Q2 2020 Bryn Mawr Bank Corp Earnings Call
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Please note this event is being recorded.
Now, let's turn the conference over to Mike Harrington Chief Financial Officer. Please go ahead.
Thank you.
And thanks, everyone for joining us today.
I Hope you had a chance to review our most recent conservation presentation.
Most of these documents are available on our website at <unk>.
Dot com any investor Relations section.
We will be referring to the presentation. During this conference call on the call with me today or Frank lateral president and CEO.
The only in Berkeley.
Chief Credit Officer.
Before we begin please be advised that during this conference call management may make forward looking statements, which are not based on historical facts.
Please refer to the disclaimer labeled forward looking statements and safe Harbor, and our earnings release and presentation for more information they car.
[music].
All forward looking statements.
The strongest car based on management's current beliefs and assumptions and speak only as with the date and time, they're made the corporation does not undertake to update forward looking statements.
For a more complete discussion topic assumptions risks and uncertainties related to our best unless.
You are encouraged to review our filings for fish Securities and Exchange Commission, Okay on our website.
I'd now like to turn call over to Frac.
Thanks, Mike and I'd like to thank you all for joining earnings call today.
The last several months redefined how an organization operates.
We've all had to change our perspective in every facet of our lives while adapting to this new normal.
Current environment has been one of the most challenging our organization has ever faced in our more than 130 years in business.
But our resilience is one of which I am profoundly proud.
Our employees continue to rise to new challenges each day brings and I'm confident in our team's ability to overcome the obstacles we face.
We continue to believe investing in our people processes and technology or the hallmarks of a successful and sustainable company.
They should become more evident in the current operating environment and the results of those investments for future fruit acute too.
Our recent results are a sign of the skills resiliency and nimble responses from our team during the second quarter net income of $15 million or 75 cents of diluted earnings per share.
Second quarter included several notable items as detailed in our earnings release, along with an 8-K filed on June 29 2020.
One example of our ability to move quickly was the shelf the P. P P portfolio to the loan source.
Starting in early.
The early part of the second quarter, we originated in funded.
Almost 1800 loans totaling approximately $300 million.
After thought <unk> fourth will review in consideration, we decided it was in investor interest So the organization and our clients to show this portfolio in the same quarter.
Well the shale generated non interest income of $2.4 million. In addition to the fee income we agree to through the margin.
We determined that further investments would be required if we weren't and manage the loan forgiveness and service the service the portfolio internally.
In our opinion the operational risk associated with this activity.
Together with the constantly evolving parameters of the P.P.P. program outweighed the benefits of managing the forgiveness and servicing process in house and led to our decision to sell the portfolio.
We also disclose plans for optimizing our real estate footprint and operational efficiency.
Well more than a year BMT he's been working on a comprehensive facility and staffing strategy with the intent of optimizing both their front and back office space to better serve our clients and the structure of staffing model to deliver our services more efficiently and effectively.
Near the end stage at this planning for these changes the pandemic Kid.
And provided new and important real time information about our ability to serve our clients in a remote operating environment.
This information we modified in some cases accelerated our strategy.
As previously disclosed disclosed we plan to exit approximately 33000 square feet of office space, both owned and leased which we expect to be completed by the end of this year.
Additionally, and consistent with our focus on better processes and use of technology, we identified efficiencies, which resulted in the decision to eliminate 25 enterprise wide positions.
We did not make these decisions lately.
However, we firmly believe used to make BMT stronger and better position for the future.
Finally, we unwound BMT can sure back investment advisors.
This entity was established to provide investment management services to the B.M.T. multi cap fund the mutual fund that was liquidated in the second quarter.
The liquidation of the mutual fund the advisor was no longer required the cost related to this action of $2.2 million will be recouped in the form of expense reduction little over two years.
Well, we navigate the current world we live in we're mindful to keep our customers employees and communities close to every decision we make.
We work hard every day.
To ensure our stakeholders.
Safe.
And have access to all the resources, they need and aware of all the services PMT has to offer.
We continue to adapt the needs of our customers by ensuring that the solutions and services, we offer help them in this dynamic environment.
Part of our success no doubt is attributable to the investments we've made in technology.
An example of this investment consistent with the strategic Fame framework depicted here was improving or digital experience by partnering partnering with encino in the automation of our deposit account openings.
As depicted in the slide.
