Q1 2020 Earnings Call
Thursday
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Thursday Thursday good day, and welcome to help Bancorp 2020 first quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You may press * then 1 on your touchtone phone to withdraw your question, please press Club.
More than two, please note. This event is being recorded. I would now like to turn the conference over to Angie Yang director of investor relations, please go ahead.
Thank you, Brandon. Good morning everyone and thank you for joining us for the whole bank or 2020 first quarter investor conference call as usual. We will begin we will be a slide presentation to accompany our discussion this morning. If you have not done so already, please visit the presentations page of our investor relations website to download a copy of the presentation or if you are listening in through the webcast you should be able to view the slide from your computer screen as we progress through the presentation.
beginning on Slide
To I'd like to begin with a brief statement regarding forward-looking remarks the call today may contain forward-looking projections regarding the future financial performance of the company and future events. These statements are based on current expectations estimates forecasts projections and management assumptions about the future performance of the company including any impact as a result of the covid-19 demek as well as the businesses and markets in which the company does and is expected to operate these statements constitute forward-looking statements within the meaning of the private security litigation Reform Act of 1995. These statements are not guarantees of future performance actual outcomes and results May differ materially from what is expressed or forecasted in such forward-looking statements. We refer you to the documents the company files.
Periodically with the SEC as well as the Safe Harbor statements in our press release issued yesterday. Hoping for assumes no obligation to revise any forward-looking projections that may be made on today's call the company cautions that the complete Financial results to be included in the quarterly report on form 10-q for the quarter ended March Thirty One June 2020 could differ materially from the financial results being reported today in addition some of the information referenced on this call today our non-gaap financial sisters. Please refer to our 2020 first quarter earnings release for the reconciliation of gaap to non-gaap financial measures. Now, we have allotted one hour this call presenting from the management side today will be Kevin Kim hoping for chairman president and CEO and Alex our Executive Vice President job.
And Chief Financial Officer. Chief credit officer. Peter is also here with us today and will be available for the Q&A session with that. Let me turn the call over to Kevin Kim Kevin. Thank you Angie. Good morning everyone and thank you for joining us today given the extraordinary changes in the operating environment brought on by the covid-19 and demek we will spend most of the time on our call today providing an overview of our response discussing the impact. We are seeing on our client and providing additional disclosures with respect our loan portfolio.
Let's begin with Sly 3 with a brief overview of our financial results.
Overall our 2020 first quarter results reflect a solid quarter of financial performance marked by continued progress with strategic initiatives designed not strengthen our organization from an operating as well as from an Enterprise risk management perspective despite the challenging conditions that have developed in recent months. We recognized positive Trends in most areas which resulted in our tax provision income increasing 8% over the preceding fourth quarter of 2019. We generated a higher level of both net interest income and non-interest income while keeping our expense levels well-controlled despite the seasonal factors that contribute to the higher salaries and benefits expense that typically occur during the first quarter of each year. We continue to drive down our cost of deposits which contributed wage
to an increase in our net
This margin both on a reported basis as well as on a core basis without the impact of acquisition accounting adjustments. We executed well on our core deposit Gathering initiatives total deposit increased at an annualized rate of 10% and all of our deposit growth came in our lower cost categories for the first quarter of 2020. We generated net income of twenty twenty six million dollars or Twenty One cents per share on a fully-diluted basis this reflect an elevation level of provision for credit losses resulting from a combination of one of our implementation of the new accounting standards Diesel and two
A significant deterioration in the economic forecast we use in our allowance mythology due to the impact of the pandemic on the economy moving on to slide off or we had a strong quarter of Business Development with photo loans increasing at an annualized rate of 10% with all of the growth coming in on Commercial portfolio page dated 625 million dollars in new loans the first quarter which was 41% higher than the same period of 2019 moving on with his life. I now I would like to provide an overview of our operational response to the coronavirus endemic affected me January. We activated our response plan an hour endemic Response Team began meeting on a regular basis to closely monitor the situation and identify issues and develop appropriate response Church.
Aimed at reducing the operational and financial risks associated with the pandemic understandably. Our highest priority has been the protection of the health and safety of our employees and customers as well as the mitigation of risk to our operation as part of our overall efforts to help contain the spread of the virus off. We responded quickly in a responsible Manner and made a number of adjustments in our Branch operation. We reduced the opening hours of our branches across the country and we temporarily closed a number of branches in close proximity to another location in terms of our non-retail and corporate offices. We enable the majority of our employees with remote work capabilities and implemented a fifty-fifty remote work rotation strategy for our communities Bangkok.
