Q2 2022 Hope Bancorp Inc Earnings Call
Thank.
Good morning and welcome to the hope baye Court 2022 second quarter earnings conference call.
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Thank you, job. Good morning everyone, and thank you for joining us for the hope band corp 2022 second quarter investor conference call. As usual, we will be using a slide presentation to accompany our discussion this morning. If you have not done so already, please visit the Presentations page of our Investor Relations website to download a copy of the presentation or, if you are listening it through the webcast, you should be able to view the slides from your computer screen as we progress through the presentation.
Beginning on Slide 2, let me begin with a brief statement regarding forward-looking remarksthe call today may contain forward-looking projections regarding the future financial performance of the company and future events. These statements are based on current expectations estimates forecasts, projections and management assumptions about the future performance of the company, including any impact as a result of the COVID-19 1900 acemic, as well as the businessess markets in which the company does and is expected to operate. These statements constitute forward-looking statements within the meaning of the? U's Private Securities Litigation were form Act of 1900 and ninety-five. These statements are not guarantees of future performance. Actual outcomes and results made differ materially from what is expressed or forecasted in such forward-looking statements.
We refer you to the documents the company files periodically with the F se C, as well as the safe harbor statements in our press release issued yesterday. Hope bank corp assuit no obligation to revise any forward looking projections that may be made. On today's call. The company cautions that the complete financial results to be included in the quarterly report on Form 10-Q for the quarter under June - 32.022 thousand could differ materially from the financial results being reported todayin addition, some of the information reference on this call today are non-GAAP financial measures. Please refer to our 2022 second quarter earnings release for the reconciliation of GAAP to non-GAAP financial measures. Now we have allotted one hour for this call. Presenting from the management side today will be Kevin Kim post B, corp' Chairman President and C? O and Alex, Co senior Executive Vice President and Chief Financial Officer. Peter Co senior Executive Vice President and Chief operation Officer is here with us as usual and will be available for the a session. With that, let me turn the call over to Kevin Kim Kevin.
Thank you, Angie. Good morning everyone and thank you for joining us today.
Let's begin on Slide three with a brief overview of our financial results.
We delivered a very strong performance for the second quarter of 2022, highlighted by the highest level of loan production in the history of the bank. Loan production for the second quarter increased 25% quarter over a quarter, or 44% year-over-year, and drove a 16% increase in our loans outstanding on an annualized basis, excluding PPP loans.
Our net interest margin expanded 15 basis points from the preceding first quarter and we continue to have success in driving down our criticized loan balances.
We reported net income of $52.1 million, or 43 cents per share, in the second quarter.
In terms of preprovision net revenue, which generated $73.9 million, which represents an increase of foureight percent from the preceding first quarter and 15% from the year ago second quarterthis performance resulted in our preprovision net revenue return on assets increasing to one point six fiveeight percent in the second quarter, up from 2% in the preceding first quarter, while preprovision net revenue return on equity increased to 15% from 14%.
Moving on to Slide 4, in the second quarter we funded a record $1.3 billion in new loans. This represents the fourth consecutive quarter in which we produced more than $1 billion in total loan funding, as we continued to benefit from the investments we have made to add banking talent and build expertise in new asset classes and vertical markets.
With this birsday record, $557 million in new commercial loans during the second quarter, resulting in our commercial loan portfolio increasing at an annualized rate of 26%, and.
As these commercial loans are variable rate loans, we are well positioned to benefit with the expected increases in interest rates, and I'm pleased to report that we also saw a significant increase in the average rate of new commercial loans from the preceding first quarter.
The $557 million in commercial loan fundings accounted for approximately 43% of our total loan fundings in the second quarter, which represents the progress we have made in strengthening our commercial banking platform and diversifying our business model and loan portfolio. Our corporate banking group generated approximately 90% of our commercial loan fundings during the second quarter, which reflects the progress we have made in moving up market and expanding our commercial client base to include more middle market enterprises.
We are also benefiting from the teams we have built within our corporate banking group to focus on vertical markets like telecom, health care and financial institutions, including broker dealers and asset managers. These verticals have been lessly impacted by supply chain constraints and inflationary pressures and have been more resistant to recessionary environments and geopolitical issues.
In terms of commercial real estate loan demand was relatively consistent with the prior quarter.
