Independent Bank (INDB) 24 Jul 202020 Q2 Earnings call transcript

Good day, and welcome to the Independent Bank Corp's Second Quarter 2020 Earnings Conference Call.

Before proceeding, let me mention that this call may continue forward-looking statements with respect to the financial condition, results of operations and business of Independent Bank Corp. Actual results may be different. Factors that may cause actual results to differ include those identified in our annual report on Form 10-K and our earnings press release. Independent Bank Corp. events relying update forward-looking whether publicly to information, unduly any and in against new to intent any future you upon statements any disclaims response cautions otherwise. or forward-looking statements, financial during that Bank will certain review call, Please measures note we this as performance. also we discuss non-GAAP Corp's Independent should be replacements with for results. non-GAAP GAAP should not These not financial and measures together considered be read contains to reconciliations to additional Please measures. these GAAP press Relations obtain website a Investor our earnings comparable copy the to refer release, information measures of which of non-GAAP directly non-GAAP the our of section regarding most our and measures please Also, this recorded. being is note that event now and Chris I to conference the Oddleifson, like Chief over President Officer. to would Executive turn Please ahead. go

joining since Rob With as many joined we President Chief extend again of pandemic has families Commercial very last posed our your to and our during you health remains Thank three good Trust, crisis In you, degree great Sean, by by our and Cozzone, Financial Officer. for will times. to and Nadeau, To our audience, good interesting Mark for months very today as And spoke. it extraordinary continue been usual, Officer. ways, best certainly ever. me the wishes listening this we us morning, Ruggiero, are uncertainty be these Operating Gerry you and as Officer; Chief we our Banking Rockland And everyone. of Chief thank

cope, the reassuring. that and ways lot a persevere are On as company about have we adapt how to other hand, a learned in

in to pretty and income more $XX.X Mark expense continue detail million covering to $X.XX as share. will serve on pressure performance, restraint came be On margin helped or income quarter at second weigh interest strong an to the shortly. the financial elevated intense levels the quarter results, in produce net provision on per decent in and our fee a counterweights

a been them intact. is commercial customers and providing lot enable crisis. gives here warranted focus with much through our laser-like our throughout, of strength a core emerge that get manage us their We've this period maintaining profitability where and through consumer to forbearance serving very this to needs and ultimately important The and on takeaway fundamentals their

forgiveness active We bank program, SBA. nearly and the involved $XXX loans, been around participants throughout helping recently, in the have about working colleagues about loan very the X,XXX virtually PPP the PPP we This with originating of the closely recipients million. our them process clock. the totaling with been XXX working have More has navigate

credit balances intensely can you imagine, exposures and environment we As customers. conditions. on focused reporting monitoring commercial and the monitor We daily loan are the borrower for with of extensive

Gerry at will of well. managing which provide Rob that as one has the in developments the a reporting minutes, Massachusetts we've earnings most updates of the these the few along industries our we the and COVID with of the in encouraging In Luckily, exposures, really manner State been Within expanded be been risk. has astute added pandemic. color end release, COVID-related consider the other the on pertinent at appendices And to of information.

health Our spaced across number a governor a has gradual activity economic weeks apart, reopening depending series instituted on over four phase of a a of of process, progress metrics.

particularly country. refer of and considerably. We the implications of Hopefully adherence number reopenings the is unfortunately guidelines that are to towards obvious cases new as during measured being experienced eye more will parts customer access that crisis. Phase comfortable certainly spike for good have medium for many observations many months experiences this taking been few past anticipating clients a takeaway preference April, currently COVID-related what in also that accelerate, normal. broad these with the the other and the digital and operational in notes of is over to in peaking the recommended an approach We've as on since grown III prevent this with the slowed service our One has will

efforts our digital prior offerings to capabilities and us positions well. the in steadily Our expand spaces,

over robust expansion will network We to our to include will needs pace reassessed of technology teller and future banks to as the these as efforts infrastructure review by these, providers emotional Also, our drive-ups enormous March. since video The successfully many crisis in this many and employees as serve of of in critical more trend. continue result on should work-from-home well combined our walk-ups so of time. Likewise, efficiency net keep have this our able invest financial as constituents. like stress all intelligently like ours in ongoing been Times branch to our service. improvement operating induced with may outside result be further the of relief

fully in we employees, full are providing much guidance and customers, communities. engaged As and such, range of across needed support the

been customer giving. connected the never This intrinsically satisfaction, diversity, reputable is out areas high from employee as our image, service, and continued received brand is stronger. we which here CRA parties in ratings such reputation Our to by has third borne charitable

meeting commitment focus healthy of quality the engenders the crisis. culture challenges relationships and build that high effort of also another lot and a paid Our huge COVID and has discretionary a to dividend, demands

no economic before, from better yours to as than I've path As the is our any crystal said here. ball of

mitigate activity crisis. will until is is developed. do slog economic guess we liquidity is vaccine the know we to be that protocol What a best muted, Our capital, to through will profitability AKA the it a and core symptoms have this or that be persevere

always our And over Mark? resourceful, and of playbook that, as prior very to Trust fully them. passion Mark. before crisis. customers through with and of and colleagues, crisis they on that turn We our resume themselves each I every one crises will resilient, it and end adhere to proud this growth this salute in my successful I discipline abates. And be tireless like whenever to to serve a proved finally, journey I'll expect their our Rockland path has am very focus and of to with proven to to

of in detail. second EPS of GAAP decreases results. reflect the of more net Thank and in prior will and quarter XXXX the quarter $X.XX Chris. second X.X%, you, income $XX.X of X.X% I the respectively quarter’s now million results diluted from cover

