Amerant Bancorp Inc. Q2 FY2020 Earnings Call

Good morning, ladies and gentlemen, and welcome to the Amerant Second Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call. I would now like to hand the conference over to your host, Ms. Laura Rossi, Investor Relations Officer. Thank you. Ma'am, please go ahead.

Thank you operator. Good morning to everyone on the call, and thank you for joining us to review Amerant Bancorp's second quarter 2020 results. With me this morning are Millar Wilson, Chief Executive Officer; Carlos Iafigliola, Chief Financial Officer; Miguel Palacios, Chief Business Officer; and Thiel Fischer, Credit Risk Manager. Before we begin, note that the company's press release, comments made on today's call and responses to your questions contain forward-looking statements. The company’s business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control. And consequently, actual results may differ materially from those expressed or implied. Please refer to the cautionary note regarding forward-looking statements in the company's press release. For a more complete description of these and other possible risks, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2019, and the company's quarterly report on Form 10-Q for the quarter ended March 31, 2020, as well as the subsequent filings with the SEC, which you can access through the SEC's website. Please note that Amerant has no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances, or changes in expectations, except as required by law. You should also know that, the company's press release, earnings presentation and today’s call, include references to certain adjusted financial measures, also known as non-GAAP financial measures. Please refer to Appendix 1 of the company's earnings presentation for a reconciliation of its non-financial measures to its most comparable GAAP financial measure. I will now turn the call over to Mr. Wilson.

Good morning, and thank you for joining Amerant's Second Quarter 2020 earnings call. Today, I'll begin by discussing how Amerant continues to navigate the current environment, including an update around the initiatives put in place to mitigate the impact of the COVID-19 pandemic and our second quarter highlights. Carlos will then review our financial performance for the quarter in further detail. After our prepared remarks, Carlos, Miguel, Thiel, and I will answer questions. As I said last quarter, the safety of our employees and customers is our number one priority. Our business continuity plan remains in place. And as a result, we have been able to seamlessly serve customers and keep our employees, customers, and communities safe. As the number of COVID-19 cases has increased in the communities where we operate, we are diligently following our business continuity plan and taking a cautious and safe approach as Amerant employees begin to return to the office. Specifically, employees are only returning to the office voluntarily at a capacity of no more than 25% at any given time, except our New York location, which is capped at 50%. Our BCP continues to successfully support approximately 86% of our employees with remote work capabilities. Regarding our banking centers, we have returned to regular business hours. That said, the entire Amerant team is following strict government safety guidelines as our goal continues to be to provide customers with the service they have come to expect while maintaining a safe environment. Additionally, Amerant continues to provide customized loan payment relief options to customers impacted by the COVID-19 pandemic in accordance with regulatory guidelines, including interest-only payments and forbearance options. At the end of the second quarter, loans outstanding which have been modified under these programs totaled $1.1 billion. Modified loans from which the interest-only and/or forbearance period had expired totaled $519.5 million or 46% of total modified loans. As of July 17th, modified loans totaling $164.9 million had scheduled payments due. The company collected payments due on $136.9 million of these loans to this day. Modified loans totaling $354.6 million have payments due by July 31st. Amerant also continues to participate in the Paycheck Protection Program or PPP. As of June 30th, we have received approval for over 2,000 loans totaling $218.6 million. Over 90% of these loans were under $350,000 each, which translates into approximately 26,000 jobs saved. We're extremely proud of Amerant's contribution. Looking ahead, we will continue to provide relief while closely monitoring the company's credit and liquidity risks. The executive management committee has taken an even more active role in this monitoring process. We have tightened our credit underwriting practices and significantly increased the frequency of loan portfolio reviews. Together, these actions will ensure Amerant's credit quality is closely managed amidst these unusual and highly unpredictable circumstances. Please turn to our second quarter highlights on Slide 4. Despite COVID-19 related headwinds, I'm proud of the entire Amerant team for continuing to push forward and execute our relationship-focused strategy. In the second quarter, we recorded a loan loss provision of $48.6 million compared to a provision of $22 million in the first quarter, and a release of $1.4 million in the year ago period. Carlos will discuss the drivers of this provision in more detail shortly. As a result of this provision, we're reporting a net loss of $15.3 million compared to net income of $3.4 million in the first quarter, and net income of $12.9 million in the three months ended June 30, 2019. Lower interest income also contributed to this net loss, which was partially offset by lower non-interest expenses. It is worth highlighting that even though our loan loss provision has increased significantly, our operating income, which excludes the provision for income tax, the provision for loan losses or reversals, and net gains on security sales, increased to $21.6 million, up 53.9% year-over-year and up 29.7% quarter-over-quarter. Also, in the quarter, our broker-dealer Amerant Investments successfully participated in the distribution of the senior notes, which, among other factors, contributed to stronger year-over-year non-interest income. The investments team also launched Amerant Investments Mobile, an application that facilitates customers’ engagement with our Amerant Investments accounts. This application further supports our relationship-focused strategy, as well as our digital transformation. Please turn to Slide 5. As I mentioned, we had a net loss of $15.3 compared to net income of $3.4 million in the first quarter of 2020, and net income of $12.9 million reported in the three months ended June 30, 2019, largely due to the higher provision for loan losses. The adjusted net loss, which excludes restructuring expenses, was $14.2 million compared to adjusted net income of $3.7 million in the first quarter, and $15 million reported in the three months ended June 30, 2019. Our return on assets was a negative 0.75% or a negative 0.7% on an adjusted basis, and our loss per share was $0.37 or $0.34 on an as-adjusted basis. Total loans as of June 30th were $5.9 billion, an increase of 3.6% compared to the first quarter. This increase was largely driven by the PPP loans granted in the quarter and partially offset by declines in other loan originations attributable to the lack of business activities resulting from the COVID-19 pandemic and the more stringent credit underwriting guidelines currently in place. Funds from these PPP loans also drove total deposits, which were $6 billion as of June 30th, up 3.1% from the prior quarter. The funds small business customers had not fully utilized totaled $132.7 million at the end of the quarter. Additionally, we were pleased to see our foreign deposits increase by $3.5 million or 0.1% compared to the prior quarter. We're optimistic and hope this improvement will continue. Shareholders' equity was $830.2 million as of June 30th, a decrease of 1.3% compared to the prior quarter. This decrease in stockholders’ equity is mainly the result of the company's net loss in the second quarter, partially offset by higher valuations of the company's debt securities available for sale, attributable to the decline in market interest rates in the same period. I will now hand over the call to Carlos.

