Q1 2020 Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to the South Plains financial first quarter 2020, <unk> earnings Conference call. Today's presenters mission all parties will be in listen only mode. Following the presentation. The conference will be open for questions with instructions to follow at that time as a reminder.
This conference call is being recorded I would now like to turn the call over to Mr., Stephen Crockett Chief Financial Officer of South Plains Financial. Please go ahead Sir.
Thank you operator, and good afternoon, everyone. We appreciate your participation in our first quarter 2020 earnings Conference call with me here today are distributed our chairman and Chief Executive Officer coordination, our president and bring.
Page Citibank's, Chief Credit Officer.
As a reminder, the telephonic replay of this call will be available through May 14, 2020.
Before we begin let me remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act 1995.
These include statements about our future expectations beliefs estimates plans and prospects.
Such statements are subject to a variety of risks uncertainties and other factors that could cause as actual results to differ materially.
Those anticipated future results performance or achievements expressed or implied by the forward looking statements.
Factors that could cause such differences include but are not limited to general economic conditions the impact of the cobot 19 pandemic changes in interest rates.
Regulatory considerations.
Competition in market expansion opportunities changes in noninterest expenditures or the or in the anticipated benefits of such expenditures and changes in applicable laws and regulations.
Therefore, the company can give no assurance that the results contemplated in the forward looking statements will be realized.
Such risks and other factors are set forth in our annual report on form 10-K for the fiscal year ended December 30, Onest 2019.
Filed with the Securities and Exchange Commission on March 20 to 2020.
We urge listeners and readers of our earnings release to review the risk factor section, but that annual report on form 10-K, and the risk factor section of other documents sell claims financial files with the FCC from time to time.
Listeners on readers of our earnings release are cautioned not to place undue reliance on forward looking statements contained in this earnings call or in our earnings release.
We do not undertake any duty to update such forward looking statements, except as required by law.
Additionally, during today's call we may discuss certain non-GAAP measures, which we believe are useful in evaluating our performance.
The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with gap.
A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings release at this point I'll turn the call over to Curtis.
Thank you, Steve and good afternoon.
On today's call I will provide an update on our operations in light of the ongoing Togut 19 pandemic that is impacting our nation and book.
I will then briefly review the highlights of our first quarter 2020 results, including an update on the integration of West, Texas State Bank or Wtsp.
Cory will discuss the steps, we're taking to manage our long portfolio and Steve will then conclude with a more detailed overview of our first quarter 2020 financial results.
Well then open the call for your questions and we have Citibank's, Chief Credit Officer, Brent Bytesphere to help.
Although my nearly 50 year tenure in banking I have seen many tumultuous periods each of which had their own unique challenges.
Ultimately it has been we experienced and talented our people combined with a well capitalized balance sheet, which is consistently position Citibank do not just weather the storm, but drive.
And we believe this time a crisis is no different and we expect Citibank, we'll continue to drive through our dedication and support to our customers and communities for without their success ours would not be possible.
It is this philosophy and experience, which guides our company and I would like to thank our employees for their hard work and dedication to ensure that our operations continue to run smoothly and the services and support to our customers are uninterrupted during these difficult trends.
I'm very proud about oversight committee for our business continuity and incident response here at the bank.
They have been monitoring the spread of the Corona bars in the communities. We serve for several weeks and have been continuously escalating our response as well as our employee and customer communications as the pandemic has expanded.
As a result of their efforts we put in place a pandemic task force, which met daily for two weeks and now mates on an as needed basis as state and local officials announced changes to procedures.
Our pandemic task force has implemented our business continuity plan to ensure the safety of our employees and customers, which remains our number one priority.
As part of our business continuity plan, we have enabled many of our employees to work from home.
Have restricted access to our bank lobbies, two allowing customers end by appointment only.
Our providing essential banking services to our drive through Windows, and recently upgraded digital platforms and have repositioned our staff in our operations center to allow for social distance.
We are very fortunate to have our Citibank operation Center that opened in 2018.
It is a cutting edge facilities that handles our digital banking Treasury management loan and deposit operations and also houses our customer experience center.
This facility is quite large which has allowed us to effectively reposition our teams and provide more than adequate distinction.
The facility also provides support for our employees who are working remotely.
As a result, we have been able to provide our customers with sandler support and service, while maintaining the safety and health of our employees.