X.XX% increase by for PPP with pre-provision, by was the for XX% quarter, income normalized in actually quarter to pretax the decrease quarter program. was assets accounted the X.XX% on the While being return compared decline the driven up the Pretax associated average with balance sheet the rate this a bottom more line. temporary second primarily to last tax return

which covering, as but we certainly results unique the of PPP focus Our be typical results. will interest we will approach provisioning is pandemic-related first dynamics to environment, of quarterly COVID-XX trends, loss activity to operating provide details contributed the QX all and is over all heavily intense you which and on towards our

seeing the similar and a our we financial environment other credit is perspective, impact From are direct COVID-XX pandemic, of Focusing most number still areas playing within out. challenging the institutions, to on first on financial results. a

or as June referenced provide deferral XX, end actively of we certainly subject July, and our in release, would billion, through situation current for to a understanding our we a middle their assessing projected date actual dates Appendix Along which over lot of borrowers of maturity to reduction an upon be With a deferral. the $X.X the the to deferrals loans lines, to another round billion of of end XX. amount of from those consumer This loans turn reach loan in F of maturity, Gerry? XX-day portfolio. a are million future another have and certain was these June As portion prior June expected commercial update to deferral loan brief $XXX request $X.XX balance on over it reached set reflects earnings deferrals like Rob to and respective to and as I'd of XXXX, portfolios. future Gerry XX.X% of total

Thank you, morning. Mark. Good

second what or appears reopen, of large it those be early might with for two a be to and first a first The now while for we've are from will in than interest-only primarily too type there were, deferral. deferrals. the a any days, when requests to cases have been hotel, round time, – recently complete majority XX retail, for was of one, the estate which completely number deferrals owners, round round second for much of these it's are have our so COVID our surprisingly We quarter service in clients. not less many of and certain, allowed been that uncertainty They facing which only capacity. for the in either volume and reduced for of requests the more been for early the be much that real restaurants businesses, some probably request And second but in call cases, it's time, we

to all plans. Phase in remain small the later of Some phase closed governance to not close early XXXX. will have Massachusetts due may or business where this IV, for reopening much be which till And fall actually QX until number,

Our requirements demanding for one. for deferrals two much round round more than are

the fiscal XXXX XXXX review receipt requiring are of financials, We year-end projections.

ADI for detailed like for are on occupancy restaurants current other with hotels, or tenant trends. then reports. for updates of circumstances We request, looking payment we justifications and the for summaries are looking current including looking businesses rolls sales and rent And gyms, for

whether also Standard EDIL for XA. asking sources PPP, loans, have they of the of They are government liquidity. We status or be

strength collateral And the from have looking mixed. findings loan these We of a and so rating. committee somewhat risk up an one the our normal been to going to level are require sustainability process, assess of credit approvals, from many offices the approval. of for these Other current highest our approval for all of quarter are loan our

others Some less so. and very positive

in own their them Martha's Hotels want with few areas, example, service deferrals those the hotels and that largely retail except us. as and get be are demand owners Those that half owners minimal challenges, providence. have New have of fairly for of like Cod, in Approximately as is tenants portfolio out. either our the many Boston Cape interesting some aspects city with are of actually negative strong vacation to or impacts been to dependent small experiencing Nantucket, been personal Plymouth. very apartment in Hampshire been for have For whether those rent. people are for Retail tourist asking on students experiencing property of tenants experiencing Vineyard, a very

are to are some XX%. strong Retail, XX% motorcycle those business and are shortages, facing And reporting or percent. between up oriented XX dealers in akin we're RV, basis solid rates to but equally that demand also for they again, sales, experiencing are occupancy on automobile, split inventory cases seen boat, have about facing almost Unfortunately they two more occupancy more weekly are those to rates up work. an so average but travel service And groups. more

builders home those change in contractors and strong has demand condominiums, home developers Home homes Suburban but out optimistic. demand, contractors, overall, going lumber, People and price home, their and to and adding XX% So discovering fairly condo are so to homeowner facing the month that by they newly in months. are offices, to built shortages focus almost been also some Depot And home only have cetera. et are increases, things for not which or for the homes the they by booked last local reporting Lowe's. material construction more, unprecedented have risen renovations due but to particularly and been homeowners on want

to I are our all that's realize our going borrowers surprisingly, likely some houses time. supply And helping will future through and we them not that's who of reporting then other service that our to additional seeking stores surprising. periods terms sales. help last, restructured pledge So those fall contractors. the of portfolio not be guarantees to be are very to robust to collateral We that also in repayment liquor guess extended to contract their need them of and loans require those accommodate

two also certain as require going borrowers additional who working have it, to they surviving are the have depleted capital months. We last

this we SBA help loans. to XA our Standard the For purpose, have with guaranteed processing to of resources added SBA Group additional

loan They commercial on, QX, during have have decline outstandings to Mark made early dropped a in balances. on average in $XXX XX% from million average As QX commented the impact nearly utilization XX% big our quarter. representing rates in

just borrowing their So credit. the customers working are on have bank, capital lines not left they less of the

in and million Approximately working Now is received this least has a the receipt certainly increase PPP to at of some borrowers, been money. C&I really commercial our $XXX is of money become by that attributable capital. temporary