Is donating more than $20,000.95 to various organizations including senior nursing centers hospital and medical centers and other community support organizations among others moving on to slide six. We have also established a number of programs designed to support our customers through this difficult. Wage for our commercial borrowers upon request by our customers whose businesses have been fully and directly impacted by the pandemic. We are providing modifications generally through interest-only payment or full payment deferrals full payment deferrals are typically being made available for those borrowers who have experienced temporary business closures or substantial reductions in their operating revenues today loan modifications have been provided to commercial borrowers aggregating less than 2% off.
the outstanding balance
Of our total portfolio. This modification request have been primarily in the hotel motel and retails Theory bucket for our customer for our life. We have the initiated a number of programs to support them during this time of need for Residential Mortgage Loan customers impacted by the pandemic. We are providing temporary for birth upon request initially for three months based on their individual situation, as of April 24th, 2020. We have approved for Residential Mortgage Loan forbearance plans accounting for approx 18% of our residential loan portfolio for our credit card customers in good standing. We are differing minimum payment up to 2 billing Cycles without penalty upon request as of April 24th of 2020. We have processed. Yep.
Payment deferral request for both consumer and business credit card accounts which represents approximately 2% of credit card outstanding balances as of March 3rd of 2020.
The SDA paycheck Protection Program or Ki tpis is certainly one of the primary tools for supporting our customers and Bank of both has been an active participant off as of Monday, April 27th. We have received more than 4,200 applications from customers as of April 24th. We have processed 2681 if you loan applications aggregating approximately 405 million dollars of government relief funding for those PPP applications that we have processed so far off 91% of the applications fall below the $350,000 Mark in titling Bank of Hope to PPP lenders, please or 5% of the loan amount back together with some larger loans and based on current funding of 405 million dollars. We would expect to earn in access to fourteen million dollars as our lenders Feast had an Choi
Great rate of 3.6% with the government additional funding of three hundred ten billion dollars to the PPP program last week. We have been working around the clock since Monday morning to help as many customers as possible before the second round of funding is exhausted moving on to slide seven. We have provided a breakdown of our commercial real estate pull by property type and geographic regions.
From the perspective of property type you can see that our portfolio is fairly. Well Diversified with concentrations in the following segment multi-tenant retail Strip Mall of Georgia these account for 20% of our CRM portfolio and Hospitality or hotel motel properties account for another 20% of our c r a portfolio took Geographic perspective. You can see that the diversification largely reflects our operations throughout the country moving on to slide eight. We have provided a breakout of our CRM portfolio by loan-to-value distribution to ensure that we are looking at properties with current appraisals.
the charge on the left
Includes the originated loans since beginning of 2019.
All flowers Theory origination since 2019 24% were booked at less than 50% loan-to-value and 49% were booked at life a 60% loan-to-value on the right side of this slide. We have provided the average size loan-to-value and debt coverage ratio of surreal owns books on a 2019 by product type overall. We have originated 1.6 billion dollars in theory loans since the beginning of 2019 the average loan now during this period amounted to 2.25 million dollars. The weighted average loan-to-value was approximately 56.95% and the weighted average that I was 1.93% with the emergence of covid-19 demek and the impact it is having on on the economy. The hospitality sector is certainly one month.
Industries that have been hit hardest by the pandemic our hotel motels. Portfolio total 1.6 billion dollars over approximately 13 percentage of our total loan portfolio the majority of these properties of black properties like Best Western Etc and limited service type of facilities. It is worth noting that commencing in 2019 with heightened the underwriting criteria for the hotel and Retail segments of our Theory portfolio. We increase the minimum wage ER photo tells 21.5 * from one point the time and the minimum PCR for retail properties to 1.35 time from 1.2 time. If you look at the chart the upper right corner of light eight, you can see that our TVs and VCRs for both hotel motel and Retail properties. Well above even the type on the writing price. Yep.
