Q1 2020 Earnings 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 them will be an opportunity to ask questions. That's a question. You may press * then 1 on your touchtone phone at anytime to withdraw your question, please press * then two months. Please note today's event is being recorded. I would now like to turn the conference over to Nicole Stokes Chief Financial Officer, please go ahead great. Thank you Eric. And thank you to all join our call today during the call. We will be referencing the press release and the financial highlights that are available on the investor relations section of our website at amerisbank.com. I'm going today by Club doctor or CEO and John Edwards. Our chief credit officer Palmer will begin with an opening General comments. And then I will discuss the details of our financial results before we open it up for Q&A. But before we begin wage

I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties the

Results could vary materially we list them in the factors that might cause results to differ in our press release and in our SEC filings which are available on our website. We do not assume any obligation to update any forward-looking statements as a result of new information early developments or otherwise except as required by law. Also during the call. We will discuss certain non-gaap Financial measures up to the company's performance. You can see our reconciliation of these measures in gaap financial measures in the appendix to our presentation. And with that I'll turn it over to Palmer for opening comments Nicole. Thank you to everyone is join our call today. Obviously today's discussion is going to be a little bit different than prior quarters because these are unusual times and things are changing daily. As I said in the press release and the first quarter. This has been unprecedented this quarter given that we had covid-19 seats all the FED Cuts in the stimulus package, but I wanted to start off by talking about covid-19 and Thursday.

For most thinking our front line and all our teammates for their Herculean efforts to accommodate our customers in our communities, certainly our investment in technology that we've made over the years is served. Well, we've got about 75% of our teammates working remotely and more importantly to work in effectively including our call center in this environment. All of our drive-thru locations are open and we've been able to perform business through the drive-through and our Branch hobbies are obviously closed except for appointment only I am pleased to say that we've experienced about a 23% increase in the growth of our number of Mobile Banking customers since the beginning of the pandemic and we've seen a lot of strong increases in the number of remote deposits taken through the mobile banking app as you would expect but we connect you to see people opening up checking account the online portal and then also using our drive-through facilities and we believe that these are some of the positive impacts quite frankly the pandemic. Yep.

You have created for us in terms of the future outlook primarily in migrating a lot of the latest doctors and holdouts of digital banking. So we are pleased with that. I say I'll just emphasize that through the panda we continue to serve our customers in our communities that beginning on March eleventh. We enacted our our program which allows borrowers impacted by the covid-19 the opportunity to extend their payments for 90 days and this quite frankly the same program. We enacted after the Hurricanes were specifically Herman Michael. So we've treated these extensions similar to those jobs which adhere to the public regulatory guidance as of April the 15, we provided payment relief almost fifty four hundred customers, totaling two point two billion dollars of outstanding loans across all types and all markets. This equates to about 17% of total loans is referenced on the slide deck on page fifteen of the presentation.

In addition, we've been an active participant the paycheck Protection Program the amount of work that all the participating things quite frankly have done to serve their customers during this time has been amazing. I've heard from any of the talking about how its time and energy it took to get this program up and going and I certainly that go to those statements. But if you ever want to see a team come together, this is a perfect example of that.

we were

So during the first round having about 3200 loans approved for the total of $685. And then we expect to do that the same number of units during the second round and hopefully the price on that around lunch time today and we'll get started on that. But as it pertains to Capital, we have suspended our stock Buy-Back program. We did purchase approximately 7 million months earlier in the quarter before we suspended the program, but our Focus remains on Capital preservation and grow and tangible Book value as we look forward as it pertains to Dividends are obviously very comfortable with where we are today, but we'll continue to monitor that with the economy and the environment. Please stay John Edwards or cheap credit officers with us today, and he's available to take questions after our prepared remarks, but I did want to hit a few main points in terms of credit before I turn it back over to a Nicole for the financial performance.

