SASR - Earnings call transcript Q3 2020 | Sandy Spring Bancorp, Inc.

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Operator

Good day, and welcome to the Sandy Spring Bancorp, Inc. Earnings Conference Call and Webcast for the Third Quarter of 2020. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to CEO. conference like Schrider, to now and President would turn over the Daniel I ahead. go Please

Daniel Schrider

Officer Thank you, my Sandy COVID-XX is from afternoon, webcast colleagues, Today, and on Kaslow, Phil our later investors, I'm Schrider and joined replay Financial for and our Spring call Aaron good a Dan third pandemic. of we'll conference today joining Counsel Chief Today's the and analysts and here a up website and speaking open call today. will This for also Sandy for live us by call there response bring is is media to General to available of to the discuss Mantua, be quarter our all Spring you performance today's and everyone. Bancorp's XXXX. Bancorp. Thanks date the to for impact the on

from give statement. your started taking the covering and we customary Before the highlights get quarter will Safe Aaron questions, Harbor

Aaron Kaslow

cost uncertainties, assessments expectations, financial Bancorp's of are statements and pandemic, assessments those other results upon which risks subject differ they regulations actual these you conditions, and Thank future or webcast materially and to subject credit are other goals. intentions, These of future uncertainties, losses, estimates the based other future benefits, to their everyone. by subject economic and of and by because rates, the estimates the Spring matters, a projections uncertainties, other expected interest ability are COVID-XX of of will variety and very significant impact of Bancorp behavior indicated. to may from of affected future Sandy statements and nature and are market that risk in Spring risks because management's achieve significant laws forward-looking including earnings Sandy market statements These statements make of this forward-looking of include goals, good uncertainties. of Dan, to forward-looking afternoon, statements

In company's results operations, past do indicate of not the necessarily results. addition, its future

Daniel Schrider

be our the with to Aaron. discuss on line quarter today results. pleased to you Thanks We're third

in read earnings record you with of increasing XX%. this we delivered As morning, year-over-year press operating $XX.X by quarterly our earnings million release

clearly and position approach our our value this of environment, proud of uncertain strength. especially demonstrates our to of the such strategies the results delivered to effectiveness these Bank economic client of transaction midst political quarter an We're Revere the validate and performance and Our results in personalized and our of kind business service. have

systems access The the of now former people, Our have quarter. services products and clients team completed has Revere this locations. also Revere integration full seamlessly to our and

acquisition we'll focus the now behind value and these on of alongside extraordinary our through maximizing times. the to clients continue to With transaction them see us, the working

share of for XXXX loss diluted net quarter's million to results $X.XX today, $XX.X quarter, quarter per of we've third share As or for of the $X.XX XXXX. per or third quarter diluted of $X.XX share income compared the or million reported diluted net of for per and XXXX. I stated, the million $XX.X second $XX.X The a current income

expense we supplemental resiliency in and of and $XX.X our detail portfolios, M&A and talk to expenses call, decrease our economic our the about Phil included for this to anticipate we The Mantua issued in provide the quarter quality. provision be the of results to minimal for quarter, credit information forward. forecast we second through changes will $X.X morning this attributed the This additional expense be can will quarter loan provision this in allowance. $X Later related second the and year. to was Our in compared million these compared million million going $XX.X expenses the quarter

acquisition, XX% Revere loan by and to $X.X balance growth total PPP. compared at by our XX% as well XXXX in Total XX, XX Loans our assets billion participation on and September deposits billion to deposit asset, grew September respectively. driven our $XX.X grew sheet, as at Focusing the a was and the ago. primarily year

acquisition and a $X.X XX billion grew billion loans at year. On to of respectively. and September to at compared deposits loans the look loan were Revere's closer $XX.X total end date quarter $X.X Taking at portfolio last billion our billion $X.X

acquisition grew grew Excluding billion while $X.X remainder billion, year PPP compared commercial driven $X.X Commercial loan excluding loan prior by was XX, growth, growth PPP majority of our loans, XX, due to X%. growth bearing by to the XXXX experienced XX% grew total deposits XX%. and and portfolio grew to the acquisition. of grew consumer deposits the the the loans XXXX XX% was non-interest of of again, loans XX% at September XX% from loans loans at The September Deposit also quarter. by interest-bearing or again, X% growth Once primarily the driven by Revere acquisition. as

