First Financial Bancorp. (FFBC) 24 Jul 202020 Q2 Earnings call transcript

Good day and welcome to the First Financial Second Quarter 2020 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there’ll be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Scott Crawley, Corporate Controller. ahead. go Please

on at Good Investor and Chief Harrod, us Felica. Financial and Chief you Executive results. are thank second release Brown, be section. Yes, and and yesterday issued slide President reference Bill today's morning conference slides joining Chief Credit Participating financial XXXX presentation on and press Jamie to the today's First call Officer; contained accompanying call the for on available www.bankatfirst.com will quarter We'll make Archie Anderson, thanks Officer; website year-to-date in everyone today's Financial our we to Bancorp's Relations presentation Officer. Both under call. accompanying the the during the discuss

XXXX in Additionally, our please company's provide the reflect of today well release circumstances filings XXXX SEC the not risk to will refer discussion statements as now to I'll XX, as is call earnings be factors. as forward-looking to quarter turn over and the Archie of accurate contained a facts this we call. disclosure Brown. any second will June after full for we the or Information forward-looking statement updating

Good were Yesterday interest most to to significantly for Consistent We're COVID-XX. joining expense. related with you and everyone, on income, today's we provision and with our industry, across operating influenced be substantially continue in our financial us pleased very by considering broader call. fee which results unique Scott. thank the circumstances the pandemic income net the when you, afternoon Thank the our morning, announced quarter. we for results second especially performance,

items. of common included resilience XX% profitability. non-recurring average tangible assets to backdrop and the XXXth marked when second on consecutive efficiency -- return share, XX.X% quarter return remove earnings equity quarter X% and and Highlights in businesses XX.XX% our despite ratio performance $X.XX a challenging adjusted Our continued a average demonstrated our on of adjusted per strength a

our was core on quarter quarter Second record. highest income fee

mortgage historic influenced work million. as sensational had in Protection deposits an the the combined team for Core with interest by division $XX.X low to revenue Program. increase trends a significantly banking drive hard and Our loans to banking XXX% were quarter Paycheck rates mortgage of our almost

the SBA X,XXX million. approval During secured we totaling quarter, $XXX approximately loans for

Additionally, system increased the liquidity growth. consumer the financial deposit client both across contributed in and businesses strong segments to

our COVID virtual solutions signs degree remote we activity. normal longer how These trends to are and restraining teams of to sales purchases a momentum many banking Our a checking to mortgage The continues low. new all-time All rates stable. encouraging new height high and normal the pandemic. embracing loan our activity of limited greater an of very been during are in no and return discretionary the hiring business also has are is consumer Credit strong teams our at were of controls. remained Expenses leveraged team across as lower a refinances Sales volume for seeing quarter, the lines. implemented see wealth. additional of with originations all the spending growth

elevated in deterioration part latter levels However, drove the forecasted credit the over year the of quarter. provision

pleased are associates work quarter. the We the our appreciative incredible and during of of

our business, prioritizing, the our to this slide of safety client continue can communities XX, continuity As associate the our crisis ensuring guiding company. assisting of our and on in preserving seen soundness principles be be safety, managing and and

technology shifted operating successfully most plan innovative lobbies and with our our model than several new implemented in pandemic service the quarter. our client branches and working for Over to with of the months, last We more ways. associates closed our XX% we of and properly remotely utilizing management reviewed

beyond customers critical at assist provide moments. and and above to went services associates Our essential

$X over million our banking worked continue in processing to a of provided of this deferrals weekends billion opening to in regard XX% historic fee over guidance the high fully Our our waivers center governments the and and and addition branch $XXX after Jamie's are over and with to on At mortgage funding Overall, and to and the of extremely time, state loans, buildings locations with Jamie? balances workplace quickly applications. customers. evenings portfolio adapt our staff pleased loan markets limited challenging lobbies with results. focus currently teams returning totaling call I'll some wrap-up a capacity and to ability details open PPP levels customer the our in XX% on normal the remotely. the in level. function by in mostly remainder I to of banking servicing the Physical with second levels to provide by clients volunteer now staffing continuing continually conditions basis of our remainder at is areas quarter appointment. I'll loan specific We monitor local centers office to commentary. of discussion, safely forward-looking work Jamie be to and our to with to some within discuss and environment then turn our And comments