Yeah, at the time these loans were originated accordingly. We are of the opinion that we went into the pandemic with cushion to absorb the potential deterioration in terms of our construction portfolio. It is relatively small at 283 million dollars or 2% of total loans. We have an average loan cost of 62% in this portfolio. And approximately 65% of the portfolio is greater than 90% completed as such we believe we have that available options that significantly helped mitigate the potential risk inherent in a construction portfolio during recessionary time moving on to slide nine months. We have also provided a breakdown of our cpni portfolio by long type and Industry as you can see from the chart that this portfolio is also a pretty well the birth
5 hours
And I put all your increased 347 million dollars or 13% during the first quarter of 2028 dni origination contributed to approximately about half of the increase while the other half of the increase was attributable to see Ni line draw Downs during the quarter in terms of draw downs and credit-line Facilities. The same utilization rate was 50% as of December Thirty One of 2019 this increased to 60% as of March Thirty One 2020 reflect approximately two hundred million dollars in draw Downs during the quarter historically. Our Sienna utilization rate has trended between 50% and 54% off with that. Let me turn the call over to Alex Cole our Chief Financial Officer to provide some additional discussion of our financial Alex. Thank you Kevin dead.
Moving on to slide pan as Kevin mentioned earlier. We adopted the new Cecil accounting standard as of January one 2020 as of December 31st of 2009 Chen our allowance for loan losses was $94 up and Adoption of the Cecil. We recognize that day one adjustment to our loans for credit losses for ACL of 26.2 million.
During the quarter. We updated our macroeconomic variables based on Moody's Baseline version to scenario published on March 27th, 2012, the operator scenarios combined with loan portfolio changes and net charge-off resulting in additional net ACL twenty four point six million dollars for total of $145 as of March 31st, 2020.
In terms of the assumptions included in the Baseline version to scenario. We have summarized them in the upper right corner of slight tan and they include among others a sudden sharp economic downturn due to the pandemic causing among other indicators a turmoil and the aqueduct and a global oil price small unemployment is forecasted to increase in the second quarter on average 8.7% off.
12 all on the economy recovery under the Baseline scenario is expected to take longer than originally anticipated month and you can see in the bottom right chart of slight tan that we have meaningfully increased our last for credit losses as a result of the implementation and account holder current economic environment.
Our ATL increase from 77 basis points or lost receivable December 31st, 2019 215 basis points off as of March 31st 2020.
If we move to slide, we have provided some additional details as to the allocation of our Lounge off as well as the cut off by product category.
The coverage ratio for our commercial real estate portfolio increase from 62 basis points 209 basis points as of March 31st, 2020 and for our standard portfolio the coverage ratio increased from 121 basis-point 240 basis points.
Morning, I'll just like well, let me review asset-quality Trend in the first quarter. We recognize good stability and portfolio month total Chris sighed and classified loans were essentially unchanged from the end of Prior quarter.
I'm performing loans increased by $20 quarter-over-quarter. This increase was largely driven by the reclassification of fourteen point seven million dollars of purchase credit generated loans or PCD loans due to the implementation of diesel.
the implementation of a also impacted our charge of and impaired loan balances during the quarter we charge off 4.7 billion of specific Reserve against long that war request by
Together with the recoveries of two point five million dollars we incurred they charge off of 3.4 million dollar.
And 22.2 million of the quarter-over-quarter increase in Imperial long as of March 31st, 2020 was due to the addition to Speedy loan for Merritt Island, which were excluded from prior to the adoption of the Cecil.
In terms of the precise loans. However, we saw a minimal amount of migration and overall our total balance of criticize lost remained stable and your historical laws for Bank of both.
Nevertheless, we recognize that the integral covid-19 is not fully reflected in our March 31st, 2020 as a quality metronome.
so
Whenever we are actually staying on top of the rapidly changing economic environment. We are encouraged however with all of the support being provided by our government in terms of financial relief for small businesses and allowing Banks greater flexibility in the accounting for longer-term models patience and forbearance.
Moving on to slide 13. I like to discuss our net interest margin.
In the first quarter our net interest margin on a reported basis increase fifteen basis points from 3.16% to 3.31%
Excluding accounting adjustment our core net interest margin increased eight basis points to 3.03% for the fourth quarter of 2020 from 2.95% in the fourth quarter of 2019.
the increase in our core net interest margin was primarily driven by a 15 basis-point decrease in deposit cost 12:40 by the overall reduction in the interest rate environment combined with an improvement in our overall deposit mix
due to the unusually high level of uncertainties driven by covid-19 from Dynamic. It is difficult to provide margin Guidance with any reasonable life insurance. I will however provide directional commentary on some of the more meaningful factors that are likely affect our life just molded First a full quarter impact from the wrist and hundred fifty basis point reduction in fed funds rate will pressure margin and the second quarter.