We had $545 million of commercial real estate loan production, which also was booked at much higher rates than the preceding first quarter. The production was well diversified across property types, with the single largest contributor this quarter being multifamily, which accounted for 32% of our total CRE loan production in the quarter and continues to increase as a percentage of our overall CRE portfolio.
Despite higher interest rate and a significant decline in demand for mortgage refinancings industrywide. We had a 75% increase in residential mortgage production, while maintaining strong underwriting criteria with average ltivities in the high 50% to low 60% range.
The higher level of production reflects the successful expansion of our team into West, into Eastern region, which has contributed to increased levels of purchase transactions.
Overall.
We saw very good trends in loan pricing in the second quarter, with the average rate on new loan originations increasing from the preceding quarter in each asset class. Combined with the higher mix of commercial loan production, this resulted in our average rate on total loan production increasing by 72 basis points compared with the preceding quarter.
The investments we have made to strengthen our commercial banking platform have not only positively impacted loan production, but has made us less reliant on Sierra lending as a growth driver, and this positions us well going into the second half of 2020. -two and.
In addition, our expanded commercial banking platform has enhanced our deposit gathering capabilities. Deposits from larger commercial enterprises, primarily generated through our corporate banking group, as well as our efforts to target U's subsidiaries of Korean corporations, now account for approximately 23% of our total deposits, and we are consistently generating new commercial deposit relationships each quarter, which is providing a steady inflow of core deposits.
Now I will ask Alex to provide additional details on our financial performance for the second quarter. Alex.
Thank you, Kevin. Beginning with the Slide 5, I will start with our net interest income, which is total hundred, their forty-one point five million dollars for the second quarter of 2022, an increase of 6% from the preceding first quarter.
Our net interest margin increased 15 basis points quarter-to quarter to 3%, and.
The increase was largely due to increases in our loan yields, driven primarily by the repricing of variable rate loans, as well as higher average loan balances.
Which contributed to a more favorable mix of a higher yielding earning assets.
Overall the yield on interest earning assets increased by 26 basis points quarter-over-quarter.
These benefits were partially offset by higher cost related to interest-bearing deposits and the borrowings as a result of the rate hikes since March 2020 -two.
Given our asset-sensitive position, we expect to continue to benefit from rising interest rates.
Looking at the third quarter of 2022, we expect another quarter of margin expansion.
But at modestly lower levels than we had in the second quarter as a lag in interest-bearing deposit. Cost increases will offset some of these benefit.
Moving on to Slide six.
We remain in as a sensitive position as of June thirtieth y thousand and twenty-two.
And our position to benefit from higher interest rates.
Of our new loan production in the second quarter, 41% represented.
Variable rate loans and, as of June , 32.022 thousand variable rate loans accounted for cent 44% of our total loan portfolio.
Now moving on to Slide seven.
Our noninterest income was $12.7 million for the second quarter.
Down by four to $4 thousand from the preceding first quarter.
We had increases in most of our major fee-generating areas.
But we did not sell much of our residential mortgage loan production in the second quarter.
During the quarter we recorded a loss of 500 to $47 thousand on the sale of $35 million. So previously identified the problem CRE relationship that was transferred to he for sale as of March thirty-first 2020 -two.
Excluding this nonrecurring transaction, our core noninterest income trended a higher quarter-over-quarter.
Moving on to a noninterest expen on Slide eight.
Our noninterest expense was $80.4 million, representing an increase of 7% from the preceding first quarter.
The most significant variance was a 7% increase in our salary and benefit expenses.
Largely due to the impact of annual merit increases that took in fect at the beginning of the second quarter.
personneal additions to support the continued growth of the company.
And higher costs associated with the retaining employees and the extremely competitive staffing market.
Our advertising and the marketing expenses were also higher.
As the second quarter includes the seasonal impact of our lpga sponsorship.
Our credit-related expenses increased by approximately $1.8 million.
Due to higher provision for accrued interest receivables.
And the legal collection expense that was a higher than usual.
Reflecting the higher salaries and benefit expenses. Our efficiency ratio trend is higher, but still remained in our targeted range in the low 50 S.
Now moving on to Slide 9, I will discuss our key deposit trends.
As of June , 32.022 thousand. Our total deposits increased 4% from the end of the prior quarter, primarily due to growth in our demand deposits and time deposit balances.
As part of our interest rate management strategy, we increased our time deposits in the second quarter in order to lock in some longer-term funding before further increases and interest rate.
The cost of our interest-bearing deposits increased by a 16 basis points quarter-over-quarter.