solid good and efficiency everyone. ratio summary elevated expectations. that as performance. quarter company's fee second quarter and we Thank second XXXX surpassed with an and four our Archie Overall, the Slides morning pleased results were our of you, a income operating performance five with provide remains

continued credit metrics, to were credit encouraged believe our stable pandemic we the $XX.X headwinds. recorded year. produce provision to performance, of positions we Despite current in meaningful back the reserve us we the our during expense Although manage and effectively deterioration the quarter million by half relative of

allow regulatory for the well-positioned both is our Our maintain targets. capital sheet core remained fundamentals and these levels strong We us foreseeable future. that and believe in of to should regulatory and ratios remain excess balance our internal

negatively declined quarter As rates. XX net by points interest compared basis lower the to basis margin expected impacted on as an were our FTE asset yields prior interest

increasing main impact foreign with expense drivers financial flat managing the quarter, funding first and were banking strong sub-XX% of of highlight we management, were results. offset base while fee $XX.X ratio. quarter another expectations. costs. resulted derivative the partially the exchange, million in and was line relatively to a Fee wealth the prudently our in Mortgage our However, one able by income was particularly with a the efficiency of client income quarter to with This elevated compared along income

the a points debt standpoint a well-positioned believe We total capital Total as are also the the capital on by regulatory and issuance basis. both beginning from improved basis linked-quarter capital we million Tier $XXX increased X XXX ratios at of quarter. sub bolstered

tangible in common second our basis XX equity declined the Additionally, quarter. ratio points

or increase points points However, earnings due reconciles assets that impact period and X.XX%. basis our absent accounted are XX deterioration for Slide to highlighting other non-recurring items $X.XX six costs. the such GAAP believe income we consolidation understanding which COVID-XX per important in performance. adjusted of share quarter the $XXX,XXX was the earnings for branch to TCE this related costs million PPP of to $XX to our as Adjusted million excludes net XX and basis of quarterly $X.X during loans items expanded

to As tangible seven, return return adjusted and of earnings X% assets average of equate shown slide on a on XX.X%. average common these a equity on

XX.X% management. approach and our diligent efficiency reflects Our ratio strong to expense adjusted remains

primarily of to second interest lower of nine, tax the equivalent quarter. net Turning fully and was interest impacted asset related was the rates by normalization on lower which point a decline to yields, for LIBOR. X.XX% The basis eight full margin quarter were basis XX slides and the

XX by quarter. margin margin net due the negatively Asset the This yields offset positively basis was during the and the mix during points the interest impacted costs, XX funding by points lower by to which quarter rates. basis partially lower impacted

to as relatively XX portfolio period, In presentation. further from first yields, increased focus the of deposits points Slide In due lower the in primarily the areas declining seven progression yield quarter. of quarter. balance quarter. of grew it's million, participation in points, period. of investment our addition, was the worth well CDs. regarding $X.X PPP Program mix yield basis aggressively commentary deposits second shown that provide the XX The brokered we by dilution remainder X and the will loans. quarter. margin Archie current shows in during average the In In $XXX changes during The from later cost XX as are our Protection further basis noting rates declining dropped deposits loan the the non-interest-bearing unchanged impact caused the the loan response compared Fed our the loans linked Paycheck driven XX as decline lowered and points billion rates. by to particular the deposit of the of depicts loan in while reinvestment basis interest X, large is to portfolio quarter mix linked Slide points deposit these increases our on slide basis the recent base balances of in which balances driven on by the during resulted average to total, actions

as of to retaining the grew an retail cost deposit of the categories savings increase our the stimulus CDs. growth exception majority attribute the and well deposits as in well checks of funding of customers All with as PPP consumer We rate. higher

we mentioned, basis reduction with a to XX point encouraged our previously deposit XX basis to manage successfully were I As points. costs in ability resulting

over funding to XX continue necessary the our the on conditions non-interest our income and market highlights adjustments deposit make for based will pricing coming Slide monitor We months needs. any and quarter.

exchange relatively significant the highest included and $XXX,XXX driven expense mortgage and since other million the increase such fee quarter derivative a slide Non-interest income, expected Overall was expectations. banking for were Non-interest on foreign branch line shown fees of expectations. all Second in income expenses income, quarter internal wealth costs. our or costs related first surpassed flat our consolidation of management was met with to quarter XXXX as recur to expenses approximately XX. $X.X client and and is incomes while in COVID-XX compared not by were costs