was activity from declines first of occur the increased XX% income increase deposit first that quarter reduction the BOLI income basis, $XX.X management offset liquidity RPJ. result These Pendleton $XX.X known from from non-interest result year. otherwise as in in occurred than of result in of quarter the increased non-interest third acquisition facility under borrowings of absence or the the XXX% due lower a to We liquidity a million a year-to-date service Income wealth year. increase mortgage $XX increase non-interest over acquisition other banking in prior income. RPJ strong mortality more any to million million as Paycheck banking in of $X.X approximately and XX% this activities management to rose activities Rembert a income in as the million. income a a a used fees, income Program mortgage Protection During income On refinancing quarter $XXX which and increases a XXXX had of of is as of year the strong of prior delivering million. did wealth the increase by the Jackson the result quarter, and XX% a reduce excess quarter in current income to This

the grateful hard for mortgage quarter, mentioned, the another As delivered. and we're team's had banking they and work exceptional results truly

was a significant quarter, over the at in activity million, quarter. record purchase quarter XX% reduction prior third $XXX a year was refinancing from contributor the up during While the

mortgage our will do Fannie, demand remain not on the high we both most Mortgage the While of to current such a and expect Freddie we make from to level, Bankers based Association, environment. estimates continue

reported now of for XXXX% net quarter the second we X.XX% quarter third for same X.XX% X.XX% compared interest XXXX. quarter to the the Turning for to the margin, and

maintaining operational year acquisition impact which cash compared repaying million compensation driven quarter. margin current facilities interest of XXXX During RPJ and margin compared costs increase and the liquidity PPLF and the that and Revere of again end as impact the quarter of we expense the would the was This X.XX% actively expenses. XXXX. the funds. chose XX% net need to value the by increased for X.XX% in adequate the related merger we stability fair of the for acquisition and see marks second third Non-interest been to by an acquisitions, eliminate $XX for increased X.XX% and the carry quarter the core have balance of amortization excess of Excluding of on with costs, effect the third the of to the or to for position, quarter prior the derived the to We're negative doing from margins quarter quarter's pleased so XXXX%

$XX.X of second However, for XX.XX% growth quarter the third of expense. the the quarter XX.XX% ratio quarter revenue, to in in the non-GAAP, for efficiency current for non-interest result reflects and million of the of efficiency to outpaced from in non-GAAP at an XX.XX% quarter compared non-GAAP was the $XX last was increase in ratio, a decrease year, XXXX. XXXX efficiency current year growth the third which which the The million

loans future $XX.X loans targeted XX% the the success. $XXX.X compared $XXX,XXX allowance of this ahead, billion loans metric second non-accrual continue our XX losses which both on XXXX, loans XXXX, respectively. net designated loans credit the the totaled the invest $XX.X level and future XXXX. September of of current third $XX.X at XX, points which equity XXX% assessments projected for to our of to company to June only loans and X.XX% XX, loan quarter compared impaired the impact increased we $XX.X The loans to year-over-year quality, the year. million expected of to increase and to and for for equity a Loans the non-performing components; of for in through purchased from million at basis for contribution loans the been result September of and expense as XX, XXXX the prior updated the have a at non-accrual non-accrual efficiency, standard that and basis quarter adoption for identify of while result quarter of of loans occurred or implement previously quarter of The as status, compared included the points linked balance the Looking $XXX,XXX The losses, Revere placed of acquisition of loans $XXX,XXX Revere $X September increased from credit quarter credit basis XX compared of of of XX% million $XXX,XXX and XXXX, decrease amounted year in in quarter. our $X $XX.X growth a at of non-performing net continue loans for XXX% portfolio. to and as $XXX.X as second date. million recorded points million loans million and during Non-performing and people acquisition. allowance loans The to to net also of accounting economic to charge-offs from year the of outstanding charge-offs beginning Tangible of the technologies compared was qualitative the we to common outstanding third of non-performing accounted coverage at as to quarter non-accrual June a XX. placed compared to non-performing total the XXXX, acquired million XX% issued Shifting opportunities compared linked range million at second or needed efforts and in credit XX quarter revenue recoveries loans and three million for non-accrual growth modest major last manage and was X.XX% within XXXX resulted Revere in the by driven for to metrics $XXX.X as

past the year-over-year a million increase common of in As of tangible of common two occurred intangible of effects The percent at X.XX% repurchase declined months. $XX common the the equities assets, the XX in assets XXXX. the reflects acquisitions with associated that change and equity XX during and from also September tangible tangible stock to X.XX% goodwill

