Q4 2019 Earnings Call

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Okay.

Welcome to course, please. Hold an operator will be with you shortly.

Crisco conference would you like?

What was that again, please? Yes, what color would you like?

Renaissance, okay. May I have your name, please?

Okay, could I get your first name again, please?

David okay. I'm sorry about that. All right, and I need your company.

I e. All right. I'll join you in right now. Just so you know, the conference already started and it's being recorded.

Drove that decline. Yeah. So just another we have some volatility as you can see that number bounces all around there is some volatility in there just with some pads 91 expenses and how wage for that and it's at the volatility is really going to be linked to to production and growth but it really that's that's more salaries and employee benefits and actually looking to whether or not we need to regain that interrupt the salaries employee benefits now, but we we held off on doing that this quarter just because of the hiring we've done we did not want to mass the Optics of what's happening in in salaries and employee benefits package says we request that over all the other expense category if you exclude that volatility, it's been increasing, you know slightly, but that's that's there is a little bit of olive oil in there just to care of of what I mentioned.

Got it. Thanks for having it. Just find a question to follow up on the the Cecil discussion. Kevin had you been

Under Cecil this quarter, you know would have implied, you know, the the tuna the 2.4 million dollar provision for growth. However, you also had five four million dollars of of nine incredible income with that resulted in a negative provision for the fourth quarter, you know based on kind of how you guys, you know, approach the methodology or in my thinking about that, you know in correctly, you know, is it kind of relates to see so going forward it would have um, so a lot of moving Parts but let's just let's just look at it from birth. It looks right now of that four million dollars and nine incredible difference that we recaptured against the 2.9. Yes, it would have resulted in. I don't know how long we we have a clear picture on what our provision would have been under Cecil what what the provision would have been but if we just take for the two knowns, which was a provision of 2.9 vs Thurs.

A credible recapture of roughly four million that that would have resulted in a net provision a negative going forward. It's all going to be Thursday is going to result in in different numbers than what we generate under our current allowance as it relates to the provision. I mentioned to you right now, we're we're we're providing roughly 80 basis points for new production outside of any downgrades as I mentioned to you. The the allowance is going to land somewhere around 1% So let's just just for simple math save it. Our Lounge would have been one 1% off. I'm sorry provision would have been one per-cent of the production as opposed to 80 basis points that may have resulted in, you know, maybe a

No provision.

Or a slight amount of provision if it would have been under that scenario, but I just said there's a lot of moving parts for those things being equal there would have been 2.9 provision versus before Thursday that would have made it to a negative and and also said just on that four million of recapture, there's volatility in that number as you've seen just just in this past year we've seen a large swings in that and that's the nature of that number. It's all dependent on the performance of the underlying non-performing or the credit impaired assets if they perform better, there will be recaptured and just log directly. They're performed better. And so we we've had that positive impact the margin if they continue to perform better, that would be a positive impact to provision rather than margin.

Right. That's helpful. I really appreciate it. Thank you guys. Thank you Brad.

The next question will come from John Rodas of Jani.

Good morning guys morning John Kevin Kevin back to just back to your your comment on Cecil and not to get into too much detail. But as far as you know, you talked about the core margin being under some added pressure. I think you said maybe down three to five basis points all things equal what sort of level of yield creation should we assume next in 2020? I guess, you know impacting the the reported margins. So you saw $23 24 basis points of view of the creation in the third and fourth quarter how long we think about that yield accretion going forward? Yeah. So so just just for right now remove the non incredible difference out of out of the margin taxes because under Cecil the Assumption under the Cecil right now is all of that comes out. What will remain is there credible guilt and and some pieces of what's in that not incredible difference.

Maybe

Credible yield but just for for the sake of of this discussion is just looking at that non incredible difference comes out the box that's in there for the most part that's going to continue to incrementally decline over the course of the year. That's a declining balance and has been since since date of acquisition. It's just that something that would Trail off over time as it relates to how much will be recognized in 2020. I may need to follow up with you on that number as a religious credible yield, but I would think it would be an amount similar to what we had in 2019 with a declining Trend that you would have seen compared to 18 vs 19.

That makes sense it Kevin just one other one on the on the the tax rate. It was lower and the fourth quarter. I'm assuming maybe some some year-end through ups and stuff what sort of you know, it was closer to 23% for the first part of the year is 23% a good good good rate use for next year. 26.3% We yeah, we did have some true out. There's a couple of State matters Thursday. We got some favorable.

opinion

And results home. And so there's a little bit of a true up on that overall expected tax rate to be in that 22 / 20 to 20% way.

Okay, super. Thanks guys. Thank you, John , and this concludes our question-and-answer session. I would now like to turn the conference back over to Robin McGraw for any closing remarks wage to carry. We appreciate everyone's time and interest in Riverside Corporation and look forward to speaking with you again soon. Thank you. Thank you, sir. The conference is now concluded. Thank you all for calling today's presentation. You may now disconnect your lines. Have a great day.

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