Q1 2020 Earnings Call

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Good day, and welcome to the community Bankers Trust Corporation first quarter 2020 earnings conference call and webcast. All participants will be in a 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 star them one on your touchtone phone to withdraw your question, please press * then two, please note this event is being recorded. I would now like to turn the conference over to mister Rick Smith president and CEO, please go ahead.

Good morning, and thank you for joining us today. As we review the results of the first quarter of 2024 Community Bankers Trust corporation, which is the holding company for Essex Bank. Let me start with that reminder that during the course of our remarks today. We may make forward-looking statements within the meaning of applicable Securities laws with respect to our operational performance future strategy and goals. I remind everyone that our actual results May differ materially from those included in the forward-looking statements due to a number of factors with these factors an additional risks and uncertainties are included in our earnings release are most recent form 10-K and other reports that Community Bankers Trust Corporation files with them or furnishes to the Securities and Exchange Commission, you can access all of these documents through our website at ww.w.

like many companies

This quarter was uniquely challenging as we addressed the issues from the covid-19 pandemic. I would like to start our call today by saying our hearts go out to all those affected by the covid-19 pandemic in terms of both health and personal loss as well as the economic hardships unlike many past disasters. Everyone in the country is either directly or indirectly impacted by this pandemic as mentioned by the president Congress and numerous articles much of the hope of our nation and economy has come the willingness and capability of Community Banks to serve the small and midsize customers and municipalities.

In the past two months we have heard thank you for many customers who are ignored or lost in the math of larger financial institutions. We have provided some form of payment relief off customers amounting to approximately $55 million dollars. We also participated in the payroll Protection Program PPP loans processing 383 loans for an additional $67 of relief for our customers the appreciation for our efforts to help and support. Our customers is showing up in Positive Growth balance sheet. The first quarter showed very positive Trends in both loans and deposits and especially in non interest-bearing deposit growth.

Loans, excluding purchased credit impaired PCI loans route $29 or 2% since year-end 2019. This was one of the best. Of course we have seen in many years this compares to loan growth of four point two million dollars during the first quarter of 2019.

For the 12 months ended March 31st, 2019 loans through a total of 81.2 million or 8.1%

Our Focus continues to be on credit quality and we are working through the portfolio by loan type and business segments to identify and manage any potential problem areas.

Total deposits for fifty seven point six million dollars or 5% since you're in 2019 interest-bearing deposit said March 31st, 2024 with 1033000000 dollars an increase of 47.9 million dollars from December 31st, 2019.

09 interest bearing deposits grew nine point seven million dollars for the quarter and twenty two point six million dollars or 13.6% year-over-year off. There was also positive news in both the non-interest income and non-interest expense areas non-interest income increased $321,000 or 31.7% year-over-year. The main driver of the increase was for mortgage loan income which increased $159,000 over that.

additionally

Non-interest expense decreased $246,000 year-over-year. The decrease was comprised of $229,000 decrease in salaries and employee benefits package and $103,000 decrease in occupancy expense. These are the results of Branch consolidation decisions made last year and Technology efficiencies. This sucks and included spending more in software and Equipment upgrades to continue to enhance our digital access including web-based and Mobile Banking. This has been especially critical during a minute as we have seen tenfold increases in the usage of our digital banking Channel.

We also increase the hours of our customer service center to include 9 to 5 on Saturdays and Sundays as well as being open for eight federal holidays for which we were previously closed.

Unfortunately, these positive metrics were overshadowed in the quarter by the large increase in the provision for loan loss expense. The large increase came mainly from classifying any loans for which we gave payment relief or or deemed at risk by the business line officers into a special mention risk category. This is a temporary risk rating until we can further assess how quickly some of these businesses and customers will be able to rebound after the restrictions are lifted. We felt that this approach was prudent given the uncertain circumstances going forward.

The increase moves our coverage to Total loans from 8% to 1.1%

that income for the quarter after the provision expense was one point four million dollars compared to three point five million dollars for the same period in 2019. Now I would like to turn the call over to Bruce Thomas to discuss the details on the financial results for the quarter. Thank you Rex net income of 1400000 down with six cents per share for the first quarter of 2020 and Compares with link quarter. Net income of $4 or $0.18 per share in net income of 3.5 million dollars or $0.16 per share in the first quarter of 2019.