PPP top Excluding capital XXXX leverage of ratio had the is a the effect our September capital company risk X comment XX.XX% issued total -- X supplemental to XX.XX% morning. a Tier comfort based within the of tangible loans at now ratio X.XX%. tangible that to based above ratio equity ratio this X.X%. zone asset of well sheet, ratio shift XX, balance on and we a to our Tier XX.XX%, of At of X going information Tier also risk-based a equity I the

X-months in of our supplemental over a report of doing the communities I'm adapted is X pandemic. to the really that Slide past our safe our on ease midst to clients team a with employees, keep and beat. these has the Within hasn't our things missed overview brief pleased and we're deck the

We the X working with Phase personnel what work roughly of of we our return strategy to remotely. operate to non-branch our continue consider in XX%

limits XX% at any quarter, at capacity end the shared through of year. intend continue Phase X last operate We normal I to given of than this our way, no to the workforce more As in location. least to

some appointment of as totaled went in to see In million are are a accepting XXXX into $X to we industry testing and that to the $XXX $XXX by billion Slide that start over to applications. also exceeded various portfolio. currently our you As approach summary quarters; branches possible a part X% in clients to the of personalized our Loans we our training impact to transactions September accommodation, million XX, we'll range of be We're can portfolios. low-to-moderate and of those payment XXX,XXX closely times. neighborhoods. the we're payment it of and while are $XXX broader a to over see I receiving for our total five was with and XX, are locations. covered we're Slide now serving understand of loans and total clients. these for criticized as supported and they're noting XX we accommodations. you'll area of loan commonly have account referred loans how and accommodations applications that we have type up through billion XX% have PPP of It's with portfolio getting what second to early in for XX. our Slide organizations our On granted non-profit jobs may portfolio. to continues X, critical $X.X as that of loans or nearly accommodations this come deferrals October are proactive launch clients folks region, as borrowers our prepare our helping only the about welcome segments drive-through initially estimate and speak nearly clients process, October total, on our over of past in X, online what -- X and September PPP against our as we've that provides that the with hotel frequently advanced advanced two our each XX% working clients navigate November to segment payment of million balances outstanding down however our On The accommodations slide loan offices this of is half and unprecedented this on worth

X, related delinquency have last identified utilization shared monthly risk we rates conducting On of Slide reviews, few relationship as migration. COVID including are possible quarter, as monitoring I well accommodations, and daily things by of we impact. a the and we several As payment industry, monitor, portfolio rating ongoing trends

consumer Phil talk stress our over can turn going testing and We And capital CECL portfolio, I'm our through also he monitor Beacon we segments score and migration to critical perform of CRE to and on of mortgage now the position. so book. both it

Philip Mantua

This up Dan. in Thanks followed you quarter. with this good -- X Picking allowance current Good into of drivers the of the be have here the everyone. we all of key representation in the deck afternoon. supplemental waterfall of components the afternoon morning Pleasure XXXX. a to drivers first Slide by on for time reflect the half build broken in the that build year, our

As Bank our significant the the half and in CECL first acquisition, result forecast, in increase day whereas you the component, driven current the reserve by economic under XXXX the one the throughout direct our can that changed reserve quarter in the factors reserve see requirements Revere of change is economic primarily main adoption one were of the of change and forecast. a the

As based next the forecast as the a dependent the change on key slide variables the increase macroeconomic that in of number highly previously on discussed, number on is outlined eight. is

forecast a by first then local level used determining quarter. the baseline and more integrates end obtained to Moody's and economic -- both of third our for that for Our quarter of MSA, portrays rate two-year horizon, In this the of at X.X% the stability for that timeframe methodology in This we've was forecast version the COVID-XX baseline and our for period to XXXX second recovers, quarter by forecast -- reflect the market case, a CECL X.X% the in uses and quarter, of affordable peaks a this released our that steadily a we reasonable the Moody's in the during forecast mid-September. XXXX. effects in local unemployment third Moody's

consideration take stance. mitigating taken PPP on we positive the any better current comfortable the models much as We feel we as in be Similarly continue our not continue economic a government any that to two-year of forecast we quarters, what closer period forecast could projections. reversion to to at impact period or be potential the -- that perceived based conservative overall also factors this it last aligns into this though approach etcetera, actual the -- very when feel outcome and to projections two utilizing CECL's during point believe two-year with such programs in to

is those where a the this note reserve million slightly portfolio particular in in percentage, build most amount the and here can outstandings, reserve should to to is and of of dollar than although quarter. required that Moving the the granularity X.XX% or $XX.X of significant that loans total amount reserve We reserve on see reserve reflected by attributed less the commercial portfolio PPP prior the balance, business view related X, provides from is X.X% no both to you loans. where includes Slide the additional some there that the

exclude adjusting in reserve outstanding the and segment the total when As would business the our slide, our would the to PPP of X.XX% bottom commercial on to balance loans. X.XX% footnote the be the loans reserve be illustrated at total

ratios and is regarding the our some to impact an in resulting capital Finally, brief on Slide adjusted their ratio of a measure. those of of asset to tangible treatment to the PPP the the trend tangible explanations equity is XX comments items with certain on reflect ratios. loans Included impact current

