXX,XXX both

the margin. income, interest rate net offset negatively with interest Although X% which of the to the partially net impacted were loans origination interest these X%, of coupled low fees loans, X% between costs PPP have benefited on our origination by

loans Our weighted PPP originated average volume X.X%. origination on of was the fee

nearly deferred XXXX, recorded loan which of June any recognized the deferred a originating the and a cost PPP also forgiven, fees fees, life is with deferred related average have of net amortized XXth, $XXX,XXX loan be benefit be cost will loans, remaining origination of net salaries million which At employee interest costs, will we PPP income. each over costs. originated. associated of through the loan the We and of personnel deferred costs decreased $XX.X to When

growth, industrial XXXX, June quarter. which an balances was loan principal during loan of far commercial million As the the was loan $XXX had PPP of net payoffs aggregate and some and as in second at included balance XXth,

in Excluding in annualized and in consumer the to of partially reduction of $XX March compared - X% commercial loans. total offset originated This increases growth the by estate million impact provided $XX XXXX. XXst, grew the loans. commercial was was indirect non-PPP by growth was industrial growth million loans, real and of loans a Most PPP

reduction lines used an as the alternative clients others used PPP PPP credit to of overall business the commercial an while the have loan borrowings line seen of our have drawing utilization reduce as lines. some We on proceeds proceeds to of have rates in loan of credit open

at XX% Based to utilization Our commercial credit used available approximately that approximately balances million to that XX% rate had available in quarters end equates of been of $XX being from the June. line previously. not declined recent of credit on

gross XX% half to from average prior increased average growth the full Compared the for compared average compared loans period was grew The with the to XX%, quarter the the second quarter quarterly due of and while to the balances acquired linked first most loans PPP Our XX% to by loans balances loan impact the periods the prior-year XXXX. coming loans. First loan increased from of Prestonsburg. PPP growth both the of year

to As modifications in early of modifications, and first second it the the wave March quarter. completed loan relates we in

deferrals. portfolio second payment an seeking months clients addition wave two or three has of commercial much experienced with smaller of some Our

a of portfolio relief balances lodging-related specific payment XXXX commercial of for requests portfolio. customers. These of total been was release sector. pandemic round and have more quarter. less clients by XX, end half of the retail impacted than second not to the for installment part of the X% consumer request for number was additional few period the clients of travel primarily the prepared been and sector balances our of reached the six-month subsided generally closely second modified. of to leisure few wave see requests second the and payment second of commercial total loan in in At as a more day be their account if payments our initial from relief. X.X% these of and clients X% a only from loan have severely our clients lodging have release. they in The to are originally the majority COVID-XX for loan approved significantly leading were new they operating loan who which the additional portfolio commercial for were of June have a continued accounted of resume analyzing total requests request standpoint, to days own. effects the We have loan Those We of total out have at resulted calls X.X% comprised exceeded The request release, cares these levers current to loans cases. of business among our on the XX deferral remaining From Overall modifications or

Our in were forbearance From associates collections up initial to begin we to requests to at perspective, anticipation full-time quality days team has of added or expire. two a further modification forbearance metrics. plans, experience relatively stable which the have continued credit XXX

Our was XXXX for the basis annualized compared X net points linked point a second quarter. negative charge-off of net charge-off rate rate X basis to quarter the in

assets for charge-offs on non-performing quarter. for previously the end. was Our relatively charged net a loan to compared off loans the charge-off rate Non-performing linked negative quarter with $XXX,XXX a and were to gross recovery commercial coupled flat quarter the lower due

increased quarter million. available of end Our our loans the upon $X.X criticized COVID-XX. the We to driven downgrades couple based borrowers with being compared classified loans quarter linked this not the million by updated had credits by a downgraded by that information was while about declined $XX.X

the credits that will continue we the hopeful these year. are of as remainder We exit through

trends at end. quarter at improved considered XX.X% loans as linked current XX% end to portfolio of compared loan comprised delinquency Our our the quarter

in While of by will do XXXX occur that to impacted we increase second we continue be our this clients have in COVID-XX. yet, experienced delinquencies as not an the half anticipate

turn clients. over additional positively John to and the will statement is details about fiscal future provide to trends Our be additional call delinquency balance if to now I income the could sheet. provided impacted stimulus

