Q3 2020 FIRST BANK (Hamilton) Earnings Call
Good morning, and welcome to the Bakken first quarter 20, Carney earnings Conference call.
Because that's really it isn't all anymore.
You need to see some big.
Moving on to conquer that's funny, but that's under stocky foreign buyers.
After todays presentation, there will be an opportunity to ask questions.
That's a good question you May Press Star then one on your telephone keypad to.
Do we know your question. Please press Star then too.
Please note this event is being recorded.
I would like to turn the conference over to Patrick Williams, President and CEO. Please go ahead.
Thank you I'd like to welcome everyone today to first banks third quarter 2020 earnings conference call.
I'm joined by Steve Carlson, our Chief Financial Officer, Peter Cahill, our Chief lending Officer, and Emilio Cooper, our chief deposit itself.
Before we begin however, Steve will read the Safe Harbor statement.
<unk>.
Statements concerning the financial condition.
Results of operations.
In business for perspective.
We caution that such statements are subject to a number of uncertainties.
Actual results could differ materially.
Therefore, you should not place undue reliance on any forward looking statements we make.
We may not update any forward looking statements, we make today for future events or developments.
Information about risks and uncertainties are described under item one a risk factor.
In our annual report on form 10-K for the year ended December 31st 2019 filed with the FDIC.
Back to you.
Thank you Steve I, just like to start off today by saying how proud I am of our team.
Across all areas everybody has done a really amazing job than we've seen strong execution and what is obviously been a very challenging operating environment.
I'd like to focus on great progress we've made in four key areas number one lowering our deposit cost number two improving our fee income number three our cost control efforts and number four our improving asset quality profile, starting with the deposit costs as many of you may have seen in.
Our release, our deposit cost came down by 28 basis points in the quarter, thanks to both disciplined pricing and an improving mix. So.
Today, our noninterest bearing deposits stood at 24% of total deposits, which is up significantly from 17% at the start of this year.
We also had a good quarter for ancillary fee income our loan swap fee income was 631000 in the quarter, which was <unk>, which was in line with our past couple of quarters, but up from prior years, our gains on recovery of acquired loans were over 500000 in the quarter slightly above where we've done in the last few quarters.
Prepayment penalty income was 115000 in the quarter slightly below where we said in prior quarters and our gains on sale. That's the loans generated 43000, a big come during the quarter, which again was slightly below average so a good quarter, but not necessarily a out of line with where we bad.
So far this year.
Our efficiency ratio came in at 50%, which highlights our strong cost controls.
Expect to be able to keep a lid on expense growth moving forward, we have a dedicated team looking at efficiency opportunities they've already uncovered and executed on several projects and we expect to see additional savings as we move into 2021 for example year to date, our marketing advertising and travel and her team.
<unk> expenses down 50% when you look at the first nine months of this year compared to the first nine months of the prior year.
We believe that our future savings opportunities in both salaries and benefits and occupancy and equipment. It's worth taking a hard look at our office space leases and our overall branch footprint.
We do expect to see an increase in technology spending going forward, but that should only partially offset the savings I mentioned in other areas.
In terms of asset quality, we saw continued improvement there as seen by our dwindling deferral portfolio, our modest delinquency rates and declining nonperforming loan levels.
Continuing to add to our allowance for loan losses in the quarter, our coverage of nonperforming loans increased to 180%.
As we sit here today, our allowance plus our off balance sheet credit marks on acquired loans come to 1.67% of total loans excluding PPP.
We saw a nice improvement in our net interest margin in the quarter, which increased 16 basis points from three point O. seven in the second quarter to 3.23% in the third quarter as our earning asset yields only declined slightly while our liability cost came down significantly as I mentioned earlier.
We did approve at our board and get regulatory regulatory approval for a new stock buyback plan. The plan allows us to buy back up to 1.5 million shares, which got us to about 7.5% of total shares outstanding.
Looking forward to the fourth quarter and early 2021.
Obviously COVID-19 remains the big unknown, but the downside risks today looks quite manageable compared to some early stress scenarios that were running in the spring of this year, we believe our lower funding cost should continue to offset mom.
Modestly declining earning asset yields potentially moving the margin up a little bit from our current levels Pete.
