Peoples Bancorp (US:PEBO)2020-04-21 21:29Financial Data and Key Metrics Changes - The company reported a loss of $0.04 per share for Q1 2020, significantly impacted by COVID-19 and related economic conditions [5][13] - Net charge-off rate was 7 basis points for the quarter, with total provision for credit losses amounting to $17 million, affecting diluted EPS by $0.65 [12][13] - Return on average assets was a negative 7 basis points, with a pre-tax pre-provision return on average assets of 1.5% [16] Business Line Data and Key Metrics Changes - Loan growth was 5% annualized compared to the linked quarter, primarily driven by construction, commercial, and residential real estate loans [20] - Commercial lending modifications totaled approximately $500 million, with consumer loan relief solutions also being offered [9][10] - Core deposit growth was 7% from the linked quarter, with a notable increase in non-interest-bearing deposits [35] Market Data and Key Metrics Changes - The company approved 2,432 PPP loans totaling $426 million, with expectations of continued demand once additional funding is available [7] - The company was selected by JobsOhio for a loan program aimed at aiding small businesses, providing a 90% guarantee on the first $25 million of increased exposure [8] Company Strategy and Development Direction - The company announced an acquisition of a premium finance company with approximately $100 million in assets, aimed at diversifying product offerings [4] - Management emphasized the importance of maintaining a diversified revenue stream, which includes insurance and fee-based businesses [27][47] - The company plans to continue supporting clients through loan modifications and relief programs during the pandemic [6][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the pandemic but expressed confidence in the stability of their loan portfolio due to diversified exposure [17][48] - The company anticipates a net interest margin between 3.3% and 3.45% for the latter part of 2020, with total non-interest expense projected between $33 million and $34 million per quarter [49] - Future loan growth is expected to be between 0% and 2% for 2020, with potential for improvement in the latter half of the year [49] Other Important Information - The company implemented the CECL accounting standard, resulting in a significant increase in the allowance for credit losses [41][43] - The company maintained a strong capital position with a Tier 1 capital ratio of 14.1% and tangible equity to tangible assets ratio of 9.5% [38] Q&A Session Summary Question: Key assumptions for reserve calculations - Management used Moody's baseline scenario, projecting US unemployment to rise to approximately 8.66% and Ohio GDP to drop by 3% [57] Question: Aggregate number for stressed industries - Approximately $612 million of the loan portfolio is in industries considered vulnerable, with a significant portion in stable franchises like McDonald's [59][60] Question: Near-term operating expense run rate - Expected operating expenses are projected to be between $33 million and $34 million per quarter for the remainder of the year [70][73] Question: Clarification on deferrals - The $500 million in deferrals primarily pertains to commercial loans, with consumer loan deferrals totaling about $46 million [80] Question: Impact of PPP on income - The company expects to earn approximately $13 million in pre-tax income from the PPP program, primarily from origination fees [82][83] Question: Internal stress testing assumptions - Management indicated that potential aggregate loss rates are projected to be in the high single-digits under stressed scenarios [86]