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spk_0: the day and welcome sandy springs bank core earnings conference call not care for the fourth quarter of twenty twenty a participant be and listen only mode you need assistance please ignore special is pressing the starkey followed by zero after a presentation they'll be opportunity as questions please note that this event is being recorded not like the time the conference over the mr dean of writer president and ceo please go ahead
spk_1: thank you and good afternoon everyone appreciate you joining us were a conference call to discuss any spring bankers performance for the fourth quarter of twenty twenty today will also bring up to date on our response to an impact from the coven eighteen pandemic this a dance rider and i'm joined here by my colleagues film and to a chief financial officer and air in casual general counsel for sandy springs bank or today's cause open to all investors analysts and the media there will be a live webcast of today's call and a replay will be available on our website later today but before we get started covering highlights from the quarter and taking your question and will give the customary safe harbor statement
spk_2: thank you dan good afternoon everyone sandy spring bancorp will make forward looking statements from the web webcast that are subject to risks and uncertainties it forward looking statements include statements of gold intentions earnings and other expectations estimate the risks to future costs and benefits
spk_1: assessment of expected credit losses the settlement of market risk and statements of the ability to achieve financial and other goals it forward looking statements are subject to significant uncertainties because they are based upon are affected by management's estimates and projections a future interest rates market behavior other economic conditions future lies and regular
spk_2: asians in a variety of other matters including the impact of the coven eighteen pandemic which by their very nature are subject to significant uncertainties because of these uncertainties family to bring bankrupt actual future results may differ materially from those indicated in addition the company's past result of operations do not necessarily indicate it's future result
spk_1: the here and welcome everyone and happy new year to everyone on the line with certainly hope that the you're carrying well and remain healthy and during the season the time i'm pleased to be here today to talk to our fourth quarter performance and our annual results or whether in the global pandemic with the challenge for everyone and twenty twenty our company did so well completing the integration of of your bank and rember pendleton jackson as well as helping our client through this unprecedented crisis we demonstrated great resilience and it shows in the record quarter we know this morning we built on our momentum from the third quarter and we finish the year strong today i will review the financials and and are ongoing response to the covered nineteen pandemic and are recap some of the company highlights from the year later in the call phil and i will also walk you through the supplemental materials we as you this morning and provide more color on our credit quality a provision expand and allowance as you read in the press release today was imported nekkid record net income of fifty seven fifty six point seven million or a dollar nineteen per diluted common shared with the fourth quarter of twenty twenty the current quarters result comparison then income of twenty eight and a half million or eighty cents per diluted common shared with the fourth quarter of twenty nineteen the and then an income of forty four point six million or ninety four cents per diluted comes year for the third quarter of twenty twenty are operating earning continue to improve reporting forty eight point two million or dollar two cents per commons year in the fourth quarter compared to thirty point four million or eighty five cents per diluted come and share in the fourth quarter twenty nineteen and forty five point eight million or ninety seven cents per diluted common shared with the third quarter a twenty twenty these numbers exclude the impact of the provision for credit losses effects of the paycheck protection program as well as them and a expenses the provision for credit losses this quarter was a credit aboard a half million compared to a charger seven million and the link quarter this change is primarily the result of a change in the most recent economic forecasts specifically the projections for business bankruptcy decreased to the part due to the positive impact of governmental really programs for individual and
spk_3: small businesses
spk_1: google cover this and more detail in my view the supplemental materials to laugh it's grew by forty eight percent to twelve point eight billion compared to a point six billion in the fourth quarter of twenty nineteen this growth was primarily driven by the riverbank acquisition and are ppp participation during the past year loans and deposits grew by fifty five and fifty six percent respectively and we originated one point one billion a commercial business when through the ppp program total oh that year and were ten point four billion compared to six point seven billion at the end of twenty nineteen and excluding ppp lungs total loans grew by thirty nine percent to nine point three billion in december thirty first twenty twenty compared to the prior year quarter as previously stated the acquisition of revered drove the majority increased in loans commercial and group fifty two percent or two point six billion excluding ppp and consumer low growth during the year was eleven percent while loans grew modestly compared to the third quarter of twenty twenty total commercial loans expanded by two percent on elite quarterback you commercial production for the fourth quarter was very strong and over five hundred million in and in new originations of eight percent compared to the pre pandemic production in the fourth quarter of twenty nineteen over the past year deposit growth was fifty six percent and not interest bearing or that experience growth and seventy six percent and interest bearing deposits group forty seven percent this growth again primarily driven by the revere acquisition and to a lesser extent the ppp program
spk_4: noninterest six a income for the current quarter increased by fifty eight percent were thirteen million compared to the prior year quarter as a result of a two hundred and forty eight percent increase in income from mortgage banking activity and growth of twenty eight percent in wealth management income
