First Midwest Bancorp (ONBPP) 22 Jul 202020 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the First Midwest Bancorp 2020 Second Quarter Earnings Conference Call.

Following the close of the market yesterday, the Company released its earnings results for the second quarter 2020, and also issued presentation material that will be referred to during the call today.

During the course of the discussion today, management's comments and the presentation materials may include forward-looking statements and non-GAAP financial information. The Company refers you to the forward-looking statement, non-GAAP and other legends included in this earnings release and presentation materials, which should be considered for the call today. This call is being recorded. in mode. are participants all a listen-only And

Financial Following Executive over Mr. Chief Officer; by questions Mike and and Operating opened analysts Scudder. will and now Chief Scudder, Chairman turn Chief President Mark Vice I and answers Barrett, the the for to Pat call be presentation Officer; Executive Officer, only. Sander, will for President and call the

for this joining with it Thank everyone us prudently performance It's for equally the reflects Great. that everyone. of which times, as also certainly took you. quarter and doing be and balance to hope fortify conclude morning, initiated obvious we the quarter the great healthy. reflects conversion lot Park But the magnitude families the you. underlying your time, governmental Thanks I actions were staying of Obviously go as successfully finds sheet, response. as the Good and to Bank, is and through going the enormity today. simply well well well. for and a this same at occurred on, the

of So, let company recap more was start financial turn of detailed this for our our performance, in my the again, before once strength Pat the some character coverage and it the to Mark broader core at and and I performance say with of me and quarter, team. displayed judgment of

was expenses, the retention and has scenario, impact has aggregate, actually -- beyond been build as dealing $X.XX recorded below to team of conversions times. time. $X.XX Mark over last the about highlight a frankly, and each relatively relative concluded client finished onboarding $XX really clients solid build our quarters the for display generated the our quarter. been performance well quarter. and PPP an second here the outstanding, other we quarter. This with of reserves quarter, environment. and performance contrasted team been up absolutely system to $X Park million was from the of stable per to just and to was I the to perspective, the our systems Bank great quarter. facilitate during The industry slightly share, the course The We proud pulled to together aggregate, unforeseen has concluded would of Also that's and then All has slightly and our impact this itself. loan our increased and the thought of we from has communities related Obviously, time, expand very a of would though, fact share drive EPS we in We away I'm acquisition of reserves credit the on we for quarter. that second will economic the the And in per following on I $X.XX to conversions to severe dissimilar or In and been of our entire the for From that in the of these which, amazing more utilization level the and major integration very, how the This last quarter. the $X.XX and that was training loans. million elected expectation, quarter, our share of Not levels per we're this, the we other too for $X.XX, our of by change saw did be conversion. $X.XX any last story down X.X% success last a virtual onboarding. between in help

of negative fee following accommodations, crisis. costs, and colleague specific singular $X.XX impact impact the We incentives pandemic-related or also had net to

quarter. third lapsed with subsequently in the was of All as return work which our to

that impact over for $X.X and added the of we that that preferred stayed rate loans I the per in provided the X which full for majority had the full was second will in the million be which a about of of quarter. then guess billion X,XXX capital up impact run that the then, dividends quarter. obviously saw quarter. The of lending Finally, well some accrued impact as $X.XX to of proceeds we PPP about yielded the sheet, of balance And funding on the X.X%, share our stock, that to course took opportunistically in we XX.X%. The grossing Tier the $XXX quarter, And assets X.XX% as additionally, during was clients.

quarter Our great really the From here did again, in impact the rates. and interest demand, Net a and from of story in of of environment. that up. drop the revenues drop the interest pandemic of rapid realities full stood income the falloff the the quarter, really and rates a reflected million in the on of perspective, the type was relatively board teams that job and stable, dual was the impact resulting $XXX across business

spreads, which and last we as of good talked managed rates the seeing lower Legacy loans were quarter. deposits, away relatively production. we for progress in adjusting adapting about seasonal not interest well Importantly, stable. is impact as made lending from credit Corporate draws PPP index deposits,

mind alluded in simply decreased of quarter. Net of identified in my at previously points obviously full income of impact Park to of bought recover to XX would credit largely basis obviously then about of the and X CECL. charge-offs requirements was to adoption well then to as expense end given improve, was follows million points drop-off to the improved in down non-interest and integration first that and $XXX of increased the as a last We actually discounted Non-interest And came in simple was assets, loans, the of earlier, those we charge-offs relative there basis stable incentives said where some but reopening related quarter we price. of I the impact due occupancy and at I the transactional from to unfolds. As acquisition higher slightly and to in were second as represents expenses. away the expect loans, largely NPAs pandemic response. to slightly from costs, quarter And performance problem as PCD pretty delinquencies volumes. that's which XX% reflective the