Typically, I avoid the non-gaap pre-tax pre-provision discussion. But in this instance, I feel it is useful pre-tax pre-provision income was just under six million dollars a decrease of $144,000 or 2.8% from the fourth quarter of 2019 the backdrop for the corner aside from the uncertainty surrounding covid-19 was the precipitous decline in interest rates, which reflected a decrease of 1.5% in the prime rate down to 3.25% this large decline in rates resulted in a decrease in net interest income of $175,000 or 1.4% as the yield on earning assets declined 12 basis points on a linked quarter basis and was 4.78% for the first quarter of 2020.

being slightly

And said sensitive are decrease in the cost of funds did not decline to the same degree as the yield on earning assets the cost of interest bearing liabilities declined 7 basis points and was 1.36% for the first quarter of 2020 this resulted in a net interest margin of 3.68% for the first quarter of 2020, which was a decline from 3.74% in the fourth quarter of 2019 non-interest income declined on a linked quarter basis by $43,000 3.1% But this is typical between the fourth quarter and the first quarter of each year from several areas that reflect a drop in transaction volumes and partnership wage income. However, our mortgage loan income of $221,000 in the first quarter of 2020 was a linked quarter increase of $73,000 off.

49.3%

non-interest expense reductions help to offset the declines in net interest income and non-interest income non-interest expenses declined $74,000 or 0.9% on a linked quarter basis. This decline in non-interest expenses was led by salaries and employee benefits which declined $328,000 or 6% pretax provision income increased $680,000 or 15.8% in the first quarter of two thousand took over the same period in 2019 net interest income only generated $113,000 of the increase as the cost of interest bearing liabilities only declined by 2 basis points, and the yield on earning assets declined by a larger 17 basis points resulting in a margin of 3.68% wage.

The first quarter of 2020 a decline of 13 basis points from one year ago more of a contributor to the increase in pre-tax provision measure wage was an increase of $321,000 year-over-year in non-interest income and a $246,000 decline in non-interest expect. The non-interest income increase is reflected primarily in mortgage loan income which increased $159,000 or 256.5% from $62,000 in the first quarter of 2019 to $221,000 in the first quarter of 2020 other facts. Interesting, was $296,000 in the first quarter of 2020 compared with $176,000 in the first quarter of 2019.

the increase of

$120,000 was the result of a $64,000 gain on extinguishment of a federal Home Loan Bank borrowing combined with $90,000 in swop fee income all set by a $24,000 decrease in brokerage fees and commissions service charges on deposit accounts of $672,000 off in the first quarter of 2020 increased by $63,000 or 10.3% year-over-year. This increase was primarily the result of an increase of 15.4 million dollars in the average balance of non-interest bearing deposits and 12.5 million dollars in interest-bearing demand deposits.

The Improvement and non-interest expenses was driven by the 2019 closing of two Branch offices which in turn reduce the number of full-time equivalent employees in the retail area of the bank in 2020 compared with 2019. These closures also lowered occupancy expenses year-over-year which declined a $103,000 from $930,000 in the first quarter of 2019 to $827,000 in the first quarter of 2028 the provision of 3.3 million dollars in the first quarter of 2020 was a result of the assessment of the entire loan portfolio, which resulted in heightened risk off the borrowers from the stay in place orders that caused many businesses to shutter and anticipated increases in unemployment in the Virginia and Maryland Workforce.

These uncertainties have continued as we enter the second quarter and given a dynamic turn around. It would not be surprising to see the allowance build-up continue in the summer quarter and possibly Beyond. However, please note that we enter this era of uncertainty with a very low level of non-accrual loans, 5.7 $2 or 0.89% of total loans and other real estate recoveries of $90,000 in the first quarter of 2020 and a cup ratio of allowance for loan losses tonight accrual loans of 228.52% additionally our level of risk-based capital strong with a leverage ratio of 10.93% a tier 1 Capital ratio of 12.91% and a total Capital ratio of 13.8 months.

