FNB - Earnings call transcript Q2 2020

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Operator

Hello and welcome to the FNB Corporation Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, today's event is being recorded.

Now I'd like to turn the conference over to Matthew Lazzaro, Manager of Investor Relations. Mr. ahead. go please Lazzaro,

Matthew Lazzaro

contain Relations and are these morning measures in call be welcome Securities the as GAAP the Website. statements Exchange earnings Please viewed of the CEO. over with should Commission related filed Good link measures. non-GAAP call. filed of Commission and financial release, Non-GAAP GAAP of GAAP. reports Delie, and and our not our the for This with measure often Exchange in our About to on and will and conference forward-looking FNB most reports Securities statement statements reported materials the A everyone replay you. call Chairman, and non-GAAP comparable an to included operating financial directly and be earnings it the forward-looking Thank to our Corporation refer this addition measures materials Investor in webcast and results corporate presentation of available registration earnings our disclosures until and Website. the posted contained financial to President call Reconciliations with to now to presentation release. alternative XX turn to section and prepared accordance our non-GAAP in July in our available our and will Vince be Us, I'll corporate in and

Vince Delie

call. everyone morning Good welcome earnings our to and

in in will commitment cover quality FNB's further Calabrese, economic operations the Chief financial and results overview today's provide protection quarter are and participation inequity discuss Officer platforms Vince of our organization's loan social initiatives our trends. Vince On an update on our an finally call, to detail discuss and our on Gary Chief will I provide paycheck will update portfolios. me on Joining provide digital Officer. continuing you in community. and asset $XXX address results then million program. physical our Gary will and and today Financial and Guerrieri, I Credit second address relevant

As and on personal a we've level, year. this significant challenges company a and endured change

with nearly $X.XX how XX,XXX support first growth impacted by a COVID-XX billion $XXX throughout and and per more quarter $X.X in of with million. the where has have are Compared quarter, $X And totaling second production the rallied our proud additional earnings second growing to $X.XX, our stronger thoughts challenging an resolve by pandemic increased interest nearly our unrest emerging and all remained company I increasing environment, our loans reserved and PPP successful million. trends were double-digit X% a we XX% a billion. community. revenues those customers of annualized and XX% to our am for to to or in loans quarter supported XXX organic or Core originating included loan quarter Our XX% June together assets and basis, for share The the revenue and of On deposits in respectively. operate. $X.X and total and to billion work PPNR billion. of end united demand deposit to linked share commercial neighborhoods to billion $XX solid total constituent. rate $X.X at increased results fill been future and which increased per significantly. increased quarter FNB million XX who Operating

$XX with million banking markets respectively. $XX exceptionally Our fee million and revenue mortgage based establishing businesses records performed of capital well and

COVID-XX, our good while of needs serve clients operating and capital there footprint, well footprint. a our XX.X% was still the most controlled the from down ratio teams strengthen due seen our activity loan disruption expenses enabled their across efficiency our dealing with were we've to support origination been has environment. our to This first though balance needs. operating to to quarter. liquidity and continue commercial who X% sheet across FNB and Our challenging ample testament a is borrowing clients Even To meet

deposits declined corporate by borrowers activity PPP continue with during driven many of balances we risk and the bank line profile to of funds market. growth overall paying to existing inflow loans utilized also in increased funding clients solid as XX%. On by large business loan decreased relationships, customer causes contracted needs average largely impacted in the to for to standard increased line stimulus and the our XX% our consistent opportunities Commercial The organic were PPP aligned lower government compared of have we Average levels X% bond underwriting credit down as growth strategy utilization Commercial activities linked utilization current much liquidity in XX%. apply working occurred. in quarter with We period. commercial economic a saw balances evaluate increase support as also capital loans and basis, large we when total rate the historical as were climate. by a facilities

our we been gain to borrowings focused reducing have on of continuing the business depositors expand and part by As wholesale existing relationships. strategy, level of

As end. a deposits. night to from deposits XX% up or bearing fully quarter X.X result, prior our we borrowing customer replacing eliminate Non-interest position it billion able were over were with

our ratio further we've positions was June which to been an PPP, deposit has our funding. in the favorably various XX%, rate long-term at organically overall of more funded integral been including to able part our XX non-interest Looking Growing environment. loan and deposit strategy consistently rate through bearing the spot grow balances, strengthening environment current interest

of fact, which from to years five and XX billion deposits XX% XX% March XX% total increased ago. compares represent now deposits, In favorably or very transaction X have

rate to near reduce income taking to With opportunity the there continuing interest is net term costs. off the Fed increases headwind deposit by table offset

management an rate is banking, reflecting important interest for continue low previously, As fee diversifying and on now success grow in extended on wealth and longer, continuing our businesses markets, environment. pressure stated essential to insurance. it based income to Interest sources we our we our mitigate lower is capital have build to rate recent revenue to net in expectations mortgage

income of This XX set fundamentals results of as quarter's million. business without new the banking mortgage the MSR record XXX better reflects production impairment quarter and the a record the million mortgage banking for

in to protection Turning participation to would throughout of the program, our communities these and I for our support paycheck teams their first our extraordinary circumstances. like customers recognize

our their to ensure needs. Pennsylvania borrowers larger banks particularly when critical have turned employees markets extended worked time many and during tirelessly Atlantic shutdown, funding receive Our within in experienced and regions our to in from when Metro Mid- a footprint the accommodate that FNB businesses

each the process, FNB account, PPP which households. of borrower bring opened origination new to an our supports part efforts As in

around Looking are to the ahead, borrowers deploy funds footprint these able [Technical be Difficulty]. that optimistic businesses we will

of by submitted and over As leveraged from of expertise to tens financial possible thousands a seamless to made consistent with the of from thousands businesses environment our communities, a challenging the last of volumes and and during we've customers mobile investment the crisis, our employee transactions online in endemic providing supported upheld online FNB has have and we remote COVID-XX physical platforms in place technology an in transition the to quickly significant aid already with the significant customers of organization, audit total small decade. This transactions our to beginning adapt engagement. coupled accommodate our digital hundreds helped volunteerism of infrastructure retention and jobs. was efforts From and our and of

throughout our on In serving branches fact, our customers. rapid went to digital clients in the appointments that in monthly our remote appointment were strategy in shift and to continue January disruption feature FNB The to the minimize in XXXX safely to grew Website XX We live enhancements already the for accelerated services setting April. new from January enabled crisis. appointments underway that our

customers. the by As in I remains to increased continue regarding online environment our share better innovative state of with chain. appointment traffic updates uptick we some millions serve a our constant daily Together will operations of Website delivery now our approach setting, in operating and change, the visitors. will our

significant product average integrated and active by in in FNB a for value within average our digital private as physical to cards, on of multiple have are we acceleration mortgage, to Customers banking, with management relationships monthly with of product both been can to and insurance. customers end include opportunities day, the single throughout and At a credit online the As demonstrates XX,XXX relationship are utilize and platform we up who connected our customer categories, such have the through the the relationships synchronizing to digital capabilities. tremendous compared remote banking it mobile digital by take wealth also and customers digital experience, the more we multi-channel strategy. FNB's customer savings, generating users capabilities, single products deepening broaden provides Overall, the XXXX. channels, volume versatile

business accelerated, online adoption While our our expressed strong customers have to have our for still customer conduct branches. a within rates mobile and desire

As it to an important FNB business, essential available remain and for is accessible.

measures, With business we begin resources collaboration other Gary the customers which to over reopened team we to can locational the evaluate system quality. a On cover to move adhering that, stringent most to phase the turn developed asset of including the majority of protocols on branch retail I'll units, including the healthcare July crisis data distancing related our continuity human operation. and in safety we to next lobbies data science, as and Our cleaning with in a basis. monitoring forward XX, banking, call to social to XXXX,

