INDB - Earnings call transcript Q1 2020

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Operator

Good and welcome to the INDB’s First Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]

Before proceeding, let me mention that this call may contain forward-looking statements with respect to financial conditions, results of operations and business of Independent Bank Corp. Actual results may be different. actual report differ our on release. cause in those earnings may annual our Form that results include to identified press Factors XX-K and

Bank events and forward-looking relying whether in any disclaims Independent new intent statements you information, to statements future any publicly forward-looking otherwise. and unduly update to response cautions Corp. or any against

be Bank note considered GAAP measures measures as financial that certain discuss non-GAAP financial should and during Please for results. non-GAAP view replacements the Corp's Independent be also should with These call, not we will together performance. we read

section Please information our reconciliations refer to regarding please note non-GAAP most directly event the Investor our the which to to Relations of a measures. being contains Also press comparable measures release, recorded. this of copy that GAAP additional obtain and is non-GAAP these of website measures

over I'd Mr. ahead. now to Please Chris Oddleifson, the to go turn and CEO. like conference President

Chris Oddleifson

joining Cozzone, Mark as thank Trust, me us and of Good With you Rockland Chief our our Gerry Ruggiero, Chief morning our joined Nadeau, Financial We're President Commercial Officer. for and by today. Banking also Rob Operating Chief are usual, Officer;

are As with from with locations we your during audience listening participating wishes distancing times. you are you, best we to extraordinary keeping These we'd before to this in and begin, families extend imagine, guidelines. And like extend to our each physical I'd pandemic today – separate to I like our crisis. very

arising per revised income $XX which related sizable first out $XX.X Our included reflective are $X.XX provision COVID. that assumptions loan with quarter results share, of loss to million of environment, of million or challenging net a

at outsized in stood of to net in provision impact. had losses less adoption minimal X the million. January Our credit $X.X CECL of contrast the accounting quarter than the standard early This

really QX basic related covering like of be but will – are messages But in will will the COVID-XX our matters QX with you address my first, today. other these I and the comments to bulk leave action. shortly, Mark

them totally deal day-to-day customers the We burdens working support enormous as they with striving to households. their are our with on in engaged operations and and are imposed

us Our high service to successfully business and has planning continuance. operational of continuity levels enabled maintain

colleagues physical, providing the and resilient From the well-being need emotional what be our customers well-being. we financial intensely ensure have And proved to is their focused And a on our of their resilient, in and lastly, INDB resourceful to of pursuit they outset, right now. themselves relentless company. engaged,

in to of profound are our stressful ability the meet challenges these We confident times.

the proven to As we past. it in case be – have has the proven

ways, over momentum. prior crisis this is as the we unique While subsequently ebates, and in ones regain have our people, crisis time persevere sheet balance to and from many model the feel business we

our to are we in support in touch various details like speak appendices will loan CECL, on at exposures of I briefly our many ways can There consistency, earnings I'd It forbearances a which on. the just to background which which along the with moment. the on release end operation contains and also

our the been customers. some ways of are supporting Here we've personal

ATM and card mobile limits. the withdrawal limits. early We have waived for increased withdrawals. spending We've increased daily debit deposit penalties We've CD

foreclosure accommodating reassure waived mortgage the added And and have on questions loans. at and deferrals home loan resources to additional for charges requests our for we've option And loans. payments. center on-site majority service call vast with window up instituted drive of payment We've appointments. for branches, customers. along answer We We've provided provided for an late XX-day equity on consumer moratorium residential

accommodated in we program government-sponsored forbearance, for secured far million thousands request small and For customers, participated for our of including modifications. thus we've several guarantees and extended businesses And have We business approximately commercial the PPP have we small retail payment the same style to of businesses. and $XXX for received concessions deferrals loan applications in loans.

to they personal deliver real to workforce with For work so family, understanding balances. we for guidelines. many on education to accordance CDC keep proper colleagues employee our We're and increased remotely. offering XX% support, over practices leadership the them continue they communicating manage time on about steps service information, of and circumstances safe with frequently capability continue our exceptional robust take work-from-home significant supporting our enable as life health customers. compassion, in Trust Rockland to colleagues, This We've non-retail with operating includes

time any practicing had cleaning And across result despite should date no safety and measures physical the and of to schedules. workplace, we're I the COVID our distancing frequency pandemic. know compensation full in we're course, layoffs reduced as increasing employees work Of for have And maintaining a branches offices. we

local we free access of financial already planned our promptly support aimed support. expanding school-aged to involvement includes have to food history outreach communities a active we urgent meeting donations up top online additional local increasing where of This banks, at an Likewise, our program long stepped key our $XXX,XXX to children. literacy donating and on popular needs, nonprofits, of

to All social in extensive website include informative our to accompanied with insight all been media, third-party communications of addition efforts all to and video, constituents these access channels, our our websites. by have colleagues helpful across hints,

the are the local the and The us federal, to crisis governments channels. during very We customers on An through expedite relying obligation designated our help individuals role. and considered financial working for all between trying great of to relief. take are are conduits businesses And to is community that heart. our programs, And to through important embrace aid banks we unprecedented period. distinction time this our and providing and we this state this crisis all tirelessly XXXX

focus on to our our and as to And reliability, which of both have applies our in brand commitment rankings. is and is ever. customer customers bad. strong good come service value times, long-standing our in loyalty times high Our difficult consistently especially course as And reflected

forbearance, we and a record track dramatically are combination this confident economic lower higher Yet of certainly costs, get cost rates, of from immune when for no near-term not low will solid crisis our this. related There question performance suffer that is for said our interest industry in through to our before, earnings resume as credit ability conditions and to we improve. during I activity, are this the

pricing strong have enhanced have significantly rather We capital we financial up in quarter. our concentration position for base think a than significantly worth the that XXXX, underwriting similar liquidity the reaching first during leading – period crisis maintained noting is we disciplines our volume. and our enhanced to the I it and And have to

when or whether or better is our tell more or is ball some crystal it's turn the no Our other really than shape listeners. the of gradual, comes timing V-shaped, of the obviously can't economic you any recovery or shape. We

are just confident efforts these our us supporting continue will and described. when just constituents We well I will that ways position comes. the our all time in actions And

to Trust I a colleagues. my would like Rockland again once to salute all extending end by

as operations the me And one and and heard the colleagues being to you customer thank despite going, logistical borne by described and to is resource. greatest totally this hearty challenges the keeping throughout needs You've inspiring. every it's them. all each out is This remarkable of all a our as crisis responsiveness truly

it over to CFO. turn will Mark I that our With Ruggiero,

Mark Ruggiero

now detail. will cover Thank you, I the quarter in Chris. results first more

primarily XX.X% of diluted to in XX.X% quarter’s in $XX.X respectively million results the the driven elevated COVID-XX of response income expense reflect by prior decreases quarter first $X.XX from XXXX, in EPS and the net provision of and GAAP of pandemic.