For if many it loans though will those them are forgiven. of be permanent

capital that their excess working their position much that has lines So to liquidity on bank borrow need improved financial from the they credit. such of as don't

that out just repaid, then may our forgiveness maybe forgiven. to PPP need as the not upon touch change some be may weighs to As process loan pipeline. of And those if

improve smaller all less in very pricing so from interest also and which us continues enabled really minimum for to banks, on has the opportunities. from requirement competitors, our expand be larger it's Our And yields. to keen competition rate in terms us helped but floors new

is couple which and portion to Now was a just May that's were $XXX And the again, during new opportunities We a on credit which million we of was a June, able best of pipeline. And from again, the improved billion, in facts our able new June. February. to are since best month to the close end million and give since February. the in $XXX June, was approved At add you pipeline month million $X.XX $XXX the of up to from of it up our May.

a bit term it just and XXXX interestingly was from borrowings. borrowers, $XXX of new million, existing are from which looking the million And point is Our this, mostly increase refinances less year-to-date at to than on for out the at enough then customers opportunities CRE their majority C&I are to over $X close closings our looking loan just of year. this only

Now turn consumer it let for updates. to over Rob me some

widespread turned deposit delayed all need In Gerry. available programs, quarter the consumer sheets you, being. of led significantly the for to benefits, second growth reduced federal due consumer fairly Thank to tax unemployment payment liquidity regards COVID, balance picture. enhanced portfolio, evidence consumer to have spending relief readily for time and bills stimulus improved only One to generous

was activity, addition, banking In well real sign of short-term up estate there residential robust no limited also held And with by as values and inventory mortgage suggested low have weakness. today. historically rates,

have statements, schedule With to payment be remains the of portfolios our real values, underlying combination stable consumer the relief on as and quality reflected credit balance And Average consumer LTVs our for to consumer to residential good. scores of financial healthy the improving. been our estate continues sheets quite strong portfolios and in manageable. requests

our and X.X% was June home forbearance. of portfolio only equity of mortgage XX, of As portfolio, our X.X% in

deferrals significantly for requests June. slowed in New

second the about the and with expiring chose days XX the to the extend incremental XX% the of during of quarter. arrangements consumer that additional lead had follow-on of requests we of deferral However, relief scrutiny. little shutdown duration We providing to balances would anticipated are

will combined days However, should XXX relief be needed more our after structured a process. legacy we of modification forbearance, follow

to relief, just of week, payment governor XX. the this moratorium to on Mass extended addition mandated In the state foreclosures October and evictions

to rate. state's has Our contributed nation's highest reopening cautious approach unemployment certainly to the

also Fortunately, rates it has to keep COVID helped comparatively lower.

there was meantime, availability the virus, local of employment approaching. seem on election Mark? the now. course the the we of another In uncertainty course, on suffer in to with should picture, impact much to an the regards additional most footing and for Of consumers wave stimulus be its solid

the other our Moody's qualitative factors Thank based on for $XX economic second our Rob. consideration, shared, Gerry. compared assumptions was $XX in quarter QX. you, scenario provision Rob Thank million in to loss SX loan own the million Gerry information of the and just you, forecast Leveraging that and

potentially metrics relief the shutdown. programs impact that as quarter, loan majority this the of remainder through providing in within With appendix orders and customers similar XXXX. impacted addition net information heavily will an asset information, E release year providing details last amounts of the deferral second of impacted Appendix loan we with the stay-in-place the directly government And remained pandemic, and the the into directly benign earnings view to those over and industries temporary by in to by effects reflects that through more expectation the actual quarter pandemic the deferral ongoing quality charge-offs for the

these of contemplating determination levels assistance the relief exposure the level quarters. the from to potential two Our are continues primary be program segments to deferral the loan of behind the last for and PPP provision factor

June PPP XX, Regarding the company over volume on PPP the through program, million loans, of XXX totaling closed has XXXX. X,XXX

As expected term fees paid earned loan to full of are origination interest or vary the to $XX.X SBA, interest of income the PPP in fees closed Approximately payment depending to a on XX, into forgiveness. at total be the and/or loans by into accelerated accrue origination in which the in SBA reminder, amount size. million through loan subject percentage June X% the be a these the upon amortized income amounts loans with over on

As such, normal of amortization during in fees quarter. the interest resulted the in $X.X second being million recognized income

and proceeds in XXXX, acceleration rules of to timing amount be forgiveness. some use the we in of loan the Although, their primarily fee will driven the program maximize customers accordance ability half anticipate by level of with the to second

be our of in XXXX. such, accelerated would best estimate of fourth level As amortization quarter point some the see at this to

the required part Rockland into of As loan at to proceeds our be PPP held program, accounts Trust. were deposited

outstanding balance still PPP and With interest sheet program proceeds still the is the and the the is in the impact noteworthy. net majority loan of metrics the accounts, deposit margin the on balance of

precision, account, loan Although on as identify PPP that we June on utilize we with still impossible XX. proceeds. expect amount see least And estimate of some that of of customers balance of XX% level the proceeds were a would still as deposit to trite the funds to at

deposit the in impacted growth the for programs, our business is businesses mindset being prioritize deposit consumer level preserve current at industry that Reserve excess and for form additional PPP interest a balances net as quarter. held stimulus both the factors with $X.X in liquidity the margin activity combination widely of said, and quarter. total liquidity deferral was a reported cash as a cash programs, seen PPP has loan billion increase the by fueled customers allowing the substantial, the deposits led environment. The significantly While of PPP-driven in With to second being Federal to overall an whole across to additional resulting increase and combined government banking in of volume of