Due to higher rates on interest-bearing checking and time deposits.
However.
With a stability in our average noninterest-bearing demand deposits.
Our overall cost of departures increased by only nine basis points.
Now moving on to Slide 10, I will review our asset quality.
We saw generally positive trend.
In the portfolio in the second quarter, driven primarily by the continued upgrading of credits.
Out of the criticized loan categories and the borrowers, demonstrates sustained performance.
This resulted in total cricstsiz loans declining by another 14% in the second quarter and represented our fourth consecutive quarter of steady reduction.
nonoccur loans increased by $16.8 million, reflecting on $18.6 million relationship that was moved from troubled debt restructure status to nonoccrual during the quarter.
The liquual loans 90 days or more on accrualed status, increased by $12.5 million as of June thirtye- 2020 -two.
$10.7 million of this has already been addressed following the close of the quarter.
$3.4 billion represented a delay in renewing maturing loans.
Which I have since been renewed and are no longer delinquent.
Another $7.3 million relationship was paid off the first week of the third quarter.
Oh all.
Our loss experience remains very low.
We had adjust $712 thousand in the charge-offs during the second quarter.
And $1.6 million in recoveries.
Resulting in net recoveries of $93 thousand.
This is our third consecutive quarter of net recovery.
We recorded a provision for credit losses of $3.2 million, which primarily reflects the growth in the loan portfolio during the second quarter, and an adjustment in our outlook utilizing Moody's as two economic scenario, which has a more recessionary outlook.
Over the last two years D the pandemic.
We have significantly increased our credit administration processes.
Which better enables us to address portfolio risk.
These enhancements include, among others, updated borrower financial statements.
Or a more frequent RIS.
A more aggressive strategy to address nonmonetary default and real time.
And the requirement for projections as part of the underwriting process. That includes a listast- a 300 basis point interest rate sensitivity analysis.
That helps drive tighter loan covenant and transaction structures.
We have also further tightened our underwriting criteria in preparation for a posed, a possible recession.
And for our corporate banking group. We conduct quarterly portfolio reviews to identify key risks for each industry vertical.
So all in all, we believe our enhanced credit administration processes and tightened underwriting criteria has improved our ability to mitigate the recessionary downside risks.
I June thirty 2020, two.
Our allowance for credit losses: coverage ratio loss: 1% of loans compared with 1% as of March thirty-first 2020 -two.
While our coverage of nonperforming assets decreased to of 37% from of the fully 4%.
Now moving on to Slide 11, let me provide an update on our capter position and return.
The increase in interest rates during the second quarter resulted in unrealized losses in our investment securities portfolio that negatively impacted a tangible common equity to tangible asset ratio by approximately 37 basis points.
Our T of a common equity to tiof after ratio remains strong at 9% as of June . thirty- 2020 -two.
And there was no impact from changes in unrealized losses through our regulatory capital provisitions.
During the quarter, we repurchased approximately one million shares of our stock.
At an average price of $14 and 10 cents per share.
As of today, we have $35.3 million remaining of our $5 million stock repurchase program.
Despite the increase in unrealized losses in the second quarter and our stck repurchase activity.
We remained strong capital levels to support our continued balance sheet growth, as shown on this slide.
During the second quarter, we completed a transfer of $2.039 billion of available for sales security to help to mature securities.
This security this reflected crea investment that the bank normally would have helped to matureity nonetheless.
With that, let me turn the call back to Kevin.
Thank you, Alex. Now moving on to Slide Twelve.
I will wrap up with a few comments about our outlook.
Although the operating environment is becoming increasingly challenging, with greater uncertainties, we still see a number of catalysts that should support continued strong financial performance.
As we look ahead the second half of the year, we believe the investments we have made to strengthen our commercial banking platform and diversify our business model over the past few years will become even more valuable and result in solid loan growth for 2020 -two and.
With the rise in interest rates, the demand for commercial real estate loans is expected to soften in the second half of the year and we expect to see a lower level of CRE production over the remainder of the year.
The aggressive pace at which interest rates expected to rise this year will undoubtedly also challenge the mortgage and SBA lending markets. We expect the geographic expansion of our residential mortgage platform will shift to higher levels of purchase transactions and support continued growth of this portfolio, notwithstanding the broad declines in refinancings.
In terms of our SBA business. We have gone through many economic cycles during our 30 -plus years as a preferred lender and recognize that the current rising- excuse me, the current rising rate environment will only temporarily impact volumes.