Deposit account applications increased 300% for March through April.
And remained at elevated levels in May.
This increase in openings were enabled by our Encino online account opening solution, which we deployed in the fourth quarter of 2019.
Also depicted or statistics related to mobile banking, where we saw usage increased by 25%.
These advancements to our technology platform continued today as we are moving forward with multiple on on multiple fronts to automate processes leveraging seen those capabilities and transition our systems to the cloud.
All with the objective objective of getting more efficient and improving our customer experience and reducing our operating risk.
Also depicted on this page is our paper usage, which dropped dropped two thirds over the last three months.
Well the cost saving might be immature not material. The fact that we've been able to effectively operate the business, while reducing paper usage is just another <unk> of the operational and cultural transfer be transformation, taking place at Bryn Mawr, as we adopt and adapt our work environment, obviously used to this new environment.
This too is part of our broader yesterday strategy to further help reduce use of natural resources as is our reduction in our carbon footprint by having a significant percentage of our employees working from home.
Finally, our board of directors approved at 27 cents per share dividend I'm very proud that this or 111 consecutive quarterly dividend.
With that I'd like to ask Mike now to discuss some of our second quarter results Mike.
Thank you Frank.
For the second quarter 2020, we posted GAAP net income about $15 million.
Or 75 cents per diluted share.
The main drivers for the quarter included strong fee income as a result was a P.P.P. long sale as well a solid results from our wealth and capital markets teams.
[noise] also driving their results was a lower provision compared to linked quarter and solid expense control.
On a core basis net income was 15.4 million or 77 cents fertile <unk> per diluted share.
[noise] our core net income during the second quarter excludes the gain on sale the PPP loans.
BMT investment advisors wind down cost and severance associated with the staff reduction.
Net interest income increased 2.9% from the first quarter.
Why interest income on loans and leases was.
Were lower as loan yields declined a methodical approach on deposit pricing saw interest expense related to deposits decreased over 40%.
Our tax equivalent net interest margin decreased from 3.3% to 3.2 tier percent quarter over quarter.
The main contributors to the decline included a decrease in the loan yields and an increase in cash held throughout the quarter.
With the sale of that PPP loans, our cash position is substantially higher asset that's what they ended the quarter.
And is likely to remain so in the near term, which is expected to put pressure on the net interest margin.
The provision for the second quarter was 4.3 million.
Dollars. This additional provision was required to account for a change to our estimates related to the timing of peak unemployment.
As we continue to operate through this uncertain economic cycle quantitative and qualitative factors pertaining to the c. so methodology [noise].
May cause volatility in our provision from quarter to quarter.
Further as discussed on our last earnings call unemployment is a key driver a future losses in our seasonal model.
One extreme uncertainty related to the economic environment and the possibility for unemployment expectations to change our provision will likely following on certain path.
Noninterest income increased 24% quarter over quarter.
Well the PPP sale had a sizable impact on this increase.
Our wealth and capital market segments also had good quarters I'd also note that our wealth revenue excludes a substantial portion of attack service fees, we typically earn in the second quarter.
The recognition of a speech was delayed due to the extension of tax filing to today extension to the tax filing deadline.
And we'll be earned in the third quarter.
Adjusted noninterest expense as detailed on the last page of our earnings release remove certain non interest expense items such items excluded from the second quarter cleared.
Amortization of intangibles BMT investment advisors wind down cost.
And severance associated with staff reductions.
Compared to the first quarter adjusted noninterest expenses were down 2.4 million.
And reflected in our lower efficiency ratio.
As Frank mentioned earlier, we have spent considerable time reviewing all aspects of the business. The expected exit of the 33000 square feet of office space to occur by year end will have approximately annual recurring pretax cost benefit of $1 million.
Regarding the elimination of positions noted earlier, we estimate the annual recurring pre tax benefits to be $2.2 million.
Additional opportunities to improve efficiencies are likely to be realized as we execute our strategy in a post covert world.
These areas of opportunity or expect to 23rd further decreases and occupancy costs.
As well as a realization of the efficiencies associated with our technology plan.
What are the increase our cash balance relates to deposits growing over 12% from the prior quarter.
Averaging less growth in deposits, we lowered our interest bearing deposit cost from 1.08% the first quarter, 2.61%.
The second quarter.
We remain vigilant to the market pricing at client behavior, and believe that maintaining robust liquidity is essential in the current environment.