spk_1: the growth of these two categories more than compensated for the decline service fee income compared to the per your order on the mortgage fraud historically low lending rates drove mortgage origination activity and an increase in mortgage banking income of ten point three million during the current quarter compared to the prior year core of note mortgage originations for the years said accompany record and exceeded two million dollars within our mortgage production fifty seven percent represent refinance activity thirty three percent were purchased money transaction and the remaining ten percent were construction permits and agent which by their very nature or new home acquisitions are we expect mortgage banking and come to remain a significant part of our fee based revenue and twenty twenty one we don't expect mortgage production to remain at the current levels as a result of the first quarter acquisition of rpj wealth management income increased one point eight million compared to the same quarter of the previous year we concluded the year with yet another company milestone the wealth assets under management in excess of five point two billion on the margins i never enters margin was three point three eight for the fourth quarter twenty twenty compared to the same three point three eight up for that thing quarter of twenty nineteen and three point two four for the third quarter of twenty twenty excluding the impact of the amortization of fair value marked derived from acquisitions the current ordered managers margin would have been three point three one percent compared to three thirty four with the fourth quarter twenty nineteen and three eighty for the third quarter of twenty twenty we're really pleased to see the current quarter expansion and broader stability in the core margin and were actively managing down the costs the funds by allowing higher price time deposits to run off diligently pricing our local in market transaction products and funding our remaining need with the most cost effective hotel sources available the their actions every day opened in our cost of interest bearing liability being reduced from seventy seven basis points to fifty three betas point and and the cost of interest bearing deposits from fifty seven basis point that thirty nine based point all all on a late quarter basis we also chose to eliminate the negative carry related to maintaining an excess cash position by repaying remaining two hundred fifty four million of ppl up on fun non interest expense for the fourth quarter twenty twenty increase fifteen point six million or thirty four percent compared to the prior year quarter primarily as a result of the operational costs revere and rpg acquisition increase compensation expense related to staffing increases and incentive compensation in addition to an increase in at the i see insurance and the amortization of intangible assets other expense and in the current quarter contain one notable item related to the establishment of a contingent liability of one point six million dollars to reserve against on twenty commitments as required by the company that option of cecil the non gap efficiency ratio was forty five o nine for the current quarter compared to fifty one ninety eight for the fourth quarter of two thousand and nineteen and forty five twenty seven for the third quarter of twenty twenty decrease in the efficiency ratio which reflects the increasing efficiency on the fourth quarter of last year to the current year was result of the forty seven point two million dollar growth and non get revenue outpacing the fifteen point four million dollar growth and not get non interest expense when we look ahead we continue to manage his expense to revenue metric to a targeted range of forty eight to fifty percent and it to twenty twenty one efficiency levels to settle into this range we expect mortgage revenues to mentally declined from current levels and operating expenses to be comparable to current levels absent the notable others
spk_5: the item i mention amount moment ago
spk_1: will also look to invest in the people in technology needed for future growth and success while identifying opportunities or greater efficiency on the credit side not performing was the federal loans increased one hundred eleven basis points compared to one hundred eleven basis points compared to fifty two bases pointed december thirty first twenty nineteen and seventy two bases point to the link third quarter nonperforming loans total one hundred and fifteen and a half million compared to forty one point three million and december thirty first twenty nineteen and seventy four point seven million as september thirty twenty twenty the year over year growth and non performers were driven by three major components loans plate and on across that it acquired revered nonaccrual loans and loans previously accounted for as purchase credit impair loans and have been designated non accrual loans as a result of the companies adoption of the accounting standard for expected credit losses at the beginning
spk_6: the of the year
spk_1: learn to play doh nonaccrual during the current quarter amounted to fifty four point seven million compared to five point four million for the prior year quarter and nine hundred thousand for the third quarter twenty twenty these loans really primarily to a limited number of large barring relationships with in the hospitality sector these large relationships or collateral dependent and require no individual reserve due to sufficient values of the underlying collateral the company recorded lecture charge off of a half a million for the fourth quarter twenty twenty compared to that charges of a half a million two hundred thousand for the fourth quarter of twenty nineteen and the third quarter of twenty twenty respectively the allowance for credit losses was one hundred and sixty five point four million or one point five nine percent of outstanding loans and a hundred forty three percent of nonperforming loans compared to one hundred and seventy point three million or one or one point six five percent of outstanding loans and two hundred and twenty eight percent of nonperforming loans
spk_7: i'm at the link or
spk_1: edible common equity increase two billion dollars or a point four six percent of tangible at that the december thirty first compared to seven hundred and eighty two point three billion or nine point four six percent at december thirty one twenty nineteen as a result of the equity issuance in there are the or acquisition the year over year change and tangible common equity also reflects the the effect of the purchase repurchase to the million of common stock and the increase in intangible assets and goodwill associated with the to acquisitions we completed and twenty twenty excluding the impact of ppp from tangible at that at december thirty first the tangible common equity ratio would be nine and or percent and december thirty twenty twenty the company had total respect capital ratio thirteen point nine three percent a common equity tier one if they've capital ratio of ten point five eight percent a tier one risk based capital ratio again ten point by the percent in a tier one leverage ratio of the point nine two percent at this point i'd like to turn to the supplemental information we issue of this morning on fly to they can see that loans with payment accommodations or some group some folks refer to those as deferrals as of december thirty first total two hundred and seventeen million resulting in two percent of our loan portfolio receiving accommodations on july three we have detailed specific industry information which we've updated and share the past three quarters of danny balances for each segment and the london payment accommodations or as of december thirty first and i'll fly for we've included an update on our ppp effort as of january eleventh we began accepting forgiveness applications this quarter and seventy percent of of loans over one hundred and fifty thousand dollars have been invited to apply for forgiveness and all the application that have been submitted to the as be a have received one hundred