Thank you, Millar. Turning to Slide 6, I would like to discuss the investment portfolio. Our second quarter investment securities balance was $1.7 billion, down from the $1.8 billion at the end of the first quarter 2020 and relatively flat year-over-year. During the second quarter prepayments on mortgage-related securities have stabilized following a surge in expected prepayment during the first quarter. Still, we continue to focus on decreasing floating-rate investments, given the current interest rate environment. As of the end of the second quarter, floating-rate investments represented 17% of our portfolio, down from 18% a year ago. In the quarter, we centered our attention on purchasing higher-yielding corporate debts, primarily in the subordinated financial institution sector, to minimize the cost of our senior debt issuance while maintaining the duration of our portfolio. Turning to Slide 7, we provide an overview of our loan portfolio in the second quarter. At the end of the second quarter, total loans were $5.9 billion, up 3.6% compared to the first quarter of 2020 and up 2.2% compared to December 2019. As Millar mentioned previously, these increases were largely the result of the PPP loans originated during the quarter and partially offset by declines in other loan originations, attributable to the current economic environment and more stringent credit guidelines as a result of the pandemic. Loan production in the second quarter centered on the PPP loans to small businesses. As mentioned earlier, as of June 30, 2020, Amerant had received approval and funded over 2,000 loans and more than 219 through this program. Beyond PPP loans, real estate loans were also up quarter-over-quarter and year-over-year due to increases in jumbo mortgages within our single-family residential portfolio. Going to Slide number 8, we see the credit quality of the portfolio. We recorded a provision for loan losses of $48.6 million during the second quarter of 2020, up from a $22 million provision recorded in the first quarter of 2020 and a release of $1.4 million in the second quarter of 2019. This provision includes two key drivers. First, we attribute $20.2 million estimated losses reflecting deterioration in macroeconomic environment as a result of the impact of COVID-19 across multiple impacted sectors. And second, the increase in provision includes $28.2 million due to loan portfolio deterioration reflected in downgrades and specific reserve requirements. Of this amount, $20 million is related to a Miami-based coffee trader that unexpectedly announced liquidation plans early this month. The borrower had an outstanding indebtedness of $39.8 million as of June 30, 2020, under a revolver line of credit. We have placed the loan in non-accrual status, downgraded it to substandard, and we're working to recover as much as possible through the liquidation proceedings. However, the outcome of this process is still uncertain. We continue to model estimated losses to provide us with a comfortable coverage ratio under the existing difficult macroeconomic environment as a result of the ongoing pandemic. Our ratio of allowance for loan losses to total loans increased 75 basis points compared to the prior quarter, ending at 2.04%. Next, non-performing assets increased $43.9 million quarter-over-quarter and $44.6 million compared to the year ago period, totaling $77.3 million at the end of the second quarter 2020. The ratio of non-performing assets to total assets was 95 basis points, up 54 basis points from both first quarter 2020 and second quarter 2019. From this increase, 49 basis points resulted from the loan to the coffee trader being placed in non-accrual status. I'd like to discuss our loan portfolio more broadly in light of the current COVID-19 market environment. Approximately 42% of our outstanding loan portfolio is tied to industries potentially more vulnerable to the challenging dynamics created by the pandemic. Sixty-seven percent of these exposures are secured with real estate collateral. I would like to note that our CRE portfolio remains well diversified with no significant property type, regional, or tenant concentration. This portfolio has a low loan-to-value and healthy debt service coverage ratios, and 42% is represented by top-tier CRE customers. We are encouraged by the recent pace of recovery efforts across the country and while cautious, expect our retail portfolio to be well positioned as the country begins phases of reopening. Amerant's retail portfolio is primarily made up of highly traffic locations, including grocery-anchored shopping centers and service-oriented neighborhood shopping centers, many of which are essential businesses or included in the early reopening phases. Finally, we remain committed to the communities we serve, particularly during these difficult times to support our customers. And as Millar mentioned previously, we continue to offer customized loan payment relief in accordance with regulatory guidance, including interest-only payments and forbearance options. While it's difficult to forecast the impact of COVID-19 on our credit quality, we are proactively monitoring all our credit practices, as well as individual exposures by business line and geography. As a result of these solid practices, Amerant's credit quality remains strong and our reserve coverage is robust. Continuing to Slide 9, we can observe that in general, our assets trended down, following the performance of an asset sensitive balance sheet. You can see that our loan yield decreased 