Gary Guerrieri

everyone. Vince, good you, Thank and morning,

portfolio in a global pandemic evolve. as the the our continues to continued credit second to quarter, COVID-XX perform manner During satisfactory

status book, provide to are will deferrals program. of manage you well in COVID non-GAAP taking sensitive held ground basis, I on those loan a on to metrics steps loan some funded credit particularly volume our we GAAP under have this of industries. updates Our will the with the challenging I our the PPP our environment, exclusive greater cover and as economic borrowers which the also detail tagged in as both

basis ended The points quarter to loan migration levels. an excluding the more bps of impacted that credits that XX during million excluding remained level would points Let's of was primarily were off basis in as annualized resulting a early totaled in charges $XX to XX point to second linked of PPP. the at totaled which points the about X.XX% now expense PPP delinquency from on the while XX prior total economic at the the XX conditions level bps includes the quarter, at current level to quarter. non-accrual the results. Touch economic the to half XX year to delinquency additional pay X.X prior stated at borrowers X provision a level down build, by bps $XX at basis, down June, at [indiscernible]. rated good year-to-date these XX few we a XX% the quarter quarterly quarter. the basis GAAP level moved previously delinquencies volume, XX Of Net due macro the NPLS million points. proactively basis driven and QX quarter continue our of ended was for our NPLS of basis totaled June, COVID The have over agreed further a environment review The COVID-XX. COVID-related the tied for quarter normalized Provision quarter, million. as for or level non-GAAP When first increase of build returns OREO

the adverse in would excluding acquired default stressed stands resulting of preliminary excluding losses. a NPL Under scenario, basis XX But ACL position X.XX%, including X.X% our point of volume the unamortized and PPP increase PPP XXX%. inclusive ending representing non-GAAP reserves totaled at XX% volume, coverage current X.XX%. severely over unamortized discounts reserve the prior cover of the loan is the ending quarter, discounts, loan Our coverage

global As call. continues last pressure this to book on with economy, to the in the line environment I COVID what remains approach managing pandemic communicated the in our quarter's

proactively thorough conduct level portfolio at overall the industries, credit books or portfolio allow address performance level. operate borrower commercial targeted to or been identify in by These risks quickly our to that within those pandemic. economically reviews industry to indicators emerging our that track continue We otherwise teams borrower and reviews the ongoing sensitive impacted key for have

work Additionally, test series under models our we we environment. a this continue as and to of scenario challenging existing conduct allowance analysis and stress frameworks through DFAST

pandemic. approved million borrowers As loans XX prior Of XX% deferments excluding these to portfolio remaining deferment were it the is XX in window. Of initial deferral relates current and the good were already our PPP XX.X% payment loan our non-accrual. request the of standing to on during requesting million,

are deferral Our at vigilant second that non-existent portfolio carefully request deferrals further for said monitoring only could payment and essentially and small have this identify initial face seen That are our we we remain for time. amount risk request economic remains a credit to geographies borrowers identify uncertain conditions. The of product the portfolio customers. composition and and allows in and well industries. quickly diverse us of to several of across pressure balanced the manage the This our while approach needs meeting still during portfolio lines, credit

Slide remains industries energy on travel of the all the XX, shown low our and granted space. As to at And in remains total portfolio, includes the food services level of operating at leisure, borrowers sensitive X.X% to XX%. these borrowers exposure highly payments deferrals which and

strain operations Additionally, we businesses. the assess retail essential the well economic on secured as asset challenges have tenants as our to insulation nature of this as been IRE closely tracking emerging the certain class, portfolio from and

on this summary, enhance In we entering this Officer and which recognize drawing the teams this Chief weighted situation a his we the to second over LTV for as we remains strong in out. tireless we in credit these difficult risk our like to uncertainty we book challenging the the Vince now as as to I environment. strength will continue strategies through to remarks. economic portfolio the to into efforts turn half of I our plays to team challenges, manage draw experienced work through our the our half the portfolio XX%. through the of economic COVID Calabrese, at satisfactory position move of environment ahead, continue management the banking year. would year. Financial of continue by call as is Our average our fundamentals our Considering environment to position latter their our continue Realizing we for on manage credit look this strong environment

Vince Calabrese

capital trends tangible Gary. levels discuss Thanks, had our position. our environment Today we've we our results and current our nearly I'll management decades year two that operating I'll common Good with position. the morning. comfortable are approach review quarter in position entered second the capital note and and strongest equity current and

CCE a been the quarter June at XX. would $X.XX bills X, Slide outsize million related the second temporary have XXX reflecting PPP PPP balances, X.X points at the basis of related these as in of items, included as Looking billion $X.XX, million CCE COVID-XX balances expenses. GAAP impact These well Without net XX June ratio loan for XX.X the items. reserve ratio or at and The COVID-XX XXX. for ended EPS to X significant including

touch of my comments. quarter, XX% PPP X.X $X.XX declared well Additionally, will X% estimate quarter earnings our than increased more of later payout we as quarter in earnings I million, provision second The Pre-tax management historical risk-based our ended capital the power to earlier this compared X.X dividend detail purposes. end of pre ratio CETX the our week. in dividend for at in the we third XXXX, are risk approach payout levels ratios. X.X% below adequate previous to at March carry a at providing as XXX more XX, weighting of loans capital and

[Technical XX, total the Difficulty]. Slide the most impact loans. in billion the X% organic in average the of well across to of the XX. theme sheet and as the June X.X increase quarter or leases balance of [Technical is strong Turning loans billion primary activity linked was commercial at Difficulty] PPP key PPP net X.X as driver X.X% on

XXs loan Average to a the XX% The or and were average XX% Transaction billion in classes annualized loans, by auto bright PPP large Our the by increased on driven billion levels in lines, billion, XX, two and clearly Difficulty] XX% demand, spot first [Technical managed growth. decline basis pandemic. PPP in to essentially consumer mortgage linked X.X borrowers affected deposits increased loans Slide end commercial annualized, client quarter over below some benefited corporate capital line installment or the historical deposits their the XX loans we Continuing increased utilization transaction direct offset X.X utilization debt. ended million well. to continue continues, from savings by X% quarter shift indirect customer down two reduce down total continued heavily of deposits deposit deposit CDs or mortgage each and June customer at activity as account significantly, increased perform as at inflows. loans bearing, flat Non-interest XXX balances transaction access XXX equaled as programs our spots and our borrowing up from bearing XX% interest and to balances of stimulus million respectively. the saw X.X residential XX% mid million to installment markets consumer to to bank direct increases rate were

Now focusing interest and rates. net [indiscernible], the margin quarter, loan to income of to growth Fed lower narrowed the net XX. XX The X.X on basis the range driven full points primarily decrease lower XXX XX as first points. interest X%, X million, quarter of to mostly Slide totaled or basis the on income offset funds a by impact XX statement to the target Compared million deposit impact

expense and cost basis points. of basis at prior reported Total a to bearing XXX,XXX million Additionally averaged MSR from or PPP quarter. of with XX.X yields were established large first increased XX.X% variable strong lower on contributions North Non-interest points cost from set record points quarter the record also with adjustable one Carolina contributions interest of XX.X or on new decreased Mortgage earning average basis mortgage impairments increasing increased funds loans XX balances. to X.X the from new excluding to and income rate million interest XX million, respectively. month the quarter. X.X due LIBOR to XX% from yield Capital prior the million derivative XXX rates Slide the XXX activity a as on and and basis production compared the reduced Mid fell and non-interest and X.X the million the for million impact a million provide XX.X details or or Atlantic million reflecting to in environment operations basis on assets XXX XX footprint. deposits region. lower as points XX XX.X% from increasing Total XXX quarterly across XX interest XXX rate declined XX to totaled million markets banking XX.X of from income