spk_8: percent forget
spk_1: as we noted in our press release today we temporarily all the invitation to our forgiveness portal ending up a to the ppp program will also took a pause in order to focus our efforts on preparing to accept applications for person second drama one of the the program resumed we expect to invite the remainder of our ppp borrowers including those with learned to one hundred and fifty thousand or less to submit their forgiveness and application within the next few weeks and on the origination say we began accepting applications for the latest round of ppp land both first and second drop alone on tuesday afternoon and now turn it over to fill to talk to see so and our capital position thank you dan eye good afternoon everyone pick up on my number five and a supplemental back where we have a waterfall representation of our lounge build a first for all of the year twenty twenty which is broken down into components that can fit the reflect pay the bill during the year
spk_9: you can see the change over the course of the whole year with primarily driven by to significant component to change in economic forecasts and the impact of i revere acquisition on the required reserve how and although not illustrated here you may recall that the majority of that that revered are both of those impacts with incurred during the second quarter of of the year on a polish white guy six we have similar presentation of the fourth quarter
spk_4: on this chart we can pay the predominant factor driving reserve early in the provision credit africa for this particular quarter it the expected year over year change in the bankruptcies which is one of our key economic factors this change in the expected the the shades and expectation which is
spk_9: ban already mentioned earlier with impact primarily by the anticipation of the additional stimulant
spk_10: we now have now been announced that the time the forecast with develop
spk_9: and which the airport with more than october shadow are other changes in the in our qualitative factors and are other economic factors as well including the projected
spk_10: unemployment rate
spk_9: how all of our key my macro economic variables are outlined on the next line number seven or he the methodology continues to you the movie baseline for gas which for the fourth quarter was the version released by moving on december twenty first pay like for kept integrate the effect of gerber nineteen and included be projected levels of unemployment for our local market that the in it's forecast peaks at six point six percent after during year and then ultimately recovered to a level four point seven percent by the end of two thousand or twenty twenty two
spk_1: finally higher than that do with projected in the prior to record of forecasts
spk_9: why in the crumbling are reasonable and portable forecast period we continue to use that to your time arriving in the current quarter to reflect the let you know that there's lots of uncertainty in a long term out what i hear at the time if know what you are approach taken throughout the year we can pin you did not take into consideration any potential mitigating factors based on good could be perceived as a positive outcome or impact of government program much of ppp acceptable we continue to be a very comfortable with taking the conservative stance why they provided some additional granularity related to our reserved from a portfolio of you where you can be the most significant amount of reserved by dollar amount and attributed to the commercial been portfolio where the tone wizard who were six point eight million dollars or two point zero percent of outstanding but did declined significantly based on the cruise we mentioned change in the projection of didn't bankruptcies we should note that that fewer people when they're thick percent of reserve might be here include ppp my own in the ballon although there are no longer required on the loans
spk_11: an illustrated in a footnote at the bottom of the slide wouldn't guilty about because pp exclude ppp my outstanding
spk_9: return on our commercial business segment would be three point eight seven percent and our total reserve would be one point seven seven percent of total loans finally on my nine and a trend of our current capital ratio with a brief explanation regarding the treatment of certain item and their impact on the result ratios including no comment that i just the tangible equity to tangible at that ratio to like the impact of tpp loans on occurred measure of and mentioned earlier in his comments we continue to be a copy you know about our capital position that all of our metric a their health daddy or improves slightly as a result of the strength of ironic during the quarter we also recently update or capital stress that's where we have constructed a baseline and to be are forecast nuria utilizing if a movie baseline poor cat incorporated people calculation and accommodate the the economy and severe case having done so we continue to be confident that we have the capital of the carried through the remaining portion of the ongoing situation
spk_10: and that they're not turn it back over to you
spk_1: they fill before we before you have to take your question the like cover the weather updates from the relief and highlights from the year as we also shared in the press release we intend to close three branches in the second quarter of twenty twenty one of these branches include to and northern virginia and one am a camry county maryland fine accounts will be consolidated into nearby locations and these these these clothes as a result of our continued analysis a ranch utilization client needs and the proximity of are many locations
spk_4: as it relates to are ongoing respond to call the nineteen the health and safety of our people and communities remain or priority and the majority of our workforce continues to work remotely lions are served branches primarily through the drive through facility than we do have limited lobby access