John Rogers

Thanks Chuck.

more compared year income increased costs income in efforts second the deposit a and linked During the interest net interest our loans Compared investment X% served the to decline linked to quarter on second quarter. compared X% offset quarter, our increased income. than by quarter, to was managing prior to the in and slightly down

The income LIBOR LIBOR While the of a at quarter, at the our XXXX income. the PPP beginning June. X.XX% loans on on during month net to our one dependence the had variable-rate our pricing X.XX% interest end from the of loans benefited of impact net negative interest for moved

loan impacted to basis compared the margin interest loans a and lower by interest These balances. yields, by XX in net earned X%. industrial stated which Our loan quarter and declined points loans rate impacted the heavily PPP linked were included was commercial of

total fees quarter, we For on for these and the recognized loans. $X.X in interest million

recognized reducing amortization declined, by were interest to XX% by yields points. in lower increase driving affected higher declines basis X to which offset to by quarter of cost during rate premium reduced environment interest We investment our by quarter. amortization Our the the compared premium the an compared margin the with linked quarter. $XXX,XXX these worked linked We net deposit

during points of funds second basis of XXXX. points prior quarter quarter XX from cost Our basis to declined XX the the second year for

cash we negative on part borrowings have a had as potential fore short-term larger of quarter loans of and the draws we lines Finally, for carry credit. balances on in of our the funding

margin points prior ability which second compared investment by the basis control year declined funding our yields, to XX and due quarter lower net costs. interest to loan partially were to Our offset

to continue prior XXXX, For $X.X the points to for Lower year interest interest basis million loan interest or second million points which net to of linked or quarter lower prior X% during offset down added XX XX or first by decline basis to half net quarter to yields be interest the year funding Accretion basis points $X.X amortization income interest costs the margin while quarter. points and driver period. XX and of net income, X partially basis $XXX,XXX for the the and declined investment net the of is was expense margin. net net the the compared margin income compared

points $X half the during For and basis income added points million net XX first XXXX. of interest the income interest to XXXX basis $X.X or or to XX million net accretion margin

performance-based received losses quarter. mostly the and gains excluding several interest due was to X% the and lower insurance in income to income to lower annually was non-interest including income, the quarter. compared total commission first Our related factors This which decreased linked

Our which balances, and deposit both The declined have higher partially programs activity and to XX% the due reduced the have pandemic. government of by charges deposit PPP account stimulus been impacted been impacted and balances were customer by service by higher loan proceeds. the

by than Our overdraft linked income and offset and normal. were spending partially the quarter fees. higher account habits funds non-sufficient swap decreased were compared declines XX% higher as to balances consumer shifted average These

to size transactions as XX% taken low larger also While and of advantage linked of increase rates. driven electronic Mortgage much were the declines up transactions banking relatively respectively. to and the the compared income compared number the interest the quarter and been quarter swap of the X% grew of during has the has XXXX, have unchanged banking

a see has these by which products. the the result for charges, the with good The environment XX% quarter was deposit reduction largely as losses gains the mortgage declined service non-interest to pipeline demand continue total X%. Compared and income We second down low rate excluding in - decline. larger XXXX of reason to increased the were for account client

to fees grew than year X%. banking X% While doubled was second and the also compared income prior of insurance quarter quarter. income lower Swap XXXX electronic the nearly

Electronic full period total gains first accounts. Prestonsburg acquired income, First to the half and losses, down grew non-interest for due the of banking X%, XXXX, impact partially X%. For excluding income was the

XX% prior comp income chartered Our doubled positive declined service decreased nearly swap XXXX. XX% fees by by the compared and year. compared Insurance the to to

in second repeated quarter expenses the first monitored additional of our during controlled during related of was XXXX. stock, and the the B closely Class of sale $XXX,XXX the We current of income unrestricted also XXXX not We to recorded which quarter Visa year.