P.P. income and expense management will go a long way towards offsetting any potential impact from higher credit costs.
And over which it what's the view of where we stand today in the third quarter, you could say P.P. income basically offset what was still an elevated provision for us in the third quarter, our provision was about $2 million and prior to call that our quarterly were provisions were actually running on.
Under a million dollars per quarter or so so overly simplify things you could say in the third quarter that our P to P income basically moved to offset the additional provision that we'd set aside during the quarter and if you take a look the only real unusual item in the quarter is we did have a significant.
Coppery about 250000 on an Oreo sale, which was probably the only unusual event in the quarter. If you will so we feel good that the quarter represented strong core earnings as we move forward and I'd also note that we have about $4.8 million in.
Unamortized P.P.P. fees that can be used to either enhance earnings and 2020 or to help offset credit costs should they materialize.
At this point I'd like to pause in turn it over to Steve Carmen for him to make his remarks right Steve.
Thanks Pat.
Third quarter 2020 results were highlighted by strong organic commercial real estate loan activity with existing and new borrowing relationships double digit net revenue gross margin.
Margin expansion continued solid asset quality metrics and effective noninterest expense management, despite the logistical and economic challenges, resulting from the COVID-19 pandemic.
Since the fed dramatically lowered the fed funds rate in March we have aggressively lower deposit rates reflective of our strong liquidity position.
Our strong third quarter earnings performance reflects in part core net interest income gains, resulting primarily from lower interest expense and an improving net interest margin.
Net income for Q3, 2020 was 5.9 million worth 30 cents per diluted share compared to 1.1 million or six cents per diluted share for the third quarter of 2019.
Net interest income was 17.6 million for Q3, 2020, an increase of 3.7 million or 26.1% compared to 14 million for Q3 of 2019.
Lower interest expense on deposits was the principal driver for the growth in net interest income for the comparative period.
Also contributing to the growth was the increase in interest income on loans, primarily commercial.
The higher provision for loan losses for the comparative third <unk> third quarters in 2020 and 2019.
As was the case for the Q1 and Q2 comparative quarters was primarily due the qualitative assessments of challenging economic conditions due to the COVID-19 pandemic.
Net income in Q3, 2020 wasn't enhanced by higher noninterest income compared to the same period in 2019 due to increased loan swap fee income, which totaled $631000 for Q3, 2020 and gains on recovery of acquired loans, which totaled 500000 for.
The quarter.
Non interest expense, excluding merger related expenses for the comparative periods was up about 17%.
As the full impact of expenses associated with September 2019 Grand Bank acquisition are reflected in Q3 2020 results.
Our return on assets was 1.03 per cent for Q3, 2020, and oral we was 10.20%.
That compares to an adjusted our way of 78 basis points and adjusted our we had 6.97 per cent for Q3 2019.
Net income for the first nine months of 2020 was 13.3 million or 66 cents per diluted share compared to 8.2 million or 43 cents per diluted share for the same period in 2019.
The results for the nine month period ended September Thirtyth 2020 were similar to the results for the quarterly comparison.
Net interest income increased 7.7 million or 18.1% to 49.8 million compared to 42.2 million for the nine months ended September Thirtyth 2019.
The increase in the 2020 year to date net interest income was driven by strong growth in average loans, which increased by $356.1 million or 23.4% from the prior year period.
Average loan growth includes the impact of P.P.P. loans originated in 2020 as well as loans added from Grand Bank.
Hey, higher provision for loan losses.
Higher noninterest income and increased noninterest expenses, excluding merger related expenses.
Also characterize results for the comparative nine month periods.
Our tax equivalent net interest margin for the third quarter of 2020 was 3.23 per cent compared.
Compared to 3.15 per cent for Q3, 2019, an increase of eight basis points.
The improvement in our margin is primarily due to the 91 basis point reduction in the cost of interest bearing deposits, partially <unk>, partially offset by 66 basis point reduction in interest, earning asset yields particularly loans.
In a dramatically different and lower interest rate environment.
On a linked quarter basis, our tax equivalent margin for the three months ended September Thirtyth 2020 was 3.23% so.
16 basis points higher than our margin of 3.07% for the three months ended June Thirtyth 2020.
As I noted earlier, our emphasis has been on lowering deposit cost, which is reflected in lower interest bearing deposit costs 34 basis points for the third quarter.