spk_1: and over the summer and spring bank foundation donated to hundred thousand dollars to support covered nineteen response their preferred a dozen local hospital serving the greater washington region are proud of all that we've done and continue to do to support our people and communities throughout these uncertain times we hope that will be a little welcome back our people into our offices at some point and twenty twenty one leopard out of remain in phase one of our return to work plan and as we know you will continue to evaluate this ongoing situation
spk_12: and we'll adapt as needed and able
spk_1: despite the many obstacles caused by the pandemic also want to know that we continue to grow the company and welcome new people to our team our efforts to recruit higher and onboard know employees and remained steady hiring more than one hundred and fifty new employees and we transition to a remote environment in march i had an opportunity to meet many of our new colleagues through virtual orientations were all eager to meet everyone face to face and personally welcome them to our company and thanks to our remarkable oil company also are numerous recognition throughout the year including be named a top workplace by both the washington post and baltimore sun earning a spot on american bankers best bank to work for list for the first time a ranking the top bank in maryland and one of america's best in they bank by forbes being certified living as a great place to work by the great place to work institute and ranking the number one among mid sized companies for employ a volunteer them in washington business journal where specially ordered by the workplace recognitions because they are direct result of are employed be back of our company and our culture and clothing i cannot understate the dedication and resilient her employees have shown that year while this remote and totally different environment is far from our the ideal our team continues to find new and creative ways to serve our client and continue to move and spring bank forward to the all of our employees big thank you and operator that concludes our general comments for today will now move to questions
spk_0: i begin to question answer session that's because question my press for them one on your touchdown phone hundred years in a speakerphone please pick up your handset before pressing the keys the draw your question please star than two at this time or part momentarily to assemble roster a question from casey witness of piper sampler please go ahead
spk_13: they get know
spk_14: i k thing i can be
spk_15: hey so he appreciate our the clarity on the other extent florence i guess i'd ask the same question i i look at fees your anything unusual gone on in the other the other feline this quarter that we should think about ours is a pretty good run right
spk_11: yeah okay to dispel and
spk_9: there are a couple you know couple areas where we we have long been heightened activity relative to extension or commitment fees that prepayment be the like but the biggest thing it within a quarter
spk_10: why we are pretty significant amount of swap fee income of about nine hundred thousand dollars
spk_9: you know we think will continue to have some activity in that area but i don't know that we would continue to work at that particular line nine about that level quarter in and quarter out but otherwise i think you know by and large that be levels the other key level fear ram probably a probably in a pretty reasonable her pretty reasonable play in iraq upright think that walk the income and maybe cut it in half or whatever and think about it that way on a quarter by quarter basis
spk_10: then on expense i did stand mansion after the one notable item
spk_9: related to you know the the kind of the continued liability for the on funny commandments which by the way we will look at every quarter and make determinations or to whether you know that reserve might need to move in in one direction or the other i think gum you know from a run rate standpoint an overall expense number and that fifty million dollar range a quarter is something that would probably a good fighter a good way to look at it going forward
spk_15: that makes sense and and i'm assuming that that run rate sort of factors one any sort of cost savings you might have from for real
spk_9: the branch caution that you already announced he added i think i think of the relate everything that that to be recognized are absorbed relative or be your transaction i think we're pretty much here they are at this point from a got they've integration standpoint as well as by the way anymore merger related expenses i think we've pretty well
spk_10: shut that down by the end of the year you know and and so i think that that would be that that would be accurate it on the court they died related to the branch closures they're not expected to happen until a little bit later in the year so in the current
spk_9: for for twenty one that saving my might be i got out three four hundred thousand dollars more on a run rate betas it's probably be a million two million to four year
spk_16: and said thanks
spk_15: ah i guess it it and appreciate offering a commoner are your commentary about the mortgage outlet but maybe i'm just some some help to have what happened this quarter keys give us a little more detail on the underlying trend this quarter in order to split between purchasing rifai and your how to gain on sale margin fair out certainly august held up in better lol a this quarter selling just and help layer thing is clear
spk_17: yeah case here for
spk_1: right a little bit earlier my comments in terms of the the split between
spk_18: production when so
spk_19: and window back out here again
spk_1: and in terms of though purchase money activity versus refund
spk_9: yeah katie i have it here on a production basis that sixty percent of all production and a quarter with reply probably other twenty my probably got three other thirty percent of it was with purchase and then the remainder was the construction type of lending that you know we do have that production about eighty four percent of it was some with then label to be sold or was sold during the year during the quarter and aren't overall net gain on that sale by margin was about two hundred seventy eight debate this point
spk_20: which is
spk_9: you know probably about sixty to seventy betas point greater than it was in the prior quarter although that big that i meant he was comparable and a third quarter there was just more of it here in the bible fifty million dollars total production in the fourth quarter as opposed to the third
spk_11: and i think that the different from probably how we're viewed it when we talked about this in the third quarter with that we did we didn't have the expectation that that level of business with going to be maintained much less grow into the pool reporter if nothing else just by virtue of historic cycles and thing too long that line
spk_21: but obviously it did so
spk_9: will probably hear thing as i think we have alluded to in the earlier comment and we don't expect that to occur this quarter as well
