Good day and welcome to the Investors Bancorp Second Quarter Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. We will begin this morning’s call with the company’s standard forward-looking statement disclosure. On this call, representatives of Investors Bancorp, Inc. may make some forward-looking statements with respect to its financial position, results of operation and business. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Investors Bancorp’s control, are difficult to predict and which can cause actual results to differ materially from those expressed or forecast in these forward-looking statements. In last night’s press release, the company included its safe harbor disclosure and refers you to that statement. That document is incorporated into this presentation. For a more complete discussion of certain risks and uncertainties affecting Investors Bancorp, please see the section entitled Risk Factors, Management Discussions and Analysis of Financial Condition and Results of Operations set forth in Investors Bancorp’s filings with the SEC. Now I’d like to turn the call over to Mr. Kevin Cummings, Chairman and CEO of Investors Bancorp. Please go ahead.

Thank you, Nick, and good morning, and welcome to the Investors Bancorp’s second quarter earnings call. Last night, the company reported in its press release net income of $42.6 million or $0.18 per diluted share for the 3 months ended June 30, 2020 as compared to $39.5 million or $0.17 per share for the quarter ended March 31, and $46 million or $0.18 per share for the 3-month period ended June 30, 2019. For the 6 months ended June 30, net income totaled $82.1 million or $0.35 per diluted share compared to $94.8 million or $0.36 per share for the six months ended June 30, 2019. During the quarter, the company completed its acquisition of Gold Coast Bank, which had approximately $535 million in total assets, $443 million in loans and $490 million in deposits. It added 7 branches in the New York market, nearly doubled our deposits in Nassau and Suffolk Counties. These customers have attractive demographics and give us the opportunity to leverage our business models to customers in that market. Getting this transaction completed during this pandemic is attributed to the grit and tenacity of the bank, as we closed the transaction, rebranded the branches and completed the data processing conversion during the weekend of April 3. The acquisition resulted in the recognition of $12 million in goodwill and approximately $2.5 million in core deposit intangibles. During the second quarter, the company recorded a provision for loan losses of $33.3 million versus $31.3 million in the first quarter of 2020, and this compares to a credit of $3 million in the second quarter of 2019. This elevated provision is a direct result of the current and forecasted economic conditions that include the economic impact of the COVID-19 pandemic. Pre-provision net revenue was $92.1 million for the 3 months ended June 30, 2020, an increase of $6.7 million or almost 8% compared to the 3 months ended March 31, 2020. And this is also an increase of $29.8 million or 48% compared to the three months ended June 30, 2019. The bank has spent considerable effort in evaluating its credit position and has focused its effort on the commercial portfolio. As disclosed in our March 31 Q, the company reported approximately $3.6 billion in commercial loan deferrals, comprised of $600 million in C&I loans, $1.4 billion in multifamily loans, and $1.6 billion in CRE. The bank’s lending teams were very aggressive reaching out to customers during a time of great stress and uncertainty. And like the PPP loan program, we looked at this deferral process to help our borrowers and customers. We were actively reaching out to them to assist them during this economic lockdown initiated by local governments. We have spent the last 10 weeks actively communicating with our customers to assess their needs during this pandemic. After extensive communications with our borrowers and follow-up on our lending teams, we have reduced the exposures to deferrals significantly. At July 24, total requests for second deferrals totaled $480 million, comprised of $218 million in C&I loans, $87 million in multifamily loans and $175 million in commercial real estate. We have performed detailed reviews on 79% of the original $3.6 billion in deferrals to date. We anticipate, upon completion of this entire review of deferred loans, a second deferral exposure for commercial loans of approximately $750 million or 5% of commercial loans. As mentioned earlier, of the $480 million in loans that have requested second deferrals, approximately $292 million is concentrated in the accommodations and food services sector. Of that amount, $230 million are hotel loans to 2 relationships who have strong liquidity and are proven generational operators. One relationship had deferred loans with an average LTV pre-COVID of 45% and a debt service coverage ratio of 1.85. The other relationship is also for deferred loans, with an average LTV of 51% and a debt service coverage ratio of 1.42. Both these borrowers have good locations in desirable areas of Manhattan. In the retail sector, we have approximate exposure of $1.8 billion at June 30, 2020, that’s the entire commercial portfolio and an initial deferral amount of $880 million, which has been reduced to $380 million by borrowers making their July 1 payment. Based on discussions with borrowers, we expect further reduction upon completion of the initial 3-month deferral period of $258 million, which would result in second deferrals in the retail portfolio of approximately $130 million. In the office sector, our total