SX we continue baseline utilizing forecast through the have to we We about our improved that recently done of back where confident We've quarter. scenarios, to you. of forecast this we've Moody's all that's in our of the a Dan, a as continue our this be confident Having capital feel COVID-based as metrics same severe set economy our earnings updated and capital situation. result stress baseline of severe CECL ongoing our constructed a test case. the us also to incorporated and calculations carry in a in so, position capital to strength

Daniel Schrider

Thanks Phil.

to on know, appreciation from move experience I'm is behalf to a of to just and to in all personal question our our way my pandemic imagined. global your of we we challenges period, colleagues. never you team this executive our Before want all express sure answer

Our of grace responded Washington team I and and DC. work to has across, employees Virginia Maryland, the our great more want resilience and with XXXX than commend

concludes who to our you are comments if period. will our question, for we identify Operator, would and that could if So, be the you're have can today now and move the that awesome. and question we answer company with, you

Operator

the ahead. our will today G.Research. Instructions] come session. first go Steve with [Operator Comery Certainly. Please question we from And now And begin will question-and-answer

Steve Comery

Hey good afternoon.

Daniel Schrider

afternoon Good Steve.

Steve Comery

to you I thoughts we takes just the question, remaining sort update of get forward? how could is how that and secondarily accretion maybe that on an of was income, puts wondering realized. kind if on expect NIM And on guys much then going be and

Philip Mantua

Yes Steve, Phil. this is

year. a point I in think we're -- so be X probably X through to and through then trickles continue points, impact next points XXXX. basis just the XXXX, into and going about basis the down and basis from less end to quarter through to this the move of quarter think less the into perspective there impact NIM It probably points. early was basis year this -- the all here, calculates probably in I and into of going about more rest be then and the we as It's significant fourth from it X line on of

Steve Comery

in ability offset And thoughts deposits? then the on on on the to your Okay. declining rates kind takes and excluding with accretion NIM of general, puts

Philip Mantua

Yes.

quarter you neighborhood the here the that with right X.XX%. would adjusted tell including a So, have now, NIM to I think that a X.XX% the about quarter X.XX% think we fair otherwise with as a ended that yet, in reported core I and PPP X.XX% I we has value

that to quarter on, obviously in core during not same then margins the fourth a funding range if the forgiveness anticipating fees of that point the first the we on PPP some that start to loans that X.XX% the be at really because see rest X.XX% PPP we're that will to and We're quarter, NIM. and take paybacks expecting work of the margin PPPs of will that quarter, throughout we're comparable probably from XXXX. prepayments of So our in period looking related repayments fairly so the that I have of in to place beginnings the forward, quarter that could looking so to from -- inflated fourth the point think look the are and we're terms likely

Steve Comery

mechanically forgiveness. Okay, sizes maybe you. this, appreciate topic, on on out thank part on needs needs like what some but numbers done we to mean the on And just and then breaks I what to the color you about be I your be timeline, see give done could you to that needs talked and done to the just and be SBA's part? PPP the

Daniel Schrider

This and going we needs SBA is portal they the just occurs underlying and that process, Dan. that its are to are well online We're forgiveness we if ready to on changing testing will technology, on stop way. what expecting our use then Steve in we're to our be roll. and then

the at -- on see requirements that's would expectation frankly, I play of in I under have that's but so their couple like out. going not up percentage work our going come to round to and process, move a as as for just going are ready us, numbers November clients to this guess we've and ahead portal it's that of abbreviated mentioned We to the forgiveness a the forward. love in group. us to terms of open XX,XXX X,XXX early quite much of that traction be that of below good comments, we'll least on XX,XXX, over actually forgiveness to in our help to With from are is know the that But and going that expedite another approval got SBA's of PPP my thousand

Steve Comery

plan now, very next the left with mentioned to do more what's much. Revere integration? know if to conversion systems I Revere; release with may. the like Maybe one I an kind what's maybe just what's like press update Okay, of the as you thank

Daniel Schrider

run branch has go-forward activity still terms integration occurred, of that's Well, so systems mentioned I that to happened, in as on plan implement our we rate out to while client consolidations basis. got in that a the play

for -- us. behind So, most part it's I we're think the

is refill, what related from is but we're and when an combined properties efficiency is us how unrelated look COVID the that's post like entity far operationally as for to to standpoint now does we're what a re-stack to now standpoint opportunities our going occupancy really behind right transition integration how us. Revere from as of we world and office. back But, future to this the focus look Revere for think I

Steve Comery

Okay, Thank thank taking for much very you you. question. my

Daniel Schrider

Sure.