to second increase employee year linked cost prior XX% by costs. X% quarter, and XX% Salaries impact deferred to compensation the the compared insurance total non-interest in quarter. increased compared lower coupled linked with expense $XXX,XXX Our reflecting benefits cost quarter declined by in of and the medical

medical of in which the costs mostly during first insurance the routine visits decline employees with elective COVID quarter, related deferred impact recently. account health savings for Our were were until and surgeries, contribution to coupled physical

real to increased is volume expenses to indirect related This mostly cost XX% deferred higher origination to linked declined other consumer of quarter. loans. estate compared the due and Foreclosed loan decrease

stay-at-home largely result second to in quarter by part compared was decrease other of million also costs, costs of entertainment for quarter the the non-interest the the The reductions personnel in quarter. which was linked the and higher salary the compared in expenses, with costs, in had further We of reductions and total to were ancillary travel quarter employee acquisition-related in place reduction driven which $X.X and orders prior-year to of deferred coupled XXXX. benefit of level due second cost in expense

Our declined acquisition-related to related fees was professional expenses. mostly and XX% lower

XX% and deposit by Our to of the was FDIC recognize credits. related target to we the of insurance fund to threshold received banks smaller expense increased because level continue the above credits be

now as higher personnel the the XXXX was franchise the electronic related banking of and all than XX% by compared compared increased was by improved year. on benefit costs. half year to data and main during Financial remainder focused XXXX expenses. expense salaries the objective year of to partially management offset to during affecting to this into the XX% Compared balances by Ohio costs prior costs, and in will deferred majority the of expense up main to higher decline and equity declined software impacted processing XXXX expenses tax - expense, and total prior insurance the We $X.X of first issued second the higher These to decrease that a stats. the employee XXXX. million compared keep to and increased throughout medical We our The and we their non-interest continue acquisition-related was utilized was lower level prior were which decreases quarter of XX% Institutions in credits XXXX, were reduction recognized a us. have X% as of The driven

we on at investment This the Moving XXth, larger result sheet, portfolio Principal anticipated higher Board The investment increased of the at end was XX% loan. refinancing reduction compared quarter. partially were of reinvested to opportunities given the quarter of payment quarter to paid rates than the the at total quarter, the were XX% first Finance support was cloud loan assets to balance year PPP due into balance on portfolio the the XXXX on our the quarter. of during payments through June end. at acquisition limited activity to the interest portfolio during for the and utilize a end attributed investment the declined during as our of Reserve the principal Premium sheet to by the the Federal also growth,

to recent deposit CDs, and driven XX% linked compared XX% second Core up Our improved proceeds XX% The and to quarter habits percentage deposits year periods. XX% end, a up end. over compared XX% deposits, and compared increases linked compared the to demand end at year stimulus quarter at year grew end, prior as changed a which year prior quarter total spending we're end of consumer's XX% the excludes ago. the fiscal the PPP to and loan quarter

account increase accounts, increase balances. March During savings XX% XX% XXst money a in in we market the XX% and deposit non-interest bearing deposits, a in growth XXXX, experienced

brokered also we cost higher reducing in We our have - deposits quarters. been recent

impact the quarter increase quarter have deposits deposits However, our relatively brokered intentional funding on provide in reductions compared to the second the brokered in deposits low compared The in These loan deposits changed in Prestonsburg to other XXXX. cost impacted cost loan First second grew were XX% we added proceeds the they averages. did the XXXX. by to the and deposits. average recent and of increases XXXX - the during and higher impacts PPP as periods All brokered linked-quarter period offset of large consumer total deposits a earlier deposits a total include stimulus, quarterly first compared half million periods funding comparisons were quarter, late spending year the for were by XX% full prior Quarterly, and habits. partially compared the growth to while recent All not $XXX second fiscal acquired average sources. occurred to XX%

of deposits remain cost the committed XX a XX maintaining XX strong during prior linked capital Our compared year XXXX points of second the points basis basis in to for this quarter crisis. points quarter the We and was to in quarter. basis

We have requirement. partially and still been reductions capital discussing our large while levels within being internal capital, regulatory in staying our and at