As noted earlier cash holdings, maybe elevated in the short term as opportunities to invest our excess liquidity our limited.
Capital at both the Bank and Corporation at the holding company remains well above the levels needed to be deemed well capitalized.
We have spent considerable time and effort stressing our capital position under varying degrees of severity.
Leveraging both internal and external resources.
We believe we have a good idea of the possible loss outcomes that result in capital levels under these various scenarios.
And are well positioned as we enter into second half of this year.
Consistent with our feeling is related to our capital position, we increased our dividend modestly as noted earlier.
The company has ample liquidity at the holding company suppose support the bank as a source of strength.
And pay future dividends.
I should note on slide eight asset quality was fairly stable in the second quarter net charge offs falling modestly from the prior quarter.
The provision for credit losses was noticeably lower just the implementation Cecil during the first quarter following the economic downturn.
Slide nine as an update from the previous quarter, which depicts a transition from the incurred loss model Cecil on January 1st 20, or 20, followed by the impact of our allowance from the economic downturn up until the end of the first quarter.
Changed from the first quarter to the second quarter is less dramatic the allowance for credit losses on loans and leases increasing approximately $900000.
Well now turn the call Roberts, our Chief Credit Officer, Lamb, Berkeley, who will provide additional commentary on the bank's loan portfolio.
Thanks, Mike.
As indicated on slide 10, our portfolio did not change significantly from the first quarter and remains diversified.
The borrower and property types.
We are spending considerable time.
Working alongside our borrowers specifically those who are more susceptible to the current environment. We are an experienced.
Commercial real estate lender, which the category that comprise a significant portion of our overall portfolio.
We ended the second quarter, 27%, a bar Cree non owner occupied portfolio was in deferral.
That sounds like this amount has been gradually declining.
With the bulk expected to come out of its initial deferral plant in August.
However, depending on circumstances and at our Alexia.
Portion of these below the barrels maybe extended for an additional 90 day.
As mentioned during the first quarter earnings call. Our leasing portfolio is more vulnerable to del charge. In this economy. We have remained conservative as we approach this portfolio, which is evident in the nearly 6% provision on total exposure.
Approximately 18% of the lease portfolio is the deferral.
The average emerging payment date for forward these loans is.
I think this week.
As we transition to slide 11, we could see a more detailed analysis of our commercial real estate portfolio.
The underlying metrics at the segments have not changed materially from the first quarter.
However, we have made several adjustments to our internal low risk rates.
Again, we're taking a conservative approach in our methodology.
This is most apparent in the hospitality sector were 73% of our total loans or rate substandard.
We believe this action is prudent and we rate each loan according to the underlying fundamentals along with current market data and market conditions.
Well, we believe these portfolios will hold up well in the current player, but we are taking a conservative approach now with how we view them.
Our trend around lines of credit usage has been positive over the last quarter and year to date since the end of the first quarter or line of credit usage actually decreased 10% were $79 billion.
On slide 12, we outlined a detailed schedule what little deferral bye.
Customer segment.
At the end of the second quarter, approximately 21% of the total portfolio was it a referral program.
Over the past few weeks, we have seen this percentage gradually decline and anticipate that this will continue as many of these loans come out their initial 90 days or alter.
However, as previously mentioned at our discretion, we may extend some off the deferral periods for select clients based on certain underlying factors.
The second quarter earnings release, we included new information as it pertains to classified criticized loans.
A trend chart the pitch this data on slide 12.
As we continue to conduct thorough reviews of the entire portfolio initiated several downgrades, primarily in our hospitality credits, which is evident in the sharp increase quarter over quarter.
We believe the taking a proactive approach is vital to address the concerns in this current environment.
[laughter] at warrants frequent analysis of our portfolio.
We believe volatility will persist for some time.
We're confident in our team's ability to address the issue is accordingly.
With that we'll turn it back the Frac.
Thanks, Lam and thanks, Mike at this point, we'll open up the Oh call two questions.
Great or if you have any questions in the Q.
We will now begin the question answer session ask a question Press Star then one on your Touchtone phone.
If you are using speakerphone, please pick up your handset before packing Micky Thomas.
So let's try your question Please press star <unk> Q.
Our first question today comes from Casey Whitman with Piper Sandler.
Good morning.
Hi, good morning.
And then I guess I'd start just with all the expense initiatives you just Scott.