spk_22: and know
spk_9: i would
spk_23: i think we don't believe that that be the case they that it should drop down from from what it was in the last two quarters but i think it up
spk_24: time will tell
spk_15: understood thanks i'll just as off i just a quick one alla on the hotel book and then migration is lacrosse maybe just some color in terms of era deals with a non accrual previously in a different period are they
spk_25: what the period restart still how did
spk_1: so that like yeah let let me let me hit that might be helpful for obviously others on the call as well because the lion's share of are different today our ours within that hotel book hundred and thirty two million of a two hundred million in the come over all commercial portfolio is is is from that
spk_26: is from the hotel book that the meat know you break up a couple things down so total hotel portfolio with a four hundred and sixteen million hundred and thirty two were still in a double hundred and eighty million however that had a deferral have resume normal payments and one hundred and four main of their portfolio never requested or was granted it for
spk_27: or or the assets that moved into nonperforming
spk_1: our or certainly were part of a deferral but in our assessment it through our portfolio review process was really is settled into to relationships and the characteristics of those cause us to question the ability to perform long term namely the financial wherewithal of the owners and sponsors to to support their properties through this pandemic period so what did it at the same time under stress liquidation scenario the result in any meaningful reserves being assigned to those credit we we conducted the same type of portfolio review evaluation of the entire book and those that are continuing with ended up deferral period at this point we feel like there is and enough wherewithal to to to work through the not only that a for a period but up a but beyond i'm of give you love him more color the maybe you're asking but i think it's important because that is the bulk of of our deferral of the total portfolio we've got a pretty diverse mix of national flags as well as diversity in the locations throughout our market footprint and there's no like some market concentration there
spk_28: largest percentage of national brands is mary at twenty one percent followed by hilton that twenty percent and then it it breaks down further from there
spk_1: in about eighty one percent of the book are would be considered limited service properties and those are the ones that a fair in a much better on a national level given lower overhead and lower occupancy required to break even and that's that's the lion's share of of what we have in our hotel portfolio only seventeen percent of the of the portfolio be considered
spk_29: both dervis
spk_30: hotels and seventy two percent would be considered the the midscale our economy property so all that aims that a segment of you know kind of the hotel industry that is is currently having a better result in terms of break even and and you know better opportunity to emerge from that the crisis
spk_1: you know with with less unscathed so book will continue to evaluate it fortunately we feel like we're in a pretty good position with about fifty nine percent
spk_15: weighted average loan to value on their portfolio as a whole and so while we have we're obviously likely have more credits you know from from the overall book that a struggle through the pandemic season
spk_0: we feel like we're in a good in a good position to adequately reserved and a good position to have successfully work through it
spk_31: and the second thanks so much for the car on your ethnic russians
spk_32: q the next question from catherine meal on kbw please go ahead
spk_33: thanks good afternoon
spk_15: that afternoon i kept them
spk_10: i went a tiebreaker tackle that the margin and and your outlook for the hear it but flight you had damage i get moving to of one hour you're thinking about an aryan and him different rates and on where you're seeing nine yards the top writing their i can also i'm just a balance sheet restructuring looks like he had a decline for league and and borrowing it we should expect any kind of further and balance sheet remakes every mystery twenty one
spk_9: yeah katherine good phil and
spk_10: time with the you know kind of broad statement about level of aren't into the year
spk_9: i'm anticipating and it's gonna stay fairly steady to the kind of levels we finish the year where they met hi three thirty or three three forty huge range you know what to report and basis
spk_10: know we're starting to get away from especially at that night a lot of the yum
spk_9: the fair value impact the third eye umar mark back to the to the yield the creative part of the yields i think that that's starting to clear it's way out of the equation and yet we go out the you know the to live affect the ppp lending for the existing ppp loans that are there i'm in probably now have some either replacing it or in addition to at related to second round ppp landing which be no we don't know what that gonna look like per se in terms of volume he had at this point but but nevertheless the you know putting those things aside again i think that because of the things we've already done on the liability time which for about a year to second and our ability to continue to do i think push that down a little bit further no i i i think that that that kind of steady app stable margin position didn't do a lot throughout all of them all of the year it on the i'm on the cost side we we have continued to let the hype right cds continue to run off i think that will act
spk_0: you know contribute to what's going on here and therefore the the make the liability side should change accordingly probably into you know similar speed although we had a pretty good block of
spk_9: intermediate type of special td that are certainly have worked their way off the balance sheet or gar continuing to do so
spk_10: we don't have anything that were pricing in the market today cds or otherwise exceeding thirty basis point though and you think about where rates were eighteen months ago or whatever more and what we would effectively replay the mat that's why i feel that that can continue to happen
spk_9: you know we we borrowed do it with dungeon borrowing from time to time it's necessary especially on a very short term basis but i often think that we found that there are other ways within the the of the page three their brokered money markets or brokered the deal with you used in the path to be and let the
spk_11: expand to work or just as you know more expensive than doing anything you know through either headphones or are online bank type advances and so i think will just continue at than that and it's gonna to look for the best
spk_9: that price the advantage to augmenting with wholesale whatever we're doing in the in a car markets in and finally any get out about the yield and the at side on a commercial moon side just the from a production standpoint here in the last quarter