54 basis points compared to the first quarter 2020. This was largely due to the impact of the Federal Reserve emergency rate cuts in March 2020. We were able to minimize the decrease in yield resulting from lower rates in the investment portfolio to only 9 basis points quarter-over-quarter through the purchase of higher-yielding securities as previously mentioned. Going to Slide 10, I would like to provide some color around Amerant's wholesale funding strategies. In the second quarter, we continued to implement wholesale funding strategies focused on managing the current low interest rate environment. At the beginning of the quarter, we modified maturities on $420 million fixed rate FHLB advances, representing $2.4 million of cost savings for the rest of 2020. Also, as mentioned before, we completed a $60 million offering of senior notes with a coupon of five and three-quarters, which provided the company with a new source of funding as we continue to navigate the COVID-19 pandemic. Looking ahead, we will continue to actively leverage opportunities in the wholesale market to decrease funding costs as we manage through the current and future market environment. Moving to Slide 11, total deposits at the end of the second quarter were $6 billion, up 3.1% quarter-over-quarter. This increase was largely driven by the funds of the PPP loans originated during the second quarter 2020, which small business customers have not fully utilized. These new funds totaled $133 million as of June 30th. Additionally, higher deposits in the second quarter of 2020 included a $56 million growth in reciprocal deposits compared to the first quarter 2020, which we offer to certain customers who wanted to make their deposits fully eligible for FDIC insurance. Domestic deposits, excluding online deposit growth and unused PPP-related deposits, increased $24.5 million in the second quarter of 2020, about 0.8% from the first quarter of 2020. This increase was mainly driven by the continued successful execution of our relationship-centric strategy. Foreign deposits, which include deposits from customers in Venezuela and other countries, increased $3.5 million or 0.1% compared to the prior quarter. While customers in Venezuela continue to use their deposits to cover living expenses, the annualized decline rate of foreign deposits reversed in the second quarter showing an increase in deposits equivalent to 0.1% compared to the annualized decline of 7.1% during the first quarter of 2020. We attribute this increase to the combination of our team's improved customer service and sales efforts capturing more share of wallet, along with the lower pace of economic activity in Venezuela as a result of the COVID-19 pandemic. Finally, broker deposits declined 59% or 9.1% quarter-over-quarter. On a final note, our cost of interest-bearing deposits was down 24 basis points in the second quarter of 2020 compared to the first quarter. This is a result of our efforts to proactively reprice CDs, relationship money markets, and tier products. Turning for our P&L on Slide 12. Second quarter 2020 net interest income was $46.3 million, down almost 6% from the first quarter and down almost 14% from the second quarter of 2019. The quarter-over-quarter decrease was driven by assets having repriced by certain liabilities following the emergency rate cuts enacted by the Federal Reserve. This quarter LIBOR rates closely tracked the Federal Reserve cost in terms of magnitude, which led to a larger impact on our interest income than in previous quarters. This resulted in lower origination and repricing rates across our portfolio. Partially offsetting the decrease were higher loan volumes resulting from our active participation in the PPP program. The year-over-year decrease was driven by the Federal Reserve's two cuts to the benchmark rates in 2019 along with the two emergency cuts in March of this year, which led to a decline in yields of our interest-earning assets. This decline was partially offset by actions that I just mentioned, and lower interest expenses due to the trust preferred securities we redeemed last quarter. The net interest margin for the second quarter of 2020 was 2.44%, representing a decrease of 21 basis points from the prior quarter and 48 basis points compared to the second quarter of 2019. Looking ahead to the balance of the year, we continue to anticipate our net interest income and net interest margin to be pressured largely as a result of the low interest rate environment and uncertain economic conditions caused by COVID-19. Despite a slight increase in foreign deposits reported during Q2, we expect this low-cost funding to continue to run off, which will pressure our net interest margin. As we did in the previous quarter, we continue to implement actions to partially offset these headwinds, including proactively cutting rates on deposits, relationship money markets, and other top pricing rates that we pay to customers. Leveraging opportunities for lower costs, including FHLB and broker CDs. As you remember, we modified $420 million. Continuing, we aim to maximize high-yield investments evidenced this quarter by the purchase of high-yield corporate securities, actively implementing and managing loan rates in our credit portfolio, which has begun this year and provide higher than average spreads, and working to further reduce asset sensitivity, which I will discuss shortly. We remain focused on implementing these actions and evaluating in order to help us navigate through the current environment.