have basis notable biggest the to provided Within the pressure decline path on factor. yields loan in point release, with the the the earnings we being a this quarter margin

the trend plan margin the also release course Appendix in in margins. have provide this of on the quarter-over-quarter C continue over view program. the and provide included insight we earnings We to to to PPP adjusted core And

inclusive adjustments hand, and the noted X in of XX appendix on X.XX%. the basis purchase PPP we the accounting adjusted by and cash pegged respectively, points at excess margin margin As with diluting to be quarterly

the more to help headwinds, relief To with place rate we yield rate points basis commercial basis offset interest cost versus help yield note, approximately $XXX point average these previous Also, to a environment That the XX address drop representing as analysis. for assume volume cost of loan loan margin to indices by anticipated million challenges. QX, quarters from in QX the additional in points core of of along the for purchase decreasing also led to specifically relief a new and rate basis in environment X.XX% cash XX As all XX we adjusted the deposit impact, rate basis impact offset floors have variable to loans, points is those QX. into on one-month full be balance of points opportunities margin. With excluding repricing looking core compression loans rate core similarly second XX index two a would of as fell asset drop of total quarter, side for XX quarter immediate and the baseline from prime tied the are this the this the adjusted accounting March, deposits overall points quarter. LIBOR of for the deposit of QX from calculated average basis low basis XX costs with repricing the on

year. core have reductions as round programs second stimulus compress behavior the over and deposit ATM we loan Rob spending overdraft over up government service in impact We fees position, in margin driven in To regarding expect customer to addition fees results that color slightly provided only half our the and levels see Gerry fees. and continue the demand, of and discussion reduced our reductions financial the direct to COVID-XX’s to of on for

Regarding capital management.

completed by of the purchased plan, the XXXX quarter XXX,XXX the Board stock quarter, repurchase purchased in During shares had approved during the been second first shares April. million we in and October X.X our with which approximately remaining

support of for and quarter capital this sheet complete capital and as this believe With operating a earnings XX, expect dividend we driven the prospective stock to the June a XXXX. X.XX% activity, future We PPP was buyback some growth. of provide provide assets level of growth primarily bit by balance capital results. environment as through for other more be of percentage appropriate as should over sustained color now to second I'll continue tangible

activity and QX $XXX in the balances primarily And second the C&I alluded the second and as general residential the in million floor C&I dropped from portfolio quarter across lending, within balances excluding impacted The is portfolios. PPP QX in decrease of in significantly by in plan, to were when in XX.X% to, quarter revolver loan utilization driven Board as product line industrial asset-based and categories. Gerry reductions XX.X% with commercial decreases

In end the although retained pipeline this mortgage current is of continued the XX. secondary of the to that be challenges approved loan activity of associated at over of the within second environment and XXXX. longer-term over the We which out addition, the sits down and challenge million the uncertainty QX category. with June loans anticipate the production within the continues offset majority strong portfolio business pricing, level market, of activity in reduced curve available pipelines commercial likely the new sold pay approximately the And $XXX to as mortgage yield to consumer were continued growth the half with

deposit strong to deposits as earlier, anticipated. second continuing of the growth noted quarter core number time contributed runoff As to with during a factors

the be timing pandemic as year dynamics overall the of as certainly the half of utilization impacted Second funds as PPP progresses. deposit will business outlook well balances by

mitigate of current from the into low deposits basis we year the further quarter. continued As partially end June, such, of we relief XX compared which when outsized decline results. point expected balances half expect in compression deposit with the second of should costs, range yield cost the already the should from level second to And of some the loan QX see in down experience to at

On $XXX,XXX prepaid sheet prepayment in the included other million the highs, liquidity company QX. federal at resulting on-balance home bank a in expenses penalty $XXX loan with borrowing historic borrowings, side, in of

In made million will addition, as our debt and $XX we a Hills interest $XX.X further expense acquisition These payoffs outstanding on obtained forward of part was financing. XXXX decrease going that prepayment June term QX QX the Blue levels. million when compared to

Turning in to second non-interest items. A few highlights the quarter. to note

as were ATM For impacted non-interest income, while previously, in charges revenue the June. of by deposit rebounding signs noted and service fees pandemic, negatively showed interchange COVID-XX

loan a quarter-over-quarter. in the secondary of origination billion Mortgage $X.X also Durbin is the assets June banking $XX amendment income elevated slightly the in return is reminder, activity with for derivative XX as the rebound income of pipeline $X quarter to with natural million as prior million, the increased at quarter. administration come remained the anticipated to against investment fees, continuing end And asset serve strong $X.X a a X.X% as at the from end. environment, will of management to $X.X compared at the QX demand are million due third into annual XX% sharp income $XXX tax revenue interchange quarter effect the strong led in second quarter combined quarter. QX over by a to to hedge a rate significant the and the remain a to impact though million quarter rebounded through decrease bump remaining to quarter-over-quarter threshold level the stabilization in second periodic to down preparation increased half Also low As market increase crossing income market least billion under With by nicely and year. expected as

miscellaneous were decreases. million $XXX,XXX and business interest collateral Regarding company through losses cash securities quarter-over-quarter other on the flow in funds, reflecting $X.X small other from gains to of quarter, offset investment income non-interest compared prior up decreases items equity by

we Regarding future, expense, initiatives certain mentioned, into there variations out from identify with was quarter. pandemic opportunities to to certainly as as Chris losing efficiency while minor not non-interest continuing to non-interest in to some of looked in prior overall potential were expense the will importance of look promote while flat this leverage drive the learnings we long-term quarter-over-quarter sight items, sustainability. essentially invest the And operational expense to

tax rate returned slightly my than anticipated PPP XX.X% fee of updated to as timing normal a the the concludes up result it to and more the questions. we assumptions That lower level comments will for of quarter second primarily open now over and Lastly, a amortization. was of

you. Thank

[Operator first We will with will now ahead. Piper go Instructions] Sandler. begin the question-and-answer Our session. from today question come Mark Please Fitzgibbon

morning. Hey, Good guys.