Our annualized net charge-off ratio is 14 basis points that total loans our non-performing assets as a percentage of total assets increased slightly to 61 basis points off. There's two fifty six basis points last quarter. We have no exposure the oil and gas and we've included additional details on our hotel and restaurant exposure and the slide deck of our investor reputation as well as kind of showing you the diversification across all the loan types within our portfolio. I'll stop there and turn it over in akola now to discuss our financial results. Thank you for calling for the first quarter. We earn 19.3 million or twenty-eight cents per diluted share that includes a $41 pre tax provision for learn Market expense and a twenty million dollar pre tax write down if our mortgage and SBA servicing assets. Both of these items are largely due to General economic conditions driven by the covid-19 pandemic and Market interest rates. Yep.

Not a reflection of our underwriting standards, which we had here to throughout the cycle on an adjusted basis. We are in 39.2 million or $0.56 per diluted share not seeing you next month charges for servicing asset impairment covid-19 charges legal fees from the ongoing SEC investigation and the loss on sale with bank premises. This is not however excludes the large provision expense related to the economic forecasting covid-19 impact as Palmer mentioned we implemented Cecil on January one of this year. So are de one adjustment increase the allowance for credit losses. I'm 91 million dollars and we reduced our Capital by a little over $56 million our first quarter provision expense or the day to adjustment as it's been called with $41. Approximately thirty-seven million a bad experience was related to loan credit losses and four million was an increase for unfunded commitment. We had approximately four point four million dollars of net charge-offs during the quarter dead.

and our ending allowance for loan loss at March Thirty One with

49.5 million compared to thirty eight point two million at the end of the year including the unfunded commitment Reserve our total allowance for credit losses was 167.3 million and 31 compared to thirty nine point three million at the end of the year.

Our adjusted return on assets in the first quarter was 87 basis points, which was a decrease from the 147 reported last quarter and our adjusted return on tangible. Common Equity was $10.98 compared to $18. I'd like order for calling Denny's ratios are due to the increased provision for one last expense just described.

Changeable Book value declined 37% from $20.81 to $20.44 during the quarter. The Cecil Day One impact was $81 off ocean that was partially offset by the 12th sense of retained earnings 31 sense of unrealized gains in the Securities portfolio and $0.01 from everything else including the stock buyback completed during the month before was suspended are tangible common equity ratio decreased fifteen basis points to 8:25 from 8:40 at the end of the year.

Are you this is Margie in decline by 16 basis points from 386 to 370 during the quarter our yield on earning assets declined by 26 basis-point all our funding not only decrease 9 basis points. However, our total interest-bearing deposit costs decreased 12 basis points as we continue to stay focused on the topic cost. We saw a decline in across income compared to last quarter because if you recall we had a large acquire non-performing loan that was resolved last quarter and that nanak readable discount came into income through Morgan going forward Under Siege was similar circumstances as favorable outcomes would run through provision instead of margins.

Parkour main production meals declined to 4:55 for the quarter against 470 on the deposit side. We continue the momentum on on interest-bearing deposit and improved our mix long as it's not interfering deposits now represent over 30 and half percent of our total deposit compared to 29.9 at the end of the year and 28% last year the same time last year. I am not interest bearing to deposit production was over 27% of our total deposit production.

Excluding the right now the mortgage and SBA servicing assets are gross and non-interest income was exceptional during the quarter our mortgage group continues to have strong production and earnings due to the interest rate environment, excluding the MSR right now during the first quarter Revenue in our retail mortgage division grew over forty percent while the non interest expense in that division grew wage a little over 11% causing significant Improvement in their efficiency ratio. We also saw an increase in the gain on sale percentage as we expected it went up to 288 to the quarter up from to 6 last quarter for the company our address and efficiency ratio increased to 59.87 for the quarter compared to 5561 last quarter the reduction in Edinburgh transferred the margin compression accounted for about 45% or 190 basis points at the increase is 138.1 million, however, when you log

What does adjusted management?