the expense, X, resulting changes minimal and the adoption. implemented company XXXX, CECL provision allowance January adopted Regarding in effective upon to

the in the for reflects deterioration is the the However, general economic pandemic COVID-XX impact estimated first $XX the driven of million by of which being bulk provision quarter conditions the expense obviously

Appendix peaks economic the to but summary, COVID-XX assumptions: meaningfully or for throughout forecast, quarter lays in which No includes of X% at the release QX following will and the our at future. that XXXX C remainder the out XX.X% the economic at remain will near Unemployment industries SX the underlying foreseeable expected XXXX, level in earnings impact provision leveraged sustained funds recovery the and crisis persist rates federal QX elevated Moody’s to of on economy. creating lockdown pressure downward continue CECL assumptions year. to rate XX% will spending. first the XXXX be remains on additional throughout until model, QX and the

macro these amounts within earnings stay et that impacted cetera. shows industries are by loan government, heavily the provided with the Appendix the to release assumptions, addition In E shutdowns, in economic place orders,

analysis also model. review was quantitative in largest help customer estimated the environment. we of not given the risk determine of qualitative well to be captured in as assess the that a overlay current such, laid exposure as loss industries, a results These of review of higher to potential future these initial additional to deemed As relationship our the balances

CECL the capital align run business. ratios we impact, manner how not elected prudent to From consistent deferral capital a it the would relief a and with take regulatory regulatory of capital perspective, our manage associated felt we to advantage in capital with the company as

I will portfolio point over to color be the consumer cover now provide commercial to he it Gerry at Gerry? by loan side. turn some and followed to Rob the over additional will this

Gerry Nadeau

Thanks, Mark. Good morning.

information As and in portfolios provide we our you commercial know, additional today. banking detailed business

managed just I'm for current as XX a maybe So challenging observations how situation And in comfort a the our to few years, gives I’ll first last on just to going brief you which this give business some limit summary environment. us of my we've comments the well.

based approach our on commercial credit foundation you of to of approvals. constructive it less those to credit a For business, is with contention the familiar

With on viewpoints scale. the versus the needs balancing heaviest with the thumb of credit line or credit

us all into well and at both committee also a ability business to greater threats quickly We pivot provides the than to $X new portfolio, feel loan weekly insight opportunities. continue to relationship greater exposure as million meetings, as we which prove

are trying risk, annualized our We us at or taking it They rates economy credit achieve with. a to comfortable X% a pricing on the is than to acceptable model growth similar simply practice more when pace. are organic that’s rates we're growing outsized is X% be growth whether growth

$XXX,XXX. commercial average million. estate portfolio, Loan our real In sizes, $X our size is our C&I in portfolio loan approximately

of over a loan of addition and risk growth from We commercial the We whose and at diversification compensation portfolio team six-digit XXX compliance very bankers long usual MACE seasoned, includes goals. incentive industries quality across the to have professionals a tenured high in measures level. benefit from level

experience his officer total workouts. a back maintained to first protests staffed have when first we dates exposed by late with was long credit for is I career also led a workout team whose to Mark occasional and that the predecessors, fully XXXXs Despite loan workout

practice our achieving have XX-year also loan rates. internal process, examine to loan portfolio, our outside we maintained to XX penetration loan annual addition In plus percent a of engaging commercial an review firm review

suffer surely the that to All being and rates. and These better possibly said than peer we pandemic not the practices we and to we delinquency this the late will not had be non-accruals XXXXs identified with since in though, at losses bank immune benefited downturn have are quite credits, in charge-offs, risk.

operators Not bone risk surprisingly, be and services, view to preserving at properties entertainment to prolonged personal Hotel comas, most the their hotel have I amusement our at with induced call be part, sought staff payment a placed restaurant, healthcare, have lenders. what government into shutdown. hotel, for deferrals their we and cutting cash segments most levels from

shops, they bars, Restaurants, service also, restaurants, can takeout, Donut wait cream again. have those up and have et cetera for which comas them except for full Dunkin to same when thing, small take out done the put include open franchise, with ice

of and and boat worthy commentary group Another with floorplans. dealer automobile customers RV our is

pay essentially industry dealers curtailments products closed. as practice to floorplans, that of inventory practice been followed that Massachusetts those down which of sits almost in is to all defer have We you on have start inventory, because a

to food approximately number billion have deferrals clients comes largest where loans types. deferrals. respect $X principal hotel, have service we With sought on Not and districts payments, entertainment surprisingly, from the balance

issues, construction might all balance shut companies on aprons, coming that With the we activity the largely specific supplier more that et whether to the like linen which have have islands, or commercial from provide cetera. a that be service have clients businesses companies they industry restaurant cloths, down table

for sentiment with travel shops, them reflect have or our the based feel them, landlords Cape operators, more will on Cod. than of optimistic they a everything professionals either of have beauty with most vacation local to And my viewpoint. a businesses, represents shops, too consumers own retail barber day of conversations A be centers or distant bit Massachusetts properties wide why nonetheless as hotel part, and they before scenery. swath that been portfolio medical customer have anxious longer of across will in forced. just for largely areas who options they're New far they're Hampshire really change That's reluctant fly from some to their in but restart probably that and but care from And nonetheless home, that travel half

they policies also fears are. believe them into hearing that who drive many well former back been from Airbnb are were and the cancellation by properties We also more how business that clean their traditional They upset customers hotels. over

and Contractors are rules. calling we're which going to safe reopened be social are sites job follow back seeing off to laid distancing new need staff,

new Another demand. they Interestingly home interesting been builders. area see has our strong still