spk_10: the last quarter yields the interact a margin were probably only fifteen or twenty basis points off are rolling to i'm on average working within the money you know low for to for fifteen or twenty range
spk_9: and yet the metal in an adult certainly have the overall johan a portfolio to continue to come down but again
spk_33: i think not not not any more so than to you know to the degree like i mentioned when we started the
spk_1: no to the point where will be able to keep the margin fairly him even in faith in the faith of that hey i have more colorful thank you and anyone follow up at a time share buyback you've gotta authorization for when do you think you'll be i'm ready to be more accurate and back
spk_15: yeah katherine dad you know we we we always want to have the authorization in place which is the essence of the timing there so there's no specific time frame
spk_33: that we would engage in or in in but share buybacks probably more on times when we think there's opportunity based on weakness and shares
spk_1: he'll get like me given an even a tacky feel like you get authorization just more opportunist got off the stock price pulled back from current level of darfur a strategy to try to get the by that complete by year on a path that of yeah no i think it's probably more of an opportunistic approach
spk_15: nick
spk_34: on what that me look like and the fear
spk_1: i'm sorry we like to there for a second catherine do mine would be known as yeah thousand technique and i'm like us because we're talking like capital and couldn't in terms that and then i haven't we've got riviere quotes are you thinking about your act your activity and in acquisition
spk_0: in the near term yeah no get good question it we have have some issue with the line gotten out and in and little bits of thanks for repeating repeating it
spk_35: you know it as it relates to our longer term growth strategy emanate a will continue to be a part of what we we do both bank and and and nonbank the based businesses
spk_36: but there's be at this point there's nothing to to report at that time and unlikely that through be anything and twenty twenty one
spk_37: great much you
spk_1: i do or next question from the contrary to research the guy it a happy new year i've been usually the i wonder if you go back to to the hotel burke on for a second on on on the labour this too much but wondering if you get you give this any any color on sort of these to your credits our moods and not a cruel and out like had loads and occupancy have trended it because it's in and he improved men are declaration there yeah israel i don't have it did detail to share this with that the
spk_38: credit relationships what i what i will say is you know that i guess the unique aspects that drove them into the nonperforming category as many many of our hotel relationships even those that have moved into a some form of accommodation have been on the heels of the sponsors or the guarantors
spk_1: stepping up and providing some type of enhancement to the credit
spk_37: you know through through other resources that they may they may have and this particular case these these these situations were unique relative the other in terms of the ability of of
spk_1: sponsors to kind of step in and support during a time when when occupancy was not sufficient to to break even and so you know and in of in live at different in other aspects of their the remaining portfolio were seeing were you know most of our limited service hotels are
spk_39: you know that that breakeven can be achieved in the a thirty to fifty percent occupancy range at the at the land lung devalued they were worse than me and and most dirt or a close to achieving at if not having achieved that so
spk_1: yeah really
spk_37: you're not not that we're not going to continue to to manage that book in a test each relationship with but these couple of relationships you know had characteristics that were clearly weaker not necessarily based upon the brand or the or the sub market but the individual operator itself okay get upset by alcohol ah maybe moving unfair to wealth management arm and other good good he quarter this a good run rate to look after twenty twenty one absent i'm in a big market moves
spk_1: yeah turns around revenue from their wealth management space spatio with think so those are those are all three of our legs the that store which is to our eyes as well as the trust division of the banker gonna contributing equally to the overall assets under management pretty close and they're all while operating very well so would expect that that that's a good run rate
spk_40: okay very good ah me one more for me ah with regard to the the branch closures are wonder if you guess you get maybe a little more our out the decision process on specific branches and whether or not you know kobe or the or the shut down and
spk_1: you know change the thinking on these branches and and gonna but that in context of the rest to sandy springs branch our and yet stated that a good good question we have an ongoing and a branch rationalization or optimization kind of effort ongoing and i which they and in these cases we've
spk_37: also like a lot of banks have learned a good a bit about client behavior through through twenty twenty and the pandemic season
spk_41: but that clearly and our case mary's up with our evaluation of when least as come do and when those opportunities you know based on clay behavior and proximity to other locations would allow us to to downsize and that's just what those were the kind of the two drivers here and and these branch
spk_0: and that will will continue to have those evaluations as we go forward and it may not always result in
spk_42: clap number of branches but it you know will open up the opportunity for us to put resources and maybe parts of our market where we don't have a location and so
spk_1: it's not just about
spk_43: reducing branches but making sure we're in the right places
spk_42: okay thank you that's it for me thank you i do next question mark hughes lafayette investments please go ahead good afternoon i hope you are well x mark good afternoon of i actually term question but i think it's just it was covered pretty well by couple the previous people with
spk_43: it might go a long term question that you might think it's kind of a tough question by think it's fair question and that is i was recently looking at it two thousand and two and a report for you or
spk_42: the reason i pick that year was at full first year you that your stock traded at the price it's currently trading at today
spk_43: and i look at what happened is badly mutilated number of acquisitions the banks about five or six times the size it was back when you've added some be based businesses
spk_42: geographic expansion seems sensible you haven't gone to noted branches in a while we're at it see yourself in short it seems like you've executed the small bay for bank playbook pretty well