Our investments in our infrastructure and technology or just one example of the many changes that are senior management team has implemented over the last six years as we have been working aggressively to improve our operations instill a disciplined credit culture diversify our funding and scale the bank we.
I've learned many important lessons from the break recession and have been position and Citi Bank to weather the next downturn.
As a result, we remain confident in our underwriting risk management and capital policies and plans.
Turning to our financials, we reported net income of $7.1 million are 38 cents per diluted common share. So the 2021st quarter as compared to net income of 4.8 million or 32 cents per diluted common share in the first quarter of 2019.
Our net interest margin increased modestly to 4.13% in the first quarter of 2020 as compared to 4.03% in the fourth quarter at 29 team.
Of note our average cost of deposits declined 11 basis points to 65 basis points in the first quarter of 2020 as compared to 76 basis points in the fourth quarter at 29 team.
This improvement was largely driven by having a full quarter of WPS based low cost deposits.
Our adjusted efficiency ratio for the first quarter of 2020 was 72.5%, which excludes the effect of a $2.3 million gain on sale of securities and compares to 81.8% in the first quarter of 29 team.
Im very pleased with the continued progress that we've achieved in scaling our infrastructure.
Lastly, as Corey and Steve will discuss in more detail. Shortly we recorded a 6.2 million dollar provision for loan loss in the first quarter of 2020, which compares to $896000 for the fourth quarter of 2019.
The increase was largely due to our decision to downgrade the risk ratings on some of the more at risk sectors now portfolio, primarily energy and hospitality.
Importantly, we are working proactively with our borrowers who are most impacted by the pandemic and by low oil prices to help them weather the storm.
While we expect our provision expense to remain at elevated levels over the balance over the next few quarters, we remain well capitalized with a common equity tier one to risk weighted assets ratio of 11.24%.
We also have sufficient liquidity on hand, as well as $450 million in Unpledged securities and access to lines of credit with the federal home loan bank of balance the Federal Reserve Bank and other banks.
Lastly, we remain confident in our underwriting and the overall soundness of our loan portfolio.
Turning to West, Texas State Bank, we completed Wtsp as data conversion at the end of the first quarter of 2020 and it went very smoothly.
All of the pre planning that our team went through made a significant difference and I'm pleased with how quickly we have been able to integrate WPS moves operations into ours. Today, we are operating those six branches and five west Texas communities all under the Citibank brand.
We have also brought in a new regional him for our Permian Basin operations, who has significant end market experience in both driving organic growth as well as managing through challenging credit environments like we're facing today with the sharp drop in energy prices.
And our many years of banking around this region, we have seen numerous cycles in your business. This once again very suddenly and it certainly exacerbated by the effects of the Corona buys pandemic. However, like all the ones before we believe it too will pass.
Outside of the Permian Arlo, the Texas economies are broadly performing and other than a few select industries, we're not seeing our major employers lay off the workers at this time.
And of course, the current environment is uncertain and we're closely monitoring all available economic data given this uncertainty we have suspended our share repurchase program and will continue to prudently evaluate our quarterly dividend with our board of directors each quarter.
Now, let me turn the call to Kuwait.
Thank you cards and good afternoon, everyone as Curtis discussed we've invested in our infrastructure and technology in order to transform our operations and build a foundation for future growth.
As part of this investment we've implemented a rigorous enterprise risk management system or ERM that delivers a systematic approach to risk measurement and enhances the effectiveness of risk management across the bank.
Integrating as the RPM system into our culture and strategic decision, making has improved all functional areas of business. For example, our asset quality improved significantly by enhancing our underwriting profit and establishing a specific credit habitat that aligns to the broader enterprise risk management framework.
Importantly, our credit culture is a key differentiator of the bank as we consistently and aggressively review our portfolio for side of the potential issues and accurately those loans for our balance sheet before they become a real problem.
Our ERM system has only improve our ability to manage credit and has positioned our portfolio and the bank to successfully whether the uncertain economic environment, which we currently face.
This is a significant change from our position in the last downturn as our underwriting and our team are much stronger today than when we entered the great recession.
We're also utilizing tremendous data and have a much better handle on our portfolio, which will aid and our decision making processes.
Additionally, our new Chief Credit Officer, Brent Bates is providing critical leadership as we work to proactively manage our loan portfolio.