housing was houses this going they some In pent-up and being week, as open talking fact, to never with projects. demand I on, builders have there's office have for new missed presented, still

payments, now whereas interesting are more previous for as though be many back as to as position. to from federal industries is making in across furloughed unemployment this unemployment that long collecting long board the will did is they hard fear, money and employees workers One many than is the observation subsidizing bring government furloughed it their

ahead the hazy coming credit. I this have terms benefits those In we that somewhat I improve every believe structure XX and windshield on potential new that see followed in for through pricing thinking my years. crisis, will summary, which some which from see, downturn

need back step from from capital business. will and working there increased be an to their banks other depleted their who businesses, market, for demand up have re-ramp As the resources

they'll become monitoring with those or to vigilant will estate our and either But real customers and seeking their we new those lastly questioning strategies buy to listening to and out issues investors And businesses unable from near who for troubled developing open the continue term, sustain for to to borrowers in workout opportunistic be risk, operations. credits. continue be

Now Rob Cozzone.

Rob Cozzone

Good Thank you morning. Gerry.

many much customers. banks, halted part lending proceedings. mentioned our like to needed our In to our As we base, doing of are we provide consumer to relief regards, foreclosure customer all have

introduced waiving late process. a delinquent XX-day we fees payment on and have are deferral We streamlined loans

during our in then Not or and for of surprisingly, relief there mass need the these either portfolios equity noticeable late through with deterioration became closures mortgage apparent. XX, businesses course was March little home of like programs March readily

X.X% XX, XXX mortgage April or requested our payment of loan As of customers relief. had

or In customers Many Massachusetts claims With jobless home unmanageable. are equity since addition, these more program the from self-employed will detail extended If individuals requests had surprising protection Mark deferral numbers mid-March, the seek under program. relief also be relief XXX discuss our should a X.X% may pandemic same. are who in of A the moment. in paycheck these in warranted, XXX,XXX endure. of requested programs neither coming our payment nor may

was of FICO XX% our XX, estate of healthy LTV X.X% consumer real The March of and XXX than real home average an LTV portfolio Only underlying and consumer LTV quality portfolios and equity. as estate for FICO mortgage of average greater average our an of at March XXX XX.X% for of and or X.X% current XX.X% and with quite of a balances as accounts XX. of

back Mark you. to

Mark Ruggiero

continuing credit. Thanks Rob on and with

consistent to at that Chris approximately million the non-performing payment or strong continue to with Gerry remains regarding as modification and the quarter-end prior deferral loans interest metrics to assets assets. X.X% during and deferral of as non-accrual were will $XX reported TDRs total or anticipated remain And alluded requests, not as the quality Asset accordingly performing will Lowe's comments periods. at quarter they be delinquent and prior accrue

stimulus the Act successfully X,XXX as program. The processing loans income the over over million which be approximately the net million and agent an Chris approximately life income, the SBA interest anticipated will balances. paycheck generate totaling approved are guarantees obtained in $XX for of loan. of under to fees, To-date, recognized As program in in Cares we participated $XXX protection noted, we loans

the more specifically. bit over color results I'll now provide first quarter a

strong experienced approved quarter quarter, estate commercial despite although at to offsetting year-end the with million growth COVID-XX be close During, real with And in see the continue to $XXX full of resulted the we opportunities C&I an to impact the the in balances. first ended closings, company conditions. as several loan economic yet current is the company loan first pipeline and solid categories deals for loan of pipelines another in construction declines quarter growth commercial and determined,

On mortgage of reduction the the secondary side, market. balances fact that to overall to continues reflect primarily production the company's the estate majority consumer is being in the real sold the

deal drove While usage this for home annualized X.X% balances line of outstanding equity in and flow an new increase portfolio.

terms In after a wave origination driven of mortgage refinance mortgage has activity significant application activity rate significantly. moderated

given to allows appraisal home equity employment necessary such procedural related also to Fortunately, time this as application slow. existing elevated, things pipeline begun work much to pipeline the home And verification. although activity and recent has needed equity the is changes

the side, this an XX% with X.X% for during over with or company first the municipal first growth was X.X% deposits deposit the of quarter, for the on leading quarter. categories, strong growth the all basis deposit quarter. X.X% charge also experienced annualized across Core up On consumer growth XX.X% deposits the exceptional and up

Offsetting stayed decreased by maturity core decisions deposit deposit points time the primarily XX flat CDs. the of the for Cost quarter. by by were accounting deposits at as purchase cut brokered X% of driven growth, rate deposits March offset in adjustments basis the quarter

Further cost range high deposits down of drive QX being the the basis rate slightly and quarter made with into by for the the quarter, period the already average point adjustments end XX should higher. of

through wholesale additional as access billion needed. liquidity. liquidity the historical be With March funding, $X.X of in XX, funding on first bank the million loan perspective, a in company borrowings From enhance secured economic federal decline conditions, the to track sheet during of should of $XXX overall of response funding immediate a to quarter significant record additional to minimal channels balance various home proactively has the company

temporary Appendix-G cover as for requested customer COVID-XX as than These loan funding liquidity well the with aforementioned release. as flow the TPP reductions payment avenues demand to to off-balance associated absorb more cash provide enough detailed in

with effort the additional deposits a conjunction in into entered company at much an $X Lastly of maturities cost higher hedge to in rate. pre-fund a the time also borrowings, fixed future the million lower

Turning decreased XXXX impact the income, X.XX% or XX in the basis net to loan to impact to rate first a during decrease quarter quarter The of the the X.X quarter. additional quarter interest when and basis first made compared reflecting interest point fourth margin XX points net of cuts cuts. fourth partial income the for accretion full quarter the million

charges, were due service the activity customer fees cover items, gears pandemic. highlights interchange seasonality quarter-over-quarter and some decreased to to combined typical due Shifting with overall deposit non-interest of ATM COVID-XX to down

quarter-over-quarter banking Mortgage reasons. income declined sharply for two

First, our of $XXX,XXX the a a of sold rapid in in expectations value swing change for servicing and a secondary prepayment result significant dislocation well as reduction asset retained. And secondly servicing a market the mortgages. loans in as as speed

was has model hedging valuation market quarter served whose to the sales as demand that by in offset changes on TBA were supply. aggregators in broke not actual The outstripped down us gains by the well