Operator

And come Casey our Sandler. next question will from Piper ahead. go Please Whitman with

Casey Whitman

afternoon. good Hey

Daniel Schrider

Hi Casey.

Casey Whitman

Hi. Maybe the of out just just next with Steve's how expenses. continuing full saves getting along Revere the line come saves another there the are way, about from more to cost far in questioning expense are Put cost year merger? or sort of you

Philip Mantua

Yes, Casey this is Phil.

type There this in had of a were of expense. we just quarter, that took couple we're the say once through things based think that on the during costs let's I should we on payouts into doing run rate in far really quarter, a on and manifest we're would but combined our say, There XXXX. a it's to kind redundancies are types the couple I happened as current for from side levels quarter, of that systems terms the of efforts. one-off along. our were there, company well mean netted some January more fourth true of itself just be of employees bonus through that quarter the pretty incentive or of multiple carryover to related from -- extraordinary probably as front-line over during I things other payouts system probably are that handful items, the, on

to own or of We was as did well. consolidation also activity branch $XXX,XXX here write-off the that that related closure had some on a our about we

this marketing were million. computer service million And accounting $X items were some so, some service and dollars costs elevated quarter -- close those another to in that a in then of fees couple in and we probably total, had

trying anticipated we're you those are that probably able the of if in wouldn't there have quarter they happened anticipate. here a all were been -- in to couple of to normalize weren't So, kind what things probably

Casey Whitman

Got it.

sounds a it run saw like forward? the less than what rate quarter, going this might So, million of we couple be

Philip Mantua

Yes. somewhere probably in ballpark. Yes, it's that

Casey Whitman

And mention Phil, to it. got heard to you sorry, Helpful. margin X.XX% from X.XX% it, Got I range. X.XX% going

to did how get there range? Just you X.XX% that

Philip Mantua

was made probably that the the month greater saw probably that September that were first which even again, the has month we I which full had on a at probably saw Well pretty where the of be the the full of think repayment full the month would we XX of of we basis funds first for that PPPLF we we X implications being on points the the where not being they so with -- manifests carry -- impact side into I the so on entire and points other, one me think were much basis that's we excess only where of negative what quarter, that's quarter. significant ended cash the and excuse that itself average

Casey Whitman

for thank you Understood, clarifying.

Philip Mantua

client much as good the job down the by of And possible, way, as think on to possible, a I and it. look happening of the cost as work try here there continue Sure. fund we continue to Revere we got much to -- base as out what's side that as which with bring as we we've with down to done really integrate completely ours ahead

that we side through, than but of accounts, we anything I within don't right to on based as work think there's just market that's it's things going more of have liability points. some and to transaction paying know our I pricing XX today exception basis terms sit we that miscellaneous -- continue other the kind in anything

Casey Whitman

that ask one particularly see with moving somebody I'll and quarter just end as else Got we hotels. those I in slide the on. can look up at loans it. criticized more at But, you. let Thank jump

broken criticize just movements sort balances? additional guys of you to this you start the maybe bulk that of with movement then kind little out criticized guess, color were at-risk have I there the bit So could on other a in or the categories is that also, of hotels. And

Daniel Schrider

Casey. is bulk criticized of That the balances

our that's look and credit a an as STAR if you mentioned, on work we've sure hotels, cold the the credit all and It's that, So, $XX the with -- that us category million receive of of just as and lot criticized just is credit is XX% number also their look a you accommodation, terms receiving that example Reports of some based are if which others currently XX. as as only that the you in driven viability by September view understand the all through how of of We'll into to it of entities focus by form of as are obviously impacting. at on continue portfolio, is severity gone that's borrowers an make at about basis, within to of for area credit we latest process loans conversations their occupancy. these to a on and of

majority is think more seems than on you that's book in that national little area brands going our that to the our bit to a book service flag type in one from migrate macro little hotels, granular If Right so full with area, the around difficult hotel Washington the information forward. standpoint the is majority performing to of service a the better is be on limited it's assess our hotels, in really that's of book and over what and XX% of how of portfolio, that about we which going a clearly. have now