So and with that, me color let turn over Pat through they additional to materials. the walk for presentation remainder it can Mark of Mark? and the

everyone. good and Mike, morning, Thanks,

Now was looking at story course this X quarter. the of loans PPP our Slide presentation, past of main on

assets these contrast loan a disrupted billion of $XXX,XXX. the To our sheet organic fee fell the coming down. quarter, small And XX% off in our million in received other This increasing utilization see Approximately over a activity as while program loans in was allowed mortgage hand up to additional with As both about outstandings $XXX and strong more very mentioned, market the intended less us $X.X X,XXX in economy Mike very loans million skewed Consumer the mid-size effort broadly funded of of generate business production quarterly we worked the higher, money the to than balance and but this indicating seasonal amount the be and QX, clients. increase Record of also grow pipelines closed loans the spent this revolvers usual vast metrics, X,XXX to clients and as on a forgiven on QX. quarter, production line over we very next program under under three were from over majority well. commercial team. us first $XXX we to of immediately is expect mortgage sold quarters. of PPP, course, strength Away in earning credit the revenue. the to and these

businesses and firmed As guidance all up a given down X% loans but evolving the has our to up to excluding this acquisitions it's offer these growth just the the as results environment three and loan in PPP, necessary factors, the over They'll slightly this way we landscape, quarters. total still result somewhat of early at quarter. away solid are of adapting point. last in too were think The prior from much month again, year-over-year,

losses, break Early our potential we Slide we were the total sense significantly the on in X% these help higher represent portfolio. We should both risk, really current right, feel of here list impacted ultimate X, these corporate in but list view exposure. aggressive very detailed down that mitigants give will sectors as our our that the original minimize to we to diversity, underwriting away its the these portfolio believe help just on, as challenges. in all the we the the They're pandemic higher segments. segments Turning risk as well inherently And we of our from of a never sectors. pandemic-related

segments that conservative, times inherently attracted strong purposefully We diversification original again, our pie granularity we overall note I underwriting in and would of of the our the For strongly and expanded Again, temper and was exposures corporate left, attention this highlighted segments. also other all to our risk. chart and/or greater the some helps broad that in these and that portfolio. segments the these greater just riskier believe, transparency have

increased some mitigated. identified risks being feel certainly are the confident and So we while well that are these stress expect to properly in see of we areas,

than high unsecured the had The risk Turning our of X% the to and Credit this highlight consumer total FICO relative on book. consumer X, X. with on represents underwriting with comfort beginning Slide behind segment parameters elements, in Slide some the of well. performance less portfolio was credit We scores quarter also as expectations. our line in loan historical highest in installment,

collective line stable metrics, from PPP charge-offs improved response points away in largely of all out, QX. And with also of NPAs slightly. a or Mike fell improved to and credit PCD our from charge-offs. Given basis pointed XX loans the were pandemic, as Net

to detailed up outlook non-PCD on of we potential to PPP for build risk chose in our allowance impact million equation, brought the quarter's of price again Replenishing views the quarter. Not stable. are the shown in to will reserves the provision the acquired provision of NPA and given to I but allowance total COVID-XX. $XX metrics multiple line profile loans the absorb. this and of risk to economic for rated total X, the here, Taking PPP NPAs forecasts the year, our move should charge-offs next reserves displays Said review, at workout another However, and QX, slide adversely this loans end. loans. our stable our to not and normal with anticipate of of very allowance estimated purchase intend we X.X%. including portfolio reserves our that of a at to PCD Based QX given consistently our out robust existing acquired a also performance million incorporate charge-off our raises impact loans remainder X.XX% in greater allocated Slide reported the note way, requirements. PCD but to migration, level that loans $XX over price levels the added for also and as we we that and