In disconnect, became in quarter. much move which delivery when should addition, the improve predict, this we method, efforts results our pull-through difficult rates move a to second realizing more began best to to

income brought conditions billion quarter-end. the on as assets at market under by by the pandemic just Investment was XX.X% to management $X impacted by significantly dropped under administration

for remains the second quarter-end products increase late-March rebounds derivative quarter. elevated. level early preparation fee million swap increased subsequent as demand However, income the further would interest complement market in and if anticipated the sustained in $X.X rate to experienced typically Loan in tax to

a other million reminder $X.X category recovery included the the QX. a decline recognition the insurance prior in contributed lastly, in that And that to of during income quarter

levels salaries as expense, company despite branch the in work all benefits due of for pay Regarding workers quarter-over-quarter. schedules flat the expenses network, and to full reduced the retail maintained service reflected non-interest much for reduced

with from small non-interest inline and changes in overall prior expenses quarter-over-quarter, relatively decreased expectations expense slightly the was other various With quarter.

quarter the be additional loss tax higher at acquisition for tax operating tax now the an be discrete carried a recognized. associated into back included the a loss resulting tax carryback with benefit particular, provisions operating net previous available lower in rate years in Hills reflected Act. $X.X benefit In The to through is million first net statutory eligible rates, tax to net Cares Blue

benefit, discrete Excluding the XX%. approximately the impact of rate have would been tax this

capital and first April to Lastly, XXXX, the March the year plan in plan. April the buyback book in with quarter, testing in been XXXX, the value current XX, additional actively with for bringing tangible the purchased approved purchased from repurchases. increase value assumptions October X.X charge shares had of book XX% those stock deployed any a per by tangible approximately that current scenarios The the standpoint, authorization large $XX.XX, scenarios share provision X. was prior by early the over company Board has stress no million plans repurchase representing during shares despite the XXX,XXX capital completion quarter, first to a level. each quarter the increased in finalized The of the to the previously environment remaining seek are There announced of incorporating adverse specific by supporting $X.XX

In of addition, these capital. continue ongoing our to analysis assessment guide and management will

which In of capital base this environment. uncertain to tangible ratio March from summary, within XX.XX% strong the provides XX, operate capital XXXX, of as a

with typically comments my conclude guidance. I updated

profound economic we the near-term insights however, the to comprehensive impacts, uncertainty a confidently Given customer provide I guidance. cannot some areas. into few and forward-looking key provide outlook can, as

of to fairly further, target with the the but Loan deposit near-term one-month following: consistent be further guidance. Reserve the last of accretion the cash be quarter's QX to with on million index full consistent levels. position throughout margin quarter. March the the And balance LIBOR adjustments, million Further to range. per below adjustment income $X sheet compression Federal with to estimate first guidance rate stay $X.X assuming end quarter net the quarter. levels, No rate cuts impact be Reserve to interest to We previous offset by Fed core compress of consistent partially

processing results, debt program how to the will this does not the much the with for to margin over given XX%. relatively tax We to anticipate approximately to incorporate the remain uncertainty We rate PPP retained of of how impact from the be two-year guidance income be repaid fee acceleration also note term. over qualify the that overall normalize versus want the and QX back the consistent forgiveness on much balance volume to trigger expenses sheet will

of the interest the the we lastly, of intense in and are certainly outlook for loan loss banking investment the industry. And community provisions aware

harsh fluid addresses amount quarter a based is first obviously of pandemic This situation. the Our impact the enumerated the on assumptions COVID earlier.

loan provision those exposure quarters coming excess in with the highly factors any well March company's the assumptions of in in loss as the loss further will be for Our deterioration correlated increased used in of perceived inherent any XX economic as portfolio.

That concludes my comments.

We will now open it up to questions.

Chris Oddleifson

Mark, little as there want been you might the questions, the about line heard Before have I talking a $XXX were static to to when on it hedge. just million. it clarify

Mark Ruggiero

$XXX million.

Chris Oddleifson

million. $XXX Yes

Mark Ruggiero

$XXX million bonds. hedge the on

Chris Oddleifson

you. Thank Great.

ready Okay, Jason, questions. we're for

Operator

Fitzgibbon [Operator question Instructions] Mark you. Please The Piper Thank go ahead. comes from first from Sandler.

Mark Fitzgibbon

Hey guys. Good morning.

question I if had for this. and apologize missed I was Mark, I First

you know is I a color? the XQ? could if the but puts in if provide and not, you sort terms XXX likely range curious takes your XXX margin be to in heard give but a in I'd little of the did lighter, margin down it I On it'll various number there, that maybe guidance for be and of

Mark Ruggiero

that did But a had provided what was I past partially than more essentially XX And number. through we we March. specific give in the as know alluded regarding you we basis typically Mark. following I much point cut. not – to guidance Hi, the if

about. would get a in that essentially you that March were points you that So talking you of if range XXX to towards we basis the that apply the received end

add margin month the a levels funds QX that LIBOR a bit I It we're creates would the The round to expect the surprisingly we held first fed is the up is certainly the But expect, of down certainly we has first given But range to back assumption. month to well cuts index. that say one where that one to that monitoring drop should just that levels of continue one a range target would started volatility. to drop reasonable and about would the you It that through quarter. caveat little index talked could is. component LIBOR

Mark Fitzgibbon

that then do Okay, disclosed XX% think questions loan requests of or press about early the second quarter Are modified. your for having number end book quarter? Gerry. second it great. for of And the Gerry, a What of the couple in likely to in change maybe forbearance, you I looks you at be like has et release dramatically? the cetera? at lots will of think you Is

Gerry Nadeau

slowed. have requests forbearance the Well

think I was impacted shutdowns. Like it's – curious I happens. that obvious the what sort the been industries sort to with have of round first yourself, see So am directly of

et example. hasn't I on and really depend their think unemployment, – obvious, the relief. need people mean rent, not is tenants might it will scale paying been case, residential I large the there's some other but industries on Whether a which for hasn’t getting That been cetera. case, depending tenants, delays