Paycheck we of the the during addition, Protection related to In Program incremental $XXX,XXX incurred quarter. expenses

quarter. turn for losses XX, which related discusses I'll for your expense to Next credit the provision slide allowance and our attention

of and Our June. The model majority released impact both reserves at in baseline provision second to for noting forecast $XX the the related million it's which $XXX losses. total that and provision quarter from expense credit includes quarter, end expected funded COVID-XX. of worth to in Moody's of economic economic utilized the Similar million unfunded the total the resulted first model ACL,

net relatively flat charge-off line with $X.X XX quarter benign, and had the compared despite increase of net the as XX, which percentage shown a when As points again loans, and for period we levels on Net levels. relatively historic first slight charge-offs to the credit metrics were had classified in non-performing basis recoveries. were slide of recent is asset fairly we million once as

the much we our we current the back the half the in While deterioration year, continue time, don't some expire reflect metrics to stress manage expect credit pandemic. and of deferrals at do as

based sheet models. balance the the position adequately levels current reserve current economic on our believe we such, As

Finally as exceed the and XX, shown regulatory all capital X on increased ratios continue quarter are to ratios slides and Tier internal strong ratios excess capital and remain Total and in during of XX minimums. targets. each second

Our tangible period. ratio by common basis equity XX points during declined the

of I denominator. the XX the in loans previously as driven We do dividend. changes any However, this by dilution common near-term basis to PPP from foresee mentioned, was points not

will turn current I'll now of impact we operating over our evaluate various However actions Archie? for the COVID Archie the of capital economic light as and develops. in areas related of to continue it to the focus particular back commentary environment. to outlook pandemic

Jamie. Thank you,

circumstances economic areas of XX portfolio. updated through Given we've within our loan COVID-XX highlight XX specific the continued focus to slides related to

this our participation recent point, customers, highlights As the low. in XX At the program is mentioned to but remains PPP. Slide demand available earlier,

awaiting guidance our final SBA forgiveness with before proceeding from launching the the We are efforts.

full interest franchise July we had of August. $XXX first in occur expiring that deferrals portfolio $XX of XX payments another secured most and is second and one, $XXX of our Our Slide and depicts these to XX-day have making been returned million a deferrals. payment which deferral. XX% million have or and granted deferrals will million payment round round principal

the As in sit primary portfolio category. the of stress to expected discussed last area restaurant is be down quarter within this

or occupancy low of seen payment our XX hotel payment on $XXX we additional be million these will can the initial XX% deferrals relief secured require XX-day given deferrals of As portfolio extended. be portfolio the to rates. expect continued Slide and likely majority

a of Lastly but our secured on how round. will one round need evaluate too second to many million early deferrals, Slide XX% or portfolio ICRE XX, retail it's $XXX

deposits decline impact fee is gradually forward-looking Given limited the Slide with that we're impacted and the and near positively with the transitory moving shows PPP guidance are expected in and forward. environment to of factors spending uncertain remain margin to additional expected more the XX accelerated liquidity. timing key term associated impact be dollars low expect Core quarter. this net of by operating PPP in interest single growth customer recognition. is expected the program. the to a digits performance of continuing excluding to PPP we stimulus our the The the elevated and payoffs be eventual of the forgiveness outflows Loan

going of and indicate expect impact excluding the some forward accounting losses impacts the conditions and term levels. XXXX higher realized environment expectations credit is of lower the provision PPP historical rate the near expense compared to modest for half XXXX. back pressure expect We economic Therefore full Current -- over when as back of declines. elevated we continued purchase

in quarter later over than fee we valuation we activity Regarding income though quarter in gradual volume a second declines refinance level the saw mortgage the the next in at normalized strong year. more expect continue and

levels. expenses, have increase. With to activity to income near significant where deposit and most hiring, business investments paused service interchange gradual We consumer as on a anticipate respect planned return increase slowly expect rebound to the as We a returns overdraft exchange we to spending pre-pandemic foreign except overall expenditures management expect expense also improves. and and approach as activities in and business revenues to discretionary critical. business term disciplined charge We follow