loan exposure is $1.2 billion, with initial deferrals of $186 million. As of July 22, we have received the July 1 payment for loans totaling $35 million, which results in a current deferral balance of $151 million. Based upon follow-up with our borrowers, we anticipate further reduction of $115 million in the office deferral balances as a result of payments principally scheduled for August 1, which would result in a second deferral balance of approximately $36 million for this sector. In the multifamily sector, we have total exposure of $7.4 billion at June 30, with initial deferrals of $1.4 billion, which have been reduced to $900 million due to payments received in July. We expect those deferrals to be further reduced upon the completion of the initial 3-month deferral period by August and September payments to approximately $100 million. So in summary, today, we have approximately $1.4 billion of loan deferrals in the office, retail and multifamily sectors. We expect, based on current conditions of our borrowers, that those deferral balances will be reduced to $260 million at the end of their initial first 3-month deferral period, which is ending August 1, September 1, and to a limited extent, October 1. Overall, we’re very pleased where we are with respect to assisting our customers through this pandemic to date. There is much uncertainty, and forecasting future events and results are sometimes very difficult, but we will continue to work with our customers to help them through this crisis. Our approach is to be proactive in addressing these issues as it will be in the future difficult conversations. We believe we have taken a conservative approach to our provisions as compared to banks with similar portfolios in the New York, New Jersey markets, and we are well positioned to weather this storm. With respect to charge-offs for the quarter, we had one significant charge-off on a multifamily loan for $3.5 million that was not pandemic-related. And have had the loan written down to 80% of current appraised value, which was received recently in May. With respect to delinquencies, $15.3 million of the $24 million in multifamily 30-day delinquent loans are current as of today. $6.5 million of the $10.6 million in CRE 30-day delinquencies are current as of today. And $5.9 million of the $7.5 million in C&I 30-day portfolio is current as of today. In the 60-day bucket, the only significant exposure is in the multifamily, which totals $19.1 million, of which $9.9 million is current today. $4.8 million has been approved for its first deferral, and $4.4 million is a maturity where there is a contract for sale. In the 90-day bucket, the only significant increase was in the multifamily portfolio, where the reference loan with this quarter’s charge-off that now has a carrying value of $18 million was moved into the 90-day delinquent bucket during the quarter. In addition, there were 5 small additional credits with an average balance of $1.4 million, which moved into non-accrual status during the quarter. Based on our current delinquencies and the significant progress in reducing our deferred loan balances, in addition to the increase in our loan reserves in the past 2 quarters, we believe we are well positioned to get through this pandemic. With respect to the balance sheet, loans increased $75 million during the quarter, which was attributable to the Gold Coast acquisition and the origination of approximately $328 million in PPP loans. Without those transactions, loans would have declined by approximately $700 million. With the uncertainty that we are looking at in March and April, it was prudent to take our foot off the accelerator and build liquidity to manage the challenge of this economic environment. As we get a better handle on our exposures to the pandemic economic impact, we will assess our growth opportunities. As the economy continues to stabilize, we will look for opportunities to grow our loans across all portfolios as opposed to our strategy in 2019 and the beginning of 2020, where we were more focused on the business lending side. This is not a major strategy shift, but one that will be opportunistic based on current interest rates. It was a strong quarter for deposits as noninterest-bearing deposits increased $618 million or 25% for the quarter, of which $93 million was attributable to Gold Coast. Total deposits increased $1.3 billion or 7%, of which $490 million was from the Gold Coast acquisition. Our loan-to-deposit ratio declined from 117% to 110% for the quarter. Cost of deposits declined 46 basis points in the quarter, and there are still opportunities to decrease funding costs in the second half of this year, as $2.5 billion in time deposits are scheduled to mature with an average cost of 1.57%. With respect to capital, the company announced a cash dividend of $0.12 per share and has maintained its capital ratios across the board given the impact of the PPP loans. We believe we have sufficient capital, strong liquidity and a robust credit culture to maintain that dividend and to handle the uncertainty and economic storm that may be on the horizon. If we look at past calamities like Hurricane Sandy and the 2008 Great Recession, we have managed the turmoil and have been opportunistic. I believe with this management team and with the investments that we have made in our enterprise and credit risk management teams, investments in technology and product development, today, we are better prepared to serve our customers, which will result, hopefully, in stronger returns to our shareholders. Now I’d like to turn the discussion over to Sean Burke, our CFO, for more commentary on our results of operations for the quarter.