spk_43: and yet at the end of the day we said your shareholders and you all are all large shareholders in the same place we were way back then
spk_42: so my question to you all is it i realize you're you're not your share prices similar to many others smaller bags and this is not to put anything on you so my question is a shareholder is what changes going forward with would make
spk_1: candy spring and small bags of general more attractive would lead to better returns going forward and what we've seen for almost two decades now and i realized part of it it takes traded at higher valuations back then versus now and baby were reiterated i used just where we're always gonna be but
spk_39: can you just get some big picture long term thoughts around
spk_44: which changes the equation in terms of how shareholders get rewarded wipe it be addressed community might look at bags and a different light that they've been looking at for quite some time now
spk_1: that is it at a good question mark this is dan and and perhaps the may have some thought to offer and in addition to to mine i think probably more than ever given the competitive nature of banking and the
spk_45: you know and and client behavior in terms of what important to them in a bank your relationship
spk_1: scale and operating leverage are going to be of critical importance going forward you probably remember for us kind of a inflection point was probably the third quarter of two thousand and sixteen when we we finally moved away from kind of always being in that below sixty percent efficiency ratio on an ongoing basis
spk_39: to a beginning a process of having that
spk_46: whoops doubt and dumb
spk_10: i think that and it it's a combination of of having having scale which also you know provides for a little better operating leverage and and and any ability to invest in future technologies
spk_4: that would have us compete favorably with you know with some of the larger institutions but the the other multiple seem to be what the multiples are and so in our long term focus
spk_9: which will you know like i said earlier will likely include it concluded additional growth is not for growth sake what the ability to drive you know earnings are any ps bases double digit over the course of time which know
spk_47: which we think is gonna be the driver for shareholder value
spk_10: at that that's going to be important for them to play out for us over the course of time villa give anything
spk_21: no i don't know that have a home early a whole lot of anything to him
spk_43: det to add to it other than it is recognized i think it's mark you did and you know that is a young and as a really tough question to try to try to try to respond to
spk_42: for a lot of reasons and i mean i think we try to focus predominately on where we sit within the industry wherein and try to evaluate just how about were performing against those that we compete with to or or periods of are on a relative basis but would make that hard is your question about how you don't want an absolute basis you look over a period of time and a absolute numbers her out and maybe for the industry at large have not changed dramatically and i don't i had a and i had to address that aspect of it
spk_43: because i get that thin the
spk_42: in the realm of how the broader market killed to use banking in general
spk_43: and and i just don't know how to have addressed that aspect of it well it just to follow up and is there anything completely out of the box that you're thinking about maybe the that if it did the traditional small bag playbook
spk_1: of violating the lawyers code of never asking a question you don't know the answer do because i don't have the answer to this one at a our it is there's some direction you can go that maybe is non traditional that you know that you're thinking about or and these are aren't quite attached to in the middle of a pandemic i get that could where you're you're you're doing everything you can to maintain your current book it's it's good a shape as as you can so this may not be that time to be thinking outside the box but or the is there anything in the industry that people are thinking about in terms of non traditional businesses to get into or three businesses maybe that and be increased that that you aren't doing right now and marco our tell you that of what you know when we think about our focus i'm not going to answer your question directly because i think we're always were always evaluating way that which we can compliment
spk_39: know our business to serve our clients
spk_1: whether that be you know in in in traditional ways or or nontraditional the base ways you know our our we look at ourselves today sitting here in one of the best markets
spk_12: in the country and we've got a company that's got the scale of sophistication to move up market in in where we can handle a commercial enterprises whether it's and lending and treasury management and wealth management
spk_22: and that's really where we're putting our resources is too
spk_10: yeah do more of what we do are better than our competition now that we have greater scale in the ability to do that and down you know we we we we believe in i think you are people do em the that we were really one of a kind and this marketplace and we want to focus on taken advantage of that in creating in a building railing franchise value
spk_9: overtime but but it's it tier i guess your point around share price you know it's about driving earnings growth
spk_10: i'm an end up for us it's it's about you know growing organically and then adding adding in ways that it makes sense rushed him to do just that over time he more than i would add to it is
spk_43: and and not so much to they get the party your question about what we could do that would be unique or whatever but i think our
spk_42: our our look towards and you know our our strategic view toward having isn't much of a diversified stream of revenue and we can potentially have a part of that the answer to that with is to continue to strive for that to be in to have art of revenue to be diversified it they can and in in part of that would most likely ultimately come from something
spk_43: there i might be different or unique from what we've been on for you know one hundred and fifty years or whatever it might be so
spk_48: i think somewhere i live and that but i got couldn't point you to something specific that would you
spk_43: know that they would that would pop out that were dumb lead the way on that as much as just striving for having that revenue stream be as diverse as possible well the part of it it makes it tough for me is that i think you're doing things well
spk_10: you talked about your fish see ratio come out and remarkable what you've done there
spk_43: i don't ask the question because i think you're doing something wrong i ask because i think you're doing
spk_49: currently what is right
spk_0: and you know if it's