our years to during branch customer our the Additionally the XX last closures of the XX% locations channel. we to of in or continue bringing network. observed accelerated we total two quarter light changes closed In behavior of over four during pandemic, evaluate almost distribution a

million mentioned originated earlier fee an in approximately second average PPP loans PPP the during $XXX we X.X%. with as quarter the of Regarding

to be concentrated and forgiveness quarter the begin expect the in XXXX. payoffs quarter in We third and fourth early

which newfound build forward. quarter upon The can second highlighted capabilities, also moving challenging, was historic and but we

to We economic the and broader to serve needs model serious The will continue of and to uncertain leverage continue challenges. reevaluate remains our our technology face customers. better our environment distribution clients

manage to a delivering in prepared the the our in call. steadfast We our the and clients be call shareholders. promise comments to associates presence the our up in while are committed of prioritizes now well-being manner that concludes We'll for financial stabilizing This value and to a open for remain and communities company physical the our long-term questions.

Thank you.

begin the comes [Operator Piper now ahead. session. Instructions] today will first We question-and-answer Sandler. of Scott The from Siefers question Please go

Good morning, guys.

Good morning.

Hey Scott.

half credit the on expectation cost the of the ask to year. wanted for back I Hey.

for the will thinking that from curious there? Just you're be the reserve things is charge-offs, Will bit. or further it what expect off at of drivers how top about just continue this outlook What the are build a enough build, there drive and least or up to main point? reserve sort still it uncertainty you would to

it's Hey, Scott, Jamie. Yeah.

to uncertainty. compared it's levels. cost, -- of relative when lot one so saying going say I So, the credit when of really we we in there's to we're I -- clarify think we're But, expense, outlook half is that saying elevated of back b, mean, I to a, a thing, that that, the first year elevated provision all, have the historical mean when to

$XX second the quarter. booked $XX we million the million So, here quarter, first in in

going economic high, to the of the half looks million uncertainty the economic to charge-offs pandemic severity lower out expect whether the going in from of in of be We look And it's It's rates. really start their a the start terms forecast still is and then, when to what's in overall year, there recovery. loans deferral happen, terms those mean factors. to what that's see that back $XX I elevated, to what of emerge going depend the -- we come just the or of the to period, to a these like on on that as depend of going lot or default the like of

we So, levels. But, are But still now based to historical somewhat we of that think at, right a the to it's that on factors. that's again, lot going compared looking economic models be elevated.

if had And elevated, would XX a just actually that. I guys was I out it mean was you mortgage would the of printed. far that me said right. about of thought. you range asked third I All maybe so I Elevated, elevated have ago, I think Perfect. you hours appreciate have think, I figured as what remaining

Just print between given but amount hear error sustainable? moderate, looks night's will of curious or typical and it just what the sort know to elevation yesterday how of last curious I -- your thoughts. a like,

Yeah.

will yes, be will elevated. mortgage we that -- that So banking do income think that be

And extremely was us. if look to Now, come overall at sale going quarter, total for gain in second though. we down do high the it's on you premium the think

comes So, down. that we think

second stay quarter levels that the production third percentage. game relatively think to same we So quarter

So, what that down, the XX%. and by down on we think comes we or backside comes XX% realize we'll think about

-- the in got So, we just quarter. it the of a perfect was for high. market kind mortgage The banking second was division extremely

So it rates production will are will come remain still levels down But high. a little bit. given where

you, All guys Terrific. very right. much. Thank

The next ahead. from Please of KBW. Chris question comes McGratty go

I think you Jamie, Wondering good surprised alluded going how given talked I'm where despite the also, in how we expense reasonable can how your to you forward? targets. operate you And the that are interested kept expenses Hi, decline you mortgage. efficiency about about range going Thanks. comments. maybe rates? your outperformed that thinking expense with to down morning. think bank the a Pleasantly you're you

to that's Yes. especially that just the on mean, at best being employees second to low just I quarter we mean, in with we given shut per some forward, as But we that decline But into quarter expenses efficiency play I'll pressure the mean, se. manage Yes. something on being ratio. going look I interest obviously not with of the the terms margin base. really maybe manage there going it's obviously, travel tackle I the net efficiency can. things obviously I in have – that able mean, first the second one we in we being to expense our down and whatnot, activity goal natural had as is second the to ratio. When