It can we expect the incremental impact slow right to the bottom line or do you expect to reinvest the state's elsewhere.
Mike Let me start and then you can jump right.
Yes. Thank you know keeps you obviously, you know where more and we're continuously investing in the enterprise I don't know that we have specific earmarked dollars that we were going to use of the savings at this point in time I think most of it will drop to our bottom line, but understand weve never worried about.
Investing some money today for the pay off later on and I think you see that in the evidence of this quarter our investments in technology over the last few years, our investments in our personnel over the last few years and our investor.
Investments in our process improvement of really paid off so Mike I don't want to add something to that that helps Justine, yes, just timing the real state since that won't be executed till the end of the or the real estate benefit won't happen until.
2021 should see.
Immediate impact from this staffing changes that we made and immediate impact from the wind down that mind investment advisor.
Good.
Got it. Thank you for me I got it okay.
Yes, yes, okay fine [noise].
Yeah, Let me, let me turn to you maybe just a little bit more color on hospitality Buck is that.
All hotels in can you give us some intimations aware that book is primary located is that on market too much hotel chains, and then you know would it be safe to say that the majority of the hospitality book was on deferral <unk> at quarter end at least thanks.
Yes.
Or rather modest exposure to the hospitality sector, the bulk of it or flags.
Hotels in the in our primary trade area.
Southeast, Pennsylvania, New Jersey, Delaware and.
Forced out this ocean city, Maryland.
It's the ER.
The vast majority of that exposure was in deferral and in Q2.
And we're having conversations are literally this week next week on.
The next round of deferrals and.
Getting to see some.
Some positive movement.
[music].
These are all or just you know we are a record slender so 100% of this exposure is supported by sponsors who.
Who have historically supported their properties the decision to downgrade the.
The vast majority of the exposure was was strictly a response to the cash flow impact of cold and occupancy rates declining rapidly.
And then until such time as we have visibility on what a sustained recovery looks like we think those ratings are appropriate.
Okay.
Got it. Thank you. So you can I say one.
Casey I just had one thing don't manage comments, which is set to know the seasonal.
Building other reserve happened first so there's some timing here too like if we sort of all sequence at the same time.
You would've seen these laws become classified or downgraded appropriately based on the current conditions were dealing with that would have coincided with the builder the allowance build the allowance happened first and then this follows a natural migration of assets and so these categories and that's which is real.
Like that and the allowance itself. That's why the allowance has been belt. So we view. These two things is very being very consistent.
Understood. Thank you.
Our next question comes from Michael Perito KBW.
Hey, good morning, guys. Thanks for taking my questions.
Right.
Morning.
I just wanted to do really quickly clarify on the expense just can you guys just repeat the M.I. I heard the the million dollars for the office and the $2.2 million DFT reduction can you just repeat the expected savings from the BMT advisor wind down in just confirm that those are all kind of targeted annual savings figures right does that.
The latter yes are targeted annual the investment advisor savings about another million.
Change so that's a earn back period, there's about two years.
Okay.
Yes that will begin in this quarter we're in now.
Mike data, yet that in the staff and DFT reductions yeah.
And then on the on the credit side.
Do you your comment like about how kind of that's the natural next step after the reserve build but but I guess technically on.
Trying to understand what these loans, mostly on deferral I mean, you guys had the ability to not.
Migrate these loans, yet correct, but you guys she's chose to do it viewing it as kind of the natural course of awarded bone dry given the uncertainty right now.
[noise] [noise], yeah that its Liam that's correct your internal risk ratings or who are always.
At management's discretion.
And we felt the lack of revenue visibility in in those hospitality credits warranted, a a downgrade up the risk rating again until such time as we get clarity when it to mikes point.
When we.
When we initiated our Cecil transition in the into Q1.
We were at the early days of to cope with it but we we assumed that with the spike in unemployment, we would see material stress, but we didn't have granular information along.
Individual borrower performance.
At the end of the first quarter.
With our portfolio reviews, you know we're much more.
Visibility.
Loan by loan basis into into the book and decided it was prudent to downgrade.
Those those assets just based on current trading conditions.
There is as you can see in our delinquency and payment stats you know <unk>.
With the.
With the deferral program Oh no no. One is we've seen no material change in our payment patterns outside referral program. So it was entirely our option to downgrade.
Okay, and I guess I will point you know do.