Second most of our variable rate spell reprise by April 2020 and this will lead to a decline in life yield for the second quarter of 2020. Keep in mind that we have a significant portion of rate loans in our portfolio. There are not affected by the recent rate reduction.
answers
The net interest margin compression from the decline in low kneeled will be partially offset by further decreases in deposit cost money interest-bearing deposit and continued to reprice too much lower interest rate.
moving on
Life for $10 income was a table with a border with no sense complication.
So let's move on to slide fifteen. We continue to have success containing hours on just expand.
Compensation expense was a higher this quarter largely due to payroll taxes and hire seasonal expenses. And this quarter's have yourself a chance to analyze to evolve you expect as a quality partially offsetting this increase. We had a significant reduction professional fees as well as advertised and the marketing.
Where is so much on certain economic condition one aspect of our operations that we can actually control is our non-interest expand wage. We plan to remain Vigilant in tightening our expense structure and the seeking additional cost savings measures as a means to improve home after the ability for the second quarter of 2020. We expect to see a decrease in non-interest expenses from the current level.
moving on to slide 16
Also, it's Kevin mentioned. We continue to see positive Trends in the next of our deposits with all of our deposit growth occurring in our minimum wage, and now account.
Owen money market and March 31st, 2020 increased 22% over 2019 and increased 38% of total deposits from 32% at December 31st, 2019.
Our total cost of part is decrease the fifteen basis points from the preceding quarter.
And as you can see in the bottom-left corner chart our monthly deposit Coast continued is downward Trend throughout the quarter particularly in the month of March reflecting the hundred basis point reduction in the FED funds rate during that month.
In particular our total cost deposits decreased significantly in the month of March decline twenty four basis points to 1.18% off.
We expect this trend to continue into second quarter 2020 mmda cost continued to decline and I'm deposit renew as significantly lower rate.
We
Expect our total cost of deposit for the second quarter to fall below 1% compared with 1.34% in the first quarter of 2020 in terms of our CD maturities.
We have included a schedule in the lower right corner of a Sly 16 for all of the Cities will expect the offering rate off your time. Would it be significantly lower than the maturing rate?
Moving on to slide 17 now. I'd like to discuss our capital and the freedom Edition. We enter the covid-19 demek out from a position of strength.
As of March 31st 2020 we had a significant Christian of Access Capital above the minimum amount required to be considered as well capitalized wage.
We had a minimum 4.61% in Christian or six hundred fifteen million dollars in excess Capital before any of our Capital ratios, which is the world capitalized threshold.
The bank recently ran a captive stress-testing analysis using an adjust. The Sikh are severely adverse stress scenario the same scenario is an adverse case scenario in which it takes much longer time for the economy to recover that the Baseline version to Thursday. We use our system allows calculation.
At the time of stress testing. It was considered a worst case scenario. Even in this scenario. The back has sufficient Capital to observe estimated losses as still at a buffer of excess capital of 1% over the regulatory minimum were capitalized requirement.
Overall, they put it in position remains strong as of March 31st, 2020 our primary source of funds continue to be our departed off and just the Declaration of covid-19. Dynamic. I am pleased to report that we have not experienced any meaningful run off of customer deposit.
in terms of secondary liquid resources
As of March 31st 2020 we had three point two billion dollars in available borrowing capacity with fhlb bank.
In addition we had over 1 billion dollars in additional borrowing capacity with frb discount window and unsecured line with other Banks wage.
other sources of funds available to the bank include broker deposits and investment repo line
We also plan to participate in the fat PPP liquidity facility to fund most of the people laws that we originated.
this source of funding will provide us with an additional source of low-cost funding while putting less pressure on our
secondary funding sources
We are monitoring all the positions on a daily basis. And at this point of the time we have that witness is any meaningful change in our position with that. Let me turn the call back to Kevin.
Thank you, Alex. Let's move on to slide eighteen. It goes without saying that the uncertainty around the severity and duration of the crisis makes public broadcasting beyond the current quarter extremely difficult. So for the time being we are just going to provide near-term expectations with the Matrix that we have visibility on long as all excess provided for non interest expense and deposit costs in terms of our Capital Management our priorities for the foreseeable future are maintaining submission Capital to support our customers and communities as well as continuing to pay our quarterly dividend. Our quarterly dividend is a relatively small claim on our capital. I believe that we can maintain it even with some of the lower profitability results from the impact of the covid-19 prices. However, given the high level of a Thursday.