During under program. the quarter, purchased nearly of we our share million repurchase XX shares

continue what We will share whether carefully evaluate level. to to repurchases in future periods at and

- after ratio total capital common equities capital our strong. ratios Tier by capital be Our of at the rate the will $X.XX our as was XX at December XXXX in assumptions; key XX.XX%, shares of completed test loans capital stress net holding share of included dividends excess capital tangible additional our levels ratio at even At income the to the XXth, was of for our recent June XXXX. for ratio tangible which and continue ratio results. for this PPP Under per XXXX, year Tier XXst, the X XXXX we XX.XX%, equity of purchases X.XX%, to was due following capital, which negatively XXth, XXXX. We've the was impacted XX.XX%, on June no points and recently asset was basis risk-based our X retain scenario, company the remainder current held full our another or well-capitalized were

$XX would by million, the a capital level our million. would well-capitalized exceed X exceed capital while risk-based level well-capitalized Our $XXX total projected by Tier common

bank, at our projected well. the would December as above XXst, levels XXXX For ratios be well-capitalized

to test by results be we common above Tier while well-capitalized Our capital equity total will exceed stress well-capitalized essence, continue income, $XX of to remaining $XXX of million provision XXXX, status. levels. absorb while able million, per no projected capital pay In our our level [XX%] that dividend would the X our indicated risk-based $XX for credit be end million through still above losses the of and withstand well-capitalized could share additional nearly

continue to closely pursue will additional stress and levels monitor testing. We capital

the level continue same share third per high we is we earlier the we morning, Maintaining dividend the pay at will and during the a this second. As did reported current priority. in quarter dividend to

in to liquidity We moved available needs. potential ensure pandemic we management proactive been they have and had in approach to the our funds early for

interest many quarter, of plus net to have months ago to outweighed managed excess cost. the some lines which the and and additional need believe our sources We risk the We margin, strong multiple cost collateral but we secure several us have the funding liquidity funding options. during our

quarter, lower the end able way funding in facility we as not are at the During to we utilizing did other up lending costs. material PPP secure

Our loan-to-deposit to and end quarter declined quarter at the XXXX at June linked XX% XX, at end. compared ratio XX% XX%

reflects coupled forecast end credit the we moved the the as growth As economic March of the we X, the disclosed and loss XXXX with last resulted to therefore continue to XX, January in XXXX. X.XX% quarter. for The standard compared quarter, loan on the CECL X.XX% our of of and show forward loss for at higher to PPP when deteriorating accounting of credit our with quarter. obligation loss our credit at allowance growth loan losses end. implementation the the to June quarter the underlying grew year recent SBA XX, of XXXX, loans Compared conditions through several by allowance quarters had no and linked plus gross impact for in X.XX% the guaranteed calculations end At

X.X impacted loans June allowance credit by to loans points using at allowance basis for credit negatively Our was additional for related was losses. no which there PPP XXXX for losses gross XX,

year XXX.XX% XX compared a has of XXX.XX% non-performing doubled loans as end credit end. for compared allowance losses was and Our at to at June percent to the quarter linked

during I the call drove allowance final will XX much for metrics credit key forecast the - losses. While the economic of June quarter, now compared metric turn to back our Chuck in own for his significantly the at new key increase comments. credit

Chuck Sulerzyski

lining. the have John. found Through silver you, we recent Thank the turmoil

from Our had are associates, even home been though working before. than working more closely many

deduction dedicated to our Our communities remain for this over help months. best teams recent time. as to are in banks payroll doing what and during as associates and $XX,XXX out difficult doing possible our is are local through much our to We to committed donated food have clients

$XXX,XXX have As banks our throughout during food organization, to we an footprint. the local pantries donated quarter also and

recently a Heisman across NFL and Trophy Pick Relief X to $XX,XXX winner Fund, we Joe was Burrow's addition, designed In which and difference Ohio. Southeast Number food by security Hunger to donated Draft Cincinnati the Bengals in make the