So at we'll moment, they the wood knock on have so slowed, see heads. where it

Mark Fitzgibbon

that's think surprised into through their else? rates digging finding me you up PPP program, the are ticked And Do or own line hadn't because more. something utilization they're borrowers then pockets Okay. funding they or

Gerry Nadeau

March, think happened ideal April. because the because lot a we clients down up, pulled then they it's cash distributions little back large in actually hitting is build somewhat first quickly most deposit in when crisis peaked interesting. very initially And clients And We – many this I was of of timing a our the interesting, and make on of them for came it did saw of of they hit, up personal accounts. what, Well when the crisis so our and tax distributions bit back. spiked and

more they timing just otherwise God, that the had I up liquidity having date. than ended So the was of grace like might they important think before that

right capital. tax those government that now not is using working they payments, the Now federal but are for getting

Mark Fitzgibbon

do when Mark third you Do in the curious, you I'm do lastly, impairment? then for that And Okay. test quarter? goodwill

Mark Ruggiero

We on perspective typically formal Mark. do a

that We the environment. an given analysis have done current over

to levels. goodwill and look quarter did in So about our continue we take first feel at the a comfortable that

think analyze we prudent to environment that to it's quarterly in continue So a this on basis.

Mark Fitzgibbon

Great, thank you.

Mark Ruggiero

You're welcome.

Operator

next The Bishop Davidson. Please go from ahead. Dave from D.A. comes question

Dave Bishop

gentlemen. Yes, morning good

Chris Oddleifson

Good morning.

Dave Bishop

average duration weighted I you fee curious, loans and what in program, the of servicing PPP terms terms I'm in balance of these all terms are these of a assuming, maybe on of sheet? guess, fee in origination of

Mark Ruggiero

the obviously backlog the And first guaranteed, in have applications through I a the component. other But David have second the think a dynamic processing interesting approximates already completed successfully for of yield that I the Yes, the round. be round. will of through that under call get banks, my and we a essentially we, there not first mentioned like we X% opening amounts to able know were many up number the little round we

over X%, should As you at know or the not back. loans be be will debt that the on forgiven and two-year the rate paid term,

But round X% was under loan the we much average. now income are pipeline on the Depending those a average fee little on have lower. on the first sizes

much So the and when get be that round much could that able to as the should but a today. we second lower for a successful up on guarantee opens are go rate up it's bit, we pipeline sits how on

would whether will end how be accelerate an really the the much achieve quarter, forgiveness of the interesting that. still trail operational to how by books will for But result will determined and of fee flow loans many third the of these into how will from clarification actually and that second are be timing that the will and see David, over how the quarter off a of income of further as interesting be through all. perspective exactly it await forgiveness part that it debt as we system, the

bit impact is because why could a card is say have for the program quarter. PPP we the this second guidance of on wild that So significant a really QX in the margin a margin

Dave Bishop

for… impact Mark the in guidance previous for every Got it. the terms points, was just And then me remind basis XX of what

Mark Ruggiero

a about we’ve cut. guiding each the drag six basis margin for Yes, on XX point point been

Dave Bishop

hedging some dynamics, of Got like. in little cost deposit it deposit of cost in if you I'm cost a maybe uptick some just terms and there I deposit it. And time the about inter-quarter. the talk dynamics in mentioned some right noticed activity bit reading

Gerry Nadeau

CD the mark essentially perfectly. a To a of is fair timing time adjust we function primarily some Hills those when rate the you closed value honest, maturities was the deposit that deposits the noise. on their coupon that timing mark not sizable, of that what on value the recall, actual Yes, yield to was if aligned accounting The a be that fairly lower matching fair of book of is. we – Blue the acquisition, of to there on than uptick purchase

of So on the accounting books. have run of the still the time end higher costs the purchase deposits We off at had benefit the some of year. those

So that timing in five this of cost or quarter. four that disconnect the about first a was deposits point basis essentially caused a in difference

point during make targeting four cut points basis XX you So quarter decisions the mentioned, five that I high the would deposits strip cost we our did as of end by have the the the if about of and to the down that first by more out, deposits broughten range or continue quarter. rate make cost decisions we'll in of basis

Dave Bishop

Got Final gave assumptions your terms the in scenario. it. and SX Moody's question, you of good color

there… is forecast in Just using curious, you're outlook that is the economic the scenario or of worst terms there

Chris Oddleifson

there interrupt has Moody's was mean to to been Yes, you, sorry David I question? – the – more didn't

Dave Bishop

I there was of package economic didn't most know forecast terms SX Yes, impact? more their of there? in is even more in the the that's Or like that like terms severe even if an draconian

Chris Oddleifson

until pretty most time, the forecast. forecast the were March up we that right was at continuing when XX monitor to Moody's conservative much the Yes,

QX. was conservative at the that So we But that the time. will going most continue into to monitor

Dave Bishop

Got it, thanks.

Chris Oddleifson

welcome. are You

Gerry Nadeau

you sort forecast. might top additional of Mark the And highlight on again that sort of conservative qualitative the Moody's of overlay

Mark Ruggiero

implementing model how terms of think, loss economic a those Those in about at essentially the factors Yes, portfolio that data up by have forecast many model the I of some number, drove QX to working. correlated quantitative it's we as over assumptions points level. number note color Moody's just specific that of to forecast to And is $X by $X factors, SX the or assumptions, important to give million the million.

we $XX of qualitative the was quarter, million of provision the in driven in So off factors. that recognize first did a that lot level rarely

loss the captured terms of in the about largest prudent Some at gauge not model. piece understand best have necessarily at industries, that looking felt would we of I we looking them in can this to quantitative been exposures high-risk expectations the the at of analysis talked inherent point as the it

that. aspect, qualitative offset. provide is interesting could start that to a So be what start a to to net gauge need could materialize it how much as to we losses where of materialize, And capture forward and we'll the quantitative going relieved be will would charge-offs component model from overlay

analysis So I just that want terms forecast sort of of Moody's how drove to in provide had much how a that bit impact of provision level. color of much of versus qualitative that

Dave Bishop

you. Thank that. I That's great appreciate color.