Do you have associated with the economic environment? We intend to thoroughly evaluate our dividend policy to order and make decisions prudently based on the performance of the company and the prevailing trends of of the economy. This is an extremely challenging time, but it is also a time for Bank of Hope to demonstrate that we can be a source of strength for our customers employees and communities. We believe we are well prepared to weather the storm and further strengthen our positioning as a back-up support for the current American and other communities across the country that we serve now, we would be happy to take your questions and add any additional color as requested off operator. Please open up the call. Thank you. We will now begin the question-and-answer session wage.
If you're using a speakerphone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster off.
Our first question comes from Christmas, please. Go ahead.
Great. Good afternoon. Thanks for the question Kevin or Alex. The the disclosures were very helpful. I'm looking at slide nine which gives the wage the a portion of CN I could you provide the the total SBA Loans that are on the 7 a loans that are on the on the balance sheet obviously, not the TPP but the off the total exposure.
Are you looking for this is Peter. Are you looking for the SBA 7A balances outside of the TV piece?
Exactly. Yep.
And that's that is see if we have that number off-hand here 491 million.
24901 I'm interested maybe in some comments given the strategy shift you guys implemented a couple of years ago, whether you're at all considering shifting back to to whatever cell model or selling some of the existing book given given the Dynamics of the market. Well that that all depends upon the situation in the secondary market and what I understand and I don't know if I'm fully updated the secondary Market was kind of inactive with the pandemic declaration and assuming that there will be a time for the secondary Market to be fully active as before at that time. We may consider selling them.
Okay, great. In terms of the the comments Kevin on the dividend understand that it's the environment moving pretty quickly and it's a poorly professional life. What would it take for you guys to address dividend or to think more? Seriously about sustainability. Is it is it things getting worse from here? Is it just a matter of time to things get better? I mean, I'm interested in your thoughts of how you're evaluating the dividend the payout. Well, as I mentioned the Capital management office is a very high priority for us at the time while it is our 250 quarterly dividend at the current level, you know, we really have to look into a lot of factors and I I think at this particular time the movement of the macro akong
Is the main driving force, you know with the deterioration of the economy. I I think we will our profitable profitability will suffer and all that. Is prolong then we really have to reconsider our dividend because when the Prophet Joseph support the current level of our dividend than you know, the we should really think about our Capital Management and and capital position and our primary focus is to maintain a good Capital level so that we can fund the needs of our customers and from the growth of the bank and for the safety of the bank, but at this time we don't see any particular Factor based upon which we should conclude birth.
That's a dividend should be.
Down where it should be stopped.
Okay, and is that I can just follow is there a certain you know payout ratio that would would be kind of evaluated in that situation obviously earnings were kind of took over the place of bank doesn't even diesel but kind of long-term payout ratio that you'd be kind of thinking about. Yeah, you know a crisp payout ratio for this particular situation is kind of meaningless my personal view, but you know, let's say what is percent of a payout ratio that we have been that is the range that we have seen with our life as well. But that obviously depends on our learning but as Kevin mentioned our top priority is a preserved the best years of our Capital so we don't have a certain no quantitative threshold. What if whatever the payout ratio at this time?
Great, and if I have you could you help out with with kind of attack going forward? Thanks. Sure the tax rate. We reported this time off slightly below 20% reason for that is our estimated total annualized 2020 income is much lower compared to what we budgeted for in December last year. So I think it will be slightly below 20% for the rest of the year.
Great. Thank you very much. Thank you, Chris.
Our next question comes from Matthew Clark with Piper. Jaffray, please. Go ahead.
Hey, good morning. Good morning.
Do you have any sense for where you're seeing? I see my line utilization at the end of April here relative 331
End of April I think we were fairly flat with the quarter end for so I think we were slightly down a little bit. But but that 60% is right right number.