Our CNI pipeline however, remains strong and should continue to result in a high level of production.
Initially, as we built our corporate banking group, we pursued relationships with more middle-market enterprises in our Texas and California markets, where our teams were positioned.
With the success of this initiative, we have started extending it in additional geographic markets where we have been able to recruit experienced commercial lenders, including the Southeast and the notice. We are pleased to see increasing contributions from these newer CNI team to our commercial loan production.
The continued strength in our commercial lending should help to offset the industry-wide headwinds in other areas of lending.
As a result, and despite the challenges of the rising interest rate environment, based on our current pipeline and projections, we have greater confidence that we will achieve the higher end of our full year guidance of high single-digit to low double-digit loan growth.
As Alex mentioned, we also expect to see further expansioned in our net interest margin as variable rate loans continue to reprice and new loan originations reflect the higher interest rate environment that we are in.
And the enhancements we have made in credit administration in terms of initial underwriting criteria, stress testing and loan monitoring have improved both the quality of the loan portfolio and our ability to identify early signs of stress among borrowers and mitigate any potential loss exposure we may have.
I am comforted in knowing that we have significantly improved the profile of our franchise in recent years. As a more diversified financial institution with a stronger enterprise risk management infrastructure, we are much better positioned today than in the past to withstand the challenges of weakened economic conditions.
We have a lower risk, more diversified CRE loan portfolio, largely reflecting the growth in our multifamily lending portfolio, and a meaningful reduction in our hospitality portfolio as well. Our commercial portfolio is increasingly becoming more diversified, with our corporate banking group more focused on larger, stronger enterprises in more recession resistant industries.
one of our strategic goals has been to differentiate Bank of Pope from the characteristics that had typically been associated with Kan American banks, most notably, a loan portfolio that was concentrated in commercial real estate and more susceptible during times of economic stress, along with a deposit base that was too reliant on high-cost retail fundingover the past few years, I believe we have achieved this goal, significantly differentiating ourselves from our nichepeers and substantially strengthening our institution in the processas a result of the investments we have made in our organization, we have significantly expanded our business development capabilities and have the ability to effectively target a much broader customer base, which will progressively transform our loan portfolio into a more diversified. one that is more resistant to economic cycles, and we also have improved our ability to continue delivering strong financial results even when the economic environment is less favorable for commercial real estate lending.
We believe that we have built a strong commercial banking franchise that can effectively capitalize favorable economic conditions to generate profitable growth, while also having a lower risk balance sheet. That will serve us well during times of weakened economic conditions, and I look forward to keeping you a price of our ongoing progress.
With that. We would be happy to take your questions and add any additional color as requested. Operator, please open up the call.
We will now begin the question-and-answer session.
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Our first question will come from Gary tenor with DA Davidson. Please go ahead, sir.
Good morning. I wanted to about the cost side of things as well as the N outlook on Slide ninein you percent TRA quarter monthly deposit trend a pretty significantly over the course of the quarter at forty-more basis points in June . Can you give us a?
A June thirtieth spot rate for posit cost to give us some sense of a jumping off point into three -q.
Sure Gary. As you know, during the second quarter the market rate has gone up substantially than what we expected. So, even though we have a targeting to lower our deposit beta to fund our loans, we had a deposit cost increase. So, as you can see, especially each month of the second quarter, we did increase quite a bit in terms of the spot rate that you asked.
We have a total interest varying deposit spt rate of 77 basis point and.
Total depo wise is a 48 basis point is our spot rate.
And just give you a little bit more color on our spot rate as of June thirtieth versus the market competition that we see now. As of yesterday, the rate that we are offering is even higher than the June thirtieth rate are reflecting those competition.
So as of yesterday, our SpA rate for the total deposit was oabout 56 basis points.
Now ex cept to your helppe, I appreciate it. And then just to put some context around the expectations for NIM expansion. I mean.
I guess the first question is what ptsince you have embedded in your, in your model, in terms of the expectation of less margin expansion than we saw in the second quarter? Yes we, because obviously the 75 basis point hike in June , you can get a full benefit of that. Presumably another 75 next, next week, that that will be impact quarters as well. So can you just talk about what's embedded, your rating assumptions, that kind of limit, the expansion maybe versus what we T expect?
Sure net interest margin expansion, as we said it will continue to expect, but not to the level that we have seen 15 bidits increase in the second quarterbut the reason why we still expect to increase in net interest margin is our variable rate loans. Obviously there will be most of those variable rate loans will be repriced, except small amount of SBA which will be quarterly withthat.