XX.X% volumes million, due decreased transaction charges service environment. expected X.X to the lower noticeably COVID-XX As in

Slide including XX X increase compared travel totaled second expenses operating expense outsize X.X% basis development realized quarter. and of amount in of as increased expenses or X.X%, On the million to in variable with XXXX, of first million benefits, expenses given unusual XX XX, of quarter. XXX.X and Turning significant million or as in the first or the declined quarter million, expenses, X.X XXXX, an non-interest quarter FAS we of associated such of have COVID-XX XX.X the loans to million lower second originated occurring business

government potential all what Additionally, which factors, know. an multiple a programs Slide of changes economic to is efficiency in ratio over on we we we quarter outlook compared trends credits income quarter know Related as daily continue that improved tax benefit transaction. on changes the tax for to to impairment current aspects our third The were from observe the Starting change programs. credit renewable directional recognized regulation tax. current to external XX%. Saying providing we recognized and changes recent energy subject based today, including are a as quarter of we second X.X in during recovery, investment million with significantly XX.X% XX,

expected low PPP current given digits forgiveness increase end period single expect assuming of forgiveness loans from no for XX, June loan time processing applications. We SBAs the to

decline, received transaction we see to customers quarter deposits expectation, second on deployment an funds continued programs, increased deposits. government the expect in based we organic to do expect through of the XX levels their While growth

by third full lower partially the variable quarter impacts higher net in rate bearing of a continued to expect cost interest loans, commercial benefit on of deposit. income LIBOR quarter interest the of We rate reduction month loan balances, offset reflect full one

the than capital positive expect banking levels We lower and mortgage this trends although record quarter. in markets

transaction service charges volume continue. expect trends We recent increase to the

We up slightly expect to from to stable expenses second be quarter. the

the Lastly, effective for XX% to expect rate we be tax around XXXX. full the year

risk Slide ratios of position, the to the For they comments, as from the our very would my overall strength. on be environment beginning benefit like of capital Continue XX. our stand I this management a as current discuss entering based to today comfortable philosophy capital given position crisis remainder of with

deck, for demonstrated the we capitalized cushions to As internal thresholds. ample we well capital relation ratios new slides, in capital capital have of the to our added all generation in have

capital have billion. would risk example, far total ratio million, capital XX%, of drop For the total total to X.X below of for by based $XXX capital X.X%

a underwriting is dollars. Our XXX credit we of that and risk that of or build has an have in XX.X over reserves XX GDP the This would million X.X weighted per position, PCD a and conservative a base to weighted X.X philosophy acquired capital X.X% net in To X.X cover been XXX in is have that half loans bias of put [indiscernible] considering million substantial allowance risk we is discount million, absorb reserves $X.X With of given billion especially discount of which quarter increased billion, by On total a decade. losses the assets on charge after plus available and XXXX. top of of how billion quarters consistent billion our well we for losses. remaining first assets previously the volume. context, average before offs in credit CETX million place for XX the tax remaining

quarter X.Xx first XX nine charge million XXX XX%, adverse to quarters to To or in half that way offs is stress under million severely XXX put test. nine XXXX discount, offs severely for relative the million at plus context charge of the scenario using remaining reserves XXX over in projected offs last period. Another we our in adverse look in Again, current using the the charge to this compares net cover levels.

the relative governed Fed quarter. we're by the and for total tests $XXX The currently of the From pay million projected undivided paying are the dividends million in up XX holding an of four the XXX million years, points basis common the quarter relative to $XX the out in after a dividend to dividends X net year, excess cushion is to third perspective, to profits there profits bank out company. sustainability, we currently Federal cushions retained two pay quarter levels and current From Fed shows perspective, as XXX the million with dividends prior of just combined significant million support well profits for to far preferred [Indiscernible] capitalized above million declared. a million net OCC. cushions for net basis ranging XXX Reserve As XX from to per shows XXX in OCC points.

looking where call to generation. back supplemented cycles, active credit philosophy to processes. important management, Vince. levels CETX capacity XXX consistent our preferred dividends was $X.XX including Year-to-date build year. addition capital turn week, through and consistent to XXXX, management capital our continue our throughout X.X%. more PPNR the grounded of capital to the Overall, can ample generated the with first than consider the in With very with see shareholders. given we supports of half it's the In the third this risk to incremental enterprise cover XXXX six monitoring earnings comprehensive you and ended economic position, to to our reserve and that, common dividend PPNR We I months conservative and ratio robust, we million Earlier at announced philosophy of first quarter capital a management varying return their underwriting of the will credit through at

Vince Delie

Vince. Thanks

team clients and everything highlighting exceptional Recent country our are inequities through been traditionally to short important few in communities our of we has mandate we've Looking the those last have our affirmed and of serve. efforts in the vulnerable over managed underserved. events who support assisting months, at in nothing which our persistent

inequity low we being a and organization As demonstrated economic in minority predominantly to recent continue strong and place $XXX and by emphasis address moderate million income social commitment community. to our an inclusive on and

As to actions we these capital prudently we our risk, position continued shareholders will company. and deploy as continue investments, liquidity benefit better to to manage our have

loan protection quarter to neighborhoods, rural in During in of XXX employees. thousands and paycheck million FNB low assisting and small program businesses originated moderate nearly income

is communities. in business to results. bankers how a encourage our non-profit way, proactive to leads XXX success This contained more of through within our on result this entities of directly and example presentation. ongoing these resources and everyone that to committing is initiatives work the outreach just commitment to Our the direct our learn about slides over diversity I good organizations links with an inclusion today's

for the best company a again sixth consecutive North culture consistency the presented. Through of of employees unprecedented feedback, our The to of the As response given we of banks our footprint. a the meet AdvisoryHQ employee of XX past Carolina, customers. In workplace the This in such based decade. we June recognition look pillars the joined response FNB key northeastern the was value challenges ranked to superior next for Dealer. on was our the and testament in year ahead assistance, are employee customer-centric top these by operational support which by to move preserve respectively pillars to phase and over across Forbes The our into continue community recovery, our our Cleveland delivered protection conditions, preparedness, COVID-XX awards customer received and will list to taken Ohio solely and needs actions have a extreme and four Plain experience focus and consistently Ohio risk shareholder among named constituents. nearly is management and the each on

as my our made been this like to again thank In asset. this continue dedicated All our exactly by I possible time of has valuable most why throughout would have be employees. they team to demonstrated they closing, fellow members,

higher a customer Our call a and questions. performance to better greater I for open the that, superior returns turn dedication experience, will our for directly to With operator shareholders. cultivating translates into culture financial the call the to over

Operator

Yes, thank you.

question And begin [Operator now session. Casey will question-and-answer from the the Instructions] first Jefferies. with comes We Haire

Casey Haire

lot. a us gotten I've question. housekeeping a with start will I

accounting So going the the quarter forward? Vince purchase and outlook in the

Vince Calabrese

of there. The XX.X discounts accretion million remaining was approach seasonal from the

remember in XX may quarter. that first million You the was

down So pretty there. it's bit, level still little a but good healthy

Casey Haire

sounds on And new were Gary, at great. XX% you credit defaults dramatically Okay, month so the program. slowed. the on like three then, quality guys a the I front, requests believe have

So I indications extending what quarter? next your expect in going or the and normal should to to is you either they trend on discussions, sort XX% back based mean, of quarter, that how this be