Hi, Mark.

morning. Good

interest. those I A of the couple that of have questions. F, deferral Appendix be? principal saw types In that $XX other the kinds it press you or and release What would table there, references million of deferral not types,

those term necessarily payment and primarily some adjustments deferrals. just Mark, are believe, I not

not content there being sort in then most think content? envision specifically most banks estimation, Gerry, I but the curious, the which you potential which And Okay. lost do have industry for your of the was segments lost to sectors general, do you guys, you potentially have in

one that Probably on in was Included some just back on there to to plans. thing go question. floor other

So mostly their on what payments curtail we used dealers, allow that did dealers, with passed. and curtailment them aged now normal deferment has inventory, car basically we to

stories question, the say, as in they different the your many lot is answer. order. no – of Obviously, to under taking the close. in pressure. are in particular going of There's country to difficult So which space the the restaurants third a restaurant is could I would country

based would until I most vaccine it's which challenged. they bankruptcy that effectively the there is will there when isn't those much business challenged hotels then on a will be, think, travel, time. and will be And into probably going retail malls, a I where such depending think especially therapy, on for or rate be

So think those I the three. probably

And I more I are up you're challenged they're Is was crisis? curious raising there? the through or then guess the what dried fund their seeing Okay. completely and how curious, not-for-profits managing

philanthropic experience, raise money couple ever personal I lot over. non-profits, It pain won share year to a to seems be willing boards than Well, been the them tend buy interestingly people are it people from personal of help the enough wealth and facing a I'll have that some actually a realizing this able their my of that – history. to of of more speak to them those of and and that are number in non-profits

to the which is were to themselves many with Now first been SBA has PPP avail able the of provide ever non-profits the able money, non-profits. support time to

to charitable and a PPP combination giving. then think of So been some I furloughs it's increased

then Okay. of stringent lastly, the you're today say, than being more Are new with I you you agree you than the a assume the bit better on that that? underwriting loans in Would past? your quality today And portfolio. fair average, that probably were, is existing with booking the

Right.

about I guarantees really enough been stronger et two values ways, able to covenants, to we've I we've And or LIBOR to prime. cetera. it in more probably think, lower or didn't floors loan been institute say comments. on fuller my But or able yes, negotiate

as the changed us, So I you're that has the much given banks on right. comments, given banks, as us smaller absolutely my large practices in mentioned their particularly That's side, as which haven't larger the opportunity.

you. Thank Great.

welcome. You're

will from next come And Please D.A. Bishop go Davidson. David ahead. with question the

gentlemen. Good morning, Yes.

Dave. Good morning,

back circling make sure initial in the just to I this Mark, I deferrals, Hey. commentary understood to want the just right. of terms

you I correct? that. it's think deferral if $X.XX billion I million mentioned I clear or about under XX, in thought process. billion, that And deferrals. In billion, $XXX millions I another $X.XX $XXX behind like $X.X wasn't potentially June of heard of As –

June as the a be $X.XX the active provide XX. earnings release, little clarity of in there, billion deferrals coined bit the To Sure. so of we what referenced to

of in the course had buildup point my in deferral. So back in you $X.X that combined gets deferral last at month to I a that volume the that off $XXX of requests, us the is approximately looking a take be that just peak book all month and think over already The June in a $X.XX actually the number much insight we've billion terms and request. referenced The July. the their will in come of with $XXX of that of give in to billion is have million in a $X.XX had of level of total subject of July. into that a or second over seen to to billion, that payment which its disclosure future as last roll some the June, I will that just that how activity is June in deferral the time. will approximately deferrals in And we quarter of first of processed million deferral of deferred essence, result the and XX-Q, deferrals payment certainly comments this XX, that of in quarter second would for those portion our first references

will first give just next more over wanted I to that what the immediate potentially deferral runoff So some request. of date of month we'll be so into the looking in reaching and what or terms color their second end at be of

there? Dave, Dave? Sorry, are clarify, does still that you So help

there. I'm Yes.

to had I mute. Sorry,

will your out your As you tough have some reaching that curious relationship a it's peers your your but if through sort you range, seek of in we're just you know that hedge, that process second of and where seeing go not XX% XX%, any managers of barrowers, and round guesstimate? clients are deferrals? sense think I the to that to

seeing in his today, as sit you challenge here the truly point see a much I now little a of we is bit of deferral. comments. asking this this decrease to first units stage portfolio is is for at terms deferral a that a how if second to, and as meaningful think Gerry But in But of a it trend. we're of of process bit it some a alluded to

comments only but XX% that relationships Gerry’s dollar in actually and food industries, of have in think haven't experienced And to number amount lot dollar range terms second goes in XX% deferral we've far, XX% we terms a the back higher that you of some accommodation balances overall somewhere so to where in of point, we've are set. seeing level that of your the evidence of reached of higher seen portfolio in our the we larger that requests of terms to amount. the which I service typically that XX% than quite So that. And units. The in to range the is referenced,

we'll been of of that versus in mentioned, dynamic for something be dollar as ratio I unit second borrowers. monitoring But So terms requests meeting certainly some deferral these it's the the an closely. And we needs mentioned. anticipate interesting just of I

Yes.

for of home consumer and equity. quarter, combination chosen mortgage has XX-day second a portfolio balances the have That's Mark, XX% a of been through so far second deferral. the the

attribute I take of sort the of just more the much as rate that? just trying possible. liquidity within Rob, borrower state you to And or alluded think advantage high you to as unemployment just to

Just curious.