Yeah, I mean, I guess, you can never make the total assumptions on total case by case basis, but presumably at some point.
They'll be some some challenges with some of these businesses and I guess you know as you got your thinking about it sounds like you have a review coming up in a couple of weeks on deferral renewals, but no out how do you guys thinking about when they're could actually come to come to a point, where there might be some write downs or or some special asset actions needed to kind of work through these credits I mean, how do you guys.
I guess at what point this deferral and kind of the bad cash flow change from Justine criticized or kind of special mention to you know actually acquiring action as you guys see it today.
Well to paraphrase, Jamie Diamonds quote last week, we don't know what we don't know.
We know that this is a good an unprecedented economic event and how it plays out is entirely opaque right now.
The impact of.
The various stimulus packages.
As well as these deferral packages is clearly given everybody trying to make assessments in June or borrow works make their own assessments of their business models astute make assessments of the portfolio.
Huh.
But assuming no other.
No other changes.
All the deferral activity rolls out, though the banking industry at the end of Q3 going into Q4, so no.
Yes, it's reasonable to say that we'll have better visibility at that point in time.
Again.
To our specific book as a recourse lender even at the property level. If there were some stressors.
We have a track record with folks who have supported their properties.
How that plays out.
Over the next.
Period of time.
Again, we'll know more later.
Thanks, and then at some point I'll add to that Mike is that we've run no outside the.
The whole credit management process, it ramps, describing and that what we're doing there then we've run memory have brunt Cecil.
And we've made some assumptions both on that from a quantitative standpoint than Weve got qualitative overlays and there are certain of our thinking around all best solve this everything you're hearing install discussed internally and then we've stressed this in a pretty dramatic fashion and that's the point I was making around capital as we have taken us a stay.
Yes, the environment.
That we're in now and you.
You know doubled down on that to see Kevin what happens, we'll take a lost six merger do we have and that as a statement, we're making around capital that I made.
As a function of all that work as well. So just appreciate that us and factor then you're thinking.
Just a collaboration and where we stand right now.
Oh, well and then well have you guys two more quick ones. If I can just just one you guys.
Outlined some some expense outlook items for helpful, but but on the non interest income side you know the the welfare you I'm expanded a little if any thoughts frankly, my thought on kind of what he the outlook might look like on some of the fee businesses as we move forward here.
Sure let me take that's right.
Well you guys, Mike Oh out anything to the I mean.
The wealth I mentioned in the prepared remarks, a lot of the normal we usually get a spike if you look back and timing for from the.
That does that are familiar with the pattern or wealth revenue typically the second quarters, one of our better quarters are big market changes because of the a tax surfaces. We collect those got pushed out to the third quarter and then we finished Q.
Quarter very strongly from an 81 perspective.
No. It's a market rally care, so bad 630 number those dollars to fees or reflect what we reflected in Q3. So.
Those are too.
Positive things from a supporting the supporting noninterest income and the other fat throwing has a wealth business continues to habit sung is growing I mean that grew on a besides just a rebound in the market in Q2 had net positive cash flows and the legacy business and.
And our Delaware the business the Primark Trust, Delaware core business continues to.
Rapid pace a lot of assets moving out of high Tech states into into Delaware. So.
And then on the capital market side, that's just a function of loan activity and I think thats.
Q3's, usually the slowest quarter and it's really dependent lot of that's dependent on loan closings. So.
Pleased with where that.
Renovations setting and they're starting to build some other capabilities such should should offset maybe.
If loan closings aren't where we expect should offset some of that FX in particular and trade finance, which are really starting to get some traction in those two areas.
Yeah, Let me just add anything that I want to just add real quickly I mean, you know Mike active last a crisis I mean this is when we doubled down on wealth and the than the fruits of that paid off obviously dramatically I think Jan has you know is in the final throws of her strategic plan, obviously, a little bit when.
Sideways, a little bit this year, just because of the crisis, but I would say that lot of the investment. She made prior to this are really paying paying off.
Generally speaking when you know when when we hit these these difficult times and I think you see the news when these large banks start disk.
It is a customer service issue generally and that's where we show and that's where we step in and I know John has is in the throws off of a pretty involved marketing plan going forward to try to take advantage of some of the disruption in the market I think it's you know she was she was also very integral involved in.