Thank you, Kevin. Net interest margin increased 2 basis points to 2.73% quarter-over-quarter despite an elevated average cash position in the second quarter. We continued to benefit from previous Fed rate cuts and saw our cost of interest-bearing deposits decline 46 basis points during the quarter. Total loan balances increased $76 million quarter-over-quarter, inclusive of $453 million of loans from the acquisition of Gold Coast and $329 million of PPP loans. Deposits increased $1.3 billion or 7% quarter-over-quarter, with noninterest-bearing deposits up $618 million or 26% quarter-over-quarter. Total noninterest income totaled $10.1 million for the quarter, a decline of $4.5 million quarter-over-quarter. The decrease was driven by a $2.6 million MSR write-down, a $1 million reduction in swap income and lower loan and deposit fees as a result of COVID fee relief policies. Excluding $3.3 million of Gold Coast-related costs, expenses totaled $96.7 million for the 3 months ended June 30, 2020, a decrease of $5.8 million or 6% compared to the 3 months ended March 31. Our reported efficiency ratio improved to 52% from 55% in Q1, reflecting a modest increase in revenue and a decrease in noninterest expense. Provision for credit losses was $33.3 million for the 3 months ended June 30 compared to $31 million for the 3 months ended March 31. Both periods were significantly impacted by the COVID-19 pandemic. Our CECL economic forecast scenarios for the second quarter included a double dip recession scenario where GDP and unemployment further deteriorate in Q4, and unemployment remains in double-digit territory for most of 2022. Asset quality, liquidity and capital were in a strong position at quarter end as we continue through this environment. Non-accrual loans represented 0.59% of total loans at June 30 compared to 0.46% at March 31, while our allowance for credit losses to loans stood at 1.37% at June 30. Our Common Equity Tier 1 ratio was 13% at June 30, exceeding the well-capitalized level by approximately $1.2 billion. Liquidity improved quarter-over-quarter as our loan-to-deposit ratio stood at 110% at quarter end, down from 117% in Q1. Finally, I would like to note that additional information on loan deferrals can be found in an 8-K that we filed last night. Now I’d like to turn it back over to Kevin for concluding remarks.

Okay. Thanks, Sean. Our message at the bank is to be faithful and not fearful. We need to be a source of hope and optimism in our communities. All our branches are open at full service at regular hours. At the height of the pandemic, we had 48 employee cases. Thankfully, today, we do not have any. We are taking all precautions to protect our customers and employees. We have close to 50% of our corporate employees back to the office, and it’s very good for me to see them healthy and strong, willing to return and lead our communities back to some form of normalcy. I visited a branch yesterday and listened to their challenges during the height of this pandemic here in New Jersey. Our retail teams are engaged and excited to be working and more importantly, helping their customers and communities through this pandemic. The past 4 months have not been easy, but we have faced the challenge and continue to get stronger and more adaptable as we navigate the changes from these unprecedented events. If we get some stabilization in the macroeconomic climate, which will then impact our economic models, we can have a much stronger second half of 2020. We’ve been aggressive in calling on our loan customers and have a war room type attitude to monitoring our credit exposures, with great teamwork from our front-line loan officers and our credit risk team. This crisis is different from the 2008 Great Recession as the banking industry is stronger with better capital to sustain the economic downturn. Investors Bank is also stronger and better prepared for these events. I am much more optimistic than I was in April when there was so much uncertainty. Our medical professionals and healthcare workers have been outstanding, and I’ve learned a lot about the treatment of this virus. We are in a better position to monitor and treat this terrible pandemic. Our earnings per share is flat to last year after taking $36 million in additional provisions in the quarter. Our balance sheet and capital are strong, and we are well positioned to grow as the economy improves. Now, I’d like to turn it over to questions.