Our overall cost of deposits was 70 basis points for the third quarter.
That represents a 59 basis point decline since March 30, Onest of this year when our cost of deposits was 1.29%.
We expect that positive trend to continue for the remainder of 2020.
Lastly, as Pat mentioned Weve continued our focus on effectively managing the level of non interest expense growth.
This is reflected in lower marketing and travel and entertainment costs for the comparative 2020 quarterly periods.
Our largest component of non interest expense salaries and employee benefits has been a management focus.
Over the last several months, we have managed to the timing of new and replacement hires reflective of the current business environment.
Absent the accounting associated with P.P.P. loan originations in the second quarter of 2020.
Salaries and employee benefits expense would have been modestly lower in Q3 compared to Q2.
Effective management of expenses has resulted in an efficiency ratio of 50.08% at September Thirtyth 2020.
That compares to 57 point, 19% at September 32019.
And 53.66% to the linked second quarter of 2020.
At this time I'd like to turn it over to Peter Cahill, our chief lending officer to discuss lending results Peter.
Thanks, Steve.
Yeah, after two quarters, where the driving force behind loan growth was P.P.T. loans, we experienced very solid third quarter growth was organic in nature and not related to the impact of the pandemic.
Loans at September Thirtyth were up $281 million for the year.
If you back out the $190 million in P.P. loans, we did earlier that leaves you with growth for the nine months of $91 million.
This is right on our pre you pandemics projected growth plan of $120 million for the year.
I think the third quarter growth of 50 million was a good performance well above the $10 million per month growth plan that I just mentioned.
The financial tables in the earnings release break down the segments of the loan portfolio on a quarter by quarter basis.
When you look at the segment percentages the results get skewed a bit by the inclusion of the P.P.T. loans, which fall into see an eye, but in terms of dollars you can see increases in all segments of the portfolio except consumer.
Like to highlight our loan pipeline for a minute.
One thing I mentioned last quarter was that we're doing to augment the sales process.
We're using this period were face to face sales efforts are difficult.
Right sales training to relationship managers and key retail staff.
The goal is getting so its more proactive better organized and focused on the types of customers that we want to do business with.
This training still going on and while it's too early to see all the benefits, we hope will accrue a warm stacked happen our loan pipeline. Despite the pandemic continues to be in very good shape.
So I think we've talked about before we look at deals in the pipeline on a probable funding basis, where we take projected year, one funding and providing likelihood to close factor to it depending upon where they were in the process of the deals are loans committed and closing next week for example.
That would be much higher likelihood. The close then we'll a piece of business that we're still collecting information.
Et cetera.
September Thirtyth the pipeline stood at a $158 million, which after a strong quarter from a loan funding perspective, I think is very good.
Importantly, the ratio of Investor real estate loans. The total loans on the pipeline is right at 50% lower than we've experienced at a quarter end in quite a while.
This means we are looking at more seasoned I loans that bring with them more deposits and this outcome meets our goals.
To keep our portfolio balanced and in line with what the regulators like to see.
Hi, I know, Steve as well, so it's a little bit on asset quality.
Asset quality metrics continue to look good charge offs and nonperforming loans both are down.
Delinquencies are manageable and remain in line with recent quarters.
The earnings release outlines our actions on the allowance after a 2 million dollar provision in the quarter. Our allowance stands at 1.25% of the total portfolio exclusive of TPP loans and 180% of our Nonperformers.
Regarding COVID-19 payment deferrals, we provided a lot of detail on these after the first quarter I provided updates last quarter and in yesterday's earnings release as well.
At this point, we're seeing just about zero requests for new deferrals.
Hurdles in place or down substantially from around 25% of the total loan portfolio.
Exclusive of P.P.T. loans earlier, this year to less than 2% of the portfolio now.
As we said last quarter, it's still even though the extent switch the pandemic will impact some of these borrowers but signed so far are very positive.
That's about it for me.
While the sales effort is more difficult due to the pandemic, we're working hard doing our best to grow our business, while focusing on credit quality and stay in close contact with borrowers.
Important task processing P.P.P. forgiveness.
For our customers is still in front of us, but we're ready to respond to applications as quickly as they arrive.