We continue give look back for our ways meaningful to will to communities. to

to our flexibility also while the team complementing excited structure the to forward be Premium clients. giving to to acquisition Finance new current of and We offer us are working look our the services with additional business

continue as forward, to work with move our issues we proactively and we closely to and place functions our to work clients our importance monitor credit modifications. identify As accommodate we on portfolio

disclosed will in be ability scenarios XX% is period dividend position, the to financial the our is compared providing points strength; which call John linked June, of Officer. economic Once basis the and turn XX we basis again, during concludes future for historic Q&A commentary we Overall, we maintain strength of of a second quarter quarter even view comprise end; the joining the as now distress not of hands expectations which As income, and the Chuck fee the for foreseeable and me our our our provides strong great stable on publicly a XX session our which uncertainty. points back total for the which this improved I our financial on will Rogers, compared low-cost OREO, our June at source and facilitator. we assets linked a a in at Financial basis XXXX; was XX stood capital This of ratio, of which will to point XX, as call Chief XXXX; XX% XX to high loan-to-deposit loans deposits, quarter, points basis quarter; call for for non-performing the were rate. percentage open decline the to our Sulerzyski our of revenue questions.

Operator

[Operator the from Siefers Sandler. And Scott Instructions] question go we come Piper of have first will ahead. Please

Scott Siefers

I something curious does the $XXX,XXX loans the I personnel new That the Is structurally prep all quarter, by hoping before. base but happened with through was going provided out. you those just haven't we're right? seen not stuff sort some upon correct? That's fashion you detail lower of expand originated. you - a expense that which I in but quarter PPP, plays can going John in remarks, like costs if that guess in were how forward in deferred know just your the could this that

John Rogers

correct. origination is requires I this defer your well under which cost. basically That's all your you XX FAS mean, as income origination

set as right, So the those we just SBA. fees got you're from all deferring loans defer costs, that we you those originate like

fees and expenses originate and an over amortize at you loans that, you'll when only gets come a that - recognize So that But the period it you these time. ongoing when the the loans happens to the cost. those two-year forgiven, all quarterly not

Scott Siefers

is on netted way when those costs your prepared right? and net but a then Did is basis correctly? fees remarks, NII. I like see from sounded sort It the that the of And the I those, just the within we'll hear expenses guess through margin, get that -

John Rogers

and deferred get run fees That's get correct. That's they FAS XX - All the run margin. into those correct.

Scott Siefers

final in and sort sense of apologies the one, loans, as then missed of if I percent is prepped for what be your your ultimately that timing total forgiveness for PPP the but could remarks this forgiven? And

John Rogers

We a process is what as thinking maybe clarity since calendar hopefully forgiveness of year, be this give But there no like is. the this think in hard to will it year. forgiven XX%, to what an is. answer it's our majority the question That's it XX$of vast that, to

Scott Siefers

okay. Yes,

John Rogers

so with would give right Chuck that year. - or as to now Definitely threshold we're the mentioned, move XX% have, to upside that right anywhere take things could happen they're give thinking this automatically as they along. come forgive, or take help up going dollar basically But

Operator

come Schiavone KBW. will from now question of Michael next Your

Michael Schiavone

shares the one are banks capital quarter. expect then buyback And few to repurchase the deposit to of this guys the levels? with about and talk and you Can you here? from the with decision your do you comfort the So continue reserve buybacks

Chuck Sulerzyski

investor to this be willing First is willing buy it? price, to We our high would off capital. stock steal. buy at we an a think it we're If not why have

excessive I time. point any going one to not analyze purchases. buying in continue in amounts think We're we're stock to at

So these I that our price, but stock it. it's what only of community review in value will reflect buyback all begins the company, the we'll do. the of last I continue sure ever And to worth. not they're And banks think don't to hope we

at So, we like the this - like it's price. hard not to stock

Michael Schiavone

excess should limited expect around the margin to for quarters, NIM, we stick given the resulting the on on opportunities And liquidity the and few drag to cash? next the the deploy