6% we had into the second quarter with concern for our customers and employees and the communities we serve however by doing our best to serve their needs during this trying time. We hope all of them as well as our shareholders can move forward once again striving for better. I will now turn the call back over to rx4 Club remarks.

Thank you, Bruce. Our main goal has always been and will continue to be to increase shareholder value for now. We need to be focused on our customers are communities and our Associates. This does not mean we are not focused on you our shareholders quite the contrary has only through building trust and strengthen our communities during difficult time. Can we improve results in the long-term? No matter what name is on the door. It's the reputation of the bankers inside that makes the difference. We have a very strong and lick balance sheet that will allow us flexibility to serve our customers in our communities in this unpredictable environment. This management team came into office at the depths of the recession from 2009 to 2011 and we will capitalize on that experience as we work through the issues of the pandemic crisis.

Our Associates have worked tirelessly to provide safe and secure Banking and Financial support during this turmoil and the continued growth of the balance sheet reflects these efforts off during this time. I'm reminded of a quote from dr. Martin Luther King jr. I know somehow that only when it is dark enough, can you see the stars?

We hope that you are shareholders remain safe and we thank each of you for your ongoing support of the company.

I will now open the call for any questions.

Thank you. We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at anytime your question has been addressed and you would like to withdraw your question, please press star then to our first question. Stay will come from John Wayne State Partners, please go ahead. Hey, good morning guys. Hope you're doing well. Hey, John, John. Hope you're all good. Yeah, crazy times crazy times. Just a I guess a few questions Rex given. I realize really nobody know obviously. Nobody knows how this is going to turn out and stuff. But as far as long as you're sort of thoughts on continued loan growth as we go over the next few quarters, just just obviously giving everything.

You know, we we are spending like every day with with our loan officers and Loan teams and every week they're putting in reports on you know, what's going on in the marketplace as well as wage going on in their portfolios. So, um, you know in in round two of ppps open up probably this afternoon, so that does take some of the focus off of the growth side, but you know so far we've been we've been holding to what we budgeted it actually beat budget, but I think is it settles down it'll it'll probably fall back into that, you know, five or six percent range going forward, but you know, they're going to be things where and what we've looked at within our portfolio. You know, we've got a lot of dentists has been off and they've got, you know Office Buildings and we're looking at it and they're out there down to it like maybe a 50% loan-to-value in their office building. Well, they may need a line of credit to get back up and going and do some things are dead.

can use that collateral so we're already

Analytics to make sure you know people need additional funds to get through that we can do it without taking any big risk with them. So I think you know, I'm I'm probably a little more optimistic than than some of my brother but I think you know, we're going to we're going to hold into that pretty normal eyes growth rate prior to covid-19 when we reopen.

Now, you know mid-single five six percent that would exclude the PPP loans.

Correct. Yeah, I'm I'm excluded those cuz hopefully hopefully they all get forgiven in the next you know few minutes a couple of quarts. What's the the average size of the PPP loan was looks like about $175,000. What's the average fee? Is it probably around 3% It's a little above that John. It's about it's right at three and half percent. Okay. Okay. Okay. So the the fee the fee she'll get off that will be a little bit over two million dollars then so yeah, I think as I was looking at it last night, it's about two point six almost two point seven and that's you know, obviously before this next round. Okay, Bruce, maybe a question or two per you just the margin you guys are still slightly asset-sensitive and given the choice Cuts happened late in the quarter. I would assume we probably see some more margin compression in here. Uh, no doubt it.