I'll now turn things over to Emilio Cooper to talk about deposits will.
Thanks, Peter deposit performance in Q3 was strong.
Despite the challenge of the COVID-19, we continued to advance in our journey toward accomplishing our strategic objectives and mission for 2020.
As you know we are focused on reducing our funding cost shifting our mix improving non interest income and growing commercial deposit.
I'm pleased to report that in Q3, we made progress on all four fronts.
We reduced our cost of interest bearing deposits by 91 basis points compared to third quarter of 2019.
Point to point end of Q2 versus the end of Q3, we reduced our cost of interest bearing deposits by 43 basis points.
This was accomplished as we allowed your CD rate shoppers to attrite, while we focused on the retention of our core relationship oriented BD customer base.
Over 239 million in CD balances matured in the quarter.
We were able to retain nearly 60% at rates on average that were 180 basis points lower.
We expect to benefit from continued reduction in our interest expense from our CD portfolio through the greater part of next year as well.
In addition through strong relationship management, our team of lenders and branch bankers were able to effectively navigate with our customers the aggressive rate reduction of our money market portfolio and promotional high yield savings accounts in the quarter, while largely preserving balances.
As Steve mentioned noninterest bearing deposits now comprise over 24% of total deposits up from 17% in Q3 of 2019.
Cds represent less than 30% of total deposits down from over 42% in the same time period.
Our investments in enhanced cash management services business banking resources increased partnership and collaboration product development and marketing along with an optimized retail leadership team and structure are enabling our success in adjusting the mix and it is exciting to watch.
We also made an investment in the growth and development as Peter mentioned of our team over the past quarter through sales training that is focused on helping our team be better advisors to our customer and targeted prospects.
We recognize businesses have evolved due to the pandemic and we are ensuring our team is equipped to have a distinct competitive advantage aligned with our brand promise in focused value proposition personal bankers real relationship.
We implemented a number of initiatives in Q3 designed to boost our deposit related fee income.
Specifically, we have projects underway to increase revenue connected to check printing NSF fee collection remote deposit capture and other cash management services.
We are just beginning to see some early results from these efforts and I look forward to reporting in more detail on the outcomes from these initiatives on future calls.
Commercial deposits are up 249 million or 52% year to date bolstered by our strong PPP execution and solid underlying organic growth.
Our deposit pipeline is strong and over weighted towards non interest bearing growth.
We are looking forward to finishing the year ahead of where we plan for 2020 and positioning ourselves for an even stronger 2021.
With that I'll turn it back to you Pat.
Thank you I'm Maria and thank Steve and Peter I appreciate those comments and at this point I'd like to turn it back to the moderator to open things up for the question and answer session.
We will now begin the question answer session to ask a question you May Press Star then one on the telephone keypad two weeks I have a question. Please press Star then too.
The first question is from liquid should at least with Piper Sandler. Please go ahead.
Good morning, guys how are you.
Hey, good morning, Nick.
With respect to the lending environment give us a sense of the competitive dynamics in your market as the competition increase with the modifications coming down across the industry.
[noise] I'll give you my quick sense, and then turn it to Peter I think within the bank competitive set I think the environment remains competitive I think yeah in certain areas. We saw a pull back from you know more the CMBS and the non bank lenders early on some of those so maybe starting to.
Get back into the game, but yeah, that's kind of the high level, what we've seen and Peter and you know why don't you jump in here.
Yeah, and I think that's right I mean in the pandemic kind of first hit first.
Ill now.
90 to 120 days there wasn't much going on.
But I think my bags now we're kind of back into it and competition. This back where it's kind of always bad.
No. We're looking at obviously credit is a lot closer now than we did in the past and I'm sure other bought back so as well, but it's.
It still seems to be bags on every deal and and pricing that's out there in the market I guess inspection decided they want to OLED.
Has been aggressive.
We've been doing what we can to kind of hold the line on pricing, but yes.
No again, there seems to be a decent amount of business out there still so.
There related to that what are what are you getting on pricing on new originations.
Well you know a lot of our loans ended up getting.
Oh, most wells are not don't have swaps attached rate. So we like the six the rate for no longer than five years, we can do that and we're still trying to keep our rates up around 370, 504% depending upon the credit I mean, it could be higher obviously smaller kind of.