Yes.

those just consumer resistance XX-day We're a I probably to unemployment them. the or not secure combination it Dave, a very it's gone uncertainty, if of putting a to easy pretty still little work. they've up that fact maybe on side, little feeling maybe back making the also, think And things, two bit second of completely modification. on we're there's

really to third be telling modification historical plans where documentation institute individual that the tailored additional So thing. to borrower, or be requires it we'll restructure sort the begin be our will will will round framework, most of that which

So that at number lot XX% I to learn. this read too a There's much into still don't point.

loan the obviously And look as we elevated there. it. loss Got uncertainty the provisions, remains with at out

to decline the the what of number? increase unemployment model start really in just it inputs I'm of be know state I we but maybe two in would decline rate Is that of to do terms in need the in inputs see in curious Just sort material ton – material there's a GDP? drivers curious – to see What are what show decline the that? a a material there, one really there. or of one of to the

Yes.

of how lot the given from asset certainly question that this regulatory perspective, buildup a particular that it's built we approach off the have unique interesting had driven data aspect in a necessarily think terms of to I reflected release in models in ours the lot heavily is quality of environment in some and an we've and the of the metrics of that of in have been input. isn't impact A to-date.

even that NPAs net you're not model. meaningful charge-offs the would of in really or levels So increases seeing influence

really of our some be is lot a – to what taking of at insight a our into had to industries, on at-risk lot has we've do what it dependent a given had of on been. the very loss the look some So much historical stress alluded default at default first We've risk. done to seen some there deferral and the we've testing The where question probability to in activities. raised Gerry rates over be more consider of where we industries, have max of

really the we've that's of built provision qualitative the so in up So model been I we've what that backdrop and far. the how aspect the of call put

to to to capture to that asset assets. we'd So deterioration non-performing levels think anticipated I loss. approach of at we've a today, we pretty requests potential increase these industry we've in would meaningful suggest assets a economic conservative level lower quality I some provision high-risk deferral continue taken and tried see reasonable activity exposures to think think lead will stand on expected But quality really pretty a that I outlook and transition And have or and these levels. where at that certainly we’ve to

certainly if we today levels expected to knowing classified being in would the that that enhance lead I So all and to second trend what elevated and to down provisioning. I on outside with NPAs of already things criticized taken levels start start the to that again, think we've we of quarter, through approach see the caveat could or the model couch anticipate, provision, I we've but equal movement

Okay. compression. that using or of you on a one Appreciate are that net or a C, base sort the there X.XX% Mark, in basis on which of by Got terms the core noted color. it. margin final the way? great the points Appendix is you And core potentially Is interest X.XX% few here basis, me, for What NIM off?

I'd say both. Yes.

X.XX% think volatile I inclusive of just bit quarter-over-quarter. has the that and accounting, is a purchase really been

think accounting. range. quarter I made excludes cost ended of the And just reinvestment still of of of the have XX I outlook purchase X.XX%. I relief the margin So disclosed that's we just that it side accounting, rate if lower we've being changes this core the in that do of that continued stating mentioned of really but And deposits point with the off a basis reflects the of that the some off had point deposit I'd the probably in volatility obvious, probably the that you'd there. on environment. think we We of pure levels into low more already basis we few purchase level, see a terms certainly decrease consistent say

into expect offset relief there of the deposit see we But quarter should side to some we challenges. yield in would So all-in-all, third the over asset second of the on compression half level say, still the year. the I'd

or that out… I excess getting is you're don't utilized? think much flow to see so. I you of Would Is of some sort – at billion that how cash that $X.X expected know

And was that Certainly, customers the see to on surprised in of going run outflow of from may deposit of I that of just more loan funds much account a end of were still the knowing to and But to that to significant government bit through how would of to portion money associated the Yes. program expecting with see the be of utilize that And PPP. think terms It's were a changes those out. tricky. bit that is June. expect I be was weeks shortly in honest, I we weeks. XX extension honestly after to think reflection see eight a issued. a the we

quarter. of as with hesitation it's cash, where stock work. We've seen terms second utilization. when you decreases to to look loan been line just think should the And associated being as of then the we at our and drops of deposits saw the some that or we portfolio $XXX environment meaningfully such I of money there's a some to additional excess dynamics quarter. book quarter, of a so think in with and that do to the put in other invest in challenging area we'll the environment securities likely decrease certainly say there. all I I'd an of the So have that million level PPPs do in third a understanding equal, runoff purchasing And in portion things third meaningful in to see But some drove here rate the that's that

half. back to and cash that As use be hope some the in it over a view volumes to that any line some the that activity we of certainly up third will utilization But in in coming well. level business meaningful maybe have loan as some the quarter, of optimistic increase way challenge deploy to second cash over a in we cautiously of see