Gary Guerrieri

late June to into May. active I days numbers did XX think was in of flattened really small in out activity it got very and There in do Casey, there. reference late June. April significantly mid that small, -- to we very April

did, we the we payments, of made, into April the was the shoved had made already number significant April kind we what recovery. and of payment March made them a further our So clients they

point, about at and about seen So we've on this for XX second requests XXX commercial the side. only deferrals retail

talking point, light a to through it's been point, rest this up into work very bankers basis. that but those late. bit, it's at So working August are and we of the and the regular them do and July September, at on expect with as closely and clients ramp very with a We this

Casey Haire

of do stay lot to to go Okay. October in those so normal? you when back XX% expect them a deferrals or to you But report at do expect

Gary Guerrieri

Yes.

go that needed restaurant for the And to significant our number more you to be a see, to going this We that have hotel second will those deferrals deferral, lot at space deferrals expect request heavier are they clients in what second see report as will will you payments. in coming that from space and And it's not those as think I point. pressure. of of need a normal not a going lot to back going a we'll forward perspective

item other that in XX.X% year into clients good deferrals the end again the of at of mention coming The the are using you standing. situation, I'll the right these took who is, to perfectly

clients And this clients. So a that report being weren't very business. of the it that was hopefully preserving Naturally, and as liquidity answers lot course number, cautious. in question has my working a mentioned, But, shutdown small you for in lot holistically. of a the were impacted of normal

Casey Haire

moderated guys quarter. you Yes, you. yes. this [indiscernible] Thank And had

it's how is do this built, -- changes guys feel just to been the deferrals recent heavy used news you tough your do it forecasts, day. decent moderated you where going the forecasted what reserve and a every are given feels feel or has reserve quarter, are to you you deferrals there? I build, is getting the behind. that Just like reserve question your you But and are the answer, when done given heavy did you you lifting build like those reserve? know, Do lower guys -- lifting like And it

there. color some just So

Gary Guerrieri

for one On the me first. you that address model first, let

a use mid-June. scenario cases to continue released in We recessionary

With was the GDP over of horizon unemployment until year-over-year middle XXXX. positive analyzed XX% rate the half of turning average forecast not the

the used fairly that it's model. we've in good recessionary So a scenario

at that our credit second feel As our in focus to pretty to relates of the said, the on did put and mix culture will book from higher That economy, confident in portfolio. consistent and it further stress. is part our of the amount portfolio the outperform I view the mentioned point if would classes deteriorates the underwriting and the with as the our generally we the and desired it you experience asset through this book uncertainty position the question, our levels of of significant around economy, want a last. that the as and in economy there cycle here,

remember third performance classes, not few additional positions across we when portfolios captured smaller in the portfolio to-date continue we'll assets forecast A and mix, position here, our have. plays others the higher the our quarter the around it assess to XX out. may QX, comments Given March as

a that of essentially models totally as Also the $XX credit million have utilized know. small months. of first we now, loan six we most information built Those are very we card, first our student that a that and point. forecasted no half from And around recent note, really environment this through at during we So reserve standpoint during portfolio. tough energy all bit

small to at build any macroeconomic which forward, additional business a helped that much across manage at a And expect for decline there. additional so portfolio, static the quarter when auto about from the up our moving accordingly, looking portfolio really as we environment and freed addition, In that on from in similar us macroeconomic based during continue forecast had economy of we'll from you're we in reserves some significant evolves million in position, wouldn't finally, the pretty And perspective. a it well. the performance direct and how line looking $XX in declines utilization

Vince Delie

add, I PPP the if just would on commented excluding Casey, you I the XXX. look think we coverage at, the this, but was reserve

so. you we $XX million absorb available another to -- is it's XXX goes of XXX. so had or accounting, slides, million unfunded in remaining reserve And CECL line, as have We have flat, loans, the points in to that's we $XX losses, basis if for in on the X acquired another our so then discount which

the So added to of that the point. since to end we've good there's year a reserves amount Gary's the

Casey Haire

in Understood. just I one capital ratio, didn't it Vince, total deck, last maybe, XXX? was the the it at or see the And release

Vince Calabrese

Total risk capital ratio? based

Casey Haire

Correct.

Vince Calabrese

not did Casey. did here We disclose not. We that

have CETX We at X.X. the

call. end able just be will I the that We that to of handy. get the have by don't

Operator

Frank next from Piper. you. the with Thank And Schiraldi question comes

Frank Schiraldi

-- the reserve if some glance be acquired look categories, seems follow to Just are the credit, the I up I out, thinner a down you you areas expected. on on little would but, drill into peers a at where include versus point first seems than as at ratio bit well to in guys book, bit a if hold up have

still example, retail more if So reserves around, detail for give think or just maybe X%. I a just the color you under bit book, wonder are could I where CRE little

Gary Guerrieri

really portfolio, feel our we've very that portfolio. we at book. in look coverages sponsors few fact that across to we've that flow in at have And about point, is some When good very as the over We retail service higher problems debt focused the last Frank, and underwriting you book this few of our at that years cash credit focused, that streams it due required talked.

of things points book with But in in that the have an delinquency the point. low extremely fluid. at XX rated is natural is basis any that is of there today we of delinquency the credit this situation level One very levels low

XX%. has been And very LTVs that our So it comments, the perspective. mentioned from at in earlier right as across underwritten book are my nicely

well point. portfolio that we're this at positioned So in

really with continue economy that start streams this working What's seeing happening those to and see eye has keep as opened feel at as continue the We'll clients. momentum So about rental on there hopefully point as we but to well. good it and we'll to forward, up. an positive are increase we move

Frank Schiraldi

are migration classified or Are wondering deferrals to pushing could road? And in as the deferrals a guys of reserve the taking downgrades be further you these that come just downgrades you there down them criticized that could there credit they pushing feel as come how if you builds. or off approaching drive and deferrals like

Gary Guerrieri

Other those generally the moved. were that notch. were position weren't first a round, particular credits moved credits a strong very the in and being During were that ones industries insensitive we're conservative,

During the deferral here, not will a require rating. to second phase two instances every notch in most one downgrade, second substandard a if

those situation. continue address in of present we'll So on risk based accordingly to those that portfolio work that fashion one the credit ratings each and in

Vince Calabrese

reviews speaking but go very commercial if tell will you're active perpetually. on commercial I'm over. similar risk there's that portfolio And not rating management sure in you portfolio I Frank, the hearing, crossing

system they and ensure at mean a the well April. what and back of a When come have those assigned have depths So commercial were in back in customers going may come on. March compliance, we based upon they've asking, of for these our rebounded that it's the because on migration April financials rating, of appropriate risk the credits, what been in, the that on to covenant deferrals I'm is right late of as And now, most impact is April, place into aggressive credit, the little review you're hearing was management the so kind majority to I May. review risk early there's going rating been it very happening industries that's beyond where if

process. a in rating. rigorous So fairly this place process an ongoing that's to And we have review

Gary Guerrieri

Vince's mean, risk standpoint. from good standpoint from to Frank very be point. point known is rating regulatory we're touch I a there a very a aggressive

whether no focus it's renewal it basis. situation call, time, on or month to what that is every a a whether require assess matter touches it's annual Our review phone credit, downgrade a whether line and of a month is, time credit them it's risk the we time, to banker

that approach been place I many in So think has years. for proactive

Frank Schiraldi

Thanks. Right.

a guys third guide the quick could, for if gave I quarter. some what one Just you to expenses, on in expect

there I this just increased expenses would puts have could from credit little tax quarter? you a you in give had quarter. takes us of If bit know getting of this and terms the

at, the I quarter. if the So guess trying expense, expense XXX take a to I if of, space like at look out related just get sense in I'm the COVID I for

So rate is Thanks. of us talking that off of give number? And steady that kind up there? you're good in slightly if beyond terms of where to XQ, any run you sense maybe a is can

Vince Calabrese

Yes.

way, lower and losses you we development, movement expense On much OREO, that then other million had impairments lower other miscellaneous. in the mentioned slide, that we miscellaneous didn't going lower the X.X We before see we on business we non-interest the because it. had had and OREO

of kind out. they net So

in quarter. As in and the first XX.X was quarter you XX.X it can second see, the

kind forward so. say remarks, or XXX, of I you in I'd commission's that I includes XXX-ish to mid my heavy. mean, of look has the very There's in when made quarter, kind between mortgage activity, the third So been the comments XXXs. prepared on that which somewhere

through item. So comes to third we'll line that some And that of through in comes that see quarter.

I quarter, it's that. quarter. any for so. a third the run other We there's of nothing said, total you kind in there, really used would I somewhere think the XXX we're like It's unusual XXX, really there, given In that we'd that around but direction Frank, hit rate fourth not XXX, the mean, So, horizon right as kind I used on XXX, XXX south a last like at I of came a on basis, think quarter be around, of that.

Operator

you. comes The from question SunTrust. Thank next with Young Michael

Michael Young

Slide through of just comfortable think be off feel with of follow the start your and obviously a kind worse Do it charge to rate Is potential you about time around? given Gary? credit. this offs the crisis think this or the you shock the around that quick could On the kind historical of that and that do x-Florida. this charge that length up guys have present of last to question X, on severity way you right kind crisis, to peak going time you but back performed I well

Gary Guerrieri

and perform how I of all build this. cycle six of testing at during the year. and models, as feel portfolio running our stress months the portfolio such we're the the models you that When will first of Michael that the the of through doing terms the and confident, around look mentioned across million in similarly as we're we the $XX

stress range normalize on confirming charge you at offs the in point looking XX at this are annualized that some it would stabilize quite to it at and an feels that that the level. basis so that offs, away. basis the models or to charge And you're me add If point good. move to needs But good from point, has at feels so perspective. economy the volatility to Naturally,

Michael Young

Okay.

then offs similar kind rates mean, of already I macro you took and we if terms maybe together everything of credit put of of accounting kind to CECL that that's that, downgrades how we think kind would in going just the charge So allowance the just we mentioned. charge And forward. for the off provisioning of kind and stabilized about should and assumed be of to then conditions outlook, kind those

Gary Guerrieri

I that's would say appropriate.

Vince Delie

growth. And for providing

Gary Guerrieri

Providing growth. for

Michael Young

the basis? switching Yes. amortization recognition what and that. gears the any go fees on then associated Was maybe Vince, just an with We And of outlook then for that forward those. PPP your fees quarter? were basis hoping accelerated a for there Sure. this on loans And is on those

Vince Delie

working Yes. still application. No, is receive forgiveness SBA how started I The hasn't the going say they're to would yet. process forgiveness on

once process ready we're that that it's start So, to to it be comes, not we're and yet. able not, but for ready

two coupon five which one of terms. is be We loans the the of portion kind quarter of the was recognition look just the the just a X.XX, fee. I second plus but came had guess the yield accretion with years, the with for over would year majority fees are a the of the handful So, to accretion way a the of is fee so it vast at in normal

know So to I that's hard you forgiveness kicking we it's our QX. in maybe you been have acceleration around, we've really in get coming any XX% in And there predict. don't don't heads mean, yet.

because not You third get yet. ready probably just the they're -- won't of any quarter in

days quarter. So respond XX to fourth have pushes when out you the they and into

June some So you modeling XX% my And quarters expect maybe of the been and then by on I of the it tail we're do like then and get we end purposes, level fourth then But of by those knows. in set using for depending to fee guess the that assumption XX% some we've nobody of points, are maybe QX. as just and like forgiveness, and get reference you the three end quarter an March magnitude have of that'll some really of happen in forward. the

quarter, of third of are have didn't I a The just we the PPP in net or second those the would comment the points it billion there in too, should have average balance be nine. balance third because kind is quarter the what the And average throughout was kind balances. we'll of So all some quarter. X.X so key

Vince Calabrese

I in will Vince, channels. the as a then Gary so this will a forgiveness on very but assembled and nice changing. clients put focus process. a to to team pitch-in keeps information of and and fairly I'll acting team hired robust help IT which for process system sophisticated forgiveness for liaisons the that And clients it's fairly process. that through has facilitate a people our Kirsch out the The say, for upload Sam other folks them thing digital built We've walks And

through if dispersion clients, loans, those are loans program, and significant capital I differentials easier relative hoping forgiveness of be help slightly our balances, kind hard would the I That of those their borrow our instantaneous PPP is balances deployment of know the to working is, to down X%, the around for, if fairly right? we to smaller there's you equation the to they're of smaller our the PPP for on think, under because those thing you that it So clients. have XXX. was if The would loans PPP smaller. the point have they borrow able place other out overall, loan Because rate were It's on the lines we're help process forgiveness overall. Typically systems that. back confidence we that pay at loans going for down still for would do customers X.X% in being subtract a their then out have an facilities, look but be tremendously X%, when look do kicked at size I'll you only at facilitate

distressed we entities you out there. across as very that we've the of provided certainly not line breakdown in that small portfolio the are transfer providing the There own prepared in that was revolver as We're decline explains And I are portfolio. the significantly, I play we would the The still customers those see the consider think, our credit and are PPP So areas. at a that to. balances mentioned, of number can comments to industries there some of And from of we look in disclosures. company, there business balances pretty active activity my other don't our or financeable are from good. overall in enterprises

So, I'm optimistic a more forward. moving activity little about the

additional us. so far, I the that fourth credit you, in a happen, seen commentary. thought haven't from looks third course, some the it I that yet quarter Of and share with think that okay for we Anyway, I'd will fallout perspective

Michael Young

per color, me It if kind there's loan costs for that. bring one be room And like you timing funding margin. Thanks any opportunity from with guys then then, the may still just deposit looks interest this And additional year, yields down that point? on the about roll and to just lingering could talk maybe net for some just Yes. the down you last of Vince. and have

Vince Calabrese

the were liability if years. I our we're over trending on on outside I within related know, mean, deposit even balances deposit up we've significantly, there's up PPP last growth significant opportunities growth base, the think The I PPP. Well, few -- to side, the of had demand deposits coming the

has continued. that So

asset to And I'll about is there liability improve overall Vince opportunities think down talk continue on to there I side. let for on the the us bring in costs. are our side, to But room equation terms side of there of that margins. the

Vince Delie

in comments, XX beginning at but look million lower coming you quarter, not that points. the the a declined had to the $XX reduction just on quarter you one little so had from influx look growth then, first XX That's point of non-interest to points you call, the to basis basis the net second additional X.X million, we've the DDAs assets, been bit the When the LIBOR comparing basis in so billion performance as given month programs, of in accretion eight mentioned in been X.X couple we business billion. earning the from Obviously that you we average When in from quarter. XX, I continuous billion at every a income interest there. X million, that's when look XXX outcome reduction net the growing deposits a a for income with growth. funded had has in decline interest And $XX.X given largely at Just it's -- impact bad bearing it some year. XXX a

to So bring impact when had the to interest deposits XX on that points down you mitigate as the help the were look bearing basis of LIBOR. slide, on we able we cost the at

which So a positive. we that chunk of to is offset good were able a

kind spot quarter of basis at the point cost XX average a XX. If you third basis, the of deposits entry the the points, look into was of the quarter on interest bearing for

into quarter expect to deposits XX bring So still rates basis have and continuing we're kind the down going at there and that of we've looking some targeted you those third and buckets head point to start of more.