Okay, and on the commercial loan modifications the 2% is that of the commercial for some of the commercial portfolio? The total loan portfolio is actually they're both around 2% right now the both the commercial as well as the the total here and we will note that we're still early in the process of awarding those modifications. So Thursday, we do anticipate that number to increase steadily here over the over the course of the second quarter.
okay, and
On the coverage ratio the 92 base points on the hotel motel ACL, I guess. How do you how do you think about that coverage ratio compared to the Great Recession a legacy? Hope I know it's a very different cycle this time around which is 1 again stands for the coverage ratio, you know, as you've migrated through the Great Recession and and the ultimate losses. There. It is a different set of circumstances in an environment. So I think it is a little bit tough to compare. I think the loss ratios were a little higher during the Great Recession wage. I think couple of components I'm looking at here. I think in terms of this time time around in the downturn. I think we have a lot of support right now with the government wage, um, do the cares act as well as the interagency guidance guidance is in terms of our modifications. I think in the nature of these modifications that will give us some flexibility to be dead.
bit longer term in terms of modify
Vacations I think will ultimately lead to a better result terms of actual losses. So there's a lot of different factors to to to wait in there, but we are offering very closely and you have seen the Cecil number jump up considerably in the first quarter based on the scenarios that are continuing to to decline
Okay, and then just on the the margin and and the deposit cost it based on total deposit cost fifteen below one hundred basis points during the second call back during deposit cost ground down by fifty basis points. I don't get the sense that you're going to come down by as much money. So just wondering you know, where you when you talk about the margin coming down here in the queue. Is that the reporting margin or is that all the core is having a tough time getting the money down on a regular basis basis. We have increased the eight basis point for this quarter, but the repair bases it was much higher. So I would say Q one was kind of unusual. We have a five point six million dollars of recovery on the a previously a file on Thursday.
Think it will have such a big accounting adjustment going forward and as I indicated in my prepared remarks on margin guidance Thursday, it's very tough. Give you a accurate margin guidance this but we gave a directional guidance. Is that a hundred fifty basis point recently caught in March definitely have our impact to our that is just margin on a negatively because we have even though we have about 59% of a loss of fixed but 39% of the variable rate loans, it will be priced at a much lower rate and not all cuz only portion of that page tied to prime rate, but we are also a very aggressive as we deliver it in the queue one in terms of deposit with birth.
Especially we were encouraged to see in the late March and April. We did see substantial rate reduction on the money market and bought a new CD. In fact, we did see increase of the money market. So I would expect to continue to see the reduction of the deposit rate going forward and hugged me about have a offset of the pressure on that interest. Margin. That's what kind of a general guide us is that I feel comfortable to discuss but further details wage yet to be seen.
I'm good. Thank you.
As a reminder, if you would like to ask a question, please press star then once our next question comes from Gary with d a Davidson, please go ahead.
Hi. Good morning everyone. This is Jake Stern on for Gary. How's it going? Hi Jake. Hi this first question. It looks like the slide deck only provides wage 2019. Is it possible? You could tell me what the metrics for total Ciara portfolio are
We you know, so we actually limited that slide to the origination since 2019 because we wanted to give an accurate presentation portrayal of the appraisal values. We should have data for the older originated loans, but some of those appraisals are not up to date but we could follow up with you if you'd like to get a little bit more clarity there but I think the 2019 with the the way we interpret this is is over the last many years five years say, you know, the market appreciation really has been pretty substantial of these some of these buckets particularly hotel motel and so as we look at the older evaluations will see actually assuming we'll see lower ltvs come through as we look at that the larger population of data, but we wanted to position the slide here so that we have a little bit better more recent information for you.
Great, appreciate the color and and how much of the hotel motel portfolio is sba-guaranteed.
9% So we're we're under 9% under 9% for that Mark.
Okay, I appreciate that. Just one more for me. Then. I'll hop off. Could you tell me the remaining acquisition fair value market, March 31st?
I think we have still like a seven point five million dollars level left.
Fascinating one and forty CD we have about $29 million left. So the combined is around $30. I'm sorry $37,000.
Okay, wonderful. Thank you for taking my questions. Thank you.
Our next question comes from David. She had rainy with wedbush Securities, please go ahead.
Hi. Thanks a couple follow-up questions on the hotel motel portfolio Welk, what was the loss rate on this portfolio during the financial crisis?
Sorry, could you repeat your question? I think you were cutting out for a second there.
Sure. So on on the hotel motel portfolio. What was the loss rate that you experienced on this portfolio during the financial crisis?
David that's a hard question to respond to because during the financial crisis. We were not Bank of hope. We were Center Nara and Wilshire so we'd have to go back and look at all three of those organizations, but we'll follow up back with you after the call. Yeah, we can definitely do that.
Got it. Okay. That was that was actually the only question that I had. Thank you. Okay.