But there will be obviously a deposit side offsetting impact which we expect to increase. There is a little bit tendency of the lagging, the increase of those deposit rate as the market rate goes up.
So that's the main driver that we would expect to see less extent of a margin expansion. But given our as sensitive position, as the rate goes up, we will see the net interest margin to continue to be expanded.
Okay I palog been clear with my question. I guess, in terms of expectations that you've got, is it basically the thirward curve for the remainder of the year, just in terms of your expectations being fully loaded for the market rate expectations is? Is that fair?
Yes sorry maybe I was not clear earlier by responses. Yes, our projection for the interest rate: 75 basis point in jly, maybe 50 basis point in September and the remaining 25 bps each. That's a market consensus or Ford curve that the market expect. We have a same view on that rate increases and that is actually reflected in our net interest margin forecast.
okaygot perfect, I ident. If I can I apologize for going on in terms of the expense increase and the increase in the guide. I mean, was the expense side a surprise at all in terms of any one particular part of the upward pressure on expenses?
Call youyo guard.
Not necessarily as you- the competition on the salary and benefits that's a not only our Bank of industry-wise but also we have in the March.
There is a.
Merit increases. That's the annual merit increases. We about 7% merit increases. Obviously that merit increase does have a little higher merit increase than the previous rate increases to maintain the talented employees and the market condition. So that was not total surprise and going forward run ratewise I don't think there will be any continuation of the forur the increase as much as we saw in the second quarter. So we would expect to have salary benefit expenses will be preve the same level that we have seen in the second quarter. And just to note the increase on the salary benefit, the main reason comes from the again the merit increase. But also we have highirering increase. During the second quarter our FTE increase was a 54% and they were mainly from the front line generating those revenue. So even though nonininterest expenses will increase, we will see some a benefit increasing, including the revenue increases in the world.
Thank you.
Our next question will come from christal grady with kvw. Please go ahead, sir.
Hey good morning Kevin. Maybe a comment on the buyback. Your opportunistic in the quarter, but your comments also struck a little bit of a conservative tone on the economy. How should we think about the remainder of the buyback from here, given the growth outlook?
Well we will continue to monitor the market for good opportunities to purchase our shares and, as you know, we have approximately $45 million remaining under the existing plan. Even after that $35 million, we would still have strong capital levels, So I do not see any reason to stop repurchase activities under the existing plan in the third or fourth quarter.
Okay Thank you. And then, just on the balance sheet, your loan to deposit ratio. You, you keep pace with the deposit growth of quarter with loan growth. Is this about where you want to be, kind of mid- Ninety's, in terms of loan to deposit, and what that would the expectation be? Securities would continue to fund loer.
Yes midnine is the ballpark that we will plan to remain at.
Great Thank you.
Our next question.
Matthew Clark with Piper Sandler. Please go ahead.
Thank good morning.
First of all, infor me, just on some additional color on the TDR that migrated into nonaccrual. Can you give us a sense for the type of properties or businesses that are underlying?
This a relationship? What happened to the this borrower situation and how do you plan to resolve it?
Sure this is Peter. Yes, there was a migration from TDR to nonaccrual within our CRE retail bucket. This is really just an elongated workout with the customer. We feel the property is well secured. We really don't seem much loss from this. But because it is a longer workout situation we determined to go it to nonaccrual for this period.
ok and then?
It sounds like you've gone through a more proactive process of getting updated financials from your business borrowers.
To see if the withstand inflation and higher debt service cost. Is there some portion of your borrower base that you think?
May get. May get a little thin on debt service coverage and cause you to offer some rate concessions.
To make sure they make it through the cycle or not?
Know I think over the last couple of years we've actually made a lot of enhancements through our, through our credit administration process. You know we think we are better prepared to whether any type of possible recession at this point. Know there are a couple areas we are closely monitoring including, I would say that the retail sector as well as our's B a portfolio, we's B a are generally all veryiable rate loans or the payments will continue to go up and so we are keeping close I on that. We have regular asset quality meetings, more rigorous quality meetings with our credit department and our lenders. And, as a reminder, you know we went through a, a fairly robust de risking strategy last year that entailed all of our C focusing heavily on the hotel and the retail sector and in doing so, know we have implemented a lot of stress testing process, including portfolio wide. We do very rigorous regular stress testing and then, on an individual loan basis, we also stress test these loans- interest rate shocks, P nl, expense items and incomes aside. We do very rigous stress testing there as well. So for now we feel that we are very well positioned, I think, to Q we were still in a very fairly healthy economic environment but we are- know we feel very well prepared for any downside potential here.