Chris Oddleifson

welcome. You're

Operator

next Laurie Please ahead. comes Compass The from from Hunsicker Point. go question

Laurie Hunsicker

Thanks. morning. Hi. Yes. Good

back was heard we that. number if some What to go XXX think because commercial? home details in deferral I I mortgage, could I equity. wondered of on the XXX for missed Just the

Mark Ruggiero

Laurie. Hi,

working and So of those of this is in what's a . terms deferral, still been reminder, through of requests. units We're just number

not is reflected by – yet, customers. this XX what's So March all been in numbers requested the we these our has provided the been are but data

appendix earnings commercial industrial XXX; and to estate So XXX; and requests real release, small commercial F business just the referring were XX; XXX. in at construction

the those other – request of And the there consumer side, if combined and channel. math equity on that so residential, X,XXX consumer. my rough categories head, that up home is doing between commercial So made business or in I'm about about it's XXX-plus and through small then four

Laurie Hunsicker

it I'm Okay. that Appendix F, thought sorry. missed okay. so I There I is.

Mark Ruggiero

problem. No

Laurie Hunsicker

appreciate really Great. Also, provided and the all on helpful. Really, here really, detail that really you the commercial. I

a high couple want and Oil a things. gas. level, I check of Just to

correct? Was zero. that are guys You

Gerry Nadeau

right. That's

Laurie Hunsicker

And much Okay. lending? I'm roughly at that your is looking how then $X.X of book, leverage billion, C&I as

Gerry Nadeau

loans. business if leveraged guess hundred put to rules, is even maybe and that most maybe by secured and at the Because of it of assets. the going I'm purchase hundred, most Maybe, half in collateral, Gosh. we as – the

Laurie Hunsicker

know around And that's million. multifamily, that's $XXX million, Okay, been helpful. then running I $XXX

balance was Just on wondered then LTV an and if the had what you absolute that?

Gerry Nadeau

I going probably And today. the think range. somewhere we – get I fairly XX% we back it's I guess we it. have It's to don't probably to to have to think get in I'm think it – ran for

Laurie Hunsicker

Okay.

you, you're generally, at last but we're times, to then question, Chris, in book. And sitting Xx obviously helpful. That’s very very, Okay. here if more you could tough just talk

the you you're broadly you're about little How we You there might how raise And about at to go balance how understand just one know just Or sheet some obviously, bank thinking their of M&A cycle? the has be looking But don't that in the of to off currency. through terms just that you more cycle? through all the fallen in cliff. want you're the bit it? as talk your hand. a a of Thanks. probably banks have thinking currencies stock Can about M&A strongest trying of a Northeast

Chris Oddleifson

Laurie, a conference it would not question. call be complete asking a without you

we've about, in it'd about interested it. to it you. thank frankly, six with think and I all all, mean, been thought the eight down heads conversations. we're so about So in of have Quite little talked have I M&A first programs weeks. bit we a last always thought not We've talked just – really be, lot is I the about the

little us, the you of reluctant What somebody of a past. that we it's the at engage this period, out. usual would in balance to way implications sort bit would time But to I've sort not robust have imagine sort I the I'd bought. sold, – sort of implications banks said very past and need that book I would be reluctant be if when calls in approach opportunistic in credit the the are were to itself that to sheet for of

underbrush contemplating customers with as things would else – of doing. I I practices. be with some were anybody the what busy that and – aggressive my – that out we're and sort half could just keeping thought also thought clear is lending think your – we the it after of have that everybody get satisfied doing needed all said of sort to this, But bit recession satisfied a the we your I in observation probably through keeping probably who of I customers a some this of

having what just a would and bring Now that on we recession. we're – didn't know

Now of the will suspect this of thinking we more of around that valuations. over about field. we integrity sort be left of that know quarters, something the apparent, become will as the loan through But books in I out certainly the next useful region couple right work and

this a best. the what that's the Laurie, add little Rob, that? of is you head, Gerry bit do anything to of but So have that's Mark, top to off or my

Rob Cozzone

don’t that's I on. think I spot Chris,

Mark Ruggiero

up, you think I it Chris. summed

Laurie Hunsicker

Great. Thank you.

Chris Oddleifson

Thank you, Laurie.

Operator

go from comes Collyn next question The ahead. KBW. Gilbert Please from

Collyn Gilbert

morning, Good everyone.

Chris Oddleifson

morning. Good

Collyn Gilbert

on are helpful. This the is loan detail guys I – appreciate side. the you Super giving color

exposed that or $X.X percent what your then those loan you billion in there of know in of do getting requests, categorized Just also a couple terms industries? so of questions you're first. the In $X.X sort of be might billion modification of

Gerry Nadeau

Yes. This is Gerry.

fall – you first to on breakdown give the a majority hotel. the into just So kind the of

sort they hotel. of So

of Food fall So into bag. the they you mix sort as second. of might that services just is think. And sort being falls

some So like that golf rinks, bowling it's some costs, a combination of open, health hockey alleys. some can't courses we have

once So care. have few restaurants. real hotels with beyond get cats of and They you it's a a dogs day and kind

But the of of the probably the your really their question? X% – answer I'm being XX-odd than hotels of percent it's forced almost – business. more those that rest percent to than to the industry shut no So total all guessing Does been in have that within XX%. probably all the are restaurant more

Collyn Gilbert

of markets – curious, then off to to Okay. relative you Or exposure going would those just your sit come guys percent just of maybe where align lies the And of and Yes, is, modification initial exposure it the much Are that Thank on you. the general name you're tuck-its? where hotel the of great. that's island? might on what have hotels? how requests hotel this when the of touched in comments, where sort and exposure you but

Gerry Nadeau

half Interestingly of question. for modification the good a not had a – islands. request probably them made That's enough, this on

traditional the those requests. I'm not had – read We've sure our then follow. footprint. Cape. Certainly will So what how maybe that in to that, And

we in Cape, And is just in is on gateway Hampshire, business I more would the et the of – locations Providence. have, balance really it, the say, areas, cetera. Islands, around the hotel it's vacation New So Boston suburban in of the and XX% cities, about one

little request bit. this I'll think be a and off the And I point, them, so at from

portfolio the far hotels. of XX% around of so request a had on we've think I

of another haven't So asked. yet XX% there is as

Collyn Gilbert

Okay.