Looking at our loan portfolio in more detail loans held for investment at the end of the first quarter of 2024, 2.11 billion, which is a modest decline compared to loan to 2.14 billion at year end 2019. As a reminder, there is seasonality in our businesses, we experienced 34.5 million in seasonal agricultural loan pay downs.
Within our portfolio approximately 5.4% of our loans, our hotel and assisted living and 3.9% our restaurant and retail business loans, which did not include properties under construction. Additionally, our direct energy exposure is 4.3% of our portfolio.
As Curtis touched on we are taking a more focused and proactive approach to help our borrowers whether this unprecedented environment. As an example, we have already have reached out to a vast majority of our customers with loan balances in excess of 1 billion in an attempt to proactively assess and address the challenges they are facing in this environment.
We have also assign TARDIS must sell Brent Bates and the banks Chief lending officer, Chris Coupe to the most at risk portions of our loan portfolio to guarantee that we have the support and oversight necessary to ensure that both the customer and the bank our look better.
As part of our efforts to support our customers and protect the bank. We have offered varying forms of loan modifications ranging from 90 day payment of barrels to six to 12 month interest only terms to provide our borrowers relief.
As of April the 24, we've modified just over 17% of our loan portfolio with approximately 76% of those modifications movie to loans to interest only which is our preferred loan modification is it better lines the needs of the customer and the bank. We believe the speed of our responses, making notable difference to the size of our borrowers that communities that we.
There.
While the outlook is uncertain, we remain very confident in our disciplined underwriting culture, our risk management processes and our liquidity position.
As we look at the balance of the year. It into 2021, we're confident that we have the capital to over the losses in our portfolio that could result from an adverse stress environment and feel well positioned to take advantage of opportunities that could be created in these difficult times.
We've also been active in assisting our customers that assessing the small businesses.
Paycheck protection program created out of the cares Act and have originated over 170 million in PPP levels through April to 24.
Represents over 1100 test versus PPP loan applications were approved it funded and just a few short week.
Helping our customers Act that PPP loans is just one way that we have been helping during this challenging time, serving our communities is also very important for south buying and our management team. We have been at the quarter of local Impartment three bank and have recently increased our financial support given the challenging economic environment for so many as a result for the current of our ending.
Turning to fee income.
Which is a priority for our team we generated 18.9 million of noninterest income in the first quarter of 2020, which compares to 16.7 million that we generated in the fourth quarter 2019, the increase from the fourth quarter of 2019 was primarily the result of an increase of 2.1 billion in mortgage banking revenue.
As a result of an increase of 28.2 billion in mortgage loan origination and 2.3 million gain on sale of securities, partially offset by 1.5 million an annual profit sharing bonuses related to crop insurance activities recognized in the fourth quarter of 2019.
Overall, the prevailing low interest rate environment has driven strong refinance volumes looking forward. It is difficult to forecast how low volumes will continue to trend as a result of the pandemic, though we believe our pipeline remains healthy and closings are happening overall, our fee income was primarily driven by our mortgage operation debit card at other banks.
Service charge income and income from our insurance Trust and investment service business.
Our fee income provide shareholders for the recurring and diversified earnings stream as it represented 32% a total revenue for the first quarter. Excluding this gain on sale of Securities I would like to now turn the call over to Steve.
Thank you Corey.
Afternoon, I will briefly review the remainder of our first quarter 2020 results as Curtis in Korea touched on many aspects of our results before turning the line back over to Curtis for concluding remarks.
Net interest income was $30.2 million for the first quarter of 2020 as compared to 24.5 million for the first quarter 2019.
The increase was largely attributable to the rise in our average loans of 211 million primarily from the Wtsp acquisition and a decrease of 56 basis points in the rate paid on non maturity interest bearing deposits.
In first quarter 2020 deposits decreased $31 million to 2.67 billion as compared to 2.7 billion in the fourth quarter 2019.
The decrease in deposits during the first quarter 2020 was largely a result of some outflows of balances acquired from Wtsp, which have temporarily increased in the fourth quarter 2019.
We ended the first quarter 2020, with total noninterest bearing deposits at $741 million or 27.8% of total deposits.
189 million of our noninterest bearing deposits are attributed to the Wtsp acquisition.
40 touched on our loan portfolio and the steps that we are taking to work with our borrowers to manage our credit.
Overall, we believe our strict underwriting and strong credit culture has our loan portfolio well positioned as we enter this uncertain environment.