focused few those grow some would expenses expect now bit normal to back actually opposed categories being T&E as we of terms being to to – internally I marketing and shut a a kind of come back kind call trying of terms what that things trying of down. business and little So to getting this the more in and in of to expense

we kind back to it's this, getting I type of these and business have normal normal will expense investing a of just projects to kind would we some that the pipeline. a back So say, of see of increase in in

thoughts Great. Maybe one I'm the are Okay. elevated. interest balance the income maybe net given What to and sheet. that. just balance talked PPP? expectations? Thank for respect to out you deposits on on margin. of I kind think Any trying about more be on in the sheet pressures the that core you the to size forecast

Yes.

I of in your to question. – sure guess, I So terms make understand want I

You're to going the rest what and deposit talking are year? the thinking we of we're do about balances are what forecasting for

interest back net I'm to trends what are be next... guess I into income over trying Yes. core the to going

balance related back fast bleed through half The that just deposit some fast overall deposit we bleed is to down is the of mean that the to the do balances mean, PPP down. consumers, year. will will how I big question Yes. the terms to balance mark I in stimulus of sheet government the of think how

guess this quite just a sheet case. so right be we the say to we unclear NIM liquidity – of carrying – balance we be. expect the we you on are now efficient, are as are could do bit excess at as we because which it's point, the can So – little how It's I that

the – the pressure of level still forward because elevated quarter, being compared that had still quarter. we NIM, at part a the the April, of mean the bit going NIM lower. bit it if see of is here look you look second the a at NIM – quarter I terms the When with just core little first we now In been to just would on little we will – are elevated was absolute LIBOR rates where you have for second

come So down the full the we has third And that will now. get quarter. that effect in quarter of

kind of costs rapidly pressure just because it's a see in third will have and quarter. down stabilize more after yields I and we're off little asset as the really we're So and then CDs bit in kind the then quarter slight the moving that. – then we'll maybe fourth seeing stabilized roll forward – of and know CD deposit as pressure to kind And third fairly of really just going

think all that's and said we mean, after NIM X.XX%. core and I somewhere done, So stabilizes between the X.XX%

on you majority sitting some Archie. consumers couple keeping And lower accounts, have just deposits, from cash-on-hand, mean I the that of conservative. And just are activity other Chris, are A one points PP of spending this is, more still dollars levels stimulus. being and less is businesses plus of because on just and

it go I activity think and then, going looks up. the slows higher in it's in down. if we that think how to thinking may to the keep stimulus in the be But of balances there. there's comes then, going to certainly, round were think we another checks so, continue a of stimulus. in more another that And gradual, say, generally to than I'd if happens. lot like keep a month, economy of keep And round another be last even We factors will people balances variable little it's

clear I margin. the on want to I'm Jamie, great. That's make sure, just

said X.XX%, you excluding PPP. So X.XX%, the that's

Yes.

that does include But accretion?

It we does that or But for, like Yes. would take it out that. see would yes. include accretion, PPP anything forgiveness any bumps

Yes. Okay.

Okay.

the into we from expect pop margin I quarter Because year, that to that's that will fourth the of come half get quarter. right? that, in the the -- first where the in, mean, And back

Thank Yep. okay. Perfect. Got it, you.

RBC Markets. from [Operator Arfstrom Capital Please Jon ahead. comes Instructions] go The next of question

Thanks. morning. Good Hi.

Hey, Jon.

Jon. Hi.

that the curious shows look guess, one. now about PPP. follow-ups, slide but question Archie, A this loan seeing? and is what what of I of maybe low-single guess, from you've with like, XX growth talked does drivers digits couple loan which your your a quarter maybe growth start just guidance, And And you're I the On excluding on categories?