be? Mark. That's qualitative reserves, risked also have guys that if looked the at Do so now perhaps reserve in That's detail you you have great. a That's you helpful. That’s question one. the loss really be interesting severely Mark. then – or that $XX that relative on percent quantitative maybe scenarios, this you the offered DFAST under would relationship so of stressed interesting. you, what the of what would to Okay. of so that for build million That's terms And is kind

Mark Ruggiero

Yes.

it to be Collyn. haven't to scenario, honest, We matched up specific DFAST a

primarily a over have lot expertise relationship that lot the to trying current handle a some a Gerry's been talking given by close lender top what of get the of shutdown this of policies the just throughout trying on apply was the about, default assumptions affected we which fault level of that. to network, being really industries think and just situation, leveraging a loss I probably the really and

DFAST formal say. per we run through So scenario, a haven't it

we of by national thought are impact, and affected was that could prudent the base know couple But knowledge really want we looked our come up We've with assumptions to complement really at overlay. we data. of a industries the level what most to was as macroeconomic and customer strong and using we with that our best that scenarios that qualitative

Collyn Gilbert

Okay.

NIM, the Okay. Mark, That’s we're of terms helpful. And in just then while here.

the quarter of Hills that with indicated lower Blue it's first would other of or comparable you lower COVID in more Is to accretion slowdown some is on I prior but dynamic Or the than your that guide. there going second quarter do the a issue? book? the the be likely payoffs, So think

Mark Ruggiero

of is normal to that we continue in just at lot residential I'd is the activity. of the particular, side. acquisition, that do coined in and No. just we if coma just happily because think Hills a I had valuation book primarily slowdown portfolio Blue overall Yes. the will a know recall, of discount. of where In it's on in economy attrite a Gerry, on – the you say the the actually that the terms versus paydown And portfolio premium

the So potentially that down, negative book margin. does pays to actual impact create it as an

impact. elevated of quarters, income. significantly overtake we've the In residential seen previous driving the factor pace the commercial down pay been And accretion that's really that of

now conservative So we've in perspective, move similar credits I income. we less full And almost the it again, are just as the expect payoff marks see of think a would QX. removed activity a sizable saw acquisition, – to accretion year what individual there can with from be I from can that

little I level, start and see So there a we'll of somewhat to basis. a that a think bit more here still one-off a normalized could create quarter-over-quarter volatility have May of from

in But residential full guidance probably likely the I we'll and think somewhere were in payoffs on the some we and between previous for QX book think combination where the reduction commercial giving. slowdown land of side, I have and the we been

Collyn Gilbert

Okay.

want Okay. Great. the And just then – I clarify. to just on

of the end of think point had the number that you the or cost include million that quarter, at so range March referenced, XX deposit the hedges? basis like in $XXX said I does you So that

Mark Ruggiero

the a At we high point. quarter, basis of would target the end XX second

just the was on the to actually So borrowings. clarify, hedge

be $X to static, million $X our pricing the is lock may was hedge and �� million there. the able $XXX on FHLB where maybe we borrowings, where hedge in was So effectively million this there

it. no currently previous the we target with deposit point associated in that basis rates We understanding leveraging through deposits has deposit The debt hedging primarily high on years, range of based XX have. mix

a a time have in do bit deposit previous mix have we years. On the we than books, of more

range what the it quarter. we QX. on time continue bit the the can across will into board end But do of take little get on that do throughout can think cuts of rate by we deposits. a So on to based feel down We we comfortable

So will XXs. the higher high average that likely than land

Collyn Gilbert

Okay.

then And good. lastly side. just fee the on Okay,

little mortgage indicated You quarter within this or had can tighter, – servicing the just resi obviously, bit that have – slowed, a I movement here the that the mortgage applications But book frame you on side. kind of all. a you sort – it’s of I of shaking always mortgage in you for terms of a of out? kind revenues normalized been see that's business mean, line key of mean, level where kind

see the year? shaping how activity Just the of you that, of the rest up sort broadly kind of through

Mark Ruggiero

I'll Sure. little after guidance okay? of I'll that's Rob, add let if on, bit and there, Rob provide needed, a if

Collyn Gilbert

Sure.

Rob Cozzone

Hey, Collyn.

Collyn Gilbert

Rob. Hey,

Rob Cozzone

pipeline Application still Mark last including quarter we is ended mentioned and to to In of the volatility And XXX. did the begin Collyn, help second of into significant, the a pipeline end gain of and gains shift comments, towards quarter to in best hedge, quarter quite to slowed first the of shift delivery year, market. third be the the volume in The his not our the secondary efforts subject or north on quarter. sale, average as we fourth the as was here. the lock

we were slightly just XXX. under quarter, This

XXX. to basis to somewhere a So three we'd efforts difference be expect best as significant on a in we quarters XXX probably move delivery, and net a between

terms it's means projecting that of this and obviously mortgage what between quarter for quarter. income, somewhere banking the In fourth

that have, of pipeline Given it this don't the that we middle I certainly significant still it's range, know improved in should the but from be nicely quarter.

Mark Ruggiero

Okay.

stabilize during to add with expect back we rates asset. come that low took as ideally second in that, have hit value about asset Rob, And servicing quarter. large to a see the and well. just up to we stabilized quarter the that We would on mortgage point the think the servicing I talked mortgage from

asset. we same the that expect servicing So that if we on impact move again, should a not more environment, consistent be, to towards would and stable see mortgage

Collyn Gilbert

that Is $X quarter. Okay. And right? you said this that million was

Mark Ruggiero

$XXX,XXX was difference P&L. direct The in of terms

gain we about a created actual had well fourth quarter retained this selling as were a And more $XXX,XXX. to that as actually had quarter-over-quarter that that impairment we asset So take change charge because the quarter. we the the servicing of of in

Collyn Gilbert

Okay.

I’ll it everybody. Okay. good. there. leave Thanks Very

Mark Ruggiero

Thank you.