Chuck Sulerzyski

in the I I at of think, economy, we opportunities, time you April, say that were situation, we're types less So, given the to the quarter-end shutdowns we We're - to May amount keep careful, things be early current definitely quarter. and I little cash. that course would need think of the But a right? potential Well, of frame. holding do further second during we brought own down decent need our the a that those I holding think cash the

forgiveness throughout have. As customers balances that the dealing upon depends of strong, of to chunk I'm as remainder of the lot inflow deposits the for of a where far remainder and cash year be we've actually least at that holds the deposits good had, the as the timing our are that these deposit they there. - that in a with pretty expecting

few a period, have they're We're kicks a third a of July we off everything that actually we next see September difficult the - very optimistic it's August, playing deposits how we're and know think currently. And Xst too. as have early seasonal the Premium to kind going when to things out strong see Finance the that over how origination at the that we But kind strong at so pipeline that funding else, And July, some the with related so officially, wall. in to have that's company I very bought We where periods. all plays is grow. to well. of quarter, They these all out do

Michael Schiavone

Right.

Okay. you. Thank

color some credit can indirect provide production the and around loans? the what came think, those loan from of I where and on consumer the of parameters you are demand just kind some

Chuck Sulerzyski

on be nationally, would - are they you. to pandemic where call from. nonetheless, top little were tell In been a if our things can close for I to footprint, bit glad help damned a not before. be pretty volumes I'll I I'd buying Sure. have higher. you XX comes do. are vehicles where my to volumes in But mean, demand they the

not new much is cars. There out there us. terms helps inventory in of that So

used So it production what for more FICO was bit And we QX to the was a than average cars little tilted have XXX. seen historically.

good So credit good growth. quality we had with

like it's So, perfect kind storm. of the

Operator

[Operator of go Russell Please Davidson. we have Gunther ahead. Next DA Instructions]

Russell Gunther

wanted some first, around deferrals. to remarks. comments couple prepared the of clarify A on But follow-ups the I of

So, sense - stand basis, dollar you us give maybe a end? could a quarter deferrals for where today total versus on where

John Rogers

Are you talking about providing loan modifications?

Russell Gunther

yes. correct, That's

just round, trend you we Just mean, trying little of spoke second to I requests where bit for I'm the to to point. track point the for about some are. track a but the a trying

John Rogers

XXth say you When XXth? mean you quarter XXst versus March you end, today or versus June mean June

Russell Gunther

like just to to However and where you today are days. it. those they've past get the would a define XX modifications I trended of sense like how over

John Rogers

as our here, about I sit it's we think, were about deferrals And I the think at peak, $XXX $XXX,XXX. million.

down. coming they're So

Russell Gunther

then... And it. Got Okay.

John Rogers

the for and - there reops to think seeing we demand our on that keep XXX on Especially key commercial really lot a the days. side any the I XX that not were side, of point customers, we're to thing. is the talking of

need So people on believe. that, would this an start where At of in they're headed not. point they're I time, inkling to or have going to

larger seeing not demand. we're So

we and in you're April so. XX to not the that to XX going XXth. start So By probably start these process off, when days, months would after over yet occurred well really time, also large next rolling the a so days runoff run

Russell Gunther

that's you we And case, reserve that in these reflected or then, forbearance do consider customers potentially current see a will be But along these that for additional to lines, higher that. is going forward? for in thank builds given are they if those the guys, you the risk reserve program? And

Chuck Sulerzyski

risk. do their million is it. well. not example of the is higher did at the vast McDonald's The be they caution increase of $XXX consider I extremely liquidity. would these about be which everything customers abundance majority to could and McDonald's good operators A to of doing portfolio,

to call, of we is about the about really feel might fine. going Where that's million $XXX-ish our in be feel different segments talked detail and through in quarter's I of So, it that last - there, perfectly out million $XXX portfolio went stressed. be over I strong the

for stressed portfolio relatively in a us, really the that in about $XX-ish of modifications. we're small is hotel the million and Fortunately those feeling portfolio, segment only is which

