Q2 2020 Premier Financial Corp (OHIO) Earnings Call
Ladies and gentlemen, and welcome to the Premier International second quarter Twentytwenty earnings Conference call.
Participants will be in that study.
Should you need assistance he's a good conference specialist basing this talkie.
[music].
After today's presentation will be an opportunity to ask questions.
So I'll ask a question Chris Star then one you touched on trying to.
Let's go your question. Please press Star then they too.
See I think is being recorded.
I would not have to turn the conference obviously, the vice President please.
Please go ahead.
Thank you good morning, everyone and thank you for joining us for today's 2022nd quarter Earnings Conference call. This call is also being webcast to me audio replay will be available at the Premier financial Corp. Web site at Premier Fin Corp. Dot com following leaderships prepared comments on the company's strategy.
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I'll be able to take your questions before we begin I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward looking statements related to future financial results and business operations for Premier Financial Corp. Actual results may differ materially from current management forecast and projection.
As a result of factors over which the company has no control.
For me should not these risk factors and additional information on forward looking statements are included in the news release and then the company's reports on file with the Securities and Exchange Commission.
And now I'll turn the call over to Mr. helmet for his comments.
Thank you Tara and good morning, welcome to the Premier Financial Corp to.
2022nd quarter Conference call joining me on the call. This morning to give more detail on our financial performance for the quarter as our CFO, Paul not just or as well as Gary small our bank President back Dirty Chief lending officer, and eventually you'll see our chief banking officer.
Last night, we issued our 2022nd quarter earnings release, and I would like to discuss that release and give insight into the opportunities and challenges for the remainder of the year.
At the conclusion of her remarks, the team will take any questions you might have.
First I want to thank all of our associates for all their efforts and dedication. During these very stressful time says they Dallas or personal health, what their passion for meeting clients need serving our communities.
The second quarter was clearly a very challenging times, where a company that's pretty though she communicated we closed our merger with United Community Financial Corp, or do you see F.C.
January 31st and have been dedicating significant time and resources to assist in conversion that took place on July 12.
Gary will give more detailed update on that in a few minutes.
We're also very pleased that our ability to respond to the impacts of the current covert 19 environment.
That is affecting our clients in our operations.
During the quarter, we incurred about 500000 I've covered 19 related costs. These are truly children classes, which has all of us continue to navigate through the health of the economic ramifications related to the virus.
Pandemic, resulting economic fallout appeared with us for an extended period of time.
We will continue their focus on the service thing.
The immediate needs of our class assuring health is something over employees and the supporting communities in which we live in Sir.
Well a great deal of uncertain if age regarding the duration of the pandemic. The signs are positive activity across our footprint are encouraging.
Our teams have been working diligently to assess clients executing the SB, a paycheck protection program or PPP and we currently have for 34 million a P.P.P. with phones outstanding.
We have turned to focus from origination P. P P to the forbearance process.
Yes be able to started accepting request on August.
We're well prepared for the process.
Additionally, we continue to have a large number of our workforce.
That are working for a remote locations and will continue in this model as we have seen an increase in cover 19 cases, a numerous markets, we serve and an increase in requirements in multiple state <unk> local jurisdictions.
This flexibility and remote workforce has done a benefit I could migrate into a go forward operating model of some nature.
All of our offices are open to serve clients and what strong safety protocols in place that include the wearing official coverage for employees and apply it and have enhanced cleaving regimens.
Actually glass germ shields and other modifications to support social distancing.
As noted earlier a great deal of leadership focus has done a system conversion and integration of operations.
This wasn't a significant milestone in the overall combination of the two companies.
We expect to see cost benefits from this over the remainder of the year with additional benefits approximately 1.5 million per quarter fully phased in Buddy ended the year.
Following an active first quarter I'm pleased with the strong core performance for the second quarter.
It all and all that we have accomplished in the quarter that proved to be even busier than the first.
Second quarter 2020, net income on a GAAP basis was 29.1 million or 78 cents per car undiluted share compared to 12.2 million or 61 per diluted common share in the second quarter of 19.
Core basis net income for the second quarter was 30.7 million or 82 cents per diluted share.
The tax pre provisioned return on average assets was strong at 2.26% compared to 1.89 for the second quarter 19.
We've also made significant improvement in reducing our efficiency ratio to 48.96 at the end of the second quarter and lift Ventana sub 50 ratio.
As our targeted going forward.
Provision for loan loss was also moderate this quarter, reflecting the current environment.
We experienced net recoveries during the quarter overall credit quality was stable in the quarter. We are diligent on our acquired the monitoring expect more impact as the stimulus initiatives phase out.
We are working to understand the dynamics of our clients as the original deferral periods expire.
Approximately 16%, excluding P.P.P. loans of our loan balances are on some type of deferral at quarter end.
We continued to see strong performance in our mortgage area, which experienced record levels of activity and gain on sale.
Overall growth in the quarter was 6.7% for miles driven by P.P.P. activity, the 15.3% for deposits with a shift in the noninterest bearing deposits as a percent of overall deposits I saw the P.P.P. loan funding remained on the deposit side of the balance sheet.
We didn't see strong deposit activity exclusive of P.P.P. deposits in the quarter.
We expect the P.P.P. balances in the deposit grade dried out over the course or the year as they are utilized by our clients.
Our overall capital planning is supported by our ongoing solid core performance some capital levels.
We're very pleased to announce R 22.
2023 quarter dividend of 22 cents per share representing approximately.
A 16% increase from year ago, and an annual dividend yield of approximately 5.4%.
Quarter end, we had 500000 shares of common stock in any for purchase under our.
Purchase plan authorization. These uncertain times, we continue to assess the uses a lot relation as well as the capital strategies, we have it.
Our tool box inclusive of sub debt issuance.
At this time, we have suspended any additional buyback activity in our assessing our appetite.
For sub debt, but not feel but at this time do not feel we haven't immediate appetite for that.
I'll now ask Paul to provide some more financial details for the quarter before I conclude ball.
<unk> Dod and good morning never gone well this quarter had a little else excitement them first quarter, what do you see L.C. merger closing and seasonal adoption. It certainly was not boring.
The economy entered a recession in the PPP program represented a significant amount off or well we continued to work on integration in core conversion.
Now I will summarize a second quarter results and discuss some areas of impact.
Start with the balance sheet first we had a minor adjustment the goodwill related to the U.S CFC merger for options fix that sets and deferred taxes, resulting in a 428000 dollar increase the goodwill.
Other adjustments were made in the updated summer is in our press release.
Regarding growth.
TPP loans, where the driver for loans in Twoq you as we completed 434 million as of June Thirtyth.
Excluding PBP loans decreased 91 million from last quarter as we saw shrinkage in each bucket.
Residential loans had very strong origination volume as I will discuss later buffer prepayments and refinancing led to portfolio shrinkage. Although we did have a 38 million dollar increase in loans held for sale.
Consumer loans declined to spending behavior is cut back during the pandemic.
And non PPP commercial loans declined primarily due to line paydowns.
For deposits, we had at 766 million for a 15% quarterly growth right.
This growth is related to deposits of PBP funds as well as lower customer spending behaviors.
Noninterest deposit growth outpaced interest bearing growth and represented about 25% of total deposits at June thirtyth.
Next I'll explain the allowance.
As noted last quarter, we did adopt Cecil effective January Onest and I described the impact of that as well the purchase accounting for your CFC on her previous call.
As a quick reminder, we added 54.6 million to the loans the allowance in one Q for those items.
For Twoq you the allowance increased 2.7 million due to provision expense for loans up 1.9 million and net recoveries of 0.8 million.
The net increase is related to an increasing qualitative factors offset by improved quantitative factors and lower volumes.
Qualitative factors were increased into Q, primarily due to the current economic recession and the potential for future charge offs.
Quantitative factors improved due to better historical loss rates, including that recovery than Twoq, you, Andy better economic forecast.
A key driver for our model with national unemployment and that forecast is for 9.2% next quarter versus the 12.5% expected for the next quarter at March 31.
Last volumes are down because these exclude PBP loans, which are guaranteed and do not require reserve at this time.
At 630, our allowance coverage to total loans was 1.62%, which is down from 1.68% at 331, but if you exclude pvp loans the ratio would be up to 1.76%.
In addition, if you include the unamortized balance of purchase accounting Mark.
The coverage ratio would be 2.05%.
More details can be found in our slide presentation posted to the Premier Financial Corp Web site.
The finished the balance sheet I'll discuss capital, where we ended with 941 million of equity at June 30 up 25 million from March 31, primarily due to strong net income.
At June 30, or tangible equity ratio was 8.85%.
And our total risk based capital is estimated to be about 13%.
Next I'll turn to the income statement.
Oh provinces with noting that year over year comparisons are obviously skewed by the fact that we had three month of operations, including you CFC and second quarter 2020 compared to non in second quarter 2019.
Let's start with net interest income, which was 54.3 million for the second quarter 2020.
It's resulted in net interest margin of 3.51 for Scott.
This does include the benefit of accretion from purchase accounting marks with 2.2 million come into your interest income and 1.5 million coming through interest expense.
It's also includes 1.6 million of interest income on PPP loans with an average balance of 298 million.
Excluding the impact of those items, our net interest margin would be 3.34%.
Which is down from 3.68% on a linked quarter basis.
This contraction was mostly expected given the precipitous drop in the external rate environment that occurred during the middle of one Q. So we're seeing a full quarter impact of that now.
However, it was more than expected due to the exit excess liquidity from the strong deposit growth and loan shrinkage excluding PPP.
We estimate the impact of excess liquidity to be 11 basis points for Twoq, you such that NIM would have been more inline with expectations.
Noninterest income was 23 million for Twoq, you and represented almost 30% of total revenues.
I'll begin with mortgage mortgage banking income, which was 9.9 million for second quarter 2020.
First gains on sale mortgage loans were 11, and a half million up from 4.9 million last quarter, primarily due to volumes.
In the second quarter 2020, we sold about 234 million a mortgage loans, which is up more than 100 million from first quarter.
This is partly due to having three four months of activity from your CFC. This quarter, but has also attributable to the downright environment that continued to make mortgage activity very attractive during the quarter.
Offsetting these gains were MSR amortization expense of 2.2 million up from last quarter, primarily due to three months versus two month.
For the use yes, you portfolio and a negative valuation adjustment of 1.4 million, which is down from four and a half million last quarter.
The valuation adjustment was negative again this quarter lots, so do the right, which were relatively flat, but more about increased prepay speeds.
As rates improve and prepay speeds revert back to normal levels, we will be able to recover against that valuation allowance.
Next I would like to point out that we have made a reporting change for wealth management income.
Previously, we only show trust income, but we've now included brokerage in financial advisory income to reflect total wealth management income.
Those amounts were previously reported and other noninterest income and we have restated historical amounts for consistency.
Those revenues came in at 1.8 million, an increase from 1.1 million last quarter.
Insurance commissions were 4.0 million, which is down from 5.2 million last quarter, but that is due to 1.3 million of contingent commissions in one Q.
And lastly service fees and other charges increased to 5.6 million from 5.2 million in one Q wobbly in other income increased to 1.7 million from 1.5 million last quarter.
As a reminder, last quarter included a nonrecurring $1.1 million gain related to an earn out there was not a cheaper prior acquisition.
Next I'll discuss expenses first we incurred 2.1 million in merger related costs in the second quarter 2020, So cumulatively, we have incurred 30 million today.
We do expect to incur additional costs in Threeq, you as we complete core conversion and the implementation of synergies.
As a reminder, we expect the bulk of our synergies the truly materialize in the second half of the year. After our core conversion, which was completed July 13th.
Before I cover normal operating expenses I would like to explain another reporting change.
Beginning this quarter, we have begun to report total provision for credit losses inclusive of amounts related to off balance sheet exposures, which were previously reported in other noninterest expenses.
We have provided transparency of these costs on the income statement separate from provision expense for loans.
Which impacts the allowance, whereas the expense related to our balance sheet exposures relates to reserve recorded in liabilities as required under GAAP.
Prior period amounts have been restated for consistency.
So excluding merger costs total expenses were 35.9 million compared to 30.8 million in the first quarter 2020 with the increased generally due to three full months of operating costs from you Cfd intergeo versus only two in one Q.
Compensation or if it represents the biggest component at 19.6 million of expensive, which is up 2 million from the prior quarter and once again better than expected due to deferred costs on the strong mortgage volume activity as well TPP loans.
Amortization of intangibles is up to 1.8 million due to the core deposit another to tangible.
Recorded in connection with youth yesterday merger.
And other expenses were 5 million compared to 3.9 million last quarter after reflecting the reclassification a provision expense for off balance sheet exposures.
This fluctuation is related to our deferred compensation plan, which had 682000 of expense in the second quarter compared to 676000 dollar benefit in the first quarter due to fluctuations in the deferred comp plan liabilities.
And last we estimate we incurred approximately 475000 of expenses in the second quarter related to the covert 19 outbreak.
So excluding the merger cost we generated a core efficiency ratio of 46.26%, which compares favorably to 51.62% last quarter and 61.22% in the 2019 second quarter.
Additionally, our corporate pretax pre provision income was 41.4 million, which generated a very strong 2.38% return on average assets.
Obviously, we're extremely pleased with our second quarter operating profit rebel profitability as we begin to realize the benefits as a combined organization with you CFC.
I will wrap up with a summary of net earnings on a GAAP basis, we reported net income of 29.1 million or 78 cents per share.
Merger costs this quarter represent a 1.7 million on an after tax basis or four cents per share.
Excluding those costs core earnings were 30.7 million or 82 cents per share.
In summary, we had a great quarter as we completed core conversion and the implementation of synergies.
Our solid capital levels on a strong operating profitability provide a good foundation and the current recessionary environment, allowing us to continue to support our customers. While we work together during this challenging time.
That completes my financial review I'll now turn the call over to Gary for highlights on our community banking initiatives merger integration progress and employee engagement efforts Gary.
Thank you Paul and good morning to Paul as you all of you may recall, we did or legal merger or two organizations in January 31st and we've just recently completed our operational brand conversion over the month of June and July and now across our network. We are Premier Bay.
We did our core system integration as was noted on July 13th.
Systems or go following that conversion and while we still are working on a few bumps that popped up during the process. We remain very focused on our customers experience and rest assured that.
We are using a very high touch.
Coach relative issue resolution, our clients are always going to get a call versus that's getting an email or letter.
We expect about approach to ensure that everybody makes the journey with us.
From one system to the other the merger integration process is very much on plan savings achievement is on track revenue synergies are in place and more developing as we expected.
We're hitting performance not third.
We set for the deal back in September of last year.
I think as the numbers illustrate the to combine organizations are creating very strong operating leverage during this difficult period.
Excellent performance metrics and.
As evidenced by a mid fortys efficiency ratio outlined in our result.
Moving to the community banking again.
We've had strong performance during the second quarter, while there was plenty of other activity that could have distract us hats off to the group.
Excluding PPP activity, our commercial loan origination was strong Matt will have more on that later or the quarter.
The line of credit pay down kind of muted the loan growth balanced figures.
PPP liquidity allowed our commercial clients to appropriately curved or line of credit draws.
Again, the front door was very strong and much business dot.
Residential mortgage continues to fire on all cylinders.
By all measures origination activity our gain on sale margin in the saleable portion of our origination activity because all exceeded expectations.
The new business activity.
Continues to be outstanding even as the mix of business is returning back directionally to the more normal mix with now 40% of our origination activity.
Being in the revised space and that had been as high 60 or 65% earlier in the year. So it's encouraging to see that number sustained the market continues to be strong.
And that's on the purchase in our construction program carrying the data right now.
On consumer side indirect auto consumer lending as returning to pre code at low levels, which is good for us in that we have growth aspirations for that book.
Very good market for used cars.
We write a very high quality book.
And we expect good things to come from that direction.
Over the course of the left.
Quarter, and a half Covance, obviously had many impacts on the organization.
As was mentioned.
We spent.
$500000, it's running through our core expenses over the year to date.
And with the majority of that being the second quarter.
To do it it takes to get our team through and or.
Handle all the safety issues that we would want to for customers and our team over that period. We've also spent about $300000 of additional backstop in our merger related expenses again to ensure that we would not be derailed by any unexpected.
Term came about as a result to the pit.
And that was money well spent.
Other items that you'll see in our financial so that are Cobra driven.
As with many our consumer interchange income wags as retail activity as.
Overdraft income was down.
Employment funding is doing its job growth and keeping people relatively flush.
Digital channels more popular than ever and really we view that as.
Accelerant Omni channel of migration April was our high watermark relative.
The actions.
Through the digital channel and as we opened up the branches we did see.
Not a return to old levels that we did see.
For the digital so clients got very familiar and as is always the case I expect that will help.
More multiple channel users going forward.
We learned a great deal about effective ways to work remotely in the around the organization in the permit and outside of our brands.
Bill pay out.
80, plus percent of our employees that are removed capable and as Don mentioned, there will be some surviving impacts from that.
In fiscal two all identified many employed friendly features that will approve our position as an employer of choice going forward.
Because we found that we can work very efficiently and effectively.
With the remote model.
And probably a hybrid of in office and remote will be the story going forward.
And again much has been done over the quarter to council our clients. During these difficult times relative to PPP activity, which was very strong simply just how best to manage your money and this uncertain environment, which is the day to day Council that we provide.
To all our clients.
More appreciated it more important than ever.
From a community standpoint.
It's been a difficult time for all at a good time for us as an organization to step in and have our team provide effort counsel as always and the Premier organization running financial support to help fill the gaps that had been created.
With so many cancellations and so forth of important event that funds. So many non for profits we've been able to do our part to up to help fill the gap and we're very proud to do that and again our brand statements right on the money per member bank is truly powered by people and it's certainly showed over the last quarter.
I don't want to turn it over to map for some portfolio discussion.
Thanks, Gary.
I'd like to give you an update on the performance of our loan portfolio our actions taken with respect to our clients impacted by Cobiz 19, and our current view on asset quality in the coming quarters.
As we discussed on last quarter's call. Our team is very active and supporting our clients through the paycheck protection program.
Providing over 2700 loans to our customers.
While the program is currently still available our volume is down to a handful at this point.
To the extent there are some additional round of PPP made available to these borrowers we are well positioned to support those requests.
We have also put our forgiveness prober program in place and are prepared to support this process when it begins.
In terms of portfolio performance well segments of our clients have been impacted we're not seeing the implications of this on a large basis, yet with respect to asset quality.
Our expectations have been for evidence of credit weakness at the client level to begin to be more evident in the second half of this year as second and third quarter financial statements I received.
Overall payment delinquency levels remain relatively low and our increased deposit balances and reduced operating line balances provide us a perspective that our client base is working hard to preserve liquidity.
We did not see any meaningful migration with respect to risk rating during the quarter, we expect to see more of this.
As we receive financial statements for the second and third quarters.
We have also been supportive of our clients with respect to payment deferral consistent with regulatory guidance.
As of June Thirtyth, we have provided approximately $835 million of payment deferrals of which approximately 23 million have returned to scheduled payments.
In terms of asset quality outlook. The biggest unknown is the duration of the pandemic because it will ultimately drive the pace of economic recovery.
Once there is greater clarity on this it will be instructive on how our clients recover overtime.
To date, our loan portfolios remain stable from an asset quality perspective that we would expect risk rating migration to be more pronounced in the second half of this year in particular, we're closely monitoring and performance of our higher risk portfolio care categories, including hospitality and retail.
Finally, we have conducted fairly robust robust stress testing on our portfolio.
Including loan level testing for a large portion of our at risk portfolio.
In both our expected in severe stress test cases, the results show that we remain well capitalized as defined in regulatory guidance.
I'd now like to turn the call back over to Don for closing comments John.
Thank you Matt.
In summary, I'd like to again express my sincere appreciation to every one of our employees for their efforts and dedication they have zero exhibited in serving our clients this quarter.
I also want express my gratitude to all those are the front line.
Pandemic contain is too.
So its face.
We look forward to the future as we navigate through a period of continued uncertainty challenges I believe we are well positioned for this environment.
And we will get through this difficult time, together and I believe that we as a company will emerge from this crisis, even stronger. We appreciate the trust you have placed in us. Thank you for joining us and your interest and Premier Financial Corp. We will now be glad to take your questions.
[noise]. Thank you very much.
Ladies and gentlemen, we will not begin the question on suspicion.
Good question, you might be star as being one on just touched on site.
Oh using a speakerphone. Please pick up you answered before appreciate the keys.
You bet anytime you question as peanut Tracy you would like to destroy your question. Please press star and the too.
Our first question is from Scott Siefers offset essentially please go ahead.
Good morning, guys. Thank you for taking my question.
Hey, good morning, Scott.
Hi, I.
I think first question I want to ask is just on trends, you're seeing and deferrals a lot of good information, particularly I'm on slide 17, I, just want to making sure I'm thinking about it on kind of an apples to apples basis, I think between last quarter's reporting and the Q there might have been some reclassifications in the way you guys were thank you.
Got it so just.
Trying to get any color you might have on how things are trending in the deferral area.
Hi, Good morning, Scott This is Matt.
In terms of our deferral activity, what I would say is we feel like the majority of our deferral activity is passed as we look at the amount of deferral activity. The majority was within the second quarter and the overwhelming majority of our activity was in the month of April so when we look at the trend.
April May June.
We saw comparatively very little in June compared to the level of activity than we saw in April.
Alright, perfect. Thank you Sir you may have higher deferred number in the past.
Because we were doing some things that have relationship level versus just a note level and so when we actually ended up on the second pass we were able to get down to the notes.
Perfect.
Okay. Good. Thank you thank your for that.
And then just in terms of cost saving sounds like you guys are are all on track with the merger synergies, which which is great. As you look forward to the third quarter now that the systems conversion as his past what do you expect core expenses to decline on an absolute basis from the the second quarter is 35.9 million.
Yes.
We do expect those to come down I think we mentioned, we've got about a million and a half.
Straight up from the duplication of systems and personnel related to running two back offices.
Now on the flip side, we're not going to have caused deferrals for PPP unless new program were to come into play so.
That benefit coming through on comp would go the other direction, we had about one and a half million.
Net benefit from from that aspect in the second quarter.
It will be back later in a little bit more this quarter because the conversion took place right before July so we'll have a duplicate cost for a while longer as we go through the process of cleaning up and finalizing acquisition. So it won't be a full quarter benefit.
Oh.
Okay.
Perfect. Thank you guys very much.
[noise] [noise]. Thank you. The next question is from Treaty stricken seek partners. Please go ahead.
Hey, good morning, guys, it's actually Janey I don't think they switched over yet.
But thanks for taking my.
Yeah, you know, it's five Oh.
So thanks for taking my question I'll, just wondered on the Cecil double count recapture in future periods.
Is three years to faster is that appropriate timing was just wonder if you any color there.
Yeah, three years or probably be a little quick for that average tenor in our loan portfolio as more of four to five years, so it'd be over kind of a longer period of time.
We did have in the second quarter, some acceleration coming through the accretion there when when loans in that portfolio payoff, we get to how we have to accelerate the marks related to them. So we got an extra million and a half plus minus related to that in the second quarter that wouldn't be.
The.
Normal recurring item there.
But I think in our modeling and then our.
Purchase accounting summary table, we mentioned four years as an estimate for that period of time.
Got it thanks, a lot that's very helpful. And then just one follow up just wondering.
What's the kind of the level of economic activity in the Columbus area versus the more eastern Ohio footprint is really any differences there.
I'm just curious.
Yes, I'd say, the Columbus has always been a stronger market.
Yes, pretty yen post the coven 19 environment.
So why we've posted about companies had.
From there and look to strengthen that market. So I would say a.
As a stronger.
Economic profile then.
Most of the rest of our markets.
Got it.
Thanks, very much yes.
Sure. Thank you.
Appreciate it.
Thank you. The next question is from Michael Chip Dillon of KBW. Please go ahead.
Hi, guys good morning.
Morning.
So given the significant deposit growth in the quarter.
And just say your cash and securities balances.
Yes, we are starting to put some of that to use in the securities book.
That's it.
Some we had to look carefully at given potential concerns on where Munich municipalities May go and things like that so we don't want to go too far too fast on that but we are putting some to use their.
Cash balances should start to turn back down, including the overnights as both deposit funds get used.
Not just yeah through consumer behavior, but also when at the user some loan growth that we expect in the back half a year here.
Okay. Thanks, and then you shed some color on the fee income outlook.
And then just specifically in regards to the mortgage wealth and insurance businesses.
Yeah I'll speak to the.
Sure and wealth business and move them will address the mortgage business.
The insurance I think we're anticipating consistency throughout the remainder of the year, there with a slight opportunity for uptick on that and I'd say, that's a generally the same.
For wealth management, we had a little contraction there basis of combining the two companies feel good about where we are positioned right now and the opportunity for growth there. So.
The wealth is a little different it's a lot of it's a market balance.
In the activity in the market drives the fees there.
So that's a little bit more of the indicator of the environment. Both we would expect some marginal growth in those areas on the mortgage side.
Thank our expectation is based on the rate environment will continue to do well I don't expect us to do the same level, we did the second quarter.
Yes, Matt maybe give a little bit more color and what he sees that area.
Yeah, I mean, the second quarter was exceptionally good as Paul mentioned volumes were up we also enjoyed a little bit of pricing power.
Capacity is capacity in the industry tightened up a little bit in.
That was really good for us from a margin perspective.
We'll see that some of that carry with us into the second half of the year I wouldn't set my expectations around Q2 is the go forward for the back half of the here, but we clearly think.
Something in line with Q1, and a little better with Q1 shortly.
Isn't appropriate way to think about our mortgage business.
Okay. That's helpful. Thank you and then the final one you talked a little about Colombia, but can you discuss your local economies and which markets you're most concerned about in the exposure to those market.
You know I don't know I'll make a general comment and then what the collective group are applying on there I don't know if I would say I am individually concerned about any particular market because of the diversification over all that we have.
Yeah.
When you start my concern goes back to a Matt talked about and what we've got when we started looking at the high impact industries.
And some are more impacted in others, that's where I'm focusing on how those.
Industries recover versus geographic market.
If you will.
I think more maybe have a concentration is industries.
But we're not you know.
We're pretty diverse not not as concerned about geographic exposure is I am industry exposure at this point, Gary I think that's well said and I don't believe that any of the markets that we operate in experience that asset bubble or anything that might have been occurring elsewhere. We are also didn't get an energy bubble.
We're really diversified.
Before.
Concentration levels.
Don mentioned that really is a couple of categories, which are relatively low in percentage terms.
But that's what we're focused on.
And then that could be spot at all across of our groups, but part of the strength of the organization is multiple diverse markets.
Geographic dispersion.
Thanks for taking taking my questions guys hope, they're all doing well.
Thank you as well.
[noise]. Thank you ladies and gentlemen, just again, if you wish to Oscar question. Please press Star then one.
Our next question is they follow from Scott.
Essentially please go ahead.
Hi, guys. Thank you I'm just wanted to ask about the trajectory on the margin Paul It sounds like you're putting a little is the excess liquidity.
To use kind of prudently, but but carefully guess I'm just curious as to the puts and takes you would see for the margin basically off of this quarter's core you know 327 level, which would I guess basically exclude the days, but still have the PPP impact in there.
Yes, yes, no that's correct you're right on with that.
We believe we're at a trough, we're taking actions like I said on the liquidity side, but excess cash to work.
As quickly as we can and as prudently as weekend.
And we also continue to address.
Depository costs, where we can more than a higher tiered buckets money markets et cetera, where we have some opportunity again need to be a little careful on that given the merger name change things like that we don't want to put undue pressure in that area, but for the most part we see this as a trough area.
Three three range there.
Plus minus subject to address some liquidity concerns there.
Perfect Alright, thank you very much.
Thanks Scott.
[laughter]. Thank you very much.
This completes our Christian on suspicion I'd like to turn the conference back deterrent Murphy for any closing remarks.
Thank you for joining us today as we discussed our quarterly results. We appreciate your time in interest in Premier Financial Corp have a great day.
[noise], Thank you ladies and gentlemen.
Conference has now concluded.
Basically sitting today's presentation you may now disconnect.
[music].