We’ll now begin the question-and-answer session. First question comes from Mark Fitzgibbon of Piper Sandler. Please go ahead.

Hey, guys, good morning.

Good morning.

Kevin, I really like your optimism. It’s good to hear. First question I had, you all saw a pretty good drop in deferrals this quarter. I’m just curious, was that borrowers genuinely willing or ready to start making payments again or did it necessitate a fair bit of nudging on your behalf to get them to sort of start making payments again?

Hey, Mark. It’s Domenick. I think for the most part the customers were willing to come off the deferrals. But we did put a policy in place in which we made it a little bit tougher to get a second deferral. We asked for income/expense, P&L statements. We’ve looked at their debt service coverage. In some cases, in exchange for getting the second deferral, we would ask them to put up a cash reserve or even put a guarantee on loans. As I said, for the most part, customers were willing to come off. But clearly, our second deferral policy is to be a little tougher and to scrutinize the deferral requests a little more than we did the first time.

Okay. And then at that same vein, how are rent payments, particularly on multifamily properties, going recently?

Yes. Mark, I think we’ve been open with this information. I mean, what we’re noticing is not too dissimilar to what we see in the rest of the market. In the multifamily space, I would say that average collections of rents are north of 85%. On the commercial real estate side, I would say that, that number is about 50%. But again, on multifamily, it’s been stronger than commercial real estate.

Okay. And then, Sean, I’m curious, can you give us a sense for the timing of the excess liquidity deployment? Because I know that obviously is weighing on the margin a bit.

Yeah, Mark, by quarter end, by June 30, you could see that our cash position had come down nicely from the average balance that you saw during the quarter. To a large degree, it has come off already. We’re expecting to kind of have that number, average cash balance in the $500 million range come the end of next quarter. And then by the end of the following quarter, we think we’ll be back to a normalized level from a cash position perspective.

And then, as you think about the margin for the back half of the year, excluding the benefit from PPP that will come in at some point, the core margin up maybe 5, 7 basis points a quarter, is that a reasonable expectation?

Mark, I don’t know if I would completely agree with that. But what I would comment is, we are expecting our margin to be stable with a bias to slightly up through year-end.

Next question comes from Jared Shaw of Wells Fargo. Please go ahead.

Hey, Jared, are you on mute?

Mr. Shaw, are you there? Are you on mute?

We can’t hear you. Hey, Nick, maybe we can go to the next caller and come back.

The next question is from Laurie Hunsicker of Compass Point. Please go ahead.

Yeah, hi. Thanks, good morning.

Good morning.

Good morning.

Just around your comments regarding the core margin for the back half of the year, are you including any PPP forgiveness in that? And then can you remind us what the fees on the $329 million are expected to be?

So the answer is yes. But, Laurie, we only have $329 million of PPP loans. So it really is not that impactful on our margin as a whole. And I think our expectation is, around 75% of that PPP balance, we are expecting that to cure within a year’s period, and then the remainder 25% is going to come in over a 5-year period. So that averages to about a couple of years, at least that’s our assumption that we’re using when we do modeling for margin purposes. But again, Laurie, even if you kind of stripped it out with or without, it probably is very negligible, 1 or 2 basis points impact on the margin.

Okay. And so, the PPP fees for that book, they’re around $10 million, or do you have a better number?

That fees were approximately $8 million. So that is the potential. I’ll say if they’re all paid off next week, it’d be $8 million of their interest revenue.

Okay. That’s helpful. Okay. And then, for the back half of the year, how should we be thinking about expenses? I mean, Gold is closed. Are you thinking about any branch rationalization or any color you can give us there? Thanks.

Laurie, it’s Domenick. Yeah, we are looking at branch rationalization. Obviously, consumers and business customers have taken better hold of online and mobile banking services. So that’s giving us an opportunity to look at our branches to see where we may have some overlap. So, yeah, there’s some branch rationalization that we’re examining for 2020.

Laurie, if we don’t change the way we do business as a result of this pandemic, we’ve wasted a lot of time, effort and sweat over the last 5 months. So I think there’s going to be significant changes on the horizon as we move forward and customer behaviors change as a result of this pandemic. Luckily, we’re in a position where we made significant investments in our technology and our products. Over the last in 2018 and 2019 with a new Chief Marketing Officer, and that’s paying off for us in spades as we work through this situation.

Okay. Okay. And then on to loan modifications, and I really appreciate all your detail. If we were just more high-level thinking about the $2.7 billion that you have as far as active deferrals as of June 30, what is that number looking like as we get closer to August 1 or September 1?

I think, Laurie, the way to think about it is just at a very high level. And Kevin gave the number at about $750 million. So what we’re expecting is, when this is all said and done, that we’ll have about $750 million in deferrals that we’ll be working with.

Okay. And that obviously included the big chunk of the $230 million or so of hotels?

Absolutely.

Yes.

Yes. So netting that out, it’s a really small number. And then, if you can just help us think about, because you’ve got your hotels and your food service combined, do you have a dollar balance on hotels and a dollar balance on restaurants? Or if not, I can follow-up...

It’s overwhelmingly in favor of the hotels. I mean, I think it’s – we don’t have an exact dollar amount, Laurie, but it is predominantly hotel.

We can get back to you on that number. I think it’s – like in my mind, it’s like less than $50 million restaurant exposure, it’s much less than that. So we will get back to you offline on that.

Okay. And then just one last quick question. Your $1.2 billion of office, do you have an LTV on that? Or I can follow up with you on that as well.

We don’t have it right here, Laurie, but we can get back to you with that information.

Thank you. Our next question comes from Collyn Gilbert, KBW. Please go ahead.

If I could start with expenses, so relative to what we were expecting and even in the second quarter, you guys saw a material drop in expenses this quarter. And I appreciate, Sean, kind of your comments and you too, Dom. But if we just think about this quarter’s expenses, I mean, it kind of run rates to like $395 million or something below. I think, Sean, what you had given is a $435 million guide for the full year of 2020. Can you just talk about kind of the movement there on the expense side? And what will come back maybe in the back half of the year and how that compares to your original OpEx guidance?

Yeah, look, on the OpEx guide, we were high as it turns out. And I think the largest driver of that is just this pandemic. We just don’t have the type of expenses that we would normally experience when people are traveling and loan officers are out generating loans. And so, I think we’re benefiting from the lack of expenses on that side. As we look through the back half of the year, we don’t have anything, Collyn, necessarily planned that’s going to meaningfully increase expenses from the base that we’re at now. So I think it’s safe to say that the guide that we’re providing at $435 million, that we’re not going to be at that number. We’re going to be south of that. I was thinking about something in the $410 million range is probably more reasonable level right now. I’d probably have a little bit of buffer in that, too, Collyn, just for some of the unknown as we go through the back half of the year, but nothing planned on the docket that’s going to throw off expenses in the back half of the year meaningfully.

Okay. Okay. That’s helpful. And then, just in terms of your – you mentioned kind of the liquidity or the cash usage through the end of the year, Sean. Can you guys just tie that to what you think loan growth will be? And then, within that in terms of like your current loan pipeline and then what you’re seeing in terms of new loan origination yields? And then I have a follow-up to that as well.

Collyn, it’s some – we’ve just recently opened up our lending to a greater degree. We came into 2020 with a strategic plan intended to reduce residential and multifamily. Certainly, that’s happened and our pipelines were reduced coming into the first quarter. Then the pandemic hit. I would say that we were more cautious on lending and did not see a lot of loans closed during the March, April, and May timeframe. As credit spreads started to widen, we recognized that we could put on residential and multifamily at a decent spread, which would contribute to net interest margin. Those pipelines now have started to build and right now, we’re looking at a pipeline of about $2.4 billion, if you include $400 million for residential loans. So C&I is about an $800 million pipeline. CRE is about $1.2 billion in pipeline. And I know that’s a long-winded answer to tell you that I’m not really sure where loan growth is going to be. I mean, if I took PPP and I took Gold Coast off the table for a moment, the loan actually declined about $700 million. I’m hoping that we could get that back and keep the balance sheet stable and neutral for the rest of this year. So having said that, that would mean that I would stay at around the $27 billion mark as we head into the end of the year.

Okay. Okay. That’s helpful. And then just – so on that – and Sean, your comment on the NIM. I guess, I would be thinking that maybe that NIM would expand a little bit more than what you guys are indicating. Can you just talk about – so you had mentioned the tranche of CDs that are maturing and coming down? But where your sort of new CD rates are or kind of the fits and starts as to what you’re assuming on the funding side? And the composition of deposits is a big one, too, right, in terms of your outlook for noninterest bearing?

Yeah. The – Hey, Collyn, it’s Domenick. The – on the cost of deposits coming in now, I mean, we have a product out there, a money market account that’s tied to our core checking account that requires activities and a certain number of online deposits and things like that. That cost is at 75 basis points right now. That’s what we’re advertising. We have a 13-month product out there at 85 basis points and a 7-month product out there at 60 basis points. Quite honestly, just been talking about it the last few days, we see those numbers as being towards the higher end of the market. So we see that coming down somewhat. But I wanted to go back to Kevin’s comment about the maturing CDs. I mean, it's significant. It’s close to $1 billion, $900 million. If you look at it through the end of the year with the weighted average cost of, let’s call it, 1.60-ish. That should help NIM coming into the third and fourth quarter. As far as our projections in being light on where that is, I mean, clearly, there’s a lot depending on where NIM is going to go. These cash balances have been a burden on us. To the extent that we continue to shrink, it could mitigate any potential benefit. But on the loan side, I mean, we’re seeing rates between resi and C&I going anywhere from 3 3/8% to 3 5/8%. So if you think about the incremental cost of funds here being somewhere around, let’s call it, 40 to 60 basis points, we’re looking at spreads north of 300 basis points, which will be additive to NIM as we head into the third and fourth quarter, obviously offset by any cash balances that we continue to maintain.

Okay. That’s great color. Thanks for that, Dom. And then just one last question on mortgage banking. It was up nicely this quarter. I guess, just seeing a lot of the activity in the market here. Do you have a sense as to where you think you can take that business line either through just near-term activity and then just structural sort of how you see that building out longer term?

The – Collyn, our mortgage banking business, I mean, we just had a meeting on this, this morning. I mean, right now our pipeline is about $400 million, and about 50% of it is slated to be sold to the agencies. It’s amazing to me. We looked at the pricing this morning and 2 7/8% 30-year mortgages can be sold to Fannie at a price of north of 3 points, which when you compare that to where we’ve been historically, let’s say, over the last 18 months, that spread has – was about 1.5. So it’s gone from 1.5 to north of 3 over an 18-month period, and the coupons have come down to 2 7/8%. To answer your question in terms of where could this go for us, it’s hard to say. I mean, we’re just trying to – we’re not out there actively having a mortgage banking business. We’re just trying to manage our own customer base and generate some commissions for our loan officers. So it’s not the type of thing that we’re going to build up or make any significant investment in. We’re just kind of reaping the rewards of the current interest rate environment and the impact it’s having on mortgage banking.

Okay. That’s great. That’s super helpful. I will leave it there. Thanks, everyone.

Thank you. Our next question comes from Matthew Breese, Stephens Inc. Please go ahead.

I appreciate all the detail on the commercial book in terms of deferrals, very encouraging. Could you just talk about deferral trends or expectations for the residential portfolio? And are the cure rates as strong there?

So Matt, that’s a very good point. It’s something that we’ve looked at. Actually, it’s not as strong on the residential side as it has been on the commercial side. So on the residential side, we had approximately $600 million of loans that were deferred. And when we look at those that were coming due in July, that totaled approximately $352 million. Of the $352 million, 34% have cured, right. So that’s about $140 million. And 65% have asked for a second deferral. So you can see on the resi side, it’s not as strong as it has been on the commercial side.

Is the process for issuing additional consumer or residential deferrals as strenuous as it is for commercial customers?

It is not as strenuous. What’s happening there, Matt, is we are trying to follow the Fannie guidelines on that. And Fannie’s guidelines don’t push customers to provide the type or the level of detail that we can on the commercial side. So we’re a little hamstrung. Even though these loans are in our portfolio, and I guess, technically, we don’t have to abide by the Fannie guidelines. But I think not abiding by Fannie guidelines would probably hurt us just from a reputation perspective.

Understood. Okay. And then considering the overall deferral comments and trends, and certainly, there’s more positive body language and tone this quarter. Can you just talk about reserve adequacy and the outlook for the provision? And whether you think what we’ve seen these last 2 quarters is what you expect for the back half of the year? Should we expect a reduction in the level of provision?

Well, Matt, some of my commentary on the macroeconomics. You deal with the model now. And it’s a little difficult to forecast that future based on the inputs that may be changing over the next couple of months. We got asked by our regulators in a meeting the other day, and it could be down to $15 million and up to $50 million in the course of that range. It’s a truck – you can drive a truck to the range, and to give guidance on that, in things that really are not in our control based on the life of the loan and the new CECL mandates, it’s very, very difficult to forecast. But I think where we are, I think we feel very comfortable with our reserve today.

Okay. And then my last one is just bigger picture. The last few years, we’ve seen the bank really push towards C&I and more relationship-driven banking. But in times of stress, we’ve heard you talk about adding to the residential and multifamily portfolio. Has everything that’s happened given you any sort of – have you contemplated maybe a more balanced approach and going back to the multifamily resi business and a little less on C&I. Has that – any of that changed?

I don’t think so, Matt. I think we continue to – I think we run a well-diversified portfolio. When you look at the ratios of multifamily loans, they’ve come down. At $7.5 billion on multifamily, $5 billion on resi, $3.5 billion on C&I and about $5 billion on CRE. That’s a pretty balanced book, I think. From the C&I perspective, we’re going to continue to try to grow that business. It’s not only the C&I loan that you put on your balance sheet. It’s also the deposit that comes with it, it’s the cash management fees that come with it. Quite frankly, when we compare our returns nationwide to banks in our peer group, and we see banks that are performing better than we are, again, pre-COVID, the one – the 2 pieces of data that are different in those banks versus our bank is that they have a greater percentage of their loan portfolio in C&I, and they have a greater percentage of their deposits in noninterest-bearing deposits. When I look at those 2 factors, they pretty clearly tell me that we can have a better return on equity and a better return on assets if we shift the strategy a little bit here, despite the fact that we’re here in the Northeast.

Yeah. Understood. That’s all I had. Thanks for taking my questions.

Next question comes from Jared Shaw, Wells Fargo. Please go ahead.

Yes. I’ll try this again. Can you hear me?

Hey, Jared. There you are.

There you are.

Thanks. So I guess I just wanted to circle back on the loan growth discussion with the headwind of looking at that core sort of number down $700 million this quarter in the pipeline you guys talked about. Are we thinking – how should we be thinking about the magnitude of loan growth from here? I mean, is it trying to recover that $700 million by the end of the year? Or is that too much, I guess, to think of over the next few quarters with the headwind on the smaller PPP balances?

Yeah. I think that’s a fair assessment of where we want to be. If we can recover that $700 million, I think we would all feel pretty good about it.

Okay. And then circling, I guess, back with that provision – with that growth is the backdrop for the provision. If we don’t see any change in the economic models, then – I mean, would that – I guess that would mathematically lead to a significantly lower provision in the third and fourth quarter without economic deterioration, without outsized loan growth?

Jared, again, I’d just go back to Kevin’s response earlier. I mean, it’s just so difficult to try to determine even to sit here and presume that there’s a better economy and loan growth. It’s just so hard to say. The CECL process is completely driven by the use of models that are forecasting the economy. For us to sit here and try to determine what our provision is, is difficult. I know it’s difficult for you, because you need to run your models and try to come up with some forecast, but it’s just hard for us to say.

Got it. I guess, actually, just one quick – on the $230 million of those 2 relationships you mentioned, how many properties are incorporated in those – in that balance?

8. Yeah, each have 4. Each have 4 locations in New York City.

Great. Thanks. I appreciate the color.

Next question comes from Steven Duong, RBC Capital Markets. Please go ahead.

Hi, good morning, guys.

Good morning.

Hi, Steve.

Hey. Just on your footprint, are there any pockets that’s showing more stress than your other areas?

Stress from what perspective?

I guess – from – I guess, from a credit perspective, just more unusual as opposed to like what you’re seeing generally?