Yes, Jon.

low-single kind as So digit we're growth broad really a it's based. little said And annualized of of I kind for more, showing near-term. a

few ICRE. probably have I towards last If more tilted you it's the little last quarters, been look is been year the probably expected a

is growth Our a of starting in show, a little slower but the there, to forecast pickup some categories. commercial

depressed So QX. we more nice had hit the to of ICRE. loan so the fundings actually the little hit is And the we some of side, of mortgage QX, The across activity across looks refinance like on little first that, is side a have it's bit actually ICRE. we thought it addition really the more mainly consumer because, categories The and part the some at mortgage might But commercial in end pay that will off a it's in portfolio. strong. -- little side, categories, and less even just volume commercial consumer a

this charges talked you've to consumer about market but curious market point of curious of And then, or talked just pre-pandemic return return starting service know to pre-pandemic levels, purchase on levels view? activity health about to starting trends. I Purchase kind refinance, you've trends? Okay. about, overall to

Yeah.

period. Jamie purchase as, with though On side But the to it the side, two-third purchase the strong. for certainly strong. activity I more is was than it's very majority maybe think, on Refinance closer mortgage the the

issue the inventory. think seeing in home there's we're low our I is markets existing

not for just construction the many well. of are in that doing the market existing example, extremely are houses in markets seeing There side So to our the buy. we are builders

just a bit It's that challenging strong. side. the on it's little So more makes purchase

production. the the side, On we're payoff great due But also refinance market. we're to pressure, consumer seeing seeing primarily

it loans in the refinance we seen for on realize to payoff we the up. is, on mean, -- period of Service from side mortgage. Jon to business But almost because so interchange, -- of charges had are on side, -- on pick growth we've I highest production depressed. quarter. the the side consumer think back. But is a close, I just So, pretty what didn't our the things look continues consumer interchange second you because on can it side be like consumer far little bit it at starting didn't

charge coming start to we business that in service of waiver programs had expect the Overdraft, quarter. during We increases. fees, back a place activity lot as

in Some excessive will consumers have. place, balances that amounts of checking of account -- think those plus we are still have, but we these that

So, going the to think not come as spins, we all as going that's of improvement. be way gradual a It's improve, QX. that back in things more to just

of Helpful. Then flagging some -- couple wanted clearly on provision, follow-ups That well. project you're but to helps. saying just as -- to credit you're I essentially difficult charge-offs. what the of it's enough but in message? picture have the charge-offs message you coming second and half it's Understand big on the year Is in not provision surprising, provision and the a the the is reserves, that increased matches

and time correct, move being, you're that -- for of saying. a the of in could around. into a the change that's that we lot if what exactly -- model the lot unless still Jon, would given forecast things uncertainty mean economic I obviously, put I had Yes. mean, the But dramatically,

loans, about, is for among peers. higher which When to on the we're side industry, coverage terms what probably about you we’re in XXX seeing from -- the of think especially what, in

back So, we of -- think reserved probably just well, to about lot a get term. there's virus near go. in we're we're levels to going it's things pre-COVID but we And the know just uncertainty not and the where

the charge obvious stress? of it of offs? just Sources categories the Is

three what into, sensitive them help, prior a classified none Harrod them them will were loans level -- you already little you quarter really -- pretty were Archie, of maybe primary had already the drove COVID. call, we enough, of charge-offs I’ll I'll probably color. that But more loan a amount a credits the during give -- could we start, charge-offs there this Jon, -- portfolios. is were benign, of Yes. of in were Bill but And or classified our the and all had we to would interestingly

had historically. just on stay credits already these on into But look are that maybe the and we as They coming in you're a color forward, our are radar. a little Bill, we pandemic what are seeing. give what So weekend already that's

be of the starting are into as monitoring first as we round very And portfolios. highlighted our mentioned expiries, of closely, portfolios Archie various And course, We Yes. actually those to to deem risk we're well book. very, deferrals. the that rest ones the from enter the referral the of earlier, the we're higher as

our course see do all are down those we to predict. going at where solutions. to a need that going highest that work really from definitive And they're make not where the need early along of understand be be of more think be really then, look we some deferrals, haven't think And help longer-term come the those last, our we really and second now, on of the And gathered to it we through need nature, longer-term round it, are I so, will through as charge-offs coming from. going us those fallout. from. call impact it. COVID of a some we COVID, as and that impact way round into will second you'll where restaurant, sit might real kind and just it's Right worked that's to information the But the hotels solutions things Because the to

All guys. Thanks a lot, right. That’s helpful.

of The Raymond next go ahead. comes David Long from Please question James.

Good morning, guys.