It's hard to file them that that any bank is not asset-sensitive now despite what they're they're models might show and I contemplated getting a question and thought about Donald Rumsfeld, you know, there are known knowns and there are known unknowns and unknown unknowns. Well the known knowns our life, we know that we have a lot of pick up on the liability side with regard to CD repricing 132.9 million months in the next quarter will roll off at slightly over 2% and you figure that there's going to be a 100 basis-point lift there and that will continue over the next three quarters. Whereas over the next year 52.7% of our deposits will re-price at 188 South

To somewhere close to 1% That's the known known component. We and the unknown no part is on the asset side some of it we know we have loans at floors, but we have loan officers getting knocked on their door phone calls a warning rate relief because they've hit the floor and now we had a hundred fifty basis point drop and so they're alone floor is well above where the market is for New Deals and other Bankers prior to what we're all managing through right now, you're looking at making great connections to your floor. So how much of that that's the unknown unknown. We don't know how much of that that we go any experience over the next Thursday.

nine months

2020

So surely.

It's my opinion that we're going to see more of a beta on the asset side than we are the liability side. I don't think there's any question about that you hope for the best choice and that

you can protect the asset side somewhat, but there's a lot of velocity on the asset side of the balance sheet.

So so I I guess all things equal you probably see another drop at or a little bit greater than we saw in the first quarter in the second quarter and then maybe some stage in in the second half of the Year. Yes. Okay, and then just one other question on expenses the 8.6 million so you guys have done a really good job, you know Bringing Down the expense boxes. Do you think the 8.6 level is sort of a good good level going forward?

I would you know, there may be a few additional expenses John from you know, what we're going through here, you know month and we are keeping all our employees on staff and and working remotely so, you know, there's there's it's you know over time is down, but you know our credit expenses and other things may move around a little bit but you know, we're trying to manage to that number of Bruce. Yeah, you know, I would say in that range. Maybe you know off on the

10 side of the decimal point the next decimal place maybe one up Tick it may be slightly higher, but we're in a pretty good range on the expense side.

Okay. Thanks guys. Keep up the good work.

Thank you.

Our next question will come from Daniel baldini with Oberon Asset Management, please go ahead. All right. Thanks for taking my call say I'd like to understand a little bit more about this payment. So the gross loans at March 31st were billion 79 2 to 9 and you mentioned in the call you had provided payment relief on $55 million of these loans, is that correct?

I think it's it's closer to it's going to end up to be closer to $67 billion. Which number would show up in the March 31st numbers.

Those are but of those loans outstanding at March 31st at the moment. You provided payment relief on $67 million of them.

No, I'm sorry. That was the TTP program.

that

Okay, we we did sixty seven and and PPP loans on the payment relief side. We did a little less than that. And they and and those payment relief sort of are all over the board. Some of them are, you know, two months of interest only some of them are up to we never did anything more than about sitting in six months of either going to interest-only or you know month payment relief for you know, three to six months but that was $55 million dollars for about a customer that we do pay for and this payment relief you're adding, you know, either the interest or the principal or both to the back end of the loan. Is that the sort of standard

Procedure it's it's about fifty-fifty. As far as people who just went to interest-only and then are still paying interest and then about half of that or maybe probably sixty percent of that page actual payment relief where they're not making the payment in that goes to the back end either to the call. Or to the maturity, correct? Okay. Okay, and then you walk in your provisions of three million bucks. I think you mentioned that you had you would provided a provision against these. How do you how did you think about how much to provide against these laws that you where you've provided payments to leave? So these are not specific to the loans in the provision. These are these are General allowance and general lounge and model is built on a lot of different, you know things that go into economic conditions for part of it. Which drug some other but dead.

It's also on risk-rating migration. So if you move down the risk rating scale, you know that that pushes some of that and so if we did payment relief we moved alone to a special mention risk-rating 6, which which drives some more General reserves, but also they were loans in which we the loan officers who've been looking within their portfolios and looking by an Asus, as far as what industries are, you know at risk and then within those Industries which one of our loans had either high or moderate or low risk, and they reassess those risk ratings will be added, you know even more so it just added to the general Reserve.

Oh, okay and one final question. So on your on the call reports that you know, all the banks file them is a section for called loans restructured in trouble debt restructurings that are in compliance with their modified terms. Now would these payment with these loans where you've provided payment relief would they be in this, you know item on your call report? No total total loan structured.

no not

Not at this point under the rules regulatory accounting rules. They are not in the restructured section.