So, we feel pretty it. good about

Russell Gunther

Chuck. color, the appreciate I

that of was, mentioned has that You next which to got the actually out of last some you sectors trended? my quarter. called question, You how kind ring-fence COVID-XX

really still terms quantify would of it? of is stand or of you that So, in other amount would most include there expect hotel, things how you the that amount? weakness Beyond ring-fence pockets you'd are in where stress

Chuck Sulerzyski

Hotels of is overwhelmingly the piece largest it.

that facilities a little care stressed. day some have We are

as high years. mean our XX the stressed reserves reserves, in relates are new our that non-McDonald's this I charge-offs to but really say extremely have I'm relative than portfolio. our the would struggling of so, I bigger - for accounting some last with to us convention. our are the And rest We reserves net restaurants little it material. that a are in nothing increase

Russell Gunther

you But you there? last Hearing you migration feel that that would you percentage a question, COVID-XX originally. first you about how significant Thank is in the for than credit that was wouldn't Have expect characterized my peak risk loans of Chuck. for lower hearing And the at seen really deferrals the Peoples we the negative that. to have on level you half year? provision

Chuck Sulerzyski

I the a reserves folks don't. there's going But forecast good I works. feel our CECL I some risk control States. are to forecasts, don't how I I And good Moody's United about an our a good for understand rules. do very do do I those convention, don't about our portfolio? up. says portfolio. that as convention, to very the economic based It our those components, But new think and economic model for on Well, unemployment the - do the And what get deteriorate, I marriage make number the forecast GDP go feel to doing. is where includes feel that clients what the variables. about are. are of Ohio according in to

Russell Gunther

There forward. going driver the that... qualitative are overlays that's So

Chuck Sulerzyski

overlays direction. overlays, can you cannot qualitative opposite modify in like The you but you can't - but qualitative go yes, it, but the

Russell Gunther

Okay.

Chuck Sulerzyski

[indiscernible], to curve, the four up, stimulus months think given those you're And if seen and reserves going credits. right, probably how to will with this enough. the when start very I would put And to imagine. you of then economic year. up to I this multitude indicators to or nothing been level a you on the before, indicators far you're credits. economic think point wrap be could specific that's plays on improved, out we've right? think, so outcomes the going at a So, start think through even maybe And three along I the few untraditional I fiscal if through has need see like But

So, the economic factors could improve.

Your core down. could models come

some reserves you up, you net need one goes that off, increase, and to How specific might a comes one a put have up. net do levels decrease. doesn't where down, You that mean - that it

to all comments decided. we the was think I that

consumer we how very But it have see now. seen does we delinquencies. very is the our So We predicting that We those are said, confident difficult. modifications. I signs good types we'll in of play think of think, things, But good signs think we've portfolio. on

Operator

Next, FBR. we with Steve Riley Moss have B. Instructions] [Operator

Steve Moss

underlying guys follow want are kind you your assumptions GDP unemployment? and and just start to regard what with the to - regarding CECL of up If - with just here, wondering

Chuck Sulerzyski

time your I'm hearing questions, hard I - had just a Steve.

use? are to know model the what we in the that You want taxes

Steve Moss

Yes, and for unemployment for GDP example.

Chuck Sulerzyski

Yes.

Ohio Ohio three unemployment, factors. unemployment it's the U.S. So, and GDP are

Steve Moss

a Right. low-double-digits-type I assuming - like guess, are you unemployment using like rates... high-single-digit,

Chuck Sulerzyski

we what use? Well,

Steve Moss

kind In the Yes. models? of both

Chuck Sulerzyski

Ohio Moody's were X.XX%; unemployment, forecast GDP, and X.XX%. XX XX to U.S. months unemployment in is out, XX.XX%; June plus Ohio the

Steve Moss

Okay.