Got it. Thanks.

welcome. You're

will question ahead. next come the from And Compass Point. with go Laurie Hunsicker Please

Good morning. thanks. Hi, Yes.

the right that about this of margin I sure thinking just staying Just way. with the make I'm to here, want question

if was it accretion income, in in the it was quarter, and look points. at now XX basis So points, X your quarter, then fourth the points you basis X basis first

how guess it more X, this a your core following your does of the of you points? the excluding Or guide, accretion points I Thanks. include question to of half think accretion? it more the X would does basis And is basis be, year? then solely X, include So X for about on guide back or just do

the the view Sure. more margin. simplistic off guess is based of it. core I to way the would say guide be I'd

in any Although second That's anticipate under the we certainly in $XXX,XXX a QX. to predict. quarter. accretion don't number in I been loan And to up the the to first million was saw little it your variations $X.X tough from quarter meaningful point, a

quarter-over-quarter. if wide $X core range, So $X.X and would a margin I'd can relatively I that be margin acknowledging range, level. compression the accounting purchase that keep that to say assume that And million to range. basis impact But both the adjusted be accretion think points pretty in accounting obviously million stable I that you that would purchase few in applicable think

be on should how we here using we And quickly closer Should think or XX% then lower. obviously thanks. rate. tax just that? about to Okay, Is

first through drop can you think I the the I'd quarters, of on level couple we've Yes. provisioning XX.X% to say the more given of that range. that pushed

guess Okay. question, just I Mark And then, last or Gerry.

or done looking the XXX a How how so you have have those of or Just deferrals If your – many XX%. many how deferral out there? request already expecting are go much hotels, days? a second at it are you

Laurie, Gerry. is this

round. deferrals So granted in up of P&I to XX we only the days first

it. Got Okay.

round, in XX so your it would only additional question? Is be second the answering an And that days.

is. it I much coming deferrals, But next your request because weeks. I well, few to are plug? – maybe how of And I XX-day sure the of another guess, – then of them you in guess are most $XXX mean, million that Yes, of expecting

I from hotel Well, XX%. think probably side, the would

by Although already that, set. And mentioned I what's interesting, we've surprised not earlier, actually I as had because vacation some us, was tell areas. little we're even they're in

So do telling period difficult have it and I'm to is which is it's to are have get to want that guarantees they to in be restructure them of really cautious, think travel areas, vacation even of by will us think deferrals. because the a and after get want on going This business we're sure most there – September. business them not – suspicion the dependent back to ones The will have I those going they some cross-collateralized, additional they my understand. very coming be are through year travel But something to okay. year,

Yes. Great.

vacation. book million the had $XXX you $XXX your travel was would percentage mentioned call of pure So What you XX% roughly million? business of

remaining That's locations. the what's harder number to interesting, balance and get it. vacation struggled the to are Because we've simply try really out with not in

coming near Boston, example, some of groups but the to not there still they're and for earlier, in So shared ones I them Boston. tourist are are

almost normal have actually These all tourist, have hotels, but us them, that. related Hiltons, have to in staying what Marriotts, but do is remaining least that the be, do of said, that from would extended places many to interestingly stays, they’re flagged, travel hospital. a XX% of further half as didn't any And probably a probably like would remainder Inns, they that told of would hospital family-owned say they on We've seek occupancy having need up deferrals. at I few leaving the some Days I the sourced Hyatts, revenue and deferrals. business type. rates business people back their again they them But family had all be gatherings. enough people Brocton of So

that the surprising, somewhat doing period. actually great, doing are interesting okay, maybe it's very So ones but

to of universities Okay. hotel hotels. to final the into you they're the area, just seen Are of out? that a figure any is it Have seeing close break kind universities. but And you don't pickup then any one that just again, of question vacation early too do the sort or on maybe any on

those stories heard I've Yes. as well.

if people because to that determine they're early materialize. too spread It look still to it's trying does think to I out. may

it see So yet to we materialize. have

for question. Thanks taking Okay. my

You're welcome.

Collyn the Please go question Gilbert come KBW. And from next ahead. will with

morning, Good everyone. Thanks.

Good morning.

Collyn. morning, Good

the but movement that. good portfolio the where you do know guys given the you've I the Just credit you conversation, Gerry, know of of go? and charge-off on for provide Thank just what digging But but sort net more just could all know level that near-term losses you question, peak? you've just you And kind of to range of a now Do detail think Super think have based the you of just is in and it's to that granularity general you again, doing the sort press question, a stick it's which, seen. what detail. release a as a done sense tough great. And now, where I into curious. could of know you hard

fourth to is if be XXXX question. tough sometime going instinct is probably I guess. my the quarter gut tells through in peak my beginning a is that mean me That Yes. in the QX XXXX

in suspicion is it peak. somewhere So over be those my is will there three quarters

Just a suspicion.