And from a geographic perspective? I can’t say that there’s one particular area that has been impacted more than the other. It feels less geographic and more asset class. I think you could see that, Steve, in our 8-K, where you see the deferrals really focused on office and shopping centers, retail CRE and then also the accommodation in hotels, motels. I think it’s more by industry than it is by geography.

Got it. And then just a last one for me. Your treasury management team, are you guys still looking – are they still out trying to win business? And just how are they doing? How successful has it been?

The treasury management team? Yeah. I mean, we’re not out there aggressively trying to win business. Obviously, we have a significant cash position right now. I think what they are trying to do is make sure that the current customer base is taken care of, and it’s in line with the market and our own cost of funds. But I wouldn’t say that we’re out there aggressively trying to bring deposits in, at least on the wholesale side, which is where the treasury management team would be most involved.

Well, anecdotally, Steve, I’ve been out on some calls, a college up in New England, up in Massachusetts, 2 very large not-for-profits, where we won, on one of those not-for-profits we had the business. We’ve taken out one of the national banks, and the cash management procedures and the deposits are a big part of that product offering to that particular customer, and it’s a sizable loan line of credit of $8 million. The other 2 situations, one’s a $32 million loan, and the other one is a $40 million loan. And it’s really, we won the business, but it’s a pricing issue on whether we can get to a reasonable return for us dealing with swaps and things like that. So I think the business we’re out there. Our guys – we recently hired 5 significant well-experienced loan officers. We’ve also continued to build out that business development team that we talked about on previous calls. Both these groups were so helpful in that PPP process, and we’ve gotten through that with a lot of experienced bankers. That’s why we’re encouraging people to get back. We have 50% of our staff back in the corporate offices. Getting back to normalcy is really what we’re striving to do to generate more core deposits. That gets back to that strategy question before. Like I said, we don’t want to change our strategy, but we’re certainly going to be optimistic and take advantage of situations where like multifamily and residential, good credit products are available to us at average yield. We’re also looking at this opportunity to move out some of our funding for the use of cash flow swaps, and that’s been – we’ve been opportunistic using some of those tools to lock down some of our funding and become less liability-sensitive as we anticipate rates going up and not going down any further with the Fed position and our position to negative rates.

Got it. I appreciate the color. Thank you, guys.

Thank you. Our next question is a follow-up from Collyn Gilbert of KBW. Please go ahead.

Hi guys, just a really quick housekeeping question. Sean, on the merger charges, do you have how those broke out in the quarter within each segment?

I can get you the breakout, Collyn. But it’s primarily 2 categories. One is data processing. So termination, there’s some cost on the Fiserv side, and then also professional fees, banker fee, legal fees. I actually think that’s the bulk, but I can get back to you, Collyn, on the breakout.

Okay. Okay. That’s great. All right, thank you.

This concludes our question-and-answer session. Now, I’d like to turn the conference back over to management for any closing remarks.

Okay. Thanks, Nick. First of all, I’d like to thank you for your participation today. This may sound strange, but the past 5 months have been an adrenaline rush for me as our Executive Team, as every day has been an adventure. The days are long, but the weeks fly by, and I’m very proud to be working with our leadership team at the bank and the great team of employees who have stepped up to help various not-for-profits, our customers and just generally people in need. As the famous quote states, adversity and crisis do not build character, they reveal it. Character is the first of our core values, 4Cs: Character, Commitment, Cooperation, and Community. These values and the core values of this country will carry us through this crisis. I know it may look dark with all the disagreements in the world and in Washington, but we need to be faithful and not fearful, hopeful and optimistic. We need to stay healthy and help each other through this time. I want you all to please stay healthy and follow CDC guidelines. So it’s good to say, wear a mask and stay away from crowds.

And wash your hands.

And wash your hands, right. Let’s pray for each other and inspire each other in our daily work and look for magical moments to help each other to be the very best version of ourselves during this crisis as we make this journey together. Always remember, the journey is the destination. Thanks, again, for your participation today. I look forward to the day that we can be out on the road visiting with some of you. Enjoy your summer. Enjoy the baseball season, the basketball and hockey seasons. They’re starting tonight and have started over the past week. It’s another step back to normalcy and let’s continue to pray for a cure to this dreadful virus. Be strong, be safe, and God bless. Have a great day, and thank you very much for your participation.

Conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.