to Our year unchanged from that XX the any Frankly, pass day, economic outlook the migration, March normalized categories returned XX we skewed early expect rating performing are too risk XX. after efforts. metrics All relatively day subsequent events to some of grow and these adverse at absent them higher though, onetime relief dues call levels, given simply the to it's further in some a certainly ago. periods,

a deposits Slide as tax average requirements. on increase delay liquidity Act filing In of of due was on in due by $XXX in the also commercial CARES PPP, estimate provided stimulus skewed million to and this added consumer that $XXX X, the similar million to program the to average, deposits the about because deposits program. rose Turning most vein, were we

time funds. We of year this in also seasonal public saw our normal bill

are we total, very in So liquid.

a cut cost from $XX and more points. aggressive As in discussion will importantly, our Pat? pricing. billion call. now certainly we in last on of basis are We QX, this, deposit to our half competitive a but broadly. the little guided cost pick deposits base a liquidity substantially we result, expected Pat as ago XX that quarter average up remain Reflecting to not in too deposit lowered

on morning good the to And from Mark. me Thanks, call. everyone

Mark's deposits. on remark Turning following to and on Slide with trailing XX, just

Our source long-term liquidity. of $XX stable billion our granular deposit base and is primary

to is capacity borrowings. part we $X capacity and our internal increased highlighted borrowings providing limits clients, Note brokered that communities. have that Additionally, those for of billion capacity basket additional colleagues This against types CDs. as is through ample over in for merely policy funding sources of funding support

Excluding brokered loan significantly approximate remains than CDs, total our funding higher billion. which $X unfunded capacity commitments, our

to lower impact dramatically was full Turning down compared the of on offset XXXX. in million the to income by net periods X%, the the same of and interest and The on quarter origination margin interest PPP Slide X% acquisition, Net $X interest income or both of rates, and $X period lower XX. compared fees of decrease amortization quarter million compared Park prior increased to to loans, cost a impact prior reflected and the funds. in

In acquisition in loans Acquired prior in a year, the basis Accretion was securities with tax the favorable ago. loans. offset to of was slide for million equivalent the quarter, from of $X NIM XX $X down down and XXXX, Continuing year interest accretion second lower the quarter resolution of same to and year. nearly current than with contributed quarter period acquired compared prior was on rates. to points addition, basis growth prior and the certain compared same due the XX margin, to higher consistent scheduled quarter Bridgeview the of linked and points the impact X.XX% by the quarter, net the million loan

higher sensitivity. for quarter, lower margin yielding of yields, reflected to of contributed compression liquid earning XX lower points accretion, in margin and well quarter took down was from quarter compared asset year PPP the to partly the rate on lower primarily were prior we reduce loans, XX basis of securities offset by compression loan points dramatically balances both stimulus Excluding from the funds. these as municipal and driven deposits, rates cost was compression, PPP Compared X.XX% reflecting also the by deposits to increase to prior periods, seasonal as The origination linked fundings linked loan prior also basis impact year. margin and the actions actions,

for for increases forgiveness benefit outlook loan fourth for expected the which for results is around reduction the a as accretion million approximately to of provision. $X is the and year, year, CECL, as growth $XX being NII the increases. in million impact for from million PPP earning the approximately modest near-term quarter is reflected impact the last this Note down decreases of modest the loan year. half both in nearly quarter, or Our excluding NIM remaining of in potential per adjusting XX% with continued third after be of in asset of accretion quarter, The loss the stabilization $X

as fees swap customer XX, in severely impacted economic we non-interest activity, to income Slide on by Turning income part non-interest income NSF fell decline and volumes. as broadly were expected the activity

helped in but line, programs throughout Our new total quarter led multiple the the return contributed in to and to see strong to levels a as sectors to trends rather solid not see hopefully, wealth activity improving as results year. second we'll do the as We of fee bulk lack of treasury drove across well, growth relief base decrease and of economy management the quarter normalized management expect income. the conditions but the the a second-half stabilize stabilizes, decline. mortgage, Market very and historically