Our next question comes from Steve merecia with capital Securities management. Go ahead. Good morning. Everyone first off want to thank you for the clarity and color you kind of gave us about everything that's going on with the bank really appreciate that to more broad questions for you guys to answer given. I know you can't give much guidance outside of this current quarter. But what are your economic assumptions month for the bank and or the US economy going forward into the second half of this year you guys looking at a gradual recovery a quick recovery or longer recovery, and my second question is in terms only if you gave this number up in terms of your total loan portfolio and given that various states are in heavier lockdowns and others. Can you give a percentage of what part of your bond portfolio is allocated wage, California, Washington, Oregon, New York and, Illinois
Okay, let me start with economic forecast that we used. We actually used a to kind of economic forecasts waterfall Cecil, which is a Moody's Baseline version to which includes recent new pandemic wage situations, which for example like a GDP forecast to decline annualized 2.5% in q1. And also they've dropped in down to 18.3% and then it will kind of rebound or recover but that's kind of a slower Pace that the v-shape another kind of Baseline that or the assumption that we use was for Thursday.
Car out of his cases for our Captain's stress testing purposes. So we use know both Moody's Baseline as well as adverse cases back from purposes and see so and capital and the secrets revealed adverse cases has a little bit more aggressive than the base life in terms of recovery. Speech. I think you asked, you know how soon we can recover from this pandemic situation again with that seek are severely adverse takes a longer time to recover the overall. It was a little bit more adverse drug cases or assumption than the movies Baseline version to that we used but one thing that I
Water be clear.
Yes, no moodies is the issuing their new scenarios, especially, you know, April we didn't see substantial changes. But as we move forth for those, you know, economic forecasts changes will reflect that in our you know, campus testing purposes as well as our Cecil, you know adequate off ACL perspective. That's the part. I'm not hundred percent sure, which is correct, but we will monitor very carefully.
Okay.
And any can you quantify how much of your what what part of your loan portfolio is split is in California, Washington, Oregon New York and Illinois, or is that not a trash? Can you get that to me later or so?
I think we have a geographical Distribution on the CRV portfolio. But if you want all the entire, I think we can do that. Sure.
I think we have for like seven we have for our portfolio distribution in California is a 68% off and New York is 11% or second highest followed by Washington or Northwest area five percent. I think this can be a representative our entire portfolio, but there might be some slight changes given hours again. It can percentage of a c r e portfolio as a percentage of total portfolio, but, you know, we can certainly get back to you the entire loan portfolio distribution to you. Okay? Thank you. That'll be very helpful. Thanks again.
Again, if you would like to ask a question, please press * then 1 our next question comes from Steve with tenor Capital, please go ahead.
Hi, good morning, where the weighted-average LT and the fact they're similar information how the company was set up back in 2008 before the Great Recession just to get a sense of what cushion?
T shows were back then versus now it just try to get an analogy with out the portfolio May hold up. These would be 10 a.m. And as we mentioned before I think you know back 2008 time frame. I think the Legacy institutions that combine to form being came from many different things probably five or six things or so. And so I think in terms of underwriting standards back then really difficult to compare I will say one of the month biggest or more significant factors. I think that does distinguish between the two portfolios is just the level of underwriting and customer base that we had. I think in terms of the smaller institutions back in 2008, there was some limitation to access, you know larger and higher quality type of customers and properties. Yep.
That's that's pretty much prevalent.
Throughout the portfolio including the hotel and motel space But as we, you know described in our prepared remarks, you know, we have been preparing to create more buffer for this particular portfolio. And we since we know we have a concentration in hotel motels. We have increased the DC are actually starting back in 2017. We we actually increased our debt coverage ratios in preparation for any type of downturn situation. And even though we increased it to 21.5 the way down as you can see originated since 2019 is about 2.16 for that portfolio. So these are hotels and these are these are hotels that have been performing Thursday. Well, we have very common to see hotels in our portfolio that are three times dcr's. They are generally located with strong sponsor support.
And we have majority of these have personal guarantees. And so, you know, I think portfolio as we stand now without directly comparing, you know, the actual writing metric I used in 2008. I would say that we are much better positioned here.
Okay, and if possible and assume that already asked for but if you can make it more widely available that same type of information on slide eight going back to the entire portfolio. So anything originated in a nineteen, I think a lot of people would find it helpful. Thank you. Sure. Thank you.
This concludes our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks. Thank you. Once again, thank you everyone for joining us today. Hope all of you. Stay safe and healthy and we look forward to speaking with you again next quarter.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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