Hi, David.

occupancy gave. down you talk customers, to have you hotel given portfolio. Any I what where about drill occupancy you the guys appreciate pre pandemic? a I seeing data? the they're the a bit on bit color your to any relative little on we were -- they that just can Have side wanted little

we or basis. into the range look into as we oriented May are less some to COVID -- – even shutdown. started this we seeing a go on the back side. even Bill down And low either saw at we course And XXs, X%, been June, it the macro And we've this we some have come of the things on is monthly XX% are of and that very occupancy over into and of this really since And much hit, is see What outliers pretty across portfolio portfolio, monitoring Harrod. in Yes. as the the down XXs.

we really improve, portfolio occupancy skeleton like that is What starting see lower but to with see into crews better, but the really getting is we a into and still starting to of of the to starting feel it as get and XXs. the in bulk it we manage XXs. increase are we're and we Obviously, so the kind the XXs start. to the of XXs, lot And XXs our in

Got it.

the Okay. any appraisals, XX% Have at the in seen And marketplace? mentioned you – you sales in you loan-to-value or done updated the pre-pandemic. slide any have the being

this have any we I've at as to working point. the very sight value a and its tight this we're not point. look think on at when When book, reappraisals in at done going marketplace the now look hotel so And seen really starting our at could of we're sales well to we not right it next of year. short that's sponsors partners early are as things they outside with to on, start which the our some and what see to and be really turn, focused

Sure.

them part maybe deferrals Okay. And days. days my these of is and days XXX of XX XXX-day – after when then sounds second XX those my so part XXX to then then most about I'm you're the it that's finally, are the But I some happens? first deferrals, or assuming, what days of will guess, like go question. had thinking And

Sure.

is we XXX and an sure of program program senses relief all our structured the on the we round them outreach another come really deferrals our will them focused to and that, gave got days appropriate on this really one with down. We increment. and customers, next of as XX-day Phase making all based dealt was opposite the We've stabilization pandemic that are where spread the see – and to

doing round as the analytical little looking, we're more what on as forward second stakeholders more relationship the the obviously the a it's well owner, is deal. sponsor and all The understanding with

need it, to full they the we're looking not through we that's we're the forward potentially in, both And and type structure right us going deferral we're at situation options what if then, or a is better in is a third sense we're and And working better industry a round, we hybrid what very going to then small do prognosis this accommodate What into now. we seeing on so that payment a do of with the the very in, work full the the doing that, looking and is defer a situation. limited focus it's what – portfolio. you're we're But a will them, looking to before round. a And after given really business longer our look makes on third what But building is, payments data going we're it's there's what looks just we're else. round, if stakeholders the – at through we're have for to is as then outcome, on stabilization. at and we industry portfolio something be to our would limited on think interest-only bridging

the industries. nice those the kind have haven't cetera, get to plan those are of road We alignment exactly the products with that, but bank come up we re-stabilization to et hit longer what be, stakeholder and owner going between to a is such on map

And in we think like is it things hotels?

Yes.

For really a restabilization there example be next interest-only of they're say construction back period and example, hotel. early not year normal or bit a a would a the be you year, longer it's little probably of would if the potentially could coming an just good where like on end hotels

how I that what have capital loans, how status do -- that anticipate on non-accrual risk you and rating, that And the impact Okay. make for or the them? accounting them say should restructured hold? or you Does those does put that to a the does

there. know guidance We've Yes, seen know good Dave. that six that on we're months, is already. This the we Archie. We

guidance would some for additional this. there's interagency beyond think discussion and I happen what coming

accountants to our it. that So we're regulators talking watching and eagerly our about

if and industries we restructure. we some can't mean those that a on tell at year, with of again probably the stabilization would we guidance Bill a that plan current as as exactly regulators decide conversations now. to do. what think hopefully those you will and But accountants it So and said I have need to I there certain there's have more where industries are that portfolios troubled may based that know this need goes look we debt beyond we probably and beyond and

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Yes, the so I do here point. appreciate at I situation the this know color is fluid,

thank you. So,

Dave. Thanks,

next KBW. from Your question ahead. Please Chris follow-up is a McGratty go from

that. Thanks. just about ask about to rate? Sorry I Jamie, wanted Great. the tax

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over This back turn our for Archie like to Brown conference the remarks. question-and-answer any session. closing concludes I to would

Thank to Thank we months. day. today. you, you you forward again you good a hope a for in and all our interest for to We joining call and stay look talking safe Have Elissa. few your

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

disconnect. You may now