partly ago. anticipated the current quarter acquisition. to compared that quarter offset elevated and note year by XX, Slide Park benefits. expenses staff remediation single the largely X% to commissions, expenses, on quarter with periods prior includes up on a and and a larger items, were acquisition evaluation The from by combined cost the driven both foreclosed was $X asset, integration-related mortgage total base these operating expenses, linked XX% our by workout expenses with and associated compared onto acquisitions, employee to and increase same adjustment higher lower driven pandemic-related costs Moving cost Away million due in

to services professional contributed related prior process continuing and technology increases. In in investments addition, to both higher period enhancements

to assets loans up focused rate, efficiency our our X.XX%, as X% ratio down on expenses annualized X% We while picked PPP and quarter year. of declines, overall the from due prior expense percentage from from prior has a away continue the be average revenue run to and down was

our quarter, to pandemic-related outlook we rate levels and for from before modestly expense lower tick note slide, rate the guidance, quarter QX. the approximately that our quarter the will leave costs, to that taxes to hopefully to integration expect consistent down third Last for similar year. and is likely costs XX% effective second with Our returning on was throughout acquisition run excluding I due continue the tax

Slide and on stock, of added both X about preferred we capital. capital XXX to $XXX XX, the to million Tier basis points Moving during quarter issued total

solid if addition needed. In to are ongoing absorption loss to credit reserves capacity capital and generation strong levels excess earnings, capital and robust levels in our well-capitalized providing of

results $X.XX that I outlook XX. the our on and this it included for per action. XX. consistent dividend on During to quarter practice, convenience pandemic, the emphasize of the with the We've summary of behaviors our a future to would remarks. limited, quarter. summarized impact over results XXXX consistent turn are With a dependent we've quarter the is back our very persistence for on customer prior Mike, of the our Slide shareholders stimulus quarter, impact financial for And final Slide government paid with outlook I'll share also that, as of and usual for the commentary we on

Pat. Thanks

open just Here, a still on murky out up the for remarks we the there. pretty summary further questions, to as few Pat outlook. it in before alluded It's

no absolutely a this the of can matter, in type who practical As environment. one there's future predict

be fully to how And equally been simply encouraging, and pandemic has still going it severe take unclear it as it's the mixed pretty plays data play form will recent long unclear and to to is pretty stimulus While effective government what it's is and how how out. as out. going

answers to quality. asset and demand those obviously, shape going So are

there, talking can we normal a in credit still And the outlooks well as through continuing a a what like, firm. is the base, look quarter, team you're of company. this about importantly, we're call, that. the and on in I and who At We've just necessary advance execute world capital impact of move and reserve read us economic of better nature generating the to more on get uncertainty same time, of We've talented to most got a to obviously business. were environment well-positioned and are but the expect a strong the dealing and the the a colleagues with build working we've steps to this critical taken the we as franchise we Mark return and gives the and we flexibility. to As engaged blocking amount of what third that, as where continue do of is tackling a and which about and we're to what robust success out long-term tremendous very what extremely think very got these markets of to the

focus of the on risk about our more obviously, a to goal our and on control with alluded we opportunities capabilities, have to our to our time, recognizing pause environment our to going management. our performance. and operating our to continuing diversification our to our to an clients part, needs digital infrastructure financial safety talent and At toward systems. our eye our explore our the continuing All our also the continue our is and overall leverage he of client of efficiently. portfolios So teams, remain evolving risk the we're And priorities. and our Mark And same particularly this, That's investments, in focus on degree as of going business cost ongoing the colleagues. talked

third last infrastructure year-over-year that and us investments control. Particularly from spend making in I feel itself our technology about over there, our little in year. the as said, is up makes our good a Our a capabilities we're digital by and about

opportunity to environment in incentive the these greater that, So, really move initiatives. forward change to mind, doesn't but on continue both provides and my certainly XXXXs it

my would that that, with conclude So remarks.