Okay, and at what point do they move into restructured or if they do I would suppose that some point where they're become become some type of credit issue where they violate their terms that we had set up in that type of thing a later assessment. You know, if we were to Grant a concession or give a loaner or a or some type that would mean that you're not going to collect the after the grace period if lack of a better term ends and then you have to make some kind of concession going forward where you're not going to collect your principal and interest under a contractual terms at that point. Then it may become if the regulator Thursday we get there, but we would assume that they would call it a TDR at that point.

Okay, Daniel, I control it works very closely with that with our chief credit officer on you know, which we looked at all these credits as to whether any of those would be classified as TDR home and you know, and they weren't at the time but but we look at that, you know.

Okay. All right. Great. Thanks very much for your time. Thank you. Thank you.

And our next question will come from Brody Preston with Stephen, please go ahead morning everyone. I hope everybody's doing okay. Hey Brody r u doing right off now. Everybody's everybody's well here. Thank you for asking. So first, you know, I I know it's I know it's an unknown unknown at this point. But you know just to give him previous experience when you go through, you know, I guess maybe through the last cycle with rates liking down like this, you know, you know that, you know here previous institutions, you know.

Our our rate concessions prevalent on the majority of floors in your experience.

I would say no, but with a hundred and fifty basis point drop, you can sort of a gauge it very well when you're getting systemic Choice Cuts, but we basically pull the somebody snatched the tablecloth off the table with a hundred fifty basis point cut and make sure there's going to be a line of demarcation in there somewhere where there's a Tipping Point that the borrowers are going to be more proactive then they they normally would now I can tell you that we had almost three hundred six million dollars at the floor on March 31st.

And so that you know, that's a third of our loans basically are at their floor. So we will see how much of that is proactive but I think you know everybody right now has her hands full managing where we are instead of shopping rates. So right off, you know, a lot of that is driven by competition. And right now, you know competition is not out there people are just trying to take care of their their life and what's going on and I will say we have we have gotten we've acquired a couple of new good house from other Banks. We got it to ignore all the PPP process. We really didn't open the doors per se to non-customers. But you know, we've we've had some good clients that we've spoken to in the past and tried to bring in the fold and they've

Come over to the PPP program which helps but you know, I think you know Bruce is when we get Beyond it's a little bit if you know, somebody looks up and says, you know, I can't I can't do anything to get my way out of this except by trying to get volume by and by them, you might get some a little bit irrational maybe but you know, I think on the other side of this people seem to be a little more loyal I really do because you know, they're going to they're going to look at the banks to help them and protecting them and that they're not going to forget about that for a while. So I'm hoping that we don't get off a lot of it and and history would say not but this is you know, we've never seen this before either right and and let's hope that we come out of this I think.

one thing that may have been gettin forgotten by Bankers was there needs to be a credit spread on a loan and wage rates were getting are are so low and live or Libor starting to come down now, but

even if rates go to zero there needs to be a credit spread and and this is maybe waking everybody up a banker's everybody Bankers Life that don't forget about the credit spread. You cannot price everything off the treasury curve and off Libor.

All right, right. Okay on the provision just wanted to better understand some of the moving Parts. Just wanted to get a sense for how much of the provision came from, you know, some of the risk rating migration that you did on individual loans in the portfolio. And how much of it came from adjustment to qualify factors.

Almost all of it was related to risk Great Migration.

Okay. So with that, you know, I must you know, obviously everything is changing all the time, you know weekly here but assuming assuming that the risk ratings don't significantly move from here, you know, do you anticipate sort of adjusting some of your koala factors higher as we get some hard economic data off, you know for two Q or how should we think about the provision in the second quarter?

Well, Charlotte General economics day is going to be you would think if we stay on this progression. It's going to be worth at 6:30 then it was at 3:31. So I don't know that the risk grade migrations would increase but we'll look at the linkage. These will look at unemployment will look at some of the larger General economic conditions and make an assessment from there. But I I think our guys and gals our loan officers did a really good job of identifying the loans that were in industries that would be of heightened risk at 3:31. So more of it would be to the general economic factors combined with delinquencies.