Operator

The David next Please Davidson. ahead. question D.A. from is Bishop a follow-up from go

David Bishop

taking probably pipeline. I like had quick loan in that coming here. quarter just a didn't Thanks up the a be follow-up. I this curious, sounds the decent word I actually, think you question. just guys would the commercial this preamble think, noted But for pandemic Yes, Mark, you Yes. given was pretty

guys people in there? curious Just the that here. some of gaining the share Just bigger of terms from? in coming you some dislocation sort market of pipeline what's is that curious maybe from of And driving where for market with that's dissatisfied symptomatic some

Gerry Nadeau

answer to Mark? want You that, me

Mark Ruggiero

going just was provide very give and lead level high I Gerry, Sure, you I let to will let off. details, a color the but some you on

Gerry Nadeau

Great. Thanks.

for And out as $XXX been had an quite surprised track. of to appraisal everything $XXX then be of so XXst, $XX going delayed about – the problems, to back getting or see million at only check million. to it done, reasons, just pulse number. point, but things withdrawn, was would I And which small take that. It's very So absolutely happen, approved on various it. at. was was over still the a we $X.X of interestingly, we that million $XX million inspections million like And on pipeline has

maybe so I is think are part going that then of people But viewing or who be it's of to going little this to the other the a kind they're your withdrawn. question. but And to of temporary somewhat wrong, be to tells

loan committee. weeks few finding last even we're else, requests a know. looking there's they're focused not at We banks – business new I at what something our for They all. – maybe have or PPP the is, had And surprisingly, new lot on don't at basically not of whatever

opportunities better us So and to given deals. really nice it's some new price structure

bit. that will maybe favor a last I just help? Does moment, So that don't the the tides although seems at that are it or not? But in know. our

David Bishop

you. It that. Appreciate Appreciate feedback. does, that thank

Gerry Nadeau

are welcome. You

Operator

Bernard The from ahead. Horn Capital Please go next question Polaris comes from Markets.

Bernard Horn

I on to PPP correctly Appendix sure understand I program. just want make Good G the morning.

fee also that? the funding advantage Does well? would as are this So the estimated effect you apparently, any appendix? include associated processing that I And see $XX on program, with of the you a – in what that million mechanism income. income have of potential so, you taking present income if And are interest there's

Mark Ruggiero

the the depending Yes. fee the Good question. processing is The $XX actual million on interest the size on of loan. does incorporate the loan. not That ore

we our that period all are to not our – evaluate for on should we of additional continuing And certain perspective, interest does options. that we're time. would the funding books stay earn, from So a a of incorporate loans

We we – we qualified utilizing. are essentially equivalent paperwork take the program and however, are believe as funding through to federal do associated – liquidity going get continue preparing that directly for there with alternative the to is scenarios just already to

We have significant capacity. FHLB availability borrowing through continue just typical to our

avenue of using loans. So PPP any to for sort have funding we not essentially committed directly

need a we'll We liquidity point of make on should decision we all good absorb avenues. on have amount financing, first this very And of that we decent our this at balance depending sheet can additional the round.

we available, paperwork the what interest doing that's could the and we'll that are but we make think be So for become depending the company. best federal that access will decision line on

Bernard Horn

And just out funding federal your what looking rate as much you of are at a on existing that better curiosity, as Is source? borrowers? far than it

Mark Ruggiero

is or bit I all on little a better, swap It’s honest, the be think the not basis, short-term to but through a borrowings market just compelling. that even FHLB differential through either our

basis want we different that's elsewhere. not to want in that that. is we XX should much believe, is we think may be the we I points have what access it than toolkit, why But all So able to obviously cost, to get the and

Bernard Horn

I that know not coming tranche this, business Okay. potential but another And but bit to you been not mean, – in to from does you able to quite are obtain other I are it, client a into prospects? have clients funding able the participate the – terms of then it's days, there's attractive, early some if degree a transferring are through, that obviously, this the and

Mark Ruggiero

in if In unsuccessful guarantee? to terms the able secure we're being of

Bernard Horn

mean... I Yes,

Mark Ruggiero

I mean we...

Bernard Horn

Yes. I actually an back. there's mean, even money to pay not option the

get or So because you loan have ran qualify help But you? you longer-term potentially more those client on to a out, terms. if could can't kind that a funding doesn't And for generating the otherwise? it make is of them hard business that's that

Mark Ruggiero

Yes.

determined would successfully still be of able that we will inquiry get to the aspect terms much to not the it into in that program. how be of think I customer of

to we have – for that would do look know as would we these customers, to know We we as and think to I ways relationships. we just many can help these continue customer.

prioritize successful last able We were dedicated first and extensively to round. we over are not resources additional We've guarantees working very, very customers get the through the the to that continue week.

and And about them can so pretty up good we work fast the pipeline into when the try as existing we just get we two round feel can. really the program that as – opens

able guaranteed wave. was that pipeline concern do this doing the is get participated in lot a to program same. first has that of through is bank The successfully likely every there And is other not the that know we

interesting very the many banks those be quickly to to have doors ready how us go the will get additional it and see geared when So are like for funds pipeline Because depleted. up open.

we and to all can. may that be as that best and are can. know to continue to some get there. to reason, continuing work for, those customers other help SBA where programs them those have to we'd at we'll remaining So the If we we demand much look relationships care the existing do able available, we're with And become look as clock as to that not existing as very it, may help for in these helpful. we all be But out love we of runs will best

Bernard Horn

of net Okay. interest $XX million? could in interest cost, your included sorry, back it’s rate funding maybe fee if the Thanks. And And would – income, on first interest bps, is margin to assume so million understand the part that? on $XXX to then question. an the the of If funding the that say, if my cost, we income for try XX – other and let’s we not what

Mark Ruggiero

loans only the X% these a is rate rate on The stipulated is program X%. so that

the of fairly over So impact, the piece why guidance think, provided it I it. fee which have we QX, a will immaterial in the be is

terms the the dilute an impact of in will of too net margin just to the much X% rate will It not because cost the margin. think rate. a I make degree of funding overall of likely

Bernard Horn

Okay. Thanks. very much. Thanks That clears me.

Mark Ruggiero

You are welcome.

Operator

concludes to no would any the over questions question-and-answer closing in Oddleifson queue. for are This our remarks. to turn like There more session. the conference I back Chris

Chris Oddleifson

and months, when again and everybody. Jason, next we the very we talk that wish we us safe very you, morning, hope thank for Stay joining be much bye. you Thank to Great. in three over the much, and you will this best everybody, you things improved. July Good

Operator

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

disconnect. now may You

Independent Bank (INDB) 24 Apr 202020 Q1 Earnings call transcript