Thank you, Carlos. Moving on to our last slide, we continue to execute on our goal to drive shareholder value. We remain focused on generating profitability, core deposit and loan growth, as well as maintaining credit quality as we navigate through the economic turmoil created by the COVID-19 pandemic. In the current low interest environment, we also plan to lean more on the careful management of our non-interest expenses and the expansion of our non-interest income to drive growth in our bottom line. Looking ahead, we will continue to focus on proactively assessing our loan portfolio in order to preserve asset quality. In addition, we will be actively prioritizing the preservation of capital. With this close monitoring of all aspects of our business, we will ensure that despite these unprecedented times, Amerant emerges stronger than before. Moreover, we look forward to continuing to support our communities through the COVID-19 pandemic. The entire Amerant team is heads down and pressing ahead on finding solutions for customers, whether it's a customized loan payment relief option or a new PPP loan. We have dedicated additional employees to these efforts and will continue to be hyper-focused on meeting customers’ needs during these times. I know I speak for the entire Amerant team when I say we're truly proud to be providing solutions and helping our communities during this time. With that, we'll be happy to take your questions. Operator, please open the line for Q&A.

Your first question is from Michael Rose from Raymond James. Your line is open.

Just wanted to start with expenses. So on a core basis, if I back those items out that you called out and then add back the $7.8 million, looks like we're a run rate of about $43 million. So good expense control. Is that a good base in which to build off? And maybe can you talk about some of the expense reduction efforts? I know you mentioned a few branches you're going to close. Can you give us a sense for kind of what expenses could look like over the next quarter or two? Thanks.

So in terms of the reason for the reduction that you noticed in the second quarter, it's primarily driven by the PPP origination. As we mentioned on the call, there was about $8 million that were deferred over the life of the loans. And of course, the fee income associated with this loan will also be amortized. So that definitely doesn't represent a structural change in the cost structure of the bank. So that will definitely come back at a rate of about a million a quarter until we reach the two-year anniversary of the loans. However, forgiveness or acceleration of the loans will definitely bring back those costs faster as well as the fee income. So I wouldn't take it as a structural change. We still keep our target of being close to the $48 million on a quarterly basis. This quarter, we spent about $1 million on the digital transformation, but we expect that to catch up during the third and fourth quarters of the year. Remember that during the first quarter, we underspent on that specific item. So progressively, the normalized cost structure should be closer to the number that we provided before, roughly $48 million to $49 million.