Okay.

that guess now, know to follow that figure given right so zero just out magnitude – here? the But it's we're you're is, mean, then the at losses a of like change what I sitting I And question. ultimately I will I trying I just up, that I to of mean look know. sort tough don't

some to there, Just color Collyn. add

reflect been don't Gerry, we XXXX activity to bring and But to because certainly the the loss had challenge the through history this I we've And That's some us crisis. but there's sorry, I a this crisis. environment doesn't where mean from back default see challenge and leveraging experience to for think and not interrupt. modeling, given charge-off really historical

we back equate we that loss combined this apples-to-apples certainly account that PPP providing understanding first as much in and I the of of And data it leverage to where on suggests analysis max quarter to it that relief, loss. did to in comparison. probability of and rates. But really by given peak to that as of PD knowing in much taking sometimes deferral relief for into risk I comfort levels try data. and that the And model with stressing of looked as in loan based the that XX% what that where our we've I XX% the mean we've portfolio to what we looked history upwards where economic leveraged see default trying assumptions doesn't default had we is is and of correlate information to we're leverage saw charge-off environment think trying So sort element past, to an there's from of some to adds think

a backbone taken that's the view net quarters. over we've conservative think understanding couple really the I peaks So and provision loss we've how our rates. been And pretty historical to first given charge-offs determined default into

the and Gerry where to think try really the some past. in through of could gone makes I But it next as the go, and much of different the nuance charge-offs think the what as three in to. So risk quarters widespread external other environment broad it been that's or unique a go we've this than in just able could factors think how and we've I best as about and four alluded environment

credit to on the just I move – question sheet. last One Okay. before balance

payments like $X.X of curious, about you quarter. NPAs this So it just return to looks had million

was what around credits? what dynamic drove curious Just the that? those Or

Of able in was I relationships there. short-term Yes. I'd that have of where have and but these they've back relationships specific Collyn, at got look some To involved top to head, the pre-relationships just into met my honest, of front I unfortunately. been to believe good me, don't the be the footings, be have challenge may of

That's worries. No fine. Okay.

two sheet, is, balance new just origination your are coming? the to loan things. shifting where yields One curious, just Mark, right? So then And Okay.

Not talked I get can second to they're tried surprisingly CRE, look different that we a looked down our portfolios, can C&I volume about on implement, as on floors, the bit many But CRE meaningfully rate And insight the on low I of on the take have Yes. results space, in side. sometimes if of average, similarly you a imagine, especially there. swap you as know to the depending X.XX look through the But loans through of some a in Gerry we're to down X% on based quarter. as little X.X to being the unexecuted with especially variable, of is LIBOR maturity. our X% sub five off fixed We've in at floors pricing capacity. XX-year one-month with book

typically the on So the spreads low and side, average, X% new I'd there. our see CRE get say, to on to quarter. right was the we second volume better X% pricing around better in Construction,

consumer volume lot there of on keep mid come Most priced portfolio equity reminder, on X% in and the retaining see volume this are significant we been talked able X% in then a there. a low we've that environment the to that rates the So in side, range. on being and quality mortgage to-date. in range side, mid the about able better the Similarly certainly are to typically in those better is we've the production. new we in And been X% just sold home

when again, But portfolio kind a of think of whole, surprisingly the levels X.XX% where the the have entire on not we've gone. rates I range So weighted-average. look probably overall you absolute a into down as at given trended

going to pay sit excess I or now obviously, for two more to PPP things side? just and uncertainty you an going I it's that. a the If beyond indicated, June, just cash are lastly, of on the down know the deposits built referenced lot loans side? position said even then I you know And borrowing do are to liquidity actually, there's in lastly, Okay. there to did in it move. the One, is how move PPP borrowing more. liquidity, as as awhile, But but this you you to more on is the here

believe, talked too not of set Those that's have borrowing of brokerage in wholesale I second runoff the on over half CDs do levels were the we'll some Well, that We million of left that rate that, off parent which year. paid over side. $XX.X to and activity have a much $XX acquisition had a that there's brokerage portion at the about CDs. debt come in half Yes. is range. company million. the pretty with we Hills had Blue The the the about, term I them sizeable on up of X%

more, second will $XXX reminder that see that lot payoff that We continue leave more, look million was to FHLB of swapped borrowings, that if and million can $XXX A here of in we terms doesn't half. a plus. the fixed. then not it whole if of all to And in really out

to the some than levels. more did brokered rack that funds of and remaining on of help look exit but down being certainly deposit with even could term we those just CD relationships, the picture should I for debt we So on cost think the potentially, what the paid some of runoff rates

the of fourth But purposes, it's any just modeling on guys then kind we next determine. after of what over And should PPP. to Okay. are assuming assume and just what on for for quarter the forgiveness sense I know schedule – hard us, you or a the that? lastly third in

know of trying as I'd $XXX,XXX magic one sort the size we following anticipation split the smoother now level some get a that hopefully been loans the on you've there's forgiveness. more relationships get avenue program, would executed. and much a that if to the around we And what It’s application page question the based to be of well. our between under that of say, arms we're and

of would of get bulk of loans our goal probably quarter, we volume, see the see them fourth of we to much the did the XX% smaller sizes. those of if most forgiveness maybe is were of and that to hope loan to level that we some able here the a the which So hope The would in about hopefully assume maybe overall PPP XXXX. think XX% larger just of would by guess get the would that relationships stage to here of modeling just year. be the been that the might a the into But we've in of doing internally fourth I bulk production trail off talking some end forgiveness And quarter. be

Okay.

based from base. speculation customer hearing just of reading we're really that sort that's Again, on what

Thanks. I'll great. it That's leave Okay. there.

problem. No

will over to any turn This session. question-and-answer conclude remarks. to would today's I back closing like the conference Mr. Oddleifson for

you joining Thank look today, you, the you And Sean. talking forward Goodbye. thank good to and all, best a us in to Have three months. everybody we and weekend. for to all again

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