Items such as covid-19 murder and conversions are adjusted not interest expense with a hundred thirty-five million of about 16.8 million from last quarter approximately fifty million about increase within the lines of business and are terrible to income growth mostly in the mortgage area that I just discussed as you can see on slide eleven, the remaining thirteen million of increased expense is Renee and administrative functions and includes things such as close to three million dollars FDIC insurance that we didn't have in the fourth quarter because it's credit two million dollars of additional audit and legal fees am almost 2 million dollars of cyclical payroll taxes and 401K match that are always elevated in the first quarter a little over a million dollars a problem loan in Oregon expense and a million dollars related to FDIC callbacks. Both of those majority of those are related to to one of the law share agreements and then 1 million dollars of increased fraud forgery and ETA charge off.

Many of these items are not expected to reoccur in future quarters. We're pleased with where we are in the Fidelity call saying but we're committed to cost savings strategies and improving our refreshing to offset that margin squeeze on the balance sheet size. We were pleased with our organic growth goes on the loan and deposit side of our loan deposit ratio ended is about 94 and a half percent organic line growth is quarter with 275 little over $275 million or just above eight and a half percent annualized the details of that production is in the investor presentation, but it was just a minor bank statement in our lines of business.

Our total deposits by 182 million, but we were new star breaker broker deposits by almost two hundred million. So really core deposits grew during the first quarter, which is when we usually have seasonal jobs. I mean, it's going to a deposit. We remain focused on core deposit growth and as stated earlier are non interest-bearing deposit production was over 27% of our total deposit production, which is acceptable.

We continue to be well capitalized and feel comfortable with our Capital levels and our liquidity position remains strong as Palmer mentioned earlier. We were approved for the PPP PLS program and claim to use that to find the the one in addition. Our current liquidity ratio is over 21% which is more than double our policy minimum and we have ample liquidity available to us with that. I'll turn the call back over to Palmer for Club, This is Mike you and a group. Thank you. Nicole Q one was certainly an interesting quarter when you think about it, January and February for everybody is showing great promise for growth and earnings going to Long cane March off that and now we're all focused obviously on the Safety and Security of our teammates and our customers and while we're certainly operating in a new world. I think it's important for everyone to think in terms of probabilities and not binary outcomes at Marist. We remained well-capitalized well focused and well positioned to ride out the storm. And of course, we're in this for the long haul off.

Remain, very confident in our ability.

Inner strength to get through this. I'll turn it back over to Eric now so we can jump into any questions the group might have

thank you. We will now begin the question-and-answer session to ask you a question. You may press the star then one on your touchtone phone. If you're using a speaker phone, please pick up your package before pressing the keys to withdraw your question, please press * then two at this time. We will pause for a moment to assemble our roster.

Our first question today comes from Tyler Stafford of Stevens, please go ahead and your question. Thanks for taking the time now.

Good morning. Toddler. I think we may have just lost title. Can you guys hear me?

Hi the weekend. Are you? Okay? Perfect. Good morning. And thanks for taking the questions. I wanted to start on credit for either Palmer or John and just I guess better understand your assessment of the risk of the portfolio today. You've got obviously you built the reserve this quarter and you've got some portfolios that historically don't have any losses and then others that do just you know, where do you see the biggest potential loss content driving from and and then conversely, you know, can you highlight some of the areas that that have historically not had any losses that you expect to withstand the storm relatively bath.

Got ashore would think that the portfolio, you know, we spent a number of years off remaking the portfolio into what it is today. Well Diversified, you know quality sponsors good equities, you know in the right places and the right deals. I I, you know, I I have I have confidence that our portfolio is going to withstand this in terms of concern or questions. I guess, you know, we've got we've gotta an unprecedented time and and what comes out on the back end of this is what we don't know yet. So will there be you know changes to two codes in in hotels that are going to have to be handled and things of that nature so so my focus really right now wage

A relates to our our retail portfolio in that includes, you know, dacian that includes the the the individual Store applications the strip centers, you know anchored stuff. I mean we we've got on that side. I I'm not you know, we've had a lot of of of our customer base that has taken advantage of the of the payment extensions. And so we really need to see

Oh, really?

See the the retailers back open customers in in business getting back to usual. I mean that that's sounds pretty obvious. But but I mean that's that's where it lies the moment.