Chuck Sulerzyski

XX So, scenario, we use the we find year. the number out Moody's quarters, and you'll go one right? can next that there the for you baseline use go think We I

Steve Moss

I regard I with for then, - apologize costs to if And funding this. the missed

funds in three next the total Just could out just bearing curious where kind in cost interest of six for months? funding to deposits here shake

John Rogers

I Well, they points. were the XX think for basis quarter,

an I to of have liquidity. of change going We much, over the cost excess deposits the think that that next... it's don't

Chuck Sulerzyski

CDs, products, are with funds drill supplier. little but most continuing will some down at We helped as come deposit a have did low our and of contracts done little that So cost. costs the some to a a that - throughout in part, for wrapping level. markets the bit, as still well we've June some public lower some pretty money We off most year, the promotional

So, those, you'll a going over have see see the to quarters. quite but we the seen last I reduction you're that few think the reduction in next for don't quarters few

talking probably we're So, to opposed basis points points. of basis as tens

Steve Moss

but perhaps you answer, in And think be back. pipeline or kind thinking do building when When to pulling are - could of a a terms customers of out? in of terms hard I'm then, that just of you you you commercial do business assuming one just have activity, most how are sense more any about further

Chuck Sulerzyski

Well, I you some better of than about may. of couple activities the think feel may there's I things. a

of Ohio, pandemic, Virginia cases per X are and Kentucky West you First, million X footprint at are so million way lower. our per the lower look and deaths at you look if way and

U.S. Kentucky average X,XXX X cases XX,XXX. X,XXX, for the West So, and Virginia is Ohio million X,XXX. per is

got the total reflect it's the So, Cincinnati. I in think that most those pandemic in numbers and whereas Columbus Cleveland, with state problems state the

we're rural the footprint, our more at look counties. you if So, in

pipeline it are between doing, a that that respectable deals the of good think a on But We customers loan Ohio than that the we're I've and QX our No. national in X% have QX. to seen did have PPP career? more deals Is or probably I growth Absolutely. average. optimistic outside do are do? my average on the pipeline. We best

bought have the that PPP of benefit we in. customers also We the

out So those as round the be next And new we I those loans PPP Peoples and times fee. them and close of deposits well as XX able days, increase to multiple in $XXX,XXX to as to million $XX over sold customers we'll we have Bank. suspect, a to that of customers over far, welcome

we'll - be And I I bleak. just think will fine. So, chip away, and it it keep don't think it's all

Steve Moss

back - in hotel then, the That's Okay. And portfolio. to kind just going just of of helpful. terms lastly,

the largest stress. You source mentioned of

of I'm customers you're a those remind lot just how to and you of kind loan-to-values us are the assuming on redefer. If going thinking about -

there? your restructuring maybe about think to what how process is thought Just loans or those

Chuck Sulerzyski

it there, at you And that reflects And since cabins stayed it night appraisals can to speak stayed made - doing trip and XX% a fully in XXX-bed cabins thing best I And the the I was aren't, those get hotel. first probably times hotel what a income the and than can't data, are week CEO dropped hotels, property. occupants, this had country, X you you been last The Marriott this tell the operational as the people them saw were And I said, went that The back. It But you But business that better done to running the ever. and week, of for last actually two problem national I they're of had of obviously, you if was last night occupancy Nine saw if loan-to-value, the XX he are that away. two began. XX great, of for but a follow my and different are they're saw had when and flagged. week. I views increasing. the long-term. three

to folks have number well-capitalized, these get of are it. they'll I are difficulty. them So suspect through A and going

I don't on year. think provision. million second is, light year sure I that these half the will this properties whatever Perhaps, think be particularly number but $XX in is, scenario these I us of Do think asked meaningful, pandemic? to of properties? possible. will I'm that that's the downgraded losses It's I in Do have of losses the the the the have it have what you anything unlikely. through these likely will expect properties If in half be second

Operator

showing At remarks? no do we're this you closing time, Sir, any have questions. further

Chuck Sulerzyski

us on want you day. archived Thanks your be for to everyone good have I wish and peoplesbancorp.com call earnings listening to that and under section. to for remember Relations want you - for Thank webcast Again, thank Please the on this thank of go release our and participating. will good on. Investor But and time I a at health.

Operator

you also today. is call may Again, for the management now to this of we thank sir care And and lines. a At conference concluded. disconnect team Take your Thank time great the time you, the you your also again and everyone. have rest day

Peoples Bancorp (PEBO) 21 Jul 202020 Q2 Earnings call transcript