And then I noticed that on the foreign deposits there were up, but the Venezuelan deposits were still down but obviously slower than we've seen. Can you talk about what drove the other foreign deposits higher? And then if this is a good run rate for at least in the near-term attrition for the Venezuelan deposits? Thanks.

The changes in customer service and payments platform have helped to retain those international deposits. And we started at the beginning of the year a reserve program also visiting other countries, in particular Colombia, where a lot of Venezuelans moved. So, we are capturing the same nature of deposit and we are expanding our relationship abroad, and that has stabilized significantly the previous deposit decay as it has stabilized significantly, and we are deepening relationships, which is very important. And also, it has been compensated by commercial international accounts where we continue to have a very good relationship and those are positively impacting the trend.

And then maybe finally for me just on the margin. Obviously, the step down this quarter given the rate sensitivity. Should we expect some modest compression on 4 basis ex-PPP impact as we move into the third quarter? And do you have a sense for how much that might be? Thanks.

Expectation on the impact of the net interest margin should be roughly close to the 10 basis points extra. So, it should be within the range of 230 to 240, more or less. We ended at 244. But remember there are still several time deposits that we need to reprice for the remainder portion of the year. Those time deposits definitely came at a rate of 2019 and some of them 2018, which were definitely higher than the prevailing rates that we have in the market as of now. So, you should expect that, that definitely will help the costs of funds progressively. So I would say that we should be able to stabilize net interest margin between 230 to 240 more or less.

Your next question is from Michael Young of SunTrust. Your line is open.

I wanted to maybe just start on the credit side with the relationship that you guys identified and announced previously and the additional deterioration. Can you just provide any details around how that relationship was identified as a problem? And then how kind of the resolution efforts are going at this point?

This is a relationship that has been on the books for more than 15 years. It had been monitored at least 20 times during those years. We did about $1 billion in constant self-liquidation transactions on an average of between $300,000 to $400,000. And since the pandemic started, as you know, we started monitoring our portfolio, and we had constant communication with all our customers in particular with this customer. We have communication in March, and in April, and in June. We were provided financial statements for December and March that did not require any forbearance, and we received payments through the month of May and June. Definitely, it was an impact because non-information of the liquidation process was given to us. We knew about this search with older companies that are in the sector. So definitely, we have not had any contact with the company nor the liquidator, only with the liquidator through our legal counsel. So we’re still monitoring the situation. And by no means, there was a sign of any weakness in our process, nor in conversation with the company.

It was kind of a digital event, it was fine until it gets there.

So have you conducted any sort of review as a result of this of kind of the rest of the portfolio, or are there any other relationships that kind of would mirror this relationship in terms of what they do on an operating basis?

Yes, we did a not in particular, because of the situation we have the review with between risk, credit and the business. We have reviewed almost 100% of the portfolio, almost 65% of the overall credit portfolio. In particular in the credit commodities sector, we have a small presence. Utilization has dropped significantly. Those relationships are mainly on the scrap metal and some proteins. They are under ABL with participation or with a lead bank that has expertise in those commodity traders. The ABT transactions do not rely on inventory, the majority are trade-secured and all are insured and also based on account receivables with an audit every year or twice a year monitored by availability. So, we don't foresee any issues. We have received financial information from at least until April and May and we are constantly reviewing those credits and today, the exposure is around $80 million.

And I guess just with this specifically identified relationship. What happened from a process standpoint that allowed them to end up in that big of a net loss position?

We are on the review with the legal. We have not determined the cause of the issue. As I mentioned, we received financial information up to March. We received payments through May and June. The last communication with them was a typical answer related to a slowdown in sales due to COVID but there was no specific reason. And like I said, we have not been able to talk to the management of the company basically because of the type of liquidation that they decided to go through. And it's important to mention that this company has gone through previous volatility in commodity prices in the past during the crisis of 2011 and the 2014 drought. So there is no indication that this company was not going to be able to sustain or weather this situation and what was reported by the financial performance that we were receiving.

And I guess aside from that, did you guys provide an amount of loans that are currently in some state of deferral or forbearance, and any breakdown on that by category?