So impact there's there. more definitely some

XX the at I points. it, as is basis side mean far I as think asset of LIBOR

So was basis XX points. down to it

So that's couple. a

mix, So on. I but think of would you loans the come quarter second other of unusual third mix that quarter that kind take basis there's a will points, just versus the than through put don't I of couple anything

So in and been the spreads kind kind that of really months. have beyond stable nothing the recent of

Operator

with Thank comes the next Baron from Fargo. And Wells Shaw you. question

Jared Shaw

here. It's Jared guys. Hi

So I just a the question, on build. reserve guess

there of So items or would for the build and Gary the that's the overlays, the that macro macroeconomic assumptions of out that reserve? are you $XX offset from taking is discussed million through what's that model some just expectation other that the forecasts. of that qualitative incremental out otherwise macro with spit those some laid what for you flowing the model

Gary Guerrieri

some overlays include our around modeling It No. would process, normal Jared.

is qualitatives. and it of overlays So inclusive

Jared Shaw

quarter, should I not potentially that we if third see model we Okay. the to assume pure additional offset or there is guess that some macro just overlays move deteriorate that in would necessarily? impact the

Gary Guerrieri

It's our going the with are I to that situation point. can't the we forward about be where position at good speculate is today, remain what of fluid. view feel going on we Based portfolio. the on to

on We it, to an forward. manage keep continue going the environment macroeconomic it as eye changes

Jared Shaw

like? had around color forward a can your look little in that go opportunities mentioned commentary give what you Vince earlier Okay. something could as and about you evaluating business you

VinceDelie

XX% insurance for tenants service get that the to debt not, occupied, looking $XX we REIT X.Xx I believe million deal certain to that value large Yes. are credit retail example, areas, just a XX%, greater. and a -- mean, it's loan of has is or the exposure or in the was out coverage an there is developer booked fairly company

on our The grade you we there large leases. property. that's going do. a business. And I largely selective after. to very are that just grocery transactions base to opportunities and would mean, to have are is There's go the investment these store [indiscernible] banks. there what out on all is banks parcel So are we're mean extraordinarily there tenant There four do long-term I lease. long-term be

We large AA-rated also for a education recently facility higher won credit institution.

with activity on in still reserves. of going is billions dollars there So

So go after. our very with we're And I know in just tune that have watch folks opportunities what appropriate going the we are to to to do.

we've operating think as continue capital That's that a model. the underwriting have our in but position conservative nature and from us for flashy our We stability liquidity We're the continue lending I continue the activities. solid forward to to of move periods and today during that perspective and to and business expansion business creates the during our not said downturn. pretty along. puts And all

So, could managing the have the countless our Difficulty] pipeline, our the over but if the do. post-COVID I'll made production risk, during PPP previous our on. these production and credit been And was worked to. to impressed prepared with employees quarter I'm so hours I I look tell on pretty you comparable what comments, mean, last you at program, and [Technical on quarter, people able I that our we they've to the were quarter, comparing go

home, going who They are not are their get very which passionate and employees was hats customers, is to eager what sitting So again, they're to they soundly. get to are there. our was happen just through My at about off make working they hard. sure I very care afraid we this and through it

activity. of So there lot a is

Jared Shaw

Is assuming forward M&A. correct? that's not we be we though bank that should of type stuff As look the

VinceCalabrese

it. same. thing are I to it. have And as manage focused perspective the our to we as the the an through on, crisis. in before better one to lot appropriate is it's feeling said same here about a for during, it the have a would team that of country people There we this focus and quality we've We've uncertainty going certain forward. I'm don't management the the of the last we many in a get move At in ability from right the the But need is proven be to we of last bankers three on economic the point, to years, ship We this not think need what's happen. time

in other the to get on decide end M&A, are do to we going and us strength great that maybe company. very want this the feel I confident So of given the distinct to we're through we'll after what position it, for possibility a this a through be is we of

we play as I that down So the will sit card today. think road we

PPP our thing because were of first the in will open incapable as larger newer up the institutions Jared non-clients that And we in mention of other to we delivering. markets, I our program in felt some people large and or our XX% were originated were the billion. Most XX% of in. able fund convert $X.X of that PPP, applications low of round banks XXs We to the the XX% brought we The range.

a clients to capital the lead So for will now lot or prospects bankers are we future that now these clients because companies. opportunities they're over brought our of of that part structure of

relationship So that that I'm as at get once optimistic have we through now we middle least about a well. prospects market this X,XXX There's with.

that's how So our we'll why that see the plays by down but good road out execution very where employees we all are. and

Operator

the Russell with next And D.A. from you. Gunther Davidson. Thank comes question

Russell Gunther

earlier. deferral conversation the on a Just follow-up

view higher of understand in to exposure, good you But so that's pandemic. this and is if customers they guys reserve? forbearance a that you're and for So these I do coming are the current be given so the standing in into that kind risk program holistic on current the accounted currently consider XX% in

Gary Guerrieri

to the the to and to number community, business Many in customers onset the Russell, economy cautious. yes. of is answer of were shock the of significant shocks wanting the the The pandemic them a everyone and be with those

drew them lines of Some their up.

our for deferral decided to Our liquidity. deferrals. went take XX%. pay line the to XX% to wanted XX%, draws interest deferrals interest They not plus up to They grab looked commercial of about

The clients the not down industries to quite those are being it's low the the volatility all at paid would and higher. and as the took XX% I in those been like. we've interest restaurant and in books be severely I taking to C&I Hotels volition. have small. second closing deferral That has that reopening, about impacted. that deferrals and surprising what own deferrals their been talked due industries been about. opening, future said, look has restaurants The been remarkably to they So compromised more relatively expect think it's the business us is opportunities

be have So with. the risk to continue dealt ratings ratings The risk been with. dealt

point. the we we cause will requests classifications this credits appropriate and have at feel Second, across risk additional the the in further that portfolio downgrades

Russell Gunther

I are appreciate that sure Gary. the missed And in then, classified saw it you but where assets I'm I I quarter? release. apologies it, criticized this disclose did and guys not if

Gary Guerrieri

Q, but be should the did sure. We that I'm not in

Russell Gunther

touch Just significant migration? on whether you can is there a directionally

Gary Guerrieri

up moderately. They're

Russell Gunther

from your terms from you Gary. to timing forbearance. a the charge-offs, of assumptions of a Okay. could on in I charge-offs and whatever Thanks, timing And see lot begin unknowns stimulus year? -- perspective magnitude, half still just solid then, going very of up But when a we start guess, first had of the around obviously

Gary Guerrieri

tell will that Yes. in into QX impact to that you see I Russell XXXX. going you're and

a see be impact you, little into tell view. my may You in QX XXXX would would but I late QX, and

Russell Gunther

then Okay. for Thanks, one last me guys. Gary. And

broad strokes up for and expense some the for the third range the quarter PPNR guide on tightened provided You us.

it But level think that. maintain PPNR all [QQ] tie [ph] based you appreciate together, So, on puts do the trying that takes PPNR to guide? of of you this can and

VinceCalabrese

give the all parts moving drivers, we think there. think Russell, you kind of the I giving right? I So,

think at I kind if is of interest to right? you through one We're XX of net going have about instance, today month elements, some for if you go think the points. income LIBOR basis

second the quarter. So it XX averaged in

it down So, I $XX then, billion, X about just net X.X a accounting, the mentioned still And would income, million to it's bring in if there, level, of lower a LIBOR at be a still purchase bit you you kind have X.X digits from that, interest the double than expect million, I to of that it be kind the quarter, adjustment okay? billion I the the in would still strong little but quarter it expect in probably it's to was of good third least.