This can be seen as our nonperforming assets to total assets ratio only slightly increased four basis points to 28 basis points in the first quarter 2020, as compared to the fourth quarter 2019.
As Curtis mentioned, we did add to our reserves in the first quarter 2020, given the headwinds that we are seeing and expecting from the pandemic in the drop in oil prices.
2019.
Driven by the overall decline and interest rates for the first quarter of 2020.
Additionally, our interest starting assets increase $417 million, primarily due to the W.T.S.B. acquisition with the proximately half of the growth occurring in loans.
Even our liquidity after the acquisition of W.T.S.B., we made the decision to purchase investment securities as we work to optimize our balance sheet.
They didn't afford Porter 2019, we purchased approximately $300 million of investment securities, primarily consisting of mortgage backed securities and catches municipal bonds.
We sold approximately 90 million of our legacy portfolio mortgage backed securities in early January 2020, and recorded again $2.3 million.
In March of 2020, we reinvested those proceeds largely in Texas municipal bonds.
The overall portfolio unrealized gain increased $18.9 million to a total of $20.1 million during the first quarter of 2020.
Looking for we plan to continue to better manage our liquidity to further drive interest income.
During the first quarter of 2020 or non interest expense was 34.0 million as compared to 31.7 million for the fourth quarter 2019.
The increase was primarily due to the 1.7 million dollar increase in personnel expanse predominantly related to the W.T.S.B. acquisition and increase commissions paid on higher volumes of mortgage loan originations.
During the first quarter of 2020, we also saw an increased and other variable mortgage expenses such as appraisal expenses in credit reports due to the increase mortgage protection.
The first quarter increase and other non interest expense was largely a result in a full court or a core expenses bar added permission based and branches.
Additionally, we incurred approximately $630000 data conversion expenses.
The equipment purchased in connection with upgrading branch equipment that acquired an existing local branches.
We will be aggressive with our expense structure has the integration of W.W.T.S.B. is now largely behind us and we expect our quarterly expense run right to began to decline in the second quarter of 2020.
We see our expense structure as a partial offset to the impact on our business from a weakening economy.
We got our tangible book value $16 and 50 per cents per share at March 31st 2020, $15.46 at December 31st 2019.
Additionally, we remain well Capitalised mateer, one capital to average assets pinpoint 34% at the end of the first quarter of 2020 compared to 9.70% in the first quarter of 2019.
Curtis discussed we were watching our capital closely on our board of Directors will continue to review our dividend core really.
On April 16th we announced that are board of directors had approved our third consecutive.
Quarterly dividend of three cents per share.
As you think about modeling our business is important to remember their first quarter 2020 results were positive typically impacted by 1.86 million dollar securities gain net of taxes.
As a result are second chords 2020 earnings per share return on average assets and return on average equity may all contract.
Additionally, Arnett interest margin could also contract and the second quarter of 2020, given that we will have a quarter of the rate cuts that were done in March of 2020.
Lastly, we expect our capital and liquidity hold steady through the second quarter of 2020. So there will be some fluctuations due to P.P.P. loan bindings and any borrowings necessary to facilitate thing.
Now turn to call back to Curtis for concluding remarks.
Thank you stayed.
Chicken clothes, [laughter] I would once again like to thank our employees that they're hard work during such a challenging time.
But kept our operations running with <unk> disruptions as we have adapted to our normal as a result of the pandemic.
While we will certainly say a contraction on the economy for some period of time.
I'm confident in our underwriting the credit worthiness of our portfolio and our capital.
When you stand ready to support our customers and our communities and look forward to the folder growing the bank as opportunities present themselves.
But that I'd like the operator to open the wind for any questions appointee.
Absolutely if you'd like to ask a question. Please signaled by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure you mute function just turned off till I like your signal to rich our equipment once again <unk> to ask a question well fresco with.
<unk>.
Good afternoon guys.
Mmm bread.
Thanks for taking my questions about.
Come from a few numbers Cory I think he said.
Who tell from the point, obviously the loan portfolio restaurant five point for energy.
4.3 is that correct.
Yeah.
Right.
Okay. I was just kids on this category, maybe you know, which which is a three you know maybe give you. The most concerned at this point and I'm. Just curious do you have no specific you know reserve levels for for each of those three categories.
Handle it grant take that one has his breath you know as we work kind of our high rest segments, we repair like the hospitality and energy sectors worm hair kind of early on and we feel like those maybe the longer to recover.