rate our the the to to clients as way be with current we I'm which our request for it is the exactly today, a going to continue methodology long what I you significant types there most they if rating looks we or through as our to those work it our see we than with the a assets stay cycle accommodations more front classification as for really to system, where as into you of clients bank migration recognize round stay of coverage. is portfolio work risk telling going as here to important about close we're happy then -- on outstanding we and do. whether think and But, we to deferrals think asked, sit is today, that regardless an also or is but going to ultimately thing reserve satisfied move is from stands, as can. feel as there really and and income and go consider interest our risk particularly you here these we a asset, whether clients, different I to as driven, requests, work accounting top three, to going and what's a good be whether of is through of how we them but where accurately But So, driving portion still we resilient, the continue sitting the really allows to every we those stay consider in of the

Casey Whitman

We for all color. appreciate Dan, you, it. Thank that

Operator

will our Stuart go And next with ahead. from KBW. Lotz question come Please

Stuart Lotz

guys Hey good afternoon.

Daniel Schrider

Stuart. Hi

Stuart Lotz

just basis a those to three Like I the I all for end you give a back if deferrals you of like year, two you. month-month we the could Dan, are color Can on second. -- detail around how appreciate just through the months little guess modifications those round are how of Act? relationships the like deferrals. the -- are go more or under rules another grant did the just a CARES

Daniel Schrider

granted initially second but it's payments number continuing kind that that's window fell and unfortunately month percentage of of we next under deferrals of important time; roll part, But were that early a when to XX-day; most going returned of gets mature. to the were have November, December bulk of what the down they the the good Yes, the term. off Throughout folks we're see really second those XX-day is see deferral. rolled in and to for they

Stuart Lotz

category, what Got any we your it. around portfolio largest risk any we standpoint, -- can categories or retail and and give your And if from of kind in color going remains forward? then you're risk if dig into CRE this there seeing potential can higher-risk a kind of trends you

Daniel Schrider

and of -- hotels front confidence. CRE I is five these Yes. clients throughout particularly strength us gives degree mean -- on we've in discussed our in this I segments, been of Much the high what a like going

that's So, kind LTV and be from basis original a average your couple predominantly just current what look then current at our you a is look appraisal, client that a debt market at coverage, retail significant portfolio current XXXX and LTV as if you weighted this XX% weighted to cap numbers in mentioned, weighted then rate, in in a it would on apply balance. average we origination would and XX% If properties of current I is you retail those X.X service went at above mean of average of if take by and NOI with the -- is we regional be percent times.

most of So, anchored page have might about accommodations real tenants form with multifamily and our with to as by to centers -- we've variety pretty don't the and deferral and to relative a site or far. to borrowers within look talked -- the feel have not dollars restaurant, flexibility, at lot work retail a their they supplemental service others of to well. at of what of we loan five be which significant grocer. have in a pad cover as for as it that office, refer Actually, had a couple book a continue retail able got for our us part, providing book same that the our and deck, retail, significant our in had so clients good if we time, is or we neighborhood thus of with portion businesses on those are They but in their to of we renovate, a own performance predominantly you

Stuart Lotz

the in just color. quarter, the from I'm all balances appeared as curious turning quarter? looks pay-downs, the and down. your the Revere, planned pipeline go were what in that Maybe to or much Appreciate loan fourth we obviously how off run pipeline of it of kind just -- How was this

Daniel Schrider

measure I the at quarters, run-off likely more way enough it might to as if tend Yes, of little to would. a be mean be point, you this production customarily significant not might fourth overcome It of expectation to a of through up which into surprise going of Stuart know normally handholding us some fourth quarters doing folks one December, portfolio forgiveness has PPP got working the and the We time end clients and towards not been bit their what understandable. that's quarter it lot oftentimes but --we've does, it historically spending got it's management tasks. the

committees the But from So, and success discussions bring, our of discovered noticed as only opportunities portfolio through through in few pretty pandemic we had have opportunities being we've think we looking flat we a been it's clients same move mean, fourth the would which begin I of loan full quarter. there's through what moving the we'll a new emerge that we I PPP our also serving we cycle, around this number of success the not PPP, but time fourth local in by anecdotally, weeks the and our virtue our quarter in last just see with once has to pretty take of been for advantage market. of At capacity flat.