going The income. to interest Those net we're element loans, DDA deposits. as to cost mentioned funded an the And additive so. interest that's longer are to additive to net have continue earlier, are income bearing the the So margin. I with down they And then $X.X you'll the to full of and billion. PPP interest work

year-over-year mentioned XX% would to XX%. back should the income still as the clearly guidance, have be to in net I transaction up The were at little decline would running and volumes down bit. it of bounce impact. a there, charges income, fee very I running XX% more The level. XX% service that's expect we kind strong But interest and a positive of for they the net-net, in that a So to be expect to to will kind

businesses to insurance expect be mortgage piece, what's kind a there. kind that see some, element high. couple expect but it that mean continuing and strong to be be of activity to is back million, records bounce high, that wealth I time number, double to this to So as very of the relative wouldn't but I can't pipelines at $XX another for record as we've non-interest strong I I would increase of up. expect be key that there's then that, a go $XX that expect see I income very kind other of I set expect still And the again predict a markets to capital then, lot a in And quarter. row. a a were third that sure the would million for business. those to busy will down, of record lot to I that And the would and expect kind new in in I the on. of digits we businesses, in of a strong some is of would the

kind non-interest those So, drivers. all reflect in total will income of

still a not see out. down, very, as and there's side, plays it's charges, you core have moving of expenses always And we a transaction helpful. the been very in. closely how expenses the that manage they've The movement parts. expense again, So And as if down you increase know, we'll deal been company much service we look basis kind an lot in the would recent flat. be on is of at very as The but operating as -- them then

will I that So that help overall. think

up would where we ends net-net, So, I see, will very mean, I be expect still mean to PPNR strong. I the it

expect the the million very months, it I it think for be look obviously six on to when third still you first where basis at year-to-date quarter. a again $XXX in strong was

XX.X. just different a the seeing to I'm outlook back capital question guys would where risk we trying and total drivers what not today. about give the So, based to I we're want know, so estimate to from you Casey's all giving and is what kind I the earlier, of number sit understand but be

the is of here, the at there think quarter, in year; it was I XX.X; end slide XX.X was last end think March. the a I at of it XX.X

the June. for is estimate the be we would end of So at XX.X where

Gary Guerrieri

right? did value per the We [Indiscernible] in tangible book have share quarter. growth, growth

Operator

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

Collyn Gilbert

a the starting Calabrese, question just impact. So just on PPP Vince quickly

PPP, of in sort calculate to loan think, maybe cost but related benefit in what's quarter? terms of And you origination from alluded PPP to I So the second interest roughly million. to the then was, also that? loans XX in the XQ you the OpEx Can just PPP, income contribution related it, also deferred from verify

VinceCalabrese

total the billion, million $XX on quarter. for the income X.XX for The that basically was Sure. the interest quarter

and So, said, X.XX includes to $X.X some third the get the the forgiveness yet have And haven't pieces like any then -- accretion quarter. will have that And that. sort yield, fees of billion, two XX in on you would I the from those X.XX we'll X.XX of obviously driven second of then, mentioned origination the we average billion X.X the the -- that the by driver deferred by first is went portion FAS the up is million which biggest quarter the earlier. I costs to PPP of quarter,

adjustment in comes that's remaining in obviously side accretion of helps you're comes life the bit positive of there on that expense fees, is and kind -- of then kind that well So net minus cost. the yield net the as the fees that but that's as the that a over given

was that X.X. for the quarter So the about delta

Collyn Gilbert

great on color lastly, And some Gary, the CRE. That's then the just retail Okay. helpful. especially of moves, with credit

just But right looking comfort that's the whatever. at what just about you that bit, you the X.XX, get I X.X% I book, have credit kind that curious with level? hotel reserve where percent of that book a Just similar reserve give little or gives a is comfort, of could like the you book. us small overall mean if maybe on it's it, the metrics

Gary Guerrieri

Yes.

million that plus would about our of core $XXX In chunk probably in what terms few of that the customers portfolio is Collyn, when or call significant that in space. of portfolio XX% excess it of performance you look I at it, of

We up have capital. never other hotel very been significant a than some hotel lender built well-heeled professionals tenured who have strong long

acquisitions. sound. very, came it good that rest very a of is chunk business there from that So of the majority is of The

$XXX recall up post-acquisition. million million You'll in $XXX of to excess portfolio the that got

to run have million. $XXX it We down

We and understand assets work losses? we through position that programs. have shops, I at non-accrual of and I we'll we'll book there. small I at when say to point. in the moved color this feel last through deal XX over this higher-risk we what some some we've forward. portfolio and in that about we've some that it the the about Absolutely. delinquency But I've expect got hotels, you our give that the I'm some years withstand of to Delinquency will Hopefully mom-and-pop off the weaker not to into four assets lent clients increases acquisitions, on deferral with surely book, that for space naturally, few we But well. which that smaller have can Is really books as the We shortly and derisked government move it, generally we'll good is were speaking, helped some. and over years, helps have with as by stimulus probably mentioned. points going basis talking some as

Operator

Preston comes with from Inc. Thank question Brody you. Stephens next And the

Brody Preston

So the PCD question. reserve of why discount you Could me part a isn't CECL? the million remind post quick $XX

Vince Delie

With loan the the discount portfolio. on

gets acquired of a gross balance in, CECL. to loan the left the loan into rules So basically on the the accreted CECL prior account works; It work. the mean the loans way when I accounting, the we discount you it's that's had through go just marks acquired to that just

that had retained marks until pool basically you gains that or the income were gone. couldn't You left there close or remaining bring because into to was gone very

Gary Guerrieri

It was stranded capital.

Vince Delie

Stranded there, right.

Brody Preston

ratio to for X.XX The is thanks be that. losses. for supposed right, reserve ex-PPP, all expected Okay, lifetime CECL

So give just, of that for modeling your sense what I don't us know a near-term NPAs? you implies can peak for sort guess I within if

Vince Delie

of at the where know. this economy the industry. so today thing any terms to really sit don't speculate I'm as difficult I situation work that. thing it's this where going you not across in think volatility you're much When you going. That's you here is increases when going, tell the NPAs look There on environment, we Brody, in and is that through do. I peak going to to a us look see and of NPAs In at would

I far as a don't throwing doing comfortable that. peak number, out As feel

Brody Preston

switching maybe And Okay. then PPP. to All right. I guess gears

like longer the we've Just loans the and a given smaller these to of I some time the cost working forgiveness. selling PPP banks do? guess considered, Have through of seen all loans third-party line servicing you

VinceCalabrese

mean to I it received all for buy the income kind get and who calls want on that free. people want to we've the of

it really it. So work. doesn't at looked We've

that to better given For us, on it's points price we just the balance sheet, are people think keep it about. the talking

Vince Delie

The hardest it. part originating was

So if for once going I you it's originate think to it, lead have to you us. it,

it to all, was our of beneficial First clients.

helps and build of very So, It loyalty. appreciative they're it.

it us it over out think well. efficient. build to this very an would point process go I for we were And again, sell that automated made to at able not

clients, process. of We that the bankers an that to end-to-end bring banks were few digitized had XXXX they the process digital with along introduced interacted are one them process, but on. a We fully There way. had paperless bankers

digitally. pretty upload for the our a that. a on and That's happen forgiveness that and through heavily in for to We is step-by-step the online same the going slick have able be to them So to walk documents system we're permits internally enables us. forgiveness company do that's with going resources invested forgiveness client to differentiator very to

have little or of all a it. So to might efficiently. more that probably outsource A portions bank to They'd we're smaller do able of it struggle. maybe

the Considering that looking total get be those percentage assets. from may ones. most larger cases banks, at was a point, to their they of in out burden of So under processing smaller it

have We what at manage bankers relationships thousands that we can it's that with comments. too, that we get my in I PPP resources us Plus, to were and non-customers would our my have. it bank, a that those do been mentioned the through substantial I be on said mention. say large of loans For mentioned for I it something portfolio didn't will us. in called can't hey, I we prepared of and you calling with else requests. I willing accommodated my

to communities those out reached non-profits folks to billion able critically and to important. our in became before an issue in rural Our across communities was community and PPP moderate-income were the $X.X a loans low XXX is retention in income footprint. originate groups and moderate This to low where it we job

through. very what a to philosophy, them, going was and philosophy That's masterful of did quality we've done the end that good on borrowers I job carry we of our we overall have proud ensuring we're So underwriting other it. I and it on think