So so that's kinda how we've worked out of what we've we've taken hands on approach to the modification process to those sectors and you know when when you look at hospitality, we've got a lot of limited service hospitality sewing feel good about that that's not really vast majority of aren't portfolio there.
And and you know to your question on reserves on our reserves on energy book is is about 4.3.
3%.
On.
Oh and hospitality.
It's a 3.3. So you know we we that was really runaway focused our reserves for the quarter or a provision I should say, what we're all those higher rest segments.
That isn't in the restaurant reserves or is there a specific reserve there.
Yeah, our our retail restaurant reserves are.
Closer to 2%.
Okay.
You know I mean look a restaurant.
Restaurant for probably I mean, it's it's really centered and Q.S.R. is not.
Maintain operations, that's that's two thirds more portfolio, there and there there well known brand. So so far we're we're not hearing the level of stress, they're they're at the waist and are are smaller and portfolio or.
Restaurant.
<unk> well, that's that's up on them within the energy portfolio can remind me kind of but mm.
The breakdown of kind of between service and <unk> inherited most of that from the from the most recent acquisitions I like.
Yeah. Some of it you know when you look at our energy, but really 92% of at a service related.
Huh.
You know I I would caveat I'd say you know there there's a third or more that that that is and something that you might might categorized as image almost like a mid stream. So so that's been kind of conservative call. It service, but about a quarter of that came through the acquisition. So.
Quarters of our energy book his legacy in about a quarter is required.
But you know again, we've you know the.
Described in the bank represents over a third of the portfolios back by really strong guarantor and we feel good about that the guarantors as string beyond the energy industry and and cash flow ability there. So.
So so we take comfort there at least but.
Thank you. This is Curtis Yep. This is Curtis Brant, you're still on there.
We're we're not trying to gloss over anything it's gonna be some tough times in the energy separate at all patch or snobby and we think a fairly extended period of downtown. We're just fortunate that it's not a huge piece of our overall portfolio and it's bright indicated some of the larger credits. We have had really strong yeah of course report there's lots of.
I don't handle liquidity, they're not really dependent on a a revenue coming in from the the energy side to continue to be able to make some pregnancy.
Down to that so doesn't maybe we won't have some hiccups better we're we're not losing too much sleep over that one.
Right right and then nuts help occur that's helpful. Thank you and maybe just switching gears quickly to the margin that Steve you mentioned that you do you know expect some compression near term you know sort of excluding the impact of the of the P.P.P. program can you sort of you know frame that up you know for a little bit.
You know kind of what your expectations are in terms of you know magnitude looks like you guys or do you make some progress on the deposit side of things, but it just kinda curious kind of how you're feeling about you know kind of told the magnitude of the compression based on what we've seen the rate barn.
Yeah, that's a good good question and and and as you said the P.P.P. will definitely over the next quarter or two we'll we'll see those numbers somewhat with the with the low rate plus the fee, but excluding that we we did make make good good headway with on the deposits.
And so yeah, and we still we've seen that you know maintain so far.
But just just 111 of the side to the to the T. One number we we had about four three to four basis points of of of in town not related to.
Payments on on on <unk> purchased impaired loans.
So so it was up you know three or four basis points to do to that looking forward.
Yeah, we got.
Will continue to five for for for the margin that we've got the you know it could be you can see a drought.
Five.
Five to seven based points or so.
Okay, Great. That's <unk>. Thank you.
Well the next though with Brady Ganley from K.B.W. Please go ahead.
<unk>.
How bright enough for anyway.
So 4.3% of logs in.
Direct exposure.
Anyway to quantify what.
Yeah I suppose.
[noise] [noise] well when you're you know when you're thinking about.
Yeah, <unk> being inclusive service you know that's the 4.3.
Yeah, we have taking a look obviously we have.
Majority of the assets down through the acquisition or are you going to be centered in in those markets down there.
So you know and and we've we've also kind of gone through the portfolio and and look for other <unk> other segments within the the bank that's.
It's going to be tied at least indirectly to the energy book and you know we're not finding a great deal I mean, I I would say and and then 2% as what we've found direct outside of the acquisition.
And so so that's kind of where we're seeing it right now what we've identified as a as the largest credits that we don't have in this boat that may be somewhat tied in with an industry.
As an illustration.
Hospitality book.