Retail related commercial accounts.
Good.
A little higher rate than a than your top but see an ideal or investor real estate deal. But then the route 375 would probably be a good number to look at.
Okay, that's very helpful and with respect to the CD book can you update us on your mountain rate due to mature in the December quarter.
Yes, I can so we'd have about 75 million coming due.
In the fourth quarter and they're Gonna every new on average at a rate that will be about 100 basis points lower than our existing rate.
Okay, Perfect and then Pat you mentioned a fair value marks me in the allowance commentary do you have the value of those credit Mark.
[noise] the actual dollar amount that the the credit Mark that after I don't have that Andy Nick but that's something we can track down.
Okay, Great and then just lastly on the tax rate not surprised.
To see an increase with the state surcharge what is your expectation for the effective tax rate.
Well, Nick I think our effective tax rate at this point a at least for the remainder of 2020, you'll probably be somewhere around 25% or slightly below so I think that's a probably.
Probably a pretty good number until we see what happens in November.
Great. Thanks for taking my question [laughter], great. Thank you Nick.
The next question is from Peter Keith We need aid Davidson. Please go ahead.
Good morning, guys how are you.
Good good morning, Chris.
Hey, so just looking at the non interest income or you had a pretty good increase in service fees on deposit accounts, which I think makes sense I'm just curious.
Where are you can get to a point where mix slightly above kind of three coal bid.
Or at pre coded numbers is that a good run rate for the next few quarters.
Yeah, I would think so Chris I mean, there wasn't anything really unusual in the quarter from a you know overall deposit fee perspective, so I.
I think as you know it's a good number to have its kind of the starting point.
Okay, Great and then just over on the expense side isn't slight uptick in salaries and employee benefits I'm. Just curious do you have.
Are you comfortable with your staffing levels or do you have any plans for further expansion there in the future.
Yeah, but I think overall you know, we're we're looking for opportunities to find savings there.
You know sometimes what happens is you find some savings in one place and you need to augment your team in another so I don't think we're projecting you know significant decline, but I do think we can keep or keep our expense level you know close to where we are as potentially even get it down a little bit but the.
Yeah. The reason you see the change from the second quarter to third quarter is partly a function of the way the accounting for the P.T.P.
Worked out in the second quarter, there was kind of a unusual a salary reduction line item in Q2 that kind of artificially represented what the true employee expense base was and you know that at one time expense reduction.
Action from P.P.P. Didnt.
Didn't show up again in the third quarter. So comparing Q2 to Q3 is a little bit misleading, but I think where we are in terms of overall expense base in Q3 is pretty much in line with where we thought we would be and again I think you know our goal is to not let it getting.
Getting much higher and potentially even bring it down a little bit and we've got a lot of we've got a lot of projects under way that that are going to you know find that some savings here and there I kind of easy.
Easy analogy and you know, we're we're turning over all the couch cushions were fine and all the the loose change its around and I think as you know if you do that regularly and consistently you will be able to effectively manage your costs and that's what we plan to do going forward, Steve I don't know if there's anything you wanted to add around that.
The TPP impact into Q.
I would just add that to your comments Pat whichever were comprehensive on that front that you know absent that that accounting you just referred to.
Salary expense in the third quarter, what about between 50 and $100000 less compared to Q2.
Got it okay. Great. Thanks, guys and then I guess, just looking at a kind of the excess liquidity on the balance sheet. It looks like you Ben.
Shifting in the Securities book I'm, just curious if it obviously you also had strong loan growth so.
What point you think we start.
You know getting some some run down in liquidity via loan growth versus securities or do you think that the securities book will continue to go up over the next.
Few quarters.
Yeah, and then I I don't think you're going to see a big increase in the investment portfolio, but Steve chime in here well, yeah with TPP loan forgiveness. Ah you know, we expect that probably will enhance our liquidity position but job.
Opportunistic as it relates to a what we do on the investment side, obviously due to the challenges presented there from a yield perspective, but we certainly with excess liquidity, yielding 30 basis points or less well take our selective opportunities on the investment side going forward.
Okay, Great and then just one more if I can.
If I can go.
So on on deferrals can you just talk about your philosophy on on migrating I mean, I know deferrals are quite low but your philosophy on on migrating loans that are currently on deferrals status.
