Image source: The Motley Fool.
Bridge Bancorp Inc (BDGE)
Q1Â 2020 Earnings Call
Apr 30, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, everyone. And welcome to the Bridge Bancorp First Quarter 2020 Earnings Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. And please note today's event is also being recorded.
This time, I'd like to turn the conference call over to Kevin O'Connor. Sir, please go ahead.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thank you. Good morning, and thank you for joining us this morning. I hope all are healthy and safe, and I'm sure getting accustomed to life on phones, web access and Zoom meetings. I'm joined on this call by our CFO, John McCaffery. We will discuss our quarterly performance as well as COVID-19 impacts, current issues on initiatives for both the short and long term. We'll of course, welcome your questions at the end.
Before I jump into the results, I'd like to provide some context and background, highlighting how our culture drove the priorities and actions of BNB for the past six weeks. Although six weeks certainly feels much more like six months. I certainly can't begin without acknowledging the healthcare professionals and first responders who are saving lives while putting themselves in harm's way. Unlike millions of Americans, they're not able to work from home or maintain social distancing. They along with the entirety of the healthcare support network must be recognized and applauded for their bravery, dedication and heroism.
New York City and the surrounding metropolitan area, which includes our principal market of Long Island, has been particularly hard hit by COVID-19 with over 200,000 reported cases and unfortunately, too many deaths. This provides the backdrop for BNB's journey over this time. Our employees have distinguished themselves by displaying an incredible commitment to our clients and to all the local businesses who need our help as they struggle to navigate this unprecedented economic and public health crisis.
We've highlighted on Slide 4, many of the initiatives and efforts BNB has made, and I won't go line by line. The health and well-being of our employees is at the core of every decision we've made, and at no time that it's been more critical. In short order, we needed to mobilize and protect our employees while continuing to support our clients. In a matter of weeks, our teams moved from a centralized work environment to working remotely, while juggling family care, the global pandemic, anxious clients, who all needed our help more than ever. While we've not experienced anything like this in our lifetime, I'm incredibly proud of how smoothly the adjustments were made. There were no gaps, no misses, no oversights.
In fact, our employees came together in an incredible way, working 24/7 to make sure our customers and our neighbors could receive the funding they desperately needed in order to maintain their businesses and keep their own employees working. I'll cover that in more detail later.
We have also provided relief to our customers in the way of fee waivers, long moratoriums and, in many cases, a shoulder to lean on. Banks to essential industries remained open. In many of our communities, our offices are one of the few lights on, and we understand we provided a sense of normalcy during these surreal times. As you can see, we recognize we're all support of the larger community and have accelerated and increased our commitments to supporting local grassroots efforts, helping to provide food, shelter and support for healthcare services. In fact, it's our intention to utilize the portion of the PPP fees to further these efforts.
I'd also like to share some of the high-level metrics for the first quarter. Net income for the quarter was $9.3 million with an EPS of $0.47, with net interest income growing to $36.7 million, an increase of $2.3 million versus the first quarter of last year. There was no change to noninterest income, which came in flat to the prior year of $5.2 million. The quarter's net interest margin was 3.26%, consistent with our prior quarter. Decline in net income is largely due to the increase in loan loss reserves and a decrease in swap fees. The reserve increased from $600,000 in the prior quarter to $5 million in Q1. John will cover in greater detail as we decided to adopt CECL.
We also believe that this covers the impact of COVID-19 at this point. Although the continuing closure of principal markets and the uncertainty regarding reopening will require an ongoing assessment of this item. We've always been a disciplined lender and believe our portfolio metrics related to LTVs, debt service, and most importantly, borrowing character will be a differentiator going forward.
We had a strong growth in total assets, reaching $5.1 billion at the end of the quarter, an 8% increase over the end of the year. The business also saw material growth in loans, $371 million or 11% higher than Q1 2019. Non-public non-broker deposits grew as well, up $141 million by the end of the quarter, a 5% increase again over last year.
John will now take us through the deck discussing Q1 and some of the subsequent activities.
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Thank you, Kevin. So on Slide 5, with just an overview of the first quarter, some of which Kevin touched on. EPS of $0.47, that's versus $0.71 for the prior quarter and $0.65 for the last year first quarter, and Kevin you discussed some of the reasons for those deltas.
On the net interest margin, our NIM held steady from Q4 2019, and actually was a little bit down from Q1 2019 as well. I will note that our margin NIM was 3.29%, so it seems like we have some momentum coming out of the first quarter on our margin in Q2, which will be also impacted by PPP. So I believe the "ex-PPP" phrase will become something of a staple in press releases for the foreseeable future. The provision, which was up significantly due to our estimation of economic impact from the COVID-19 crisis was also affected by the first quarter adoption of CECL. We did adopt and we opted to speak with CECL because we did have an option to delay the impact of that, but we didn't see any real upside for going forward with not having CECL.
We took a $1.6 million day-1 CECL adjustment to our ACL and a $5 million provision, of which $4 million was related to the COVID-19 crisis that had an impact of $0.15 on the quarter.
Some balance sheet highlights. As we entered into the end of March, we did see, obviously, this crisis was beginning to ramp up, and we decided to bolster liquidity from the -- we decided to bolster liquidity in light of the uncertainty coming around. We went out, and actually, because of some anomalies in the interest rate markets, we were able to borrow $100 million at negative 30 basis points for the first three months of that borrowing.
We let the lower-yielding investments continue to decline as we managed liquidity and our requirements for posting flatter for municipal deposits. First quarter C&I loans were up significantly after we had a very CRE-heavy fourth quarter. Our IPC deposits, which are our non-brokered, non-public deposits were up 10% on an annualized basis. And our DDA as a percent of those IPC deposits is holding steady at 46%.
During the quarter, we repurchased 180,000 shares at a cost of $4.6 million. At the end of the quarter, we again, as an abundance of caution to preserve capital, we decided to spend that on March 25.
Income statement highlights. So interest income for the quarter was up $1 million quarter-over-quarter. And again, we mentioned the NIM stayed at 3.26%, and PPP is going to have a significant impact on this reported margin in Q2, and we'll assess that as we go through the second quarter.
Past due numbers are quarter-over-quarter. At the end of Q1, we had $13 million in past due loans. I just want to say that as of today, $4 million of those $13 million have been recurrent and an additional $2 million related to one residential loan is slated to close, and we thus be taking out of that loan sometime in the next week.
Service charges were up quarter-over-quarter and year-over-year in the noninterest income line. And then title fees, SBA and swap income were up year-over-year. The drop in SBA, swap fees from Q4 to Q1 was certainly a function of the Q4 commercial real estate activity that we had, which was quite significant.
Noninterest expense is down quarter-over-quarter, and we believe we have been concentrating a lot on our cost controls. Again, I will state that this crisis we've been going through and the reaction to would -- may impact our noninterest expense as we try to manage through more of at cost we have to buy and other expenses we're occurring in response to this.
Going down a little more on the allowance within the first quarter. This kind of -- this chart will take us through where we ended last year, the $1.6 million CECL adoption day one that we spoke about. And then during the quarter, net charge-offs were just $200,000. We feel the first quarter impact -- the first quarter generalized provision would have been $1 million, and we increased it by $4 million based upon the response to the COVID-19 crisis. The assumption in the model -- for our CECL model was that we're going to have recoveries in 2021. I don't know whether that's a U-shape or a V-shape or a flat V, but that's the current assumption we're making, and obviously, we'll continