Q2 2020 National Bank Holdings Corp Earnings Call
Good morning, everyone and welcome to the National Bank Holdings Corporation, 2022nd quarter earnings call. My name is Mariama and I'll be your conference operator for today.
At this time all participants are in a listen only mode. We will conduct a question and answer session. Following the prepared remarks.
A reminder, this conference is being recorded for replay purposes I.
I would like to remind you that this conference call will contain forward looking statements, including but not limited to statements regarding the company's strategy loans deposits capital net interest income noninterest income margin allowance taxes and non interest expense.
Actual results could differ materially from those discussed today.
These forward looking statements are subject to risks and uncertainties and other factors, which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission.
These statements speak only as of the date of this call and National Bank holding Corporation undertakes no obligation to update or revise for these statements.
In addition, the call today will reference certain non-GAAP measures, which National Bank Holdings Corporation believes provides useful information for investors.
Reconciliations of these non-GAAP financial measures to GAAP measures are provided in the news release it posted on the Investor Relations section of Www Dot National Bank Holdings Dot com.
It is now my pleasure to turn the call over and introduce National Bank, holding Corporation's Chairman, President and CEO Mr., Tim Laney. Thank you Mariama.
Good morning, and thank you for joining National Bank Holdings second quarter 2020 earnings call I have with me or Chief Financial Officer oldest burkins and Rick Newfield, our chief risk Management Officer.
We continue to address the challenges presented by the Cobot 19 pandemic head on.
During the quarter, we realized annualized net charge offs of Josh five basis points, well also experiencing a decline in our nonperforming loan ratio.
Adjusted net income of 62 cents per share during the quarter resulted in gross of our tangible book value by 40 cents per share to $21.67.
We continue to fortify our balance sheet with our common equity tier one capital ratio growing during the quarter to 13.2%.
The stress in the current environment represents a legitimate tests to our underwriting approach and I'll watch what I'm, saying.
Underwater, even with conservative ltvs cash flow coverage.
And reasonable what do you see reserves tends to provide solid downside protection during challenging periods. We also benefited from operating in markets that have performed better than the national average during the code that pandemic.
Ensuring the safety and soundness of our bank remains a top priority.
Yes, Rick to speak to the actions we've taken on this front, thus far right.
Thank you Tim and good morning, everyone I'll cover three areas in my comments first I'll briefly summarize our first quarter, sorry, second quarter credit metrics and performance second I'll discuss the cold and related modifications. We completed through June 30, and third I'll describe the actions we've taken to mitigate credit risk within our portfolio.
While working to prudently support our clients.
With respect to our credit metrics trends held up well I'll note that the asset quality ratios I'm about to cover excludes the paycheck protection program loans, thereby showing a more conservative view of asset quality.
Our non accrual loans decreased during the quarter with their nonaccrual ratio improving from 0.47% at March 31, 2000, 22.4 or 5% at June 32020, or classified loans remained relatively flat with the ratio ticking up 2.90%.
At June 34.86% at March 31, but lower than 0.96% at December 31 2019.
Our total nonperforming asset ratio improved 2.60% from 0.63% at March 31.66% at December 31, 2019.
30 day, plus past dues were very low 14 basis points improved from 27 basis points at March 31.
Net charge offs for the quarter, only $616000 or five basis points annualized.
Positive credit trends and strength of our loan portfolio leaves us well positioned to deal with the continued challenges presented by the pandemic and the current and expected economic stress.
Provision expense this quarter was driven by a worsening economic outlook relative to March 2020, and all this will cover that in more detail during his comments.
Cumulatively through June 30, we've executed modifications on 10.3% of our total loans, 98% of these modifications were for 90 days and 52% required clients to continue to make interest payments versus full payment deferral. We expect the majority of our clients to return to regular contractual payments during the call.
Current quarter after the initial 90 day modification.
In fact as of today the percentage of loans on a payment modification has fallen to about 7% of total loans.
Tim myself and our banking teams have continued our intensified portfolio management and further refine or process.
We are reviewing all commercial and specialty banking clients as well as business banking clients with either larger credit exposures were at higher risk sectors on a weekly basis. During these reviews, we assessed weekly revenue versus revenue required to cover the clients expenses and contractual debt payments.
We discuss operating status, particularly to the extent impacted by pandemic driven jurisdiction mandated restrictions as well as weekly and trailing four week trends.
Not only has this enabled us to quickly to tax credit deterioration and take actions faster to address as needed, but as put our bankers in a position to be more advisory with our clients as they are having a minimum of weekly discussions on each client's operations and trends.
While the vast majority of our clients have been able to stabilize revenue and expenses at sufficient levels to cover debt service a contractual levels, we recognize or hotel clients, representing only 3.8% of our total loans will most likely will most likely face a longer road to recovery.
Beginning in June well before initial 90 day payment modifications were set to expire we began working with our Hilton hotel clients on a conservatively forecasted path to sufficient occupancy in average daily rates to represent re stabilization.
Based on any operating deficit is forecast and ongoing interest only loan payments each client's required to infuse additional cash equity and agreed a certain additional loan terms.
To date, we have successfully negotiated such agreements with the majority of our hotel clients, we benefit from our conservative underwriting of this portfolio and our further protected by an average loan to value of 56%.
Given the additional equity infusions and other enhancements to our loan structures I believe our hotel exposure is well positioned to weather the potentially protracted stress from the pandemic.
Given the Pandemics continuing impacts is noteworthy where we have no direct exposure aviation cruise lines malls energy services casinos and gaming convention centers and hedge funds, we have no dealer floor plan indirect auto car leasing and no consumer credit card exposure.
I believe maintaining a diverse granular loan portfolio as a straight we've conducted twice your stress test on our commercial loan book.
The most recent of those test was just completed by an outside party with a focus on continuing stressed by the KOVA 19, pandemic and an elongated patch recovery over the coming years and the most severe scenario models, which assumes no meaningful rebound in the economy in 2020, and a week L shaped recovery we room.
Made very well capitalized I'll also point out the non owner occupied commercial real estate is only 14% of our total loan portfolio, excluding PPP loans and as conservatively in or underwritten as Tim said relative to loan to cost loan to value in other key metrics.
We are well diversified across industry sectors with most industry concentrations at 5% or less of total loans and all concentration levels remain well below our self imposed limits.
Ill now turn the call over to all of us.
Thank you Rick and good morning.
As we reported yesterday, our second quarters net income was $17.7 million or 57 cents per diluted share.
Included in this quarter's quarter's results was a nonrecurring charge related to our decision to consolidate 12 of our banking centers. Excluding this 1.7 million dollar pretax charge adjusted EPS for the quarter was 62 cents 40, 12 cents increase from the prior quarter.
This quarter's results demonstrate the financial strength and the resiliency that our bank has built over the years in these difficult and uncertain economic times. It has allowed us to focus on the safety of our clients and associates, while also delivering solid financial results.
During the quarter, we grew our core transaction deposit balances, 57.7% annualized improving the loan to deposit ratio to 88.3%.
Funded $358.8 million and BBP loans.
Realized record residential banking revenues.
And added to our allowance for credit loss reserve, increasing it to 1.36%.
Our strong financial performance generated pretax pre provision net revenue of $33.7 million for the second quarter, which was 27.3% higher than the first quarter of 2020, and 20.4% higher than the second quarter of 2019.
During the quarter, we originated $461.6 million say new loan fundings.
I've ever as Tim on the taken already mentioned.
All records. This our efforts this quarter, we're focused on working with our existing clients to ensure the safety and soundness of our back.
Such $358.8 million seven new loan fundings for PPP loans.
Excluding PPP loans, our loan portfolio decreased by $72 million from the prior quarter.
The decrease was primarily driven by a $55.8 million reduction in the revolving lines of credit some of our constitute the opportunity to pay down their debt.
View this activity as a positive.
Moving to deposits.
Average transaction deposits grew a very strong $521.7 million or 57.7% annualized.
Our transaction deposit costs decreased 13 basis points to a low 19 basis points. This quarter and we saw strong deposit inflows from both our existing client base as well as newly established finds relationships.
The fully taxable equivalent net interest income totaled $48.6 million at $3 million decrease from prior quarter.
The linked quarter decrease was driven by 806 basis point decrease in the average one month LIBOR rate as well as the load up some of it accelerated loan mark accretion income.
Rick provided a detailed somebody off our credit trends. So I'll just touch on the provision expense and a loans this quarter.
As a reminder, our Cecil modeling corporates Moody's macroeconomic forecasts.
Other than competing for the nominal net charge offs. So just $616000. This quarter's $10.3 million provision expense was entirely driven by of worsening macroeconomic outlook as compared to the March 2020 forecast.
Typically our models incorporate the national and national unemployment rate GDP growth home price index in the retail sales growth as the key macro economic forecasts drivers for the allowance calculation.
In terms of the loan loss provisioning, we finished the quarter by the Navy seals, the total loans, excluding PPP of 1.36% as compared to 1.13% of the prior quarter end and 0.88% the prior year end.
Additionally, as of June 30, 2020, we held $15.2 million and loan marks against the acquired loan portfolio.
These loan must continue to accrete through net interest margin and they also provide additional protection from credit loss in the portfolio.
During the second quarter, we realized record non interest income of $38.8 million, which was $15.3 million or 65% higher than the prior quarter.
The increase was driven by the gains on sale of our residential mortgage loan originations.
This was somewhat offset by lower consumer service income and lower swapping income as we saw significant slowdown in our client activity due to the pandemic restrictions.
Needless to say, however, this quarter with an exceptional quarter, Florida residential mortgage group.
Our team generated record mortgage origination volume almost double that of the second quarter 2019.
On top of the record volume our teams are able to widen margins by 70%.
During the second quarter, we closed $663.3 million senior loan mortgage loans.
40, 98.8% increase from the same quarter last year.
While we are experiencing strong refinance activity driven by the low rate environment, an important factor that we continue to monitor as activity with the part of it then the purchase market.
Our teams of bankers side doing an excellent job supporting new home buyers within our footprint and we benefit from operating in markets, where the housing activity remains strong.
As a result on a year to date, but year to date basis. The purchase market represents a solid 36.9% of the total mortgage disclosed.
Turning to expenses.
The second quarters, non interest expense of $53.8 million was $5.1 million higher than the prior quarter.
The increase was primarily driven by the variable compensation related to the residential mortgage activity and the previously announced nonrecurring expenses related to the banking Center Center consolidations.
As the residential banking activity has increased over the past several quarters. So has the variable compensation related to.
Which eliminates our total expenses so to break out the few components this quarter off that $53.8 million non interest expense $10.5 million was it related to the mortgage activity and $1.7 million was nonrecurring expense due to the banking center can center console consolidations.
During the quarter, we also incurred approximately $600000 in additional cold weather related expenses from actions, we took to protect our associates and clients.
Excluding these items expenses this quarter would have been slightly lower than the first quarter. Similarly adjusted numbers.
In regards to the banking center closures announced earlier. This month, we are planning to consolidate 12 of our banking centers into other nearby locations within our footprint.
We continue to see client preferences shift toward mobile and online banking.
And we are confident that with a healthy mix of digital client engagement and the convenience of neighboring banking centers, we will serve all of our clients well.
The total nonrecurring banking center consolidation expense for the year is expected to be $2.5 million with approximately $400000 yet to be realized during each of the third and fourth quarters.
Going forward based on these actions, we anticipate to lower our operating expenses by approximately $3.5 million annually, earning back and onetime charges in less than a year.
With regards to capital as Tim pointed out earlier, we finished the quarter with a strong 13.2% common equity tier one ratio and we grew our tangible book value by 40 cents to 20 $1.67 cents at the end of second quarter.
Over the past four quarters, the tangible book value has increased 9.3% as our solid financial results. During this period have more than covered the quarterly dividend payouts as well as covered and meaningful build of reserves set aside to address cold in 19 that related economic weakness Tim with this I will turn it back to you. Thank you all this.
We are operating under a range of assumptions to suggest a protracted level of economic stress running well into 2021.
We believe that our prudent approach to credit and capital management leave us well positioned to address the severe consequences of the coated 19 driven crisis.
Further we tested our ability to deliver our dividend in a range of stress scenarios and we believe our ability to deliver the dividend is strong we clearly benefit from operating in markets that are performing better than national averages across a range of economic measures. We also believe as Rick pointed out that the day.
Diversity of our loan portfolio will continue to serve us well during this downturn.
Most important we remain vigilant in our work to route to protect our teammates our clients and of course, our balance sheet.
Sorry, I'm off we are ready to open up the call for Q in May.
Thank you.
I Wonder to ask your question you will need to press star one on your telephone.
Withdraw your question press the pound artists Keith Please standby, while we compiled acuity roster.
Your first question comes from the line, Jeff Rulis with da Davidson Your line is Jim.
Thank you good morning mourn morning.
Thanks, and Rick I thought the credit overview was seen can throw us because I've heard this quarter. So appreciate the detail there.
On the on the questions.
Maybe indicative of the environment, but although said typically you've you've offered some guidance on on margin expenses, maybe even touch on mortgage maybe not specific but any thoughts on those fronts as we.
Head into the back half.
Oh, well taken starting with the margin.
Certainly behave the way we we thought then be guided last quarter last quarters earnings call for this quarter.
By now most of the rate.
Changes that took place in late March had been priced and then our earning assets. So that's a good there.
It's hard on the guidance go forward basis kind of three items said it will be will be impacting margin calculation itself is is liquidity excess liquidity be starting to build with the with a solid deposit behavior here late and second quarter and going here in third quarter, so that they're earning asset deployments will be important.
The timing of BPP loan forgiveness, clearly will impact the margin calculations for the third or fourth quarter send and certainly the purchase mark accretion speed is going to be important for us yet still as I mentioned, we have $15.2 million submarkets still being accretive and.
Did see some of the slowdown and in a.
Paydowns payoffs in late second quarter, so the speed of dazzle impacted.
I will say that in margin does that really what we focus on and as we as we look forward is growing to net interest income right over time, that's important in hand. The good news I think is that in second quarter. Net interest income is as I mentioned priced and most of the rate rate movements. So we all else equal no no assumptions made on PPP loan timing.
We should be able to hold here and then look to grow from here.
Okay.
Yes.
I know you mentioned the expenses expensive I broke out this dive a little bit more given how how much the residential mortgage contributor to the variable compensation expenses. So if you weren't to strip out those three items that I mentioned 10.5 million of mortgage.
Obviously, the 1.7 million nonrecurring and $600000 on of course with related items.
Come up with a low 41 million dollar type and number.
Thats the number does the core back number that we would project going forward then that's a really the number that you look to improve on based on the consumer banking center consolidation announcement and moving it down on $3.5 million annually type thing.
Okay and honesty did you include was there a deferred comp benefit on TPP in the quarter energy book that net in that.
Book next so if you look at the footnotes and the loan tables, you'll see that.
Hi.
Net but what be funded to what we've reflected on the books is about $10.1 million that's net of the fees.
And the deferred comp.
Component.
Thank you.
Yes.
Just a last piece is is that.
Or even just commentary on the mortgage front has that shrink.
I wouldn't anticipate that causes the year like this but has that continued at least into Q3 and any thoughts on the mortgage piece.
It's very difficult to forecast mortgage clearly they do rate environment as far as low.
We are still our goal.
Hi, except for historical.
Yeah.
Very helpful.
Or hearing of.
This is signaling background you could check that.
Okay.
Okay.
Let me.
Okay.
Okay.
In terms of mortgages, obviously hard to forecast given the volumes to be realized this quarter.
What we focus on is building on that purchase market year over year Wi Holdings, a whole host steady there we are operating in markets that are good markets.
I will say that this last quarter to second quarter. Our teams are able to given the volumes on the refinancing we were able to widen the margins quite a bit as I mentioned, 70% increase.
I don't expect to hold on to that but.
Clearly the environment for refinancing is quite favorable going here and second third quarter.
I would add Jeff.
Obviously very proud of the work on the part of our residential banking team from leadership.
Through the entire organization and as oldest pointed out we did benefit from being in a very healthy markets.
They are almost seems to be an increase desire our focus on people moving into our markets like Colorado, and so that obviously bodes well for.
The residential banking space, we actually believe third quarter will will be pretty strong for us.
But but.
Again, no one has a crystal ball, but based on what we're seeing.
Activity continues to be pretty solid.
Your next question comes from the line of Chris Mcgratty with KBW. Your line is open right. Thank you good morning.
Yes.
They did come back to the net interest income I just wanted to try to understand kind of the trajectory going forward.
Hello. This is we take the.
46 that Brazil reported mesquite doses this quarter.
What was the what was the amount of accretion I know you said it was down how much accretion was realized.
The way I look at it is really on the acquired loan book yield basis, and you can see we meet that book is yielding about 8.5% the coupon underneath is closer to 4.5%. So thats. The additional accretion that that you can back into it. The book, though is I'll say that the book is typically.
Amortizing about 30% on 30% annualized basis.
And while that is.
You lose that.
48.5%, yielding type asset on to the extent that is prepayment and payoff driven amortization you to get to accelerate that mark. So it's not an exact science, but does the 8.5% is where where its yielding and we didnt pick up any but to your last point all this we didnt pick.
Any kind of and accelerated marks in the quarter that stood out so that stood out as you know Chris that tends to be pretty sporadic it's nice when it comes but.
Second quarter was light.
Okay. So maybe I'm sorry, if I took out yes, I'll just start with a 46.
[music].
The PPP was a 1% learned did you realize any fees in the quarter from TV.
Yes, we've got more unrealized fee amortization over two year period, so be realized.
Take $12 million over 24 between 24 months and okay about three months worth of wouldn't have months' worth of the amortization of fee amortization.
Okay. Okay, I guess I guess, what I'm trying to decipher is.
The good Eni trajectory from here that you, obviously have liquidity to build into margin.
Alex everybody, but I'm trying to kind of get a sense of where loan growth might be and kind of the comments on margins just to see if eni is going to growers are going to kind of bottom out for the next couple of quarters there.
Yes.
I think I mean again, excluding the accelerated component of.
Of the fee.
Alization.
We've kind of bottomed out here and then the the trajectory will be how fast and what type of earning assets can be growth.
Well, Chris I would add this is Tim I would add that look first and foremost in this environment. Our focus is on protecting the balance sheet. So it's an interesting time to be talking about picking up additional market share.
Needless to say the levels of additional underwriting that's required to make that happen or in some cases almost insurmountable.
What we are starting to see your opportunities working with existing clients that we know well and understand to take advantage of certain opportunities. We'll also continue to look at with every renewal pricing opportunities with the indexes like LIBOR, where they're at today, we don't necessarily think thats. It.
Procreate index or the way to be thinking about pricing credit on renewals versus looking at overall yield. So we think theres opportunity with yield management, we think there's opportunity with existing clients, but we're not going to be running hard into the marketplace. At this point expanding our balance sheet with.
The number of unknowns that are out there.
Understood Great and then maybe last question legacy Brennan.
The color on the mortgage was great Oh, this divestment I'm just kind of understand.
I don't think about the marginal efficiency ratio that business, you talked about the tenant or half million of comp good 30 million.
Roughly of revenue.
Is that how I should be thinking about kind of a marginal efficiency ratio for that business.
The best layout summarizes it looking year to date basis, it's running where we think can be as gain on sale the mortgages.
Upward I should say variable compensation that representing about 40% of the gain of send more sales mortgages, so that the variable component.
Now embedded obviously, there is a fixed component of of facilities and.
Shared services staff and all that so in the longer on that business still is running.
Above the 60% efficiency ratio this quarter again as I mentioned margin driven viewer we were quite profitable in the business.
Understood. Thank you.
Thanks, Chris.
[music].
Next question comes from guarded Maguire with Stephens. Your line is open good morning Gordon.
Good morning, Tim.
Maybe start with all this you touched earlier that some of the deposit growth came late in the quarter in was continuing.
But it's such a large jumped 14% transaction growth on an average balances I'm curious if there's anything that might be more trends into are transitory.
They could be outflows that I'm, just trying to think about the size of the balance sheet from here.
Great question, and we spend ton of time looking at our deposits and the source of this and.
I think that most I think you've heard from other banks have talked about it but.
Most hard one to kind of put your finger on it is is we had our entire PPP loan book that got funded on day, one get put in that in that.
Transaction account with our bank and those are our clients and serve as a primary band for them. So those dollars as they get used are certainly likely to lead the bank our than that it's hard to say it feels like a lot of awful lot of our dollars heavy lifting gathered have come.
From new relationships, Howard or expanding relationships and issues Theres a lot of liquidity in the system and how that gets utilized over time.
We certainly want to be part of it and to retain most of it if not all of it.
Okay, and then Tim mentioned, maybe focusing.
The loan portfolio morning, existing clients not necessarily taking market share right now so so to be fair to say that.
The liquidity the excess liquidity this quarter, probably gets plugged into securities book, I guess, how should I think about the strategy with your liquidity now now that that portfolio is starting to grow off of 15% of assets.
Yeah, I mean, potentially I think it's going to maybe mix will be conservatively I think we will be ready to deploy it into loan growth and they certainly going to tied up in the longer duration.
Very low yielding asset today, so we'll be smart about that I think what we might leave some of it then in cash and can hold on and they for the opportunity to to turn our loans loan pipelines again.
Okay.
And Tim with the office consolidations I'm curious, if there's any specific targets efficiency or overhead that you're targeting with this and whether there could be more to come.
On that side of the health.
It is most of the listeners would know when I know you recognize this gordon.
As a team we have us pretty strong track record of continuing to.
Identify opportunities to better manage expense and we certainly believe to be more specific in answering your question, we still have nice runway on that front.
Certainly an area that will continue to focus on is the right balance between brick and mortar in digital.
With the coded pandemic, we've seen like other institutions really amazing adoption rates on our digital capabilities.
The work thus far with the 12 branches are banking centers, we've announced.
Earlier in the quarter on or is that work is going really well and we'll continue to look at opportunities to better balance the way, we serve our clients, while reducing expense and as I've said before while I'm not prepared today to talk about specific.
Targets I can tell you.
A strategic level, we're confident that we still have nice runway on that front.
Okay I appreciate it I'll step back.
Thank you Gordon.
Your next question comes from Andrew lease with Piper Sandler Your line is open I Andrew.
Hi, good morning.
If you follow up questions from me.
It sounds like the cost savings from the branch consolidations expected the fall the bottom line, but you also referenced.
Increasing technology usage, so is that some of that.
These cost savings can be reinvested back into the franchise or is the right way to look at it just.
Thats great benefit to expenses will continue to look at a investing in our alternative delivery channels, but I would tell you that this is an effort that's been underway in our company over the last number of years in so in terms of any big expected spikes and those areas that's not.
Something that we forecasted.
Pretty comfortable with our current run rates of investment.
Okay.
That's helpful and then just circling back to the deposit growth.
The referencing certainly benefiting from Bob Pvp recipients parking their money at the bank, but beyond that it was still exceptional as I say you can point to that that was driving it.
Yes. Thanks.
Yes, you know we were on.
Yes.
We had high expectations and we expected our teams to be very disciplined around the PPP program in working with clients that were willing to open up if they didn't already have them with us to bring all of their operating depository business to our company and that's just the core.
Kind of philosophy of the way, we do business, you're expecting to capture that full relationship maybe one of the unexpected benefits.
We saw was.
With a number of prospects, where we weren't able to work with them on the PPP, but this particularly team seem to happen with the largest of of banks in the country. We saw a meaningful number of of new business relationships develop as a result.
Them being disappointed and the response of their large bank on PPP and moving all of their depository and operating business to US I don't think we were unique in that regard we were focused on it but we love that because we also see is a first step than doing potential.
Other business down the road when when the economic environment starts to.
Solidify so I don't know recalled us anything else you would add.
We continue expanding our cloud relationships they do accounts I think the.
The relationships I should say end and it is driven by broadening broadening than that so to say I think I think in some respects what all this just pointed out Andrew as maybe the most important focus for me because I can't.
Discern how much of this balance growth at the end of the day is just driven by the liquidity. The government is pumped into into the markets, but what we can measure with confidence is how many new relationships. We are growing and that's what's exciting is that we're seeing nice core operating deposit relationship growth.
By the way not just not just in small business and commercial but in consumer as well.
Okay. That's that's very helpful. Thanks for that the color there.
And then just one follow up question just on the reserve ratio 136.
Excluding the PBP loans, but then you also referenced the $15.2 billion discount is the right way to look at that add that $15.2 million into the allowance to calculate the reserve ratio.
I'm just curious at five.
We really should be including that in there.
Certainly it look I mean, if any at any of those loans, we had trouble with it that mark is there to protect it doesn't matter, but there was on at the time to purchase was generated by by credit water interest rate that Mark is there to protect the Mark you get to what remind everybody I had the markup on on the book itself is worth 34.
Basis points.
Overall as sorry overall loan book is worth 34 basis points that would bring us up and.
Comfortably into once a high want sixes.
If you if you kind of narrowed to the purchase buckets for 5%. So is it is quite a bit protection and that we viewed as a protection even though as these loans are maturing and rolling off we are realizing it through through net interest income.
Got you so arguably there, but the reserve stronger than that 136%.
Yes.
Okay, great. Thanks for taking my question about the bank there Andrew was that your dog, where the question.
Yes, I think so I think it might have.
We have we absolutely can relate.
Alright.
Thank you I am showing we have no further questions at this time I will now turn the call back to Mr. Lady for his closing remarks. Thank you mariama ill just simply wish everyone.
Continuing their continuing safety and health and thank you for joining today.
Here.
And this concludes today's conference call. If you would like to listen to the telephone replay of this call. It will be available beginning at approximately two hours and will run through August 2020 by dialing 8558, Fivenine to zero Fivesix for four years four five.
3734 years fix and referencing the conference I'd of 8919 Threenine the earnings release and an online replay of this call will also be available on the company's website on the Investor Relations page. Thank you very much and have a great day you may now disconnect.
[music].