So as provided in the documents, we have approximately, I mean, from what is left and I've mentioned there's about $500 million that expired and that we have those that were due, we have received almost everything and/or they have resumed payment of almost everything that we do. There's another $300 million that are coming due and payments are expected to resume by the end of this month and based on conversations we've had with the customers in the region, the improvement that we have seen in some of the collections and occupancy levels, we believe that that's not going to be an issue. From what is left, we will have about 12% of the real estate portfolio. We’re still in one type of forbearance. And then from the commercial another 10%. So we think that this number will be reduced from the 20% that we see there to about 8% or 9% of the portfolio. And then as the situation progresses and things are reopening, we believe that that number should improve. We have seen that many of the customers have used the first 90 days as liquidity management for prevention. We have seen that in the second extension they have not needed those ones.

I guess that's a very important point, because one if you look at the trend of the forbearances after reporting on the first quarter $1.1 billion, you went to $500 million now in the second quarter. And most of what we discussed in the first quarter was that we identified that most of our customers were using this type of arrangements to preserve liquidity. And now it's consistent with the performance that we're seeing that now we just have $500 million still under forbearance.

Your next question is from Brady Gailey from KBW. Your line is open.

So I was wondering about your ability to further reduce the cost of deposits. The cost of deposits was down in the second quarter but it's still relatively high versus peers at over 90 basis points. How rapidly do you think you can get that down? And how low do you think you can get on the cost of deposits from here?

So there is one immediate action that we're working on and actually it has been a work-in-progress since Q1, which was the progressive repricing of our high-cost time deposits. So, we have changed our table rates several times since the Fed fund drops significantly in March and now, we continue to do so. So, based on the repricing schedule that we have on the time deposits, which is roughly between $300 million to $400 million for now through the end of the year, there should be an opportunity to reprice those time deposits to, let's call it, between 0.5 basis points to 0.75 basis points, and that would definitely create an opportunity for cost savings. Additionally, we are evaluating our premium products like the relationship money market, which is roughly $400 million in balances that cost us roughly 1% that is also being reviewed for further drops. So, that combination between the actions that we can take in those premium products plus the repricing of time deposits, you will definitely see a potential savings coming into the interest expenses.

So I know a lot has changed from when you guys went public. We have the pandemic rates are now at zero, it's harder to grow loans but a lot of what we talked about on the IPO roadshow was this profitability improvement story. So, you've had several things go against you. But as you look at the opportunity you have on the expense side to reduce expenses as a way to increase profitability. Is that something you're considering further reducing the expense base from here?

Definitely, that's a work in process that we have been working on for about two years now. We have several strategies that constantly evaluate our cost structure, not only headcount but also physical space. As we disclosed today, there are two branches that are being closed. There are multiple efforts being done throughout the whole balance sheet to identify what areas are subject to have more drops in the cost structure. We continue to do so. So as I said from physical space through the implementation of technology to create more efficiencies and increase productivity, we are working on that day by day. And of course, efficiency is impacted by the drop in the net interest margin so that doesn't definitely play in our favor. But it's a work in process and rest assured that we're working on that.

And then just finally for me back to the loan modifications. So I read in the press release you're at $1.1 billion as of June the 30th. So what you're saying is, as of now that number has dropped to $500 million. Is that correct? The $1.1 billion is loans that we have approved for or they were under forbearance, and they are those that are outstanding. Those are the loans that we provided forbearance and they're still outstanding. But out of that, we have already received payment or we expect to receive payment and some that have expired in forbearance period. And whatever is left is $500 million.

Better to say about $600 million out of the $1.1 billion, they expired their forbearance period, and they are coming in due for payments. Some of them already received payments as of July 17th, some of them are due for payment before July 31st.

And it's a constant communication with the customer. And customers are now requiring the extension. There are some that since the beginning were 480 days. So we’ll still be there. But definitely if the trend continues like that it’s a good sign and also we're monitoring the situation of each of the regions where we are.

I'm showing no further questions at this point. I would like to turn the conference back to you, Mr. Wilson.

Thank you for joining our second quarter earnings conference call. As we manage through the unknowns of the current COVID environment, we intend to continue to implement mitigation strategies that ensure long-term success for the benefit of all our stakeholders. We look forward to continuing to communicate with you regarding our progress in the quarters ahead. Thank you again for your time today. We will now disconnect.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.