your it open questions. up Let's for

And Young SunTrust. from question. the Please [Operator first Michael Instructions] question with state your comes

good everyone. to wanted Hey, with Mark. morning, I start off

of? to what you comments be And and there little you about give that TDRs maybe something credits categories thinking expect Could a loan created Your that? adversely potentially to else higher drive moving the or that modifications due we is should more on, the over medium-term. detail maybe just

even with quarter. it's little of the the what review think a a the risk portfolio more we Michael. segments. bit moderate course view dive It's we did of of everything, started We over the and highest and segments I deeper risk certainly second as level

for our And so of recovery. back. all a of but slow bounce not the And quick a an that. it's certainly view combination We're looking uncertain,

as segments impact So backdrop, risk risks I certain those inherently there again, my in Page or additional highlighted are have some and in are chart here. we've against pie that -- elements. the are, also on X, There's that, remarks certain said that

And risk trying out financial statements point view kind risk that a migration. of of project a of this at to migration this without so, indicate would

if So, that your answers I question. know don't

you'd think I'd be a or segment two, to. in talk there's I like about to happy specific,

Yes.

risk? to be what it'd what just in get and just But expect? it's making you're a modifications areas? diverse these I an managing be going think, helpful little idea know helpful to across be And understand some of of of we borrower of you're I should category. kind more just sort will detail the how to

We certainly accommodation to all the programs. impact in the client of layer try

So there, give I quick summary let a me guess.

by loan million than round XX.X% of Commercial less in deferrals, commercial which and our month, X% in less terms first deferrals round were of $XXX each consumer. segment, ended one, last our so consumer segment about we books. book of so in that within billion than the $X.X X% had In

round few over last two begun has Now weeks. the just

given two. early lower the consumer that it's view, a little regularly our been certainly in the likely So we to to over in a quarter. conclusion. think round to fact too have is have talking strong a come firm we've But clients We

asks it, think new in Commercial, expect there need dramatically two. while Some to for have well X% a as maybe for we two. one in in be round under And people we'll fall ask it round round that you'll didn't it. we few

one. than as we've half talked had around be those we we will and to less clients, in round think than As two

priorities looking the As And for X, strongly other very as clients they're as is this up, Slide frankly, the Relative so. people at PPP -- other you PPP deferrals things. look there PPP. have list to instance, Franchises, loan or certainly for right. on clarity. open used than greater XX%

used Some it than other their than the different around of industries personnel because decisions more were those XX%, other.

users as as that well, again, clear around the again, all and programs, segments numbers pie outlook these what the to into that kind for that we think that's of hard them active client -- about we who's an all It's of yet. as It's used migration So factor in uncertain in accommodation is chart what time. put the there's coming. some

see in do all additional captured may in credit, of cetera? going already feel graded you for that think loan I build maybe to we of even on that forward, Pat, increases as And ex-PPP like forward? what there's about of we credit strong going Understood. the that just pretty kind the just could X.X% loss we've relative But Do expectations move your you reserve peers. et are necessary Or that's given think you some level, reserve? talk to adversely kind be

well at frankly. by point, very suggest that's second building. Michael, probably need last two-thirds $XX,XXX on of about modeling, everybody, quarter, based quarter quite we've which loan, up, commercial review, based we question loan over at We're that on the continue as the loan and our book. to for And bottoms evidence not a this comprehensive of the as customer end would customer total probably covers done that our by seeing the

bill because environmental deteriorating just reserve further be would that of would anything suggest factors. So,

suggest will nicely. biggest if loan driver. actually and deferrals just any you would pretty impacts fourth need took I further our recover the don't CECL build. think outlook, models being and That first in Interestingly, models, we And the PPP seen I that we've resumed quarter, excluded unemployment subside. and when think third economic and our reserve quarter that the

depending would those in, If on continued keep further you build. recovery, you reserve suggest quarters assume it on what the

of without the kind this just said, I'll not quality any happen split seeing it, the two typically very Mark what's at into just if reflecting in deterioration. migration the measures those a about that's economy. much we're as of quarter to reiterate going some the reflect between difference build uncertainty And you in was that reserve asset all Our too essentially far specific would sort look evidenced But going outlooks of sector. our

being board. we're So across cautious the

I'll back. Okay. Thanks. step

from next state Terry Please Our your Stephens. will question. with question come McEvoy

and Good were morning, were running then first third in fourth quarter it And outlook expect the on expenses slides, through everyone. Question slide, for Pat. quarter come your When you the levels. hopefully on to down. to down the says, official comments come