Yeah, and I think Bruce the soft factors don't contribute as much as what goes on within the loan portfolio. So, you know, we get more more loans, you know, starting wage rate into into high-risk categories that you know, go into special mention are beyond that that drives it a lot more than a software package.

Okay.

Okay, thank you. And then just wanted to know if you guys could provide any detail on some of the industries that are going to be most impacted by this this in terms of exposures to restaurants hotels retail CRV those sorts of things.

Yeah, so I'm looking at you know, the spreadsheet. We just we did by Nathan's codes and of course hotels and other lodging places. It's been the one that we're not going as one of the one of the higher risks and then of course, you know, we've got within that you've got the retail stores, which we don't have a lot of but you know, that's that's one we looked at and you know also the the restaurants

entertaining to go in there, but

also, there's some that are in the medical care services, you know, they're a lot of smaller doctors and dentists you'd have to you know, cut hours to close offices except for emergency things and and we've looked within them but that is probably you know, those are probably the

the biggest

Categories, um, you know, and then we do have another one. I think there's a there's a recreational in vacational thing with campgrounds of stuff. That's we don't have a lot of exposure to ever we identify that as a as a high-risk industry within that and look at the you know,

okay. Are you able to share those exposures Bruce?

I do not have them at my disposal right now Brody, but

You know, I think yeah, we could look because you'll see in the in the release, you know back by certain categories. What does exposures are as a percentage of the total portfolio. But within those Brody, you know, you need to be a little careful because as we look at them some of them, you know, and they might be in one of those categories hotels and lodging for instance, but it could be wage was a you know, really well-run hotel that's got strong guarantor strength and they've cut their expenses and their you know, they look at us and said we're fine. We're going to ride it out, you know, when we reopen we reopen and so, you know, there's there's a lot of moving Parts within those categories.

Yeah, yeah, of course, of course. It's just you know, that's it's what's on the top of every Investor's mind nowadays. And so that's that's just what I was asking God. I will say this portfolio. I'm I'm very pleased from a risk standpoint about the granularity in that industry types that we have our concentrations. I think they're very well managed by our chief credit officer leading that effort.

Okay, I think Brody don't don't quote me, but I'm looking at this is this is my internal spreadsheet that we're using with the loan officers. It looks a little over 4% exposure say like in hotels and other lodging place and you know, that's you know, that's probably one of the one of the larger categories, you know, some of the service stuff like to represent, you know, it's it's it's Bruce said Patty and and the credit card was not a great job of sort of keeping things granular and keeping things spread out.

Okay, great. The last one for me is just on that the three and a half percent fee that you earned on the PVP loans. Do you expect to recognize a proof of that rather in the second quarter or the third quarter know they they have to be they have to be split over the the the technical life of the loan which is technically two years. Right? I mean it's assumed that they were forgiven though, I guess is yeah, but like they get they get forgiven. I would I would assume most of those would be forgiven, you know in the in the end of the second quarter based on what you know, the dog has been telling us that you know, there'll be some leakage. I'm sure.

Okay, great.

Thank you very much. I appreciate the call. Thanks, bud.

As a reminder, if you would like to ask a question, please press * then 1 hour. Next question will come from Stuart, please go ahead.

Hey guys, good morning. Hey Stuart Stuart. Most of my questions have been answered already sir. I really appreciate the color on your PT. Sorry TPP participation off. But you know as we think about this next round of funding, I know I think the house passed it yesterday. You know, what is your kind of your pipeline for round two? And do you have you know, how many customers are in how how can we think about, you know a number that you could secure for this next round of PPP funding after the you know, the $67 in round one month. So we've been we've been sort of keeping a a list of folks that want to get into q and of course, you know as we get them in the queue and what we don't know is in and I was on a conference call with with Senator Mark Warner's office a couple of weeks ago and he said very very plainly that they're concerned about the first round was that it wasn't

Need-based and they they were they were very concerned that they were you know businesses that didn't need it. They were getting it. So is this next round comes about I'm assuming that there might be a bigger fog ratios the FDA that's not not everybody that wants to get it's going to get it this time, but we've got about we probably have about sixty customers in the queue right now and maybe a few thousand more but you know, some of those might not be eligible some, you know will but right now the the queue is sitting at a little over 60.

Okay, I appreciate appreciate that number.

I guess as we you know, as we think about, you know, your gross pipeline like I'm guessing most of your you know, most hands on deck right now are focused on the PPP program. Um, and I think you've mentioned earlier you still have, you know, you're still hopeful for that five and six percent loan growth Outlook. Um, you know, maybe that's on hold near-term so long is it safe to say that, you know, most of your your lenders your kind of focused on on the PPP program right now, and that's where you know the gross going to come from at least in in to you and three Q

I'd say at least into cubes Stewart because it is and what we've what we've done is we've really tried to push the lenders into a situation and said, you know, you need to take care of the customers. You've got in your pipeline right now and in your in your portfolio right now, that is the utmost importance. They've got to be touched and talk to and you know know that they've got a a a rendered but you know cares about them. It's going to help them. It's going to work with them. So they're spending a lot of time, you know going through the portfolios going through the exhaust the list and then looking at the PPP program and what's going on with that and that does, you know take up a fair amount of time but we have still been closing. I mean, you know, I'm looking at it out from yesterday that you know, we're still we're still booking loans other ones. So it's it's it's not going to be a I don't think it's going to be a zero-sum game in the second quarter, but certainly, you know, it's going to suck.

That's a lot of that production. But I I would hope by the third quarter that we're back into more of a you know a normal.

Situation. Hey, and I'm glad to add a found the information to answer Brody's question on some granularity in the loan portfolio page and Rex touched on all these and I think I can affirm his directional indication about our level amusement and Recreation Marino's just slightly over 1% hotels and places of lodging 4.83% medical and health care services for and half percent personal services such as barbershops beauty salons Etc one pack retail stores, 1.3% and recreational.

.84%

Yep. Thank you very much for that for that color.

Maybe just one more for me, you know looking at your pre-tax pre-provision earnings, you know came in at you know, Five Point 1 million this quarter. I think it was about, you know, five and a quarter in the fourth quarter and taking your guidance for expenses. And as well as for you know, some margin compression and if we kind of keep your fee income flat, but add on pack, you know, one or two quarters of the PPP fees. Um, you know, what is the bulb how should we sing about, you know, your your pre-tax pre-provision income kind of holding that 5 million range, or do you see, you know, maybe closer to five five and half from from interning standpoint.

I would say it would be in that at 5, maybe slightly higher with the

PPP fee realization

But we're certainly, you know, I just anticipate some margin compression. So of course the quick pop from the fee. It depends on, you know the page over which it's realized but you could see it slightly higher than than 5 million, of course aside going deeper than wage tax provision, of course where

ultimately concerned about net income and

I think there's still a lot of question about how much provision are we going to see in the the second quarter as well?

All right. Well, thank you very much for your time and thanks again.

Yeah, one thing we do know is that a mortgage loan group has been has been very busy and remains very busy and we've been working with them and and the realtors in in the airbag. It's it is amazing to me that there there are a lot of home sales still going on and a lot of folks who are buying homes based on Virtual virtual tours and then letting the inspectors do that the actual you know, the the inspection but you know mortgage loan pipeline still looks very strong and that's been a good feed fee-based for so, you know, hopefully and that's what we're looking to do is figure out, you know, where that where the gaps may fall and how we fill the gaps. Well, it's on the, you know, another piece of income or whether you know, it's expense based and where we can look and you know, that's what we going to do.

Yeah, thanks for taking my questions.

At this point we have concluded the question-and-answer session and I would like to turn it over to Mister Smith for any closing remarks.

Well, we we hope that all of you stay safe and we just want you to know we're going to be working harder than ever to manage the balance sheet so that when we get through all this that will be stronger than before and certainly wage, you know, the camaraderie and the ability of our Associates to work together through this has made a very strong company and we thank you all for your support and we are available today for a couple of questions if you need it.

Thank you. The conference has now concluded and you may now disconnect.