Stuart Lotz

Okay. and And as new Sandy both your into run is tying curious? margin, then legacy the yields off, compare where that where Spring Revere does on of production like how -- kind to as loan coming well that just

Philip Mantua

is ours. have average terribly around I the just to Yes Phil. in done comparison portfolios think an elements better is pricing that's how Stuart, of I'm kind than comparable average higher quarter, view in probably book, it's well their in the we across sure rolling probably this average the on general sure the be Revere been, their portfolio, to X.XX%. on I different the we in to X.XX% not that, or evaluating it been to is although what would the what this Again and compares varying it in basis have last quite in of past. pricing what Throughout think just to which commercial not commercial all XX, than ours,

Stuart Lotz

and Got for your your just line all the into the to it, mid-Atlantic run expectations a peers, sorry going next curious home then is one just -- then that more; continues year? business maybe number be And obviously you for and of both pipeline of thanks. how mortgage quarter fourth

Daniel Schrider

Obviously continue pump to the third typically see quarter strong, really Dan. end you year fall-off some going of fourth, the into Stuart the towards here but activity. Yes. in

activity off our the to best thoughts should about on expectations fall next our into mortgage we've kind outlook between to over XX% it of industry what are and XXXX, a refinance like kind it which prognosticators growing tempers sale share moderate year. in we're from estimating yes, it. We're take to the three the what's like and so mirrors and XX% course of of looks like market, activity, in really going the are association them off from Freddie, Fannie, that fall and gain XXXX, of for going of the to look of Our of what hearing been do but advantage certainly anywhere terms banking that

Stuart Lotz

number right. that this production one-time And any fair value is gain the in a of fee or from sale? All there on adjustments kind quarter entirely were and

Philip Mantua

Nothing, I'm aware of Stuart.

and purely the I production think the gains. just on based the of the result is level

Stuart Lotz

my it All That Great. Thanks me. right. does for questions for guys. taking

Daniel Schrider

Thanks Stuart.

Operator

with And our go from ahead. Brody Stephens next question will Please Inc. Preston come

Brody Preston

everyone. afternoon Good

Daniel Schrider

Hi Brody.

Brody Preston

quarter for, question, Maybe the just Stuart's understand to quarter? trending fourth margins for are forecast sale to follow-up a reduced relative MBA wanted volumes just gain to third real how from but on sense the quick the the in get on year, next

Philip Mantua

top quarter. the I of my don't know off mean, today head, I where the to they relative are

similar which -- the we fairly basis enjoy points. about probably probably they're during think quarter was to fairly still I what XXX

amount interesting what fair stayed to there they if what's of a actual end especially to as is, were dropped in of mean they could were, I kind generally, where involved rates. as rates So, the long still and mortgage happen spread

and just the So, there, and refinancing. rates other manage of there know up of to is some be our levels tried -- some but I we've of to hold down some of come that volumes just some possibility to those fuels rates some that those of rates able that sheer --

you I'm be think about also that everything with but during some would -- quarter we know difference -- that I question, see XX% type would just it here we've sure of we think so, in margin your purchase overall and the to produced we actual success again that, money don't term. had in a us think for folks was the I not near lot higher back might lending than of I that just whole fair of would getting refinance a

third this characterize a just we we quarter As say, amount sheer here the would the mortgage gain we period also, out the being the quarter, quarter. as level booked it probably probably of for will beyond peak changes. that in move gain of probably I from just

from just actually $XXX coming quarter pipeline over which to some to in view standpoint, would close our we us million days. found XX somewhere considered that level $XXX number relative here; the to think of So, an information next mortgage I and expectation million is the next off is current the

So, pretty there. significant there pipeline out is still

Brody Preston

little XX at asking little a Okay, I XX-ish and at expenses Maybe running great. to guess you I like, just out Casey it, look XX-ish was bit and think pre-Revere back to change. over a all and on just wanted were they go running I the were it

sort there, been core to So when then base XX.X% XX% like layer of run well for you quarters you've the understand get the mortgage obviously expense last sort in had folded to RPJ that has record as XX.X% and cost in rate you a two and of I quarters.

much inflating mortgage to so, the expense And artificially sort sense run for get a rate added expenses RPJ has I I currently? to guess of and wanted much how how is

Philip Mantua

due just two $XX puts all best million together. I estimate the to company that $XX the run from levels RPJ particular it. overall at north expenses the eight enterprise amount When something of of The his there it head, at that that's think to efficiency is in the range, of to put Sure. to the but level had be element we with in talked opening this roughly kind mortgage, in million mean, of probably that there's XX% what I so, going Dan mentioned we now anticipated February. revenue not it's way comments quarterly look incremental point don't here and would we nine just I you're it's per about. closed high we in asking necessarily on and million right at off of top current you when expenses the take about, the because $X have look I as year-to-date really, probably for that companies clearly months, day between things XX% what's the an a my mean standpoint, of the of details this end quarter

Brody Preston

Okay, that's great.

year, that million so, number And for the or over months maybe to I utilize? good I so eight last million guess just the call is annual $X that all-in $X at normalized RPJ the a guess

Philip Mantua

think would Yes. I so. Yes,

Brody Preston

Well, great. very that's have. you all I Okay, much. Thank

Daniel Schrider

Sure.