The process improvement in some of the reductions that we had through the second quarter. So I think she is well positioned to move forward on both the wealth and insurance front I think Mike's comments about capital markets are spot on there. So I just wanted to add that little bit of color.
Helpful. Excuse me I helpful. Thank you guys and then and then just lastly can you just give us an update I know that the on the Encino front you guys. We're rolling out quite a few products where are you guys are in that and then just any thoughts Frank on kind of what's what's next from a technology perspective, I mean, it seems like you guys kind of have some stuff in the budget.
Already which is why most of the other cost savings you want to the bottom line. So I'm just curious what some of those items are as we move lower.
Well, we are in the throws of decisions Encino project, it's been a multiyear project for us.
You know what we're talking here I'm not going all over my wouldn't asked about how lucky we were to get the deposit piece completed when we did that was really integral to us being able.
To handle seamlessly really the PPP origination process and the opening of accounts around that so we see the free to that throughout the balance of the year and into the first quarter. It looks like will be will be completed probably by the end of Q1 2021 with the with the other transformations and smoke.
Jimmy consumer small business and then of course.
Really the big aspect of this is commercial lending piece and that's why we're sort of pushing that back we had to push it back a little bit on the timing just to make sure commercial lenders have enough focus going into the latter part of this year on credits.
So I mean that is that's a big focus for US you of course, we always have a lot of things in the works.
We have a lot of projects, we have pretty detailed.
I've been on our Chief Technology Officer is really developed I think a very detailed strategic plan for for for technology for us in conjunction with all of our business line really I think Adams, it really reacting to the needs of the businesses and what's going to make us more efficient what's going to make the customer experience.
Better in any way, we possibly can so there are some things on the forefront I mean, I think if if you're getting at are we going to have some major multimillion dollar spend I don't know, we having <unk> other than what we were already looking at them, we have any major Lincoln Encino like project.
I think Adams really focused on getting us into the cloud and getting a lot of that off of our our backs so to speak.
And then and pushing it out there, but it's really just digital transformation. This this whole. This is like I said it is a whole strategic plan around technology and around the digital experience at the bank and its ongoing and look at me you followed us long enough Mike to know this started back in 2015 so.
It is a process, it's not it's not a one in gone it's an ongoing process.
I think that's the only way to do it I mean, we had to get our foundations in place.
Which we did early like I say 2015 16.
That paid off really well for us that allowed us to do a lot of what we're doing today, but it's a continuous.
Process to to improve our technology and the and the experience with technology.
Right.
Thank you guys, sorry, I know I had quite a few questions I appreciate the color. Thanks.
Our next question comes from Christopher Marinac with Janney Montgomery Scott.
Thanks, Good morning, I just wanted to go back to the classified and criticized assets. So what has to change for you to put a bigger reserve against those and the are you comfortable that you've got that properly marked with them. The reserve I just want to understand kind of what has to change to change the reserve allocation there.
We believe we are we are appropriately reserved now.
And it should have a material change in our reserve allocation for those specific assets going forward.
We would it we would have to make a determination that the values are permanently impaired.
[music].
And obviously the.
The transitory nature of the current crisis, it's pretty hard to figure out the terminal values.
Until we get into something that looks like a normalized recovery.
The only thing that would accelerate any of those discussions would be.
Hey, hardcore payment default to a counterparty.
Weekly was unable to maintain.
Service.
Thanks, and again as its current time, we don't see that on the horizon.
Okay, Great Thats very helpful. And then is there any major revenue change to the unit that you disbanded in the quarter you had mentioned that earlier I just missed it.
No.
Now we just.
It had some cost related to.
The wind down of the advisor and mutual fund than will again, we noted we read too bad in two years.
Sounds great Mike. Thank you Frank Thank you both appreciate it okay. That's great.
I guess, if he'd like to ask a question. Please press Star then one join the queue.
Our next question comes from Matthew Breese with Steven.
Hey, good morning.
Just real quick on the on the total deferral deferral balances now what what portion is paying interest only or on partial payment plans versus deferring the entire thing principal and interest.
<unk>.
From a public disclosure perspective, yeah, you know, it's a good point weed out we haven't disclosed that information.
Matt So.
Don't know if we lamb might habit I don't have out in front of me that that breakdown.
No I I have a break down like if it's okay to.
Talk about broadly.
Oh.
And that is it a roughly 65% of the ER.
Transactions in deferral or on a total thing that deferral.
With the with the other 35% on.