We we've got about 16% of that are related to hotels that are located down in the permanent and certainly there's nothing impacted possibly over a longer period of time and hotel properties in other markets in Texas.
So again, it's still pretty manageable number there were quite a few loans that we acquired that because of that particular lender that was involved in making them. We're not in fact located in the planning and region. So it's or it's not like the entire loan book was it was all tied down there to the activity.
Permiam, it's all those down there will have some struggles I was comforting and find out when we get a little looking on our indirect portfolio that only a very small portion of our indirect auto landing is to ZIP codes that are down in the middle though that's the area. So I was concerned would not have some impact.
But it's going to be pretty minimal.
Alright, so $170.
<unk>.
So.
<unk>.
<unk>.
Huh.
<unk> that's about it.
Well.
What's the.
How how active.
The second round.
So we we calculated that <unk>, if our family came in pattern 173 million at the it's gonna be somewhere we intend to paint plus preventative million.
At 3.5%.
Alright, how how you know 173.
How much you all such a good the second round.
You know, we're not been able to find you need it to integrate extent, yet but from appraisal standpoint, we're 35 million into it.
Okay.
Look at.
Space was 34th quarter.
<unk> so.
That'll be coming down last quarter <unk>.
Magnitude is how much.
Expense side [noise].
So so we definitely had I think we show 630000 in in Q. law and that would be a non recurring although we do you still have a little bit of conversion expense I think that that'll that'll tell off in a in q. too.
So so we should we should see the majority of of that and number of timing out over the next couple corridors.
Yeah, and then in addition to that we we have began implementing some new.
Cost saving strategies on on our own as well.
Yeah. If you if you look back at what we projected on <unk> I think we're very much on track <unk>. We're staying the course of what we originally projected however, we think there'll be some additional ones that just like Steve alluded to I mean, we just got through you know we work in our health plan. The renews in July we we've been able to.
Adapt that plan into some significant <unk>. Thanks for the company I mean, that's the kind of stuff work consistently staying after trying to pod improvement.
Alright, Thank you guys.
Thanks Brady thank you.
Thank you <unk>.
Our question and answer session for today I'm heading that's lower back to the speakers for closing remarks.
Well, let me close to call out my thanking everyone. Thank you operator for your help like everybody joined our call today, We hope you and your families are continuing to stay safe through this.
We if we are definitely an uncertain times unprecedented times.
Our approach is that it is going to take several months before.
<unk> some sense of normalcy.
We're working with our portfolio is is driven by that thought we do hope we will be back in great condition.
By sometime during 2021, but we still got some Rocky times ahead of US I believe before we're back to anything understanding like what we had been accustomed to prior to the pandemic.
I'm very proud of our employees. They have worked so hard to support our customers and our local communities to all of this and have gone above and beyond with extended hours working in difficult environments and or are still are doing their best every day.
Every one of them.
Our investments in technology and infrastructure and our people has really position Mr. Succeed through time like this we've got some challenging Gen ran certainly backed up with all of that working together, we we feel pretty confident that will come out strong.
And our local economies are still continuing to function, they're they're all diminished everyone is we really optimistic many at our industries, you're going to continue to perform during this environment as we mentioned clearly the energy industry has been very hard hit that will affect certain areas, which we we maintain a bank locations but.
Locations and many of the other parts of the state have been a somewhat.
No hit nearly as hard let me just phrase it that way all the economy's or been tightened up because of the stay at home rules and the businesses that have been required to stay closed during these times, but as our governor is indicated that the state real gradually began to open backup and we believe you're going to see some economic activity improve and a lot.
Manufacturing sector and the other basic industries continue to move along agriculture for US is very important and we are are still seen farmers getting ready to <unk>. We are fortunate we don't have a huge amount of exposure to the livestock sector. As you. Many I'd you know that are certainly been hard hit recently by the are closing up some packet.
Plants, but our local farmers or you're in Europe to have have another good here, we hope and they're they're moving on despite all the other challenges out there.
Customers that are impacted we are aggressively and proactively working with them to ensure that there looked after to best we can and will be protecting the bank.
As we deal with the problems that that might crop up in the portfolio.
And finally, we believe we remain well positioned in real capitalized to take advantage of some opportunities that may occur as we are beginning to come out of this dire situation and we will plan to roller bank and scale infrastructure is that happens I. Thank you all for your time today and stay safe.
Operator.
This conference today's call. Thank you for participating you may now disconnect.
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