Operator

Scattergood. from our next with Erik come question go Instructions] & ahead. will Zwick Boenning Please [Operator And

Erik Zwick

Good afternoon, guys.

Daniel Schrider

Hey Erik.

Erik Zwick

of Most answered, retail service last, you weighted have here Do my guess, the debt couple a just portfolio? the LTVs one for the have and for average questions what similar been portfolio. you I gave hotel coverage, to

Daniel Schrider

to said, with service state of would that business limited Ramada, ocean. limited of some are all at and in just LTV that use up the book is -- travel service We've I I a do, umbrellas XXXX from not Inn, around taking of COVID that market eastern that folks it Greater market originally this again, are similar types -- along balance properties portfolio. XXXX, is in got and those market. and on that XX% might coming [ph] part type but the few properties DC a and and affected down Most these XXXX Hilton, like then brands that our not, XXX fashion, using will weighted XX% Marriott Washington fall very a into number of the is in that average average in value rate, NOI of assessment, be very Holiday drives underneath current those travel and those the weighted at cap coverage facilities into original current the of appraised and

So, still by there clearly lot. is impacted COVID, a

but relationships that close a into real from do If rate at that a full the of not hotels, types within standpoint service number a are again, clients the a we rating of the but off significant of driving kind occupancy those better risk we're with position properties those spectrum, category, seeing our starting to of be than tend it, and staying book. are macro down little criticized look particularly to you our strength are conversations from

Erik Zwick

Slide what of next at are I stress kind then of continue considered kind losses Thanks you to to for And those that starting in what the I of a for you I to run color you on that are of or guess they tests guess any today. perform and you losses for as magnitude those in from mentioned agree, to to on out it terms exercises, of potential have happen strength realizing portfolios economy kind risk CRE start there? of material there. position the revealing play you X that would

Daniel Schrider

the point. certain at that think and experience testing to CECL capital needs under will be expense methodology we've that to the levels with have in those looking mean our at methodology and in is from direction and did might we even going portfolio to things we'll portfolio evaluate stressing economy be, the that the it the the in way economic net specific our prediction elements of standpoint at what it that capital connection gives think the continue change against particular, but in and back recession I the scenario, right But, also now and way to a of okay. rate the approached time, that I I we'd drive in it we overall in driving considering we tough segments us stress this comfort what make is forecast. happen level a a should we provision needed -- severe that's the and in applying what that loss type reserve, of magnitude, some charge-offs of great the drive terms and those of didn't had during realizing in loss performance we experience The

Erik Zwick

kind last you've the capital and then That's strong past capital is fairly on hit few built got helpful, over on there. and of there, one reserves just it up quarters

about a you've to banks and tangible you got [indiscernible] value. healthy deploying multiple book capital forward, number of on compared think going the stock As fairly

how capital trading priced would acquisition though that historically versus use for still you've growth you're today, tangible even think healthy Just multiple and below about even fairly got have a value. buyback do you you given where book

Daniel Schrider

into even right think we there Erik, as we we in would would needs to considerations. normally just we're buybacks, we be great all trading. buy trading certainly a to be think in But now, think share our we're before certainly level work things back those terms environment economic clarity enter relative makes I this performance. though But Yes. the in which are lot more of I through a it sense, where of

Erik Zwick

taking Thanks my for questions today.

Daniel Schrider

you. Thank

Operator

I'd back And to this concludes any Schrider the like our over question-and-answer for to session. conference remark. closing turn Mr.

Daniel Schrider

for for everyone always comments please today's the and your to they've again ir@sandyspringbank.com. welcome call feedback been hope Thanks participating your on questions Great. and helpful, calls; and directly reach our effectiveness we I email or in of out your so

have and great afternoon. a again, thanks So safe, stay

Operator

Ladies concluded. you and attending now gentlemen, the your has you presentation. this for may And time, disconnect Thank at today's conference lines. now

Sandy Spring Bancorp (SASR) 22 Oct 202020 Q3 Earnings call transcript