Well tell her I only thing I'll add to that is is I do think that when you look at the path of the virus and the economic recovery, I don't think it's a one-size-fits-all. I think a lot of it is going to be specific to certain geographies. Obviously as many of you know, George's opening back up today for the most part still be an interesting test case quite frankly to see how everything perfect but people are anxious to get back to work. I don't think people fully appreciate the long-term damaging effects that that this pandemic has had on companies does certain types chapters a long-term and I think that that's to come I think there are certain sectors that will immediately get back into business. I don't want to say they'll read down to where they were but I think there's going to be a lot of money to be filled longer-term than most people anticipate as we look out over the next next several quarters.

Okay, great John, maybe I guess sticking with you or Nicole. I was hoping you guys could provide a little color on the underpinnings of your Cecil assumptions. And and what what went into the especially the the economic forecasted portion of the the reserve built this quarter.

Certainly. So we use the Moody's forecast. That was the March 27th date. I believe I know y'all have heard that over and over that's that was the date that off utilize for the forecast model and we looked at several scenarios. Of course that we believe had had em, we we use some some judgment after sort of taken that model added face to determine whether we thought things would be a little better a little worse or whether that money was right on the money. So so of course, we we made some some adjustments. I don't think at that time the full impact of many of the government programs in the you can list them out from the PPP to the stimulus checks the payment extensions that of course the banks have made the SBA stepping up to make payments for those.

Lens for six months. All of that was you know, we we needed to consider the impact of that and when that light would would impact the loan portfolio. So we exercise judgment on the scenarios that we reviewed and determine uh, you know, the one that we felt like was most representative of the month the forecast. That we were looking at so that's the one we went with I'd we looked at the cold I've been talking about it from the the most severe one that we were viewed life or the the the upper band of of the Cecil range that we reviewed was was about 180 in terms of the loan loss reserve and another 20,000 unfunded so 2 to 10 inch and so, you know, we were Within

Elvis 43

$2 on the upper end, but we would kind of right in the middle of the ranges that we that we were viewed based on that model.

Okay, that's helpful John and then lastly Nicole. I wanted to shift gears over to the expenses obviously lots of moving pieces here. That's quarter, but they they were kind of, you know, ahead of expectations and I appreciate the details in in the slide deck of what potentially may fall out in the run-rate here and I I get that, you know expenses from the mortgage inflated but it does look like those other expenses War higher as well. So can you just kind of help us better triangulate kind of what what should stick around what's going to be in the run-rate what's going to fall out and kind of how you see the experience and efficiency migration kind of moving forward through out the year sure. I appreciate that and I hopefully on slide ten in the presentation. I tried to break that down. I did not go over fairly quickly in the script. So about four million dollars of the increase was related to mortgage and when you look at the income statement for mortgage that number

The thirty-four million that excludes I mean that includes the MSR right down. So if you added that back into the segment mortgage and then look at their if their expenses went up about four million dollars that their income increased significantly more than that and that's really where we were able to you know, finish the the call saves in the mortgage area and then really get their efficiency going. So, exclusive of that four million dollars or was about another thirteen million about 3 million of it was the FDIC insurance that we didn't have in the fourth quarter because we had the credit off the two million dollars is increased in in auditing legal fees that we don't anticipate recurring some of that had to do with the end of the year audit and you know some additional package in some additional work that went in because of the material weakness the payroll taxes in the 401K match that's always very cyclical and it's always increased in the first quarter the problem one Oreo and the dead

If you have seal off share callback those as well. Those were related to one of the Lost near agreements that expired and there was some some lingering expenses that were deemed that were not going to be reimbursed Thursday. I see and then also some additional call back and then the the fraud borders ETA lost that was about almost close to a million dollar increase, but we are diligently working on a working through. I mean there were some things sometimes you can't I hate to say like this but you can't control some of the fraud and the forgery or video loss. And so we're we're certainly very causing of that and we've put additional resources toward that as a management team. We are committed to continuing looking for coffee and to become more efficient and to use technology, especially knowing that we have that that margin squeeze that we need to either have to you know, grow revenue or or would use expensive to get our efficiency ratio back in mind. We're very cognitive that and we're we're reacting to that.