Either a principal, albeit it's humid they ask interest only.
Or we're maintaining.
Sufficient payments to that to meet their swaps.
I mean, there swap obligations, so roughly 65 35 split between.
And.
And total payment deferral.
Okay.
And what's the total amount of accrued interest tides deferrals at this point, meaning deferrals were to go to MPL, what would have to be backed out of and I from the deferrals.
Yeah, that's probably a little a lot more than were we haven't got align us up with our public disclosure as well so.
Oh, Yeah, and then I think going back to Chris' question, just on the reserves versus.
The hospitality portfolio and retail portfolios, while could you just give us some insight apart from the Ltvs being very healthy you know as you look at the bar was there are there other sources a payment or other levels of comfort you have on those portfolios where you'd get repaid.
Well good globally speaking you know the strength of our sponsors we look we look at their or their global position in the aggregate we look at their liquidity.
Got it yet and we look at that they're concentration by asset class and property.
Mitch as I mentioned previously historically, our sponsors have supported their property.
Through the last downturn with the.
But.
If we get demonstrations of strength where needed.
And.
It's something we obviously monitor.
Our I get to doing deep dives constantly looking looking.
At both our borrowers at a property level and our sponsors global cash flow level.
And that's how we make our assessment as to risk ratings and and future appetite for discussed.
Understood, Okay and then.
Frank you'd mentioned the back office optimization, obviously 33000 square feet.
You Office you also mentioned taking a look at the front off the front office side of the business.
You know at some point in the near or medium term future should we should we expect <unk> branch optimization branch closures and expense saves from that Avenue.
What Chris I mean, yes, I think we that's part of our overall view of real estate and I think you know it's public now that we actually exited a lease or the end of next month or for a branch that we acquired a number of years ago that just really didnt fit.
The strategy anymore, and we continue to look at each branch and I think now that we have this new model that we're going to operate in its going to give us are real opportunity to look at.
Branches, and you know who's doing what where and that'll give us some opportunity in the future I mean do we have very specific plans. It. This way you know I've not not anything definite.
But you know we're going to look at each one of our branches as time goes on and try to make some decisions. There just as we've looked at some of our office space.
I think any differently, we're not going approach at any differently.
Sorry for hopping around a little bit you covered quite a bit in your opening comments did actually just on on capital and the dividend you know should we take.
This quarter's a the 27 cents dividend the increase should we take that as a a step in the right direction versus last quarter's message, which felt a little bit like a take a wait and see approach on the capital front and the dividend front.
[noise] [noise] [noise] limited.
Okay shot at that answer, which as I wouldn't I mean, this environment I want to read too much into.
A penny increase may were never say never and out I hope that we're going to pair dividend.
And you know this quarter and increasing at a penny was debated internally we looked at the analysis, we've done around capital adequacy and liquidity at the holding company.
No at one Penny and one cent dividend is a very small amount of dollars Oh from a cash flow perspective or from a capital perspective. So we thought it was important to increase the dividend and demonstrate that we feel good about where we're at but I wouldn't read too much into it about us trying to predict the future because I think all of us on the.
Phone or so.
You know very wary and very concerned about what might transpire here were just don't have a lot of.
We don't have a data we need to make predictions about the future so were.
It's not the 800000 change of extra capital, we're paying back to shareholders wasn't a material amount in the context of.
What my common we're very well capitalized and felt like or were in a good position, but again, we're not trying to.
Not trying to make a statement around what the future is kind of bring.
Understood got it Okay, and then just the last one.
At this point has the majority of the of the the floating in variable rate loan book Repriced and what should we expect on the NIM front over the other near to medium term.
Yeah, I think a lot of that book as very short term repricing profile. So you saw that.
Repriced downward in the quarter following the market indices and as I noted in my prepared remarks [noise].
Just the fact of are holding a lot of cash is.
It's going to have yeah, just falling out of cash kind of put pressure on them.
Understood. Okay. That's all I had I appreciate taking my questions. Thank you.
Thanks.
This concludes our question and answer session and I would like to turn the call back over the Frank Love for any closing remarks.
And thank everybody for joining us today in these really uncertain times and while we cant to forecast the future I think our investments in people and processes and technology and our historic focus on credit quality it positions us well in this environment and what is yet to come.
We look forward to talking to you in the future and again, thank for your Oh being shareholders at the bank. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.