Okay and can you remind us how a big the nonguaranteed fba portfolio is on the balance sheet?
okcan. M just waiting for the number here.
If $42 million.
Okay great, and then just shifting gears to the loan pipeline coming out a second quarter. How does that compare to the end of one Q? Have you started to see any projects get delayed because of higher prices, or or has there been some portion of the pipeline dry up because of higher rates? Just trying to get a sense for the fluid fluidity of that pipeline.
The let let me cover that actually loan pipeline is pretty different from CRE sector, from the commercial sector, and let me first cover CRE.
We expect demand for CRE loans will soften in the second half of the year because of the higher rates would impact demand in the refinance market and.
Third quarter has traditionally been one of the strongest quarters of the year for Bank of hope. But our current CI pipeline is meaningfully lower than what we had in the second quarter. So given the expectation in the market and our current pipeline, we are not really anticipating a meaningful growth in our C portfolio. Rather we expect that to remain relatively flat for the balance of the year. On the other hand, CNI side, we have not seen any significant impact in the demand for C loans as a result of recent hikes and going into the third quarter we have a very strong pipeline of commercial loans and many of them are in the latter stages. So we are not really expecting any meaningful impact to our C volumes in the third quarter, even with another interest rate high in a very near future. On the other hand, the fourth quarter traditionally has been seasonally slower in terms of commercial lending, So we may have less robust loan volumes that year end. But as far as the third quarter is concerned, we feel pretty strong about C loan demand as well as expected production of commercial loans.
ok Thank you.
Again if you have a question, please press star, then one.
Our next question will come from Tim coffee for janny. Please go ahead, sir.
Great Thank you more and everybody, and thank you for other questions. Alex and I just want to go back to the expense questions. Like can fully appreciate the guide here. Does the guide include future hirings or is it just kind of the current employee base right now?
It does take into the consideration of the future hirings as well. But just for caveat, we will continue to grow. But the exact the hiring number is yet to be decided. But it does capture our best expected hiring. As of now it might change a little bit.
Okay and then how? How does the future hiring Fes relate to the second quarter? Do you mean you anticipate growing 50 Fes's quarter?
I don't think you it will. Again, it will depends on our strategy and the pecially the growth will be depends on our revenue generation. So it wasn't like a 54 F increase in the second quarter was a little bit higher than historical trend. So I think it might be lower than 54 F increase in next quarter or so. Okay, and there's one more question on the ftts, the ones that you hired in the second quarter that you're looking to higher earlier this year. Is there a specific category? Is it mortgage? Is sw and I.
Not not.
No I'm not thinking it's a specific to one sector, but it's a more overall lending side and we had actually increased our FTE for the back office function in the past. So I think it is again cdg and other lending related business. I think that's the main driver for the increase of that key.
Okay okay, that' that's too powerful, Thank you, and then ide a question on SBA premiums and what you're seeing in the marketplace.
yessba premium was a pretty high last time on. As the interest rate goes up we see is coming down quite a bit. So as a second quarter we see it's a lower level like a four point five to 6% level. However, as a rate goes up and as a reminder, SBA loans of reprice on a quarterly basis So there's a view that current four pointfive to 0% range may be a bottom. So there is a expectation that it will go up in a third quarter or so. five do not have that exact expectation.
Okay okay. Is there a level at which you consider port following the SBA loans again, because I knew you've done that in years past.
Yes we did, but we resumed to selling it and we believe in order.
Like a lower premium will be one of the factor that will consider to portfolio versus continue to sell and also the total production for the FDA. We expect it will be slowed but we still have some portfolio if we choose to continue to sell. So as of today, we do not expect to a portfolio it in a near term, but again, if it depends on the premium and the secondary market demand and so forth.
Right okay well, those are my questions. I appreciate the opportunity. Thank you.
Thank you.
Again if you have a question, Please P Star then one.
This will conclude our question-and-answer session.
I would like to turn the conference back over to management for any closing remarks.
Okay once again, Thank you all for joining us today. We hope everyone stays safe and healthy and we look forward to speaking with you again next quarter.
Thank everyone.
The conference has now conclude.
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