Kinda through.
The credit classifications are you are you doing those.
Performing loans until until the end of the deferral period or are you continuing to migrate them, even while they're on deferral.
Yeah, well I mean, it's it's done on a case by case basis, Chris, but certainly as a as a general rule I would say and initial 90 day deferral didnt necessarily trigger a risk rating downgrade.
In most cases, it's not all cases, a second 90 day deferral would almost certainly have triggered a downgrade and ER for folks that need support beyond the 180 days you know that's almost certainly going to trigger additional downgrades were not necessarily.
Putting folks on non accrual, but we've moved away from Hey, If you think you need help we're happy to do a deferral too yeah, we're really going to dig into the numbers, let's see what the cash flow is let's see what you can handle and on a temporary basis it folks can perform.
Form a according to the terms of the additional deferral or you know that wasn't necessarily trigger and moved to non accrual, but it's really done on a case by case basis and obviously, if you have folks that haven't paid at all and can't pay anything going forward. Then those are situations where you.
Almost certainly looking at you know non accrual status, but thankfully, we really you know we really haven't had any of those so you know most of the folks that we've dealt with obviously you've seen the numbers the percentage of deferrals are way down the dollars are way down and even the folks that need a little bit of additional time there.
Seeing some decent improvement in trends to the point, where you know in almost all cases folks that maybe had a fall p. Eni deferral initially or are at least coming back to you know, making interest only payments as a way to hopefully get that back towards full payment status in the not too distant future.
That's great. Thank you guys. So much for taking my question.
Thank you.
The next question Im sorry at its peak with Boenning and Scattergood. Please go ahead.
Good morning, guys.
Hey, good morning, [laughter] Oh.
First just wanted to follow up a little bit on your comments about seeing some good new opportunities.
Hi.
Portfolio I'm curious if you can provide any color to what any particular industries and markets within your footprint that are driving driving those new opportunities today.
I will I'll, let Peter chime in here as well I mean from my perspective, Eric It's not really industry specific I mean, the the opportunities that we're seeing quite honestly a lot of them were generated by our ability to get a quality P.P.P. process up and running quickly to the.
Point, where a number of local C. P A's and other friends of the bank new people that weren't getting taken care of by their banking organization, we're getting referred over to US and you know that that was kind of across the board. So it wasn't really a function of their words in industry trend it.
Was more a function of a you know folks were sort of realizing the importance in the value of having that relationship with their bank and a number of those folks got referred over and we're looking we're looking to bring that business to us, but Peter anything you'd add there.
Yeah, No I agree no no concentrations anywhere as you would imagine a lot of service related.
Companies that you know haven't been impacted directly by T.P.T. much professionals doctors those kind of things you know typically I would consider see an IDE to include as you know Oh owner occupied real estate as well. So you know as those that.
Since that side of the seasonality.
Stuff is a little bit lumpier write bigger dollars immediate outstandings that kind of stuff with real estate, but oh, no really no concentrations anywhere no no loans with major size.
Oh, great. Thanks for the color there and then that's great to hear that there are some secondary.
Secondary benefit coming off of their PBP participation.
Participation as well I guess, that's a good segue I think you mentioned about 4.8 million and unamortized TPP fees remaining what are your current expectations for I guess, you know the percentage that will ultimately be forgiven and kind of maybe that the timing on those as well.
Yeah, I mean, we I know some banks sort of held off on starting the forgiveness process. So we didnt, we have our our portal up and running and we have our full team you know dedicated working on applications I think weve submitted to the S.D.A.
Approval applications for about 20% of the total portfolio. Unfortunately is only heard back on a a small fraction of that and we have gotten a few loans always heard back and they've been forgiven, but I.
I think in Peter or maybe you could provide a little more detail I think what we're seeing is in most of the applications. The vast majority if not all of the P.P.T. loan amount is a is being forgiven. There are in some cases, some small stub periods remaining but I think Peter for the most part it looks like.
Oh, Yeah, Oh, you know a big chunk of that is getting forgiven is that right.
Yeah, you're right.
Yes. The board you afraid, it's 20% of the 1100 or so TPP loans, we did have been.
Forgiveness. So it's been filed and the you know what we've heard back is palatable.