spk_50: beside myself is trying to think of what's going to change this when
spk_51: there aren't obvious areas that need improvement
spk_50: are we appreciate that because we feel the same way lot of times too so
spk_1: well thank you very much i wish you luck for the career thank more thank mark thank you that question from brody prosper stephen link please gus good afternoon everyone they broke every
spk_0: just on the follow up on the mortgage you the sixty forty reply that similar to your historic on that previously or was it more purchase heavier in the past yeah brewery we transitioned over the course of the last couple years from being more of a boutique shop they did a lot more construction permits percentage of overall production
spk_52: the and you know we're taking take advantage of kind of the revive waves that they came but probably not nearly as effective on the purchase transaction peace and so we would put a lot of effort and and resources in terms of originators that
spk_53: they've done just a tremendous job of driving driving the percentage of our production from i'm from purchased money up and other you're going to help us as you know as as the expectation of of preps you know rights movement in the opposite direction and and slowing down that mortgage production will still capture a good
spk_52: peace to that purchased money business
spk_22: with that so it it's we're we're we're definitely making inroads on on the purchase money percentage
spk_9: thank you again if you have a question please press star than one
spk_10: next question areas like bennington skattergoods please go ahead
spk_9: good afternoon got their here i got a couple questions just try to think about our average earning assets night shape up throughout the year and i guess first off start on that the ppp loans and i appreciate all the commentary you've given it turns out that the updates on on the shy than reopening that are the portal at this point in inviting customers to apply for forgiveness i guess it at that point there's a little less than one point one billion of those outstanding
spk_6: x what are your expectations for a what percentage of those will be forgiven and then just that the timing and how many quarters to that potentially i take it's kind of that the first part of my question
spk_52: the are good fell
spk_1: so i think that we've been running around at the flaming about eighty percent of the existing one point one billion in ppp outstanding were dumb would give would be given forgiveness and would probably now having put it back given the thing that day and mentioned earlier about you know the forgiveness poor to like that are and in some of the client behavior on trying to accomplish forgiveness thinking that that going to be and of this quarter in the early part of the second quarter so probably the month of you know february march april as opposed to as much of it in the first quarter here having our but already have more than halfway through the mud january and having very little activity and never guard so
spk_12: i think that the way we're evaluating the current book of ppp loans in the way with would leave the balance sheet
spk_54: that's that's helpful thank you and then i guess in terms of the recent and of reauthorization and and opening that up again for funding i guess are you seeing much demand there and and but had you potentially think about the size of of a new round of ppp entering analogy
spk_55: yeah
spk_1: you know eric it's it's tough to predict the amount of activity they'll give you a give you experience in less than forty eight hours and we open open the portal we've had over a thousand applications
spk_52: so there's clearly demand
spk_53: but the average average size of those requests heretofore has has been on the smaller side relative to the first wave and will we could likely get smaller is as additional applications come in but tough to tough to predict exactly what this second round is going to yield in terms of
spk_1: overall outstanding it took to talk to me at this point i mean clearly clearly clearly do not expected to you know come near what we did the first time but could it be happy that much the it it off but we we no no notice too early that's helpful i appreciate the early commentary there and then i guess switching to work away from that that that would certainly be a had to that the neck router and that balances for the you're thinking on the organic site near commentary you've got from on a comprise thinking about commercial lounge where the pipeline stance today and how you would think about our or organic growth in the commercial portfolio and twenty twenty one
spk_52: yeah good question you know with with the it is hoped to adequately articulate the the lived that the ppp process
spk_1: requires or of on on the team and that bill though that are in here helping clients his relationship managers and all way through through the system so it is really right now all hands on deck for the next few weeks as we work through this next round of origination so what will i say that because i think it's gonna it's going to dampen first quarter organic production just due to the tpp program
spk_39: but our outlook for the year is kind of mid single digit
spk_52: commercial growth as we as we think forward we make we may
spk_10: we may outperform there but that kind of the way we're we're thinking and that's really based upon the heavy lift of both originations in the forgiveness process on or ppp as well as just the economic demand
spk_9: that's helpful again and then i get it in terms of the pipeline have you seen any material change in the pipeline given the and
spk_10: just we had and and late fourth quarter wet vaccines coming online and awesome improvement and economic forecasts are still kind of steady as she goes acts yeah i would i would not say there's been a significant lived in pipelines and since vaccine mean we very encouraged with you know the half a billion dollars of commercial production in the fourth quarter
spk_52: four quarter normally very strong but when you consider that level during the pandemic i think it's it's as much an indication of
spk_56: the attractiveness of doing business with the andes bring bank from from borrowers that are you or with other organizations are particularly larger institutions and i thing despite me a slower economic environment i think will you know when our fair share of opportunities folks that want a real relationship with will
spk_0: the with a local player and but going into the first quarter of the pipeline's pry little softer which is typical
spk_1: season from a seasonal standpoint adamant last one for me it's kind of our housekeeping item just in terms of modeling probably or fellows twenty four percent dog a good rate to use for the effective tax rate looking into twenty twenty one
spk_0: yeah certainly apps and i'm a thing that the mr biden my to with them
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