Brody Preston

of or to back understand $XXX by Just to that cash had moving the forward? sort wanted if And you going was significant margin, million how driven PPP, any? you so. a balances expect liquidity just pretty increase much cash I in for what of

VinceCalabrese

of down loans of exceeded XX% of deposits coming Yes. to The to captures the kind deposit which all we had, the ratio loan and that. influx that

Vince to a remarks, having his balance being of we mentioned there borrowings really kind few went isn't on running investing about that that you he which that's our in sit today and hundred million at sheet mentioned As as here from in zero. overnight

the some a at kind driver point and number we'll that as as happens. that PPP is the to big of up down So flex in will the deposits utilized such meantime, get And numbers. then

We prospects. XX% relationships new continue PPP talents the were to gaining business. to add and Vince's And customers the and new of point,

of they -- pool clients were actively going a and so customers that we're to So that's not be

Vince Delie

depository bank open of move the with they or them they loan, to relationship. And to the fund expand relationships some because additional the just deposits needed over

it's at, of accurate pool we system customers. place, when that a in look we seen an of watch XXX% were what accounts we've developed we that of PPP funds, of put but that migration we to have expansion you it fundings, and funds not we've when in So is we flows originating have the tracked the actually number with

existing amount PPP the overall balances instances look amount deposit we're that pay if some you loan up at in balances the is balances over us. exceed to mean of over certain and of of helped PPP those debt. and deposits went That's funded. moved down the I well the So

funding ability So our we're about good perspective. from pretty deposit our mean, looking pretty and good households. I feel a base to I gain

Vince Calabrese

to Our working Vince's teams expand point. relationships are to those

Vince Delie

And pandemic. that's a in the midst of

people So unrest, couldn't a I have our social I civil think be prouder. I done like I job. tremendous think said

Operator

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

William Wallace

One quick question. modeling

are the the that On the PPP, way based today, your of loans on rules written is what percent forgiven? the of expectation will be

Vince Calabrese

talking total, XXs. forgiven. in think don't not. would think, going an know happen mean with be We vast for we're average it's forgiveness mean in or certainty. I'm the not below be going think I if I mentioned, out. I about sure to that's majority XXX,XXX. I clears to the was... our automatic will That I loans Vince

Vince Delie

[indiscernible]. was It

Gary Guerrieri

$XXX,XXX. The average is

Vince Delie

based think of required we we higher the a I walk the That's why certain of opportunity discussion. required information interact with multiple in to a had percentage and client. achieve an validated help certification they activated pretty process of we That be that there folks across And XXXX that pieces business When will we what think help was forgiveness also bankers lines forgiveness. will the for was required clients you I in, forgiveness. them a good job. to would lender what upon did that by our brought through, there us

VinceCalabrese

kind just I of Willy forgiveness we're our to of earlier, XX% just about. is then, least the what to what the end the kind at end get of now, the the in have estimate our mean right thinking estimate fourth XX% of and the said restate total June forms was I March And quarter, is assumption XX% of on by based by

William Wallace

remarks Thank you digital big In much. your very your D. you, gave base. for then significant customer with numbers of some utilization in you question Vince Okay. And suggest prepared one a the pretty that increase network

if you could might digital and and the diligent wondering increase thoughtful the I'm over network the the years in of branch You utilization about talk network, about your you out. branch if step pretty the slowly I'll consolidated guys approach had decisions been that it. around changes and you've way the network

Vince Delie

I question. the appreciate a great It's Yes. question.

such educational We huge in say for in accelerated I channels. been, in those there increase had this environment, let's has process an digital think that a clients. adoption obviously

focused how what it We we interface that, always a the we what us the the with and client, because was control budget, easy we for can believe have that's with interact to unlimited always is on on interface. really don't have consumer focused we

are going still need stop to consolidated, come and issues it they go push opportunistically Clients site. they think like a they to We of branch XX on go asked of I don't It's to I'd many and is intuitive consolidated, products at lobbies going coin through put make or users our know job me took will that Web you has tell expect of stop the it make recommend certainly place a purchase this services me throughout a of to and street like but to year, a that had the be currency your when with would even closed our XX educational email, mean that if and because Web sent will exceptional I very instances to through educational of been out still the number five their letter, in to you that M&A, an branch in open? years had go the have some customers to use process cash; preferences. that and designed way written a been process changes when platform. to it the business on at to I to change I numbers did we our Small to look want process. lot and because haven't some and generally last COVID-XX the in the We but in. that's folks branches, easy view in. a over a deposits and site. they I The clients client ability me on take content. continue,

did, it's illustrated article concept -- there was branch. think be to I in So just it the going our an S&P

deliver fewer on that to to may a look I always of design there There The content drive we and at fewer of them. will the branches. we're branch products efficiency. continue be will and to be but how think And will need. be change, services going there

to was structured to strategy focusing on front-end ability system, conversations content. system products in a and our interface our comprehensive So provide and services invest sure in invest the the to branches appropriately or and making is branch accommodate and to the in the manner, then optimized

I afford opportunity we will us forward. more that an continuing see So efficiently it with -- trend move and as that's operate to Anyway

Operator

comes with Janney Martin next Brian Thank question you. Montgomery. the from And

Brian Martin

have questions my been of Most guys. Hey, answered.

Just, a couple of housekeeping.

on but the think this expect you I you range Vince, XX% XX% Just like down know bounce of think how service expect, that I you said charge it's down is kind did now was to I some only down back think perspective, it income that? quarter said and it's about you

VinceCalabrese

Yes.

You Brian. got it,

Brian Martin

Okay.

wanted sure, whatever that? quarter, I we recovering make the then Vince, captured of I timeframe or So fair that those right. next got by million, most maybe guess the to to number, given end some the should about of of that just about I I think And that with dropdown is the this accretion think remaining just guess $XX year

VinceCalabrese

so I say two I mean would kind frame more of it year, or coming be, something Brian I kind bulk to in. of time of I'd end different But kind that programs that over say the a you'd next would of of year I vast three through. have the the right function refined the say two is would it's probably have reasonable. years. think the you'd prepayments years, probably to or X majority it a of I'd reasonable. of to mean government go the of would up come more loans was prepaying kind X of probably By that is end

Brian Martin

The guess, me, just quarter, on Okay. just this And the general, comment then the of in I last your on one guess impact from guys. that? margin, is guess I PPP I

Vince Calabrese

of margin. you to mean with I the funding deposits yield it actually mentioned points. the additive at look X I X.XX, mean if basically it's I -- basis at

about a So spread X.XX. have of we

it's say basis XX XX the If the that adding you would I do short during margins there. to math, period points.

funding will say quarter at you it as a spread, start going what it's the So haven't be and you. reported. if as margin how change, second funded impact can certain deposits, them for was the we customers far the are to are obviously those you to going So use as of around some right? those function you're see, point through funds math, but to coming mix with and long to demand additive long which with then I it is how your X.XX do how was is can we and the Thank of a

Operator

to question closing was Thank comments. the I you. any turn for last and management like would And that floor to the

Vince Delie

appreciate time look to thank questions and the meeting FNB. you quarter. everybody we you've stay and in forward the truly next Take the I'd Well, in with safe us with Please for that care. spent like to interest

Operator

concluded. Minato presentation. lines The has Thank attending you. now you Thank conference today's central for

F.N.B. (FNB) 17 Jul 202020 Q2 Earnings call transcript