So that above level still Is of year? of is operating expense costs quarter there getting you kind were kind what COVID-related of that possibility at? first a keep this the line the

our used probably But this we because in will pandemic-related are which guidance year. not to still to resume last reoccur estimate. our that's the best I if the I suggest to precision those or of of it the would rapidly proxy our quarter or No, quarter and have otherwise near, less best estimates, at quarter think third persist. expenses should expect back than around for I be, word the same both at And for places. the levels, that of was would a uncertainty is end level trying outlook going as and reliable annualized subside around our how fourth costs QX and was

quarter. then And moving you outlook see improvement? and looking what's line? kind the big capital Okay. which dip I guess markets, that And Thank expect there? fee about parts. moving some And third you here, just think up slide the of of to took in there's specifically the then on you. it, income. non-interest improvement just get Normalized I lot to down do And of areas, at it's major pretty as where a a fourth modest that levels But and to the growth what happened

Sure. you to Terry, Pat, me take that? do want thanks.

put line, which that's low that's last your and certainly it, we've us as would CRE that I'll markets, is in swaps all as for capital those seen largely low I again what expect in as to category capital mean, activity So drove as for we QX, was markets. of well. based production

all almost what the any I relief And liquidity the has a in stretch, we reasons don't to prior frankly you'll us two X.X% And the it record build decreases I quarter, the two from are from and get card expect think go, think us in two quarters X.X% see all I nowhere So big our but overdraft, the in of candidly quarters, knows you'll of come here we the again, around that production. here. activity. that also think everyone frankly, back for took programs. see lack terms and in by did had and to we up but out the

all So, activity areas importantly presumably, those areas. in come down programs in those are is factors. of some but ending more we relief will our expect returning of Liquidity and those largely eventually,

incremental in grow of management recover should here. we to Mike we build can So still that We from low normalized this environment, basis, long-term like QX. continue we grow in in on the And that a solid a think alluded management and treasury have that think other to off see ones will and will wealth businesses environment. those

both for insight. appreciate you the I Thank it.

from comes Race Sandler. Piper next The with Nathan question ahead. Please go

Good guys. Hi thanks. Yes, morning.

that out perhaps of the within to I alluded earlier of this factors some you much just the versus just that downgrades how if in CECL qualitative back portfolio? reserve function increase maybe to of curious maybe kind can factors the to was you I'm a contributed just guys just provision the going Pat, model of hoping the reserve quarter. the Just parse was discussion,

to one, Mike? that You take want me

Pat. Go please. Yes, ahead,

rating The specific stable. incremental would say build Okay. very model entirely migrations credit have that our inputs Yes. was I that rating driven. two-factor and risk on we was the

was incremental depending the word external timing in the depth us And this really very much factors zero that anywhere outcomes. last and the assumption models question it to our So, $XX persistence well on didn't recession reserve build. I on magnitude as changes of recession from of drove million range recovery, telling answering versus were of and environmental probably or of

as around on the that is exactly reflects we progress to so to just judgmentally year. what the us those going And with uncertainty went midpoint bring environment we the through economic our

alluded to I you credit commercial now. deferrals. XX% went round to Mark believe alluded on through Okay, second, And the first of got think line going for And you're right a you to of then it. second just staying book I the

additional So I guys what commercial of and the XX% amount you that guess not may granted past that XX format? [indiscernible] period need any loans, sense support that of day

It as yes. have to half round in it. that you it'll in percent period. knows And of I say we've the happening them what's significantly XX% said best they needed in talked some deferral clients two, want could to deferrals in of in than think in than still some have we adapted be what than paid our ask needs XX% loan And that's the it'll way, so round a franchises deferral of as is and about have ask was, one, it in less do, two. Nate, in be And folks to talked be less adjusted, one my some are round be greater XX% Sure people things there as that along people example. remarks, that to half But they the clarity. of were they've XX% loan other back, who XX%-ish then it opened round to over for I all for priorities a round one. I They as who get think the so loan

round they’ll they've think reflecting environment. adapted two to be how I XX% the XX% in