Absolutely.

Okay, so if I just I guess at some of those items that you highlighted here on flight ten, what is it around four to five million that should not persist in the run-rate going for them.

Is that a rough part? I would say it's closer to 7 to 8 and you got to increase audit the payroll tax is the one in the broad obviously life insurance is recurring got it. Okay. So so one Q is inflated by 7 to 8 and should fall out. Okay. That is it. Go ahead. I actually don't I hadn't broken down even more all the way down to some items that were like two hundred thousand dollars that I just decided that was way too granular and it really caused up the slide but there are some other things that were smaller we still had some Consulting fees related to Cecil that will go away. We have some we actually have about two hundred thousand dollars of an s h l p prepayment penalty cuz we were able to recruit that when they raised sales so quickly. I'm already working. So there were some other noise in there that were smaller pieces that would add up to gives you closer to the 9 to 10.

Okay, very helpful. Thanks Nicole. Great. Thanks for calling.

Our next question will come from David feaster of Raymond James, please go ahead with your question.

Hey, good morning guys. Good morning. I just wanted to follow up on the the Cecil discussion and the you know, the factors that drove it. I mean, I guess giving your mom and Terry Palmer and just some of the continued weakness in economic data that we've we've got in a second quarter, I guess. How do you think about future rebuild near-term. Do you think you maybe get towards the higher end of that range that you were just talking about?

Well, we will obviously continue to watch the economic forecasts that for movies that that we adhere to for Cecil. I will say Thursday and we will make the adjustments as needed. Of course based on our portfolio. I I will say and I did mention when Tyler is that there is a a we still have 50 million dollars worth of credible discounts that are in the portfolio that are there to help support, you know the reserve if necessary on those particular loan. So there is a an additional piece of that but I I think it's a little early to to see as as we are, you know, maybe on the cusp of reopening certain places at least here in Georgia to know for certain that you know, we would need to have a reserve build up to that that that range but but obviously we we will watch it closely enough and and make the adjustment wage.

Lester

okay, that's helpful. Thank you. And then just on the PPP program appreciate the comments are that you can't expect a similar size in the second round. Are you talking in terms of dollars a month or a loans? And then I guess just generally, you know, are you looking at this as a way to gain share a you only focused on on your existing clients? And are you using this as a way to track a drive deposits as well? Well, I will tell you the second round will be what I quoted there was more on the unit not the dollars the second round bulb. What what town is the dollar limit is actually lower than in the first round but we have done very good job. The team has focusing in all taking care of our own clients and the first and foremost and in offering this this program and then we do have we do have some external non-customers to that have participated in the program.

But the majority of the ones that we've extended so far our existing customers.

Of all the relationships and they don't have a deposit relationship. Certainly. This is a prime opportunity to ensure that you've got that deposit relationship for all banks.

Okay, that makes sense and just last name for me. And there's a lot of moving parts that just, you know, being a lower rate just any commentary that you could provide check on the corn him to help us, you know, think through how that might progress going forward just in light of all the moving Parts would be helpful. Sure. This is this is a call back. That's a great question David month. I'm going to be cautious on guidance, but I will tell you that since mid single-digit compression is possible going forward and I'll split it up into kind of three components first on the loan side, um about half of our variable rate loans have floors and about 75% of those have hit the floor production held in it or $55 compared to 470 lights corner and Burleigh slow on early payoffs of slowly because of the economy. So those three things all affect the margin going forward on the funding side you think about the FED cuts the DraStic said comb

I mean late very very late. In the quarter. We made wholesale deposit reductions in March when the FED cut and we we really continue to grind out any remaining above Market deposits down at the edge of the bed is at zero rate environment becomes more acceptable kind of in the competitive landscape. In addition. We have a CD book that three pricing around 70 basis points average and where we are right now. We're able to retain historically we've been retaining about 75% of that as it replaces down and then you mentioned fhlb. That's a great point. The the first quarter it would be 162 and that's dropping too about fifty basis points. And I already mentioned that I've got a $200 prepayment penalty. That was an honest expense in order to give that to us. So we price down and then the third compact that I wanted to talk about with the the PTP of the program and the impact that would have on a margin but we put in the slide deck kind of a breakdown of of the fee category about 50% off.