Stuff. So we'll just have to see how that how that goes.
Okay. So about 20% submitted so far and I think once they get it they have <unk> and up to 90 days to respond to how long you think it takes you to get that remaining 80.
80% submitted.
Well, it's gone up.
Yes, I know you guys.
I was just going to say, we're kind of at the.
You know the board the borrower has to initiate the process right. The way we're set up so we have a portal for them to supply. The information you know the application for forgiveness with the.
Supporting documentation, so weve reached out to all 1100, plus it's a couple of times too.
Show them, what to do remind them or to go et cetera, and a few other kinds of dribbling. It. So that's where we're at right now.
Got it that's helpful.
And then just looking at the the loan to deposit ratio is up a little bit this quarter and I know you know that that's PBT loans and related deposits are impacting both the numerator and denominator mentioned also that the deposit pipeline is strong and kind of on track their goals, just curious about kind of where if you're kind of targeting a certain ratio or.
Where are the upper limit.
Comfort range is at this point.
Sorry upper limit on what they're.
The loan to deposit ratio Oh, Yeah, you know and that's something in a normal environment, we track pretty closely I think right now.
You know the primary issue is overall liquidity levels and you know we have a a strange situation where you've got these P.P. loans that you know we didn't we didn't end up funding them dollar for dollar with P.P.P.L.S. funds, but obviously, if you did right you'd be adding there.
[noise] portfolio was 200 million in loans, which is you know impacting your numerator, but you've got borrowings funding. It instead of deposit so the the loan deposit ratio temporarily looks a little bit out of whack. So you know in normal times, when we want to keep it under a 110% closer.
The 100% or lower but right now because it's getting a you know a artificially inflated if you will by the P. P. P. I think you know we're more focused on what does it look like once the P.T. loans are forgiving. The borrowers are paid off and the balance sheet kinda deflates back to where it was.
This is certainly in that environment, yeah, we'd like to see it down closer to 100 and 110 so.
And then just last one for me on the new share repurchase authorization curious about your appetite to.
Utilize that today, you know kind of how actively you be whether it will take several quarters. If that's your full intention to use it just given you know it seems like a fairly attractive.
From a financial perspective, given where the stock is trading today.
Yeah, exactly and that's obviously going to be a b. The big driver you know trading at a significant discount to book value and given what we're seeing in terms of core performance and improving asset quality metrics you know the the best and that's an opportunity out there right now.
It's probably a buying back the stock obviously or the stock price moves significantly or if we see some trends that are are problematic will have to revisit it but I think right now what you're seeing is a clear signal from the board that based on everything we're seeing or you know.
Buying back our stock at these levels or looks attractive to us. So you know I suspect will be we'll be moving forward and trying to put that to try to put that buy back to work.
Thanks for taking all my questions. This morning.
Sure No problem. Thank you sure.
The next question is a follow up from me, that's what I needed to type of Sandler. Please go ahead.
Hi, guys just a quick follow up on the PPP remarks, the 20% live applied for forgiveness is backed by number of loans or by dollar amount.
Yeah. Thank you both.
Yeah, Yeah, I think yeah again, it's 20% that have applied.
You know I think what part of what was being asked was of the of those that have applied what percentage of the loan amount was applied to be forget that and it wasn't 100%, but it was a pretty high number I think north of 90 on average and you know that obviously includes a bunch alone.
That would should be 100% forgiven and some others that are maybe more 70, 80%, but you know the 20% is what weve submitted. Unfortunately, you know we haven't actually heard back from the S.D.A. on more than a handful of them. So.
That's very helpful. Thank you yeah.
Yeah, Nick I know you.
You had asked the question about the the credit or the you know the purchase accounting credit Mark from acquisitions and that number we were able to track that I think is 7.7 million.
Terrific. Thank you so much for sure.
Again, if you have a question. Please press Star then one.
This concludes our question and session I would like to turn the conference back all that does not do crying for any closing remarks.
Thank you I just would like to thank those who are who called in for their interest and their questions and we look forward to providing an update for the full year in ER on our earnings call in late January thanks, everybody.
The conference call is now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
[noise] [noise].
[noise] [noise].
[music].
[noise].
[noise] [noise].
[noise].
[music].
[music].
Oh.
[music].