Any exit how maybe transitory of year? of in growth. Protection that at terms sense appreciate versus to the Obviously, balances deposit for quarter I growth And this quarter clients’ through of tied this on just lastly just then is clarification. in forward. core much it. growth going Program Payment the that the we liquidity deposit with a very deposit third margin about Got strong point cash how onboarding kind should kind think of of i.e. impressive the

Go Mark. ahead,

these Nate, get flushed make all if come quarters largely you not question with The I been so we're to PPP do consumer is they those next that right, million think in But want is with $XXX so clarify. side cut to of will still a will that think that deposits, please has Consumers as out as around. there, I majority extended, different. in think couple over bit your we period are well. time terms a due down. to little going it so happen can money do cash I commercial, the What’s little the sure spent We point. a we be if the about it's an less will up utilized of at and vast again like didn't the will stimulus not, that have answer whether two impact on or we this see question? and decline round programs your we'll there clear Did that

helpful. color. guys. Yes. you That's all appreciate I Thank the

you. Thank

as a consumers of caller extra evolve which enter a have levels impacted degree. and are waiting The for some us, fundamentally, to seasonality, Nate, and flows, recognize tax funding quarters just seasons. carrying been recognizing have third question all while dates start due little for typically second that municipal we're for also are the delayed. tax the of next over been the payments cash we to cash, And

a around. there's factors So lot moving of are that

next Please you. question Thank ahead. Raymond will Instructions] with The [Operator come Tamayo Daniel James. go from

everybody. morning, Good

and So, follow-up just an liquidity the real quickly quarter? you excess from move there But NIM give impact a from guys then to I'll perspective on. in did

Pat, why don’t take you that?

excess We Sure. speaking And call deploy to basis was municipal liquidity the that that couple that because we of at actually Mark the at was couple we X.X% X%, where liquidity municipal related X a years it Fed. down on to them, the just points ways excess PPP had compression. break likely of nicely could side, about talk liquidity didn't excess a X we affecting of have cash I'll that say to

it's zero. Now

of earning costs, but be had decline really asset out. with calling impact meaningful. think in the majority we was biggest coming where the kind Park And strong that it basis funding that. changed drop a overall also in the of of which The period particularly in just coming yields mix, was not digit impact. And was also we're vast to I the was similarly even driven, compression rate really that So we'll point low-single back driver of the then

were Although, certainly noteworthy. the dollar amount is contributed

right, getting All myself here. maybe ahead And terrific. then of

start strengthening Or through meaningful you have preferred And again? this? second did about obviously you has get to the acquisitions to targets get you thinking the levels to issuances what perhaps potential through this? there. are we when we have with So, potential happen quarter, conversations start capital as for to How in

I certainly one Well, can this take Dan.

through stabilize, been of to this, outlook as through. course different level again, a the that you stock stabilize consolidations time As we They and XX acquisitions had that doing we've tend probably move over career, expectation. my gives or go XX because of around this markets for and or once various a long consistency

So, through be and year what think outlook the confidence for will then conversations progress the business I certainly as gets credit production is, more those one of productive. as and we a level

consolidation was while circumstance impetus any will, do would then environment out are the up. and consolidation the the additional as environment. a benefits confidence through overall that that responsive I be is to of I scale the likely operating that would coming I ourselves of bid a have look gone greater have as today, will going as that, we to for for think you see needing as start scale of 'XX think you the as and if that you at out things will those have driven that of would different back conversations obviously, you to question unfold. objectives specific navigate conditions think when scale gives out those then But move soon pandemic improve was if coming I business broader seen the the to be simply likely the in find your there those think don't read on even pick you to drive that. generally through And tougher that the margins, crisis, spreads

color. the for Thanks

ahead. come Chris KBW. question with go McGratty And the will Please next from

Hey Mike and I late, Pat good Mark, so or or on jumped apologies. morning.

Some about work been the dynamic about for excluding prospects the for hey, medium-term more the of expectations as near versus in to we has want to loan we quarter the How talked we loan utilization customers peers think Obviously, do want to growth banks. company? our PPP, your have growth the for a with second new.