Cars are the 3% loan about around roughly 15% or so is the 1% and then it's about 35 to 37 is the 5% So that gives us an average fee of about 44. I know that the government has said these can be longer terms. But we we've done all of ours basically two years and that that would be the technical duration. We believe that they're going to pay off, you know, as opposed to the page that they will pay off less than that. So if we assume a weighted average duration of a year on the that would be a $344 fee plus a 1%

Race and we're going to send that with the PT PLS program at thirty five basis points about next about a $4 to a $4 a year old on you know, six hundred thousand a million million dollars of of of lung growth, but that will also affect the margin. So those are kind of the three key components looking at the margin going forward. Does that help clarify going to be more color than what you wanted Dead know that's that's very helpful. So you're thinking so you're thinking the the won't stay on closer to a year know I'm being very and I I think I I mean, I think that the expectation for most is that these are you know, six to nine months. The technical duration is is two years for us or the the coupon duration is Dead 2 years. So I kind of went middle of the road on that and say if we average a duration of a year

assume that fact becomes

A year, that would be a 3:40 around 3:44.

David it'll be interesting to see how the secondary Market opens up for the potentially for the sale of some of these and if it if it's a who's going to sell the loans or to retain, but that's yet I'm saying.

Absolutely, that's great color. Thank you very much.

Our next question will come from what do you lay of KBW, please go ahead with your question.

Hey, good morning guys. Good morning.

Hey just a follow-up on the on the margin. You mentioned CDs where every pricing about seventy five basis points lower. I was just curious what percent of the CD portfolio was set to reprise into q and and what percent would re price in 2014.

I do not know that I have that exact number in front of me. What do you but I actually I do too. I'm sorry. So you need to know what you want to know how much is in YouTube.

about 20%

and then the remaining for 20 20

Yep.

No greater than 50%

Okay, that's great. Thanks for that. And then looking at the the wound deferral program. I was just curious for any color surrounding the pace that these deferral request came in. I would assume it was front-loaded around the mid March. When the program was first initiated, but are you starting to see a Slowdown in these requests over the past couple of weeks?

It's a great question answer is absolutely in the first in the first two weeks. We we probably have had 75% of of what we did. In fact, it has every day seems to be less and less but it is the price of that is is is well below what it was and that first two weeks.

Okay, that that makes sense. And then last for me it was interesting to see the 23% increase in the mobile banking users since itself quarantine wage was wondering if you have a sense if consumer Behavior might be changing long-term. And if so, would you reconsider America's brand strategy, especially in in the Atlanta MSA or Fidel had significant scale in that market so which is curious around that absolutely the answer that and I think you know what's encouraging for us is is I mentioned in my comments earlier said there there were a lot of late adopters to the digital technology and a lot of them had been forced to utilize that in today's environment and quite frankly if become accustomed to it and and like it and I think it kind of changes behaviors across the board and in many of our markets and I think all the banks right now are are realizing they can do a lot more with with less in terms of birth.

They're full scope branches.

You may find branches that you may keep open, but it maybe drive-thru only and then you can utilize the the lobby for for other initiatives, press the mortgage officer investment home rather than having the full overhead and Staffing in the branches. But Branch optimization is something that that all banks are looking at now. And and this is a a good opportunity for us to take a look at it. All right. That's that's really interesting. Thanks guys. That's all I had.

Thank you, Woody.

As a final reminder, if you would like to ask you a question, please press * then 1 our next question will come from Christopher of Janney Montgomery Scott. Please give us your question. Hey, good morning. Just wanted to drill down on the on the large amount of deferrals. How do you think about that as it pertains to risk ratings and portfolio or these loans Thursday kind of come and go from risk ratings or where they ultimately become kind of future classified. Just kind of curious how you think about that in the big picture.

Well, it's a great question and and you know my take on the grading and you see it in the press release and so much in the spot deck but wage is a an increase you can see an increase in what is our grade five which is the lowest pass grade. I felt like that that we needed to identify if there was weakness and industry or the borrower to go ahead and make a grade change on it. But that doesn't necessarily mean that that those are are going to the watchlist. You know, this next quarter. We're trying to be very

Purposeful and how we deal with the with the customers and what their issue is and and and so we will we will evaluate those as we go in several months, you know, the the deferrals I don't Palmer's made this comment in the past several, you know, what you would say very strong customers took advantage the payment deferral because of the fact that when it was available and and it was prudent to conserve cash, you know during this period of time so I don't I don't think it's necessarily just was an automatic negative across the board is what I'm trying to say. We didn't want to just say everybody is is treated the same but because of of of wage, you know, just looking at them as as they came available we did make some movement on the internal grades, but within the past category, I I don't know you tell you that 20% of those will migrate on Thursday.

Watch list or whatever, but you know when the when the 90 days is up and we have to consider whether to extend that further will you know will will know more about the month. Hopefully by that time we'll know more about the the economics the you know, reopening of the of the economy and and so on and so forth to be able to make a little bit better judgement. Chris is okay. During the during the last downturn in a deferment was kind of a bad word. And and I think the difference is in this go-round is is I view it more as a positive, especially when you start seeing a lot of these in front page loaded because these are generally companies that are being proactive rather than reactive and and anticipation of preserving liquidity and cash flow and that's really what we saw a lot of our commercial customers doing on the front end send her a lot of the draw Downs you're seeing on some of the lines of credit. So to me that that's a good cash management for them and I view that as a positive as opposed to the last go round wage.

Get the call the eleventh hour and all of a sudden, you know, they they couldn't pay so if if we start seeing this continued to escalate in terms of the percentage of deferment long that takes it into a different.

Category right now. I think a lot of this was was good business planning on the part of a lot of our our companies.

Got it. Okay, that's very helpful. I appreciate that both your comments there and you know, I know it's early but you know, can you talk about kind of new opportunities you're seeing with customers either your existing ones where you can deepen your wallet or just the new customers coming in the door that are getting overlooked by your competitors.

Well, the biggest opportunity we've got right now is probably the PPP plan and not so much in terms of participating the plan is it is there are a lot of non customer that are upset with their their primary banks that were not able to allow them to participate in the program. They did not receive funding. So we have received and have accepted numerous off earlier than non-customers that we had. It allowed to participate the program. And the way that worked was was it received a call and several of these are meaningful a meaningful deposit and they have not gotten any response or communication kind of primary bank and it's one of these situations that listen if you can get us in this plan, we will move our entire relationship. We have certainly taken advantage of that and I think that's one of the benefits of a lot of the smaller banks will have and Regional banks will have from some of the other competition dead.

So we we've capitalized on that. We certainly will capitalize on the growth from the TV plan mortgage continues to be a busy bright spot for us and and and quite frankly, you know, when I look at the even the commercial opportunities companies right now are for open to having discussions with other Banks and we certainly keep that in mind from a defensive posture as well. But I think you'll find that while the growth component may not be there as much as we don't like four Banks as we look over the next couple of quarters. The retention component is going to be far more favorable. So you won't have a runoff that we had all been experiencing earlier earlier this year in in the fourth quarter last year. So I think for attention is key and and quite frankly this environment kind of allows us to do a better job of the retention piece. We've seen it on the deposit front. We've also seen it on the renewal from when it comes to the loans and competition.

Great, that's very helpful. And then just one quick one from the Cole. You mentioned the liquidity. I think being double your policy. Does that sort of stay in effect Nicole this quarter or do you think that would kind of add back down is this month's going to place out?

No, I hate to give any guidance. Cuz if you would ask me last quarter if we would have had a pandemic I would have never said yes. So so we we anticipate keeping our liquidity. Keep it fluid as we can for for a little while till we get through this.

Got it. That makes sense. Thanks very much. Thank you.

This concludes our question-and-answer session. The conference has now concluded. Thank you very much everybody for attending today's presentation. You may now disconnect.

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