Go ahead, Mark.

easier we I'd say, set consumers limited people product level, activity to good a know because have mortgage if there. at visibility this and little certain lots still there's stay we while good level there. have are we And of of refinanced, a have predict rates

in clients a you I did see little a quarters. we a And Once doing So just bit hundred everything the where to said, we don't little the and first. went our prospects a Chris relative prioritizing helped we and think Commercial ever some still few is can. consumer think completely to some. to of murkier. But have end as next you couple couple clients often. you getting to in We we prospecting XX% growth plus we'll satisfied them, into talking open are back all clients, we people, loans PPP, there. of prospects PPP those certainly

construction shut to, So that mixed. as client is completely There are And to the that you are of down, about a the There all it's sectors sectors relationships business. those other clients. trades the hotel are but we're picture the looking economy certain are almost need frankly. little along always build nicely, humming know,

it much And range. is in so have hotels. at we don't runs My point

don't it. of forward. large see I number -- looking I predict it's to you'll to QX saw line repeating going I that decline in know on We're amount in itself utilization don't the forward So hard you QX put a -- going to because drop think that see there's

than will So, murky slow QX, speak. I better pretty so picture to growth think it to again, see be QX. much a in But

great Thanks That's color. a Mark.

the about exclude because think would ballooning PPP any be fees comments sheet growth? the process resumption think Pat, to think your the quarter, If Just the NII but we just given the accretion income, a core of balance further I you of and to to a on is bringing NII how back challenge margin we the industry. do alluded it troughing I about great? remarks in

Pat. ahead, Go

out the to the would X%, with know seeing, that don't that don't on impacted going quarter, and if as activities. much to going outlook to where I fourth today they given also role, quarterly think earning how competition. do X.XX%, the rate funding down for of this still we're we're -- fixed high expect zero our borrowing dramatically it's compress anyway. imagine QX in to But run and kind remain quarter. reporting to of They're closer of we'll yields zero. that be are what more actions know to to we're reprice to tough and is that noisy range think immediately very I a costs, We've get bring pretty We of of with that's to rate. to about continue going much by non-recurring come sort but yields, back what think that we'll feel I a I on that book recover today low right frankly, will but of are the turned really both spreads, ton don't as if to quite I asset And our hitting than so normalized now. in side, close a environment too we're kind cost back costs able funding we level, good that.

see as the volatility and which So And earning a said, lot volume we loan volatility, of the going that's now. be is to tough meaningful growth would in how probably on that near-term predict going yield just recovers side. come don't forward particularly to Mark asset, from very the right

quarter a core. longer-term is this don't So, think proxy bad I for

One if more I could. Great.

were there's we with business? stones ago uncovered learned How from you've see bring reducing last years any costs out the guys about what think costs. in with excellence a Maybe of potentially if go program yet fairly delivering do be of couple to and to days maybe You back efficiencies? aggressive more the XX to

can I Well, that one, Chris. take

world you've talking practical behavior. consumer, a I'm consumer accelerated individual in about business an a we're operating change where and As and seen matter, in

translate to hard looks it's like. the that outlook what longer-term into So

quarter the technology and that even first been out. on investments that have for a We more how to in our and in while. about plays taking doing a works path of We it talked leverage

So, that's you consumer next murky the to if where can't excellence more I the in because give to that too continue differently. what to quarters, and are on seen in focus longer-term. work drive clients behavior, to little using And on certainly, something of our delivering we can see our have any continue But here a initiative, translate over in we're right to services what more to and couple like to it's see still change directional environment going now, there. direction, you we'll adapt can you've that then changing means specifically the as that. a is obviously incremental

Mike. Thanks,

That’s, vague, Chris. though [ph]

thanks. Perfect,

over back further Instructions]. [Operator call will no Mr. now questions to I turn are comments. there If Scudder any the for closing

Great. Thank you.

to again, closing before thank to, just want opportunity our the I once So, colleagues. all take here of today,

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that Thank share I is a belief First you. a all wish you And ongoing we great As our Midwest day. great investment.

a have parties Ladies the for nice and this you now you, and all All gentlemen, And sir. thank today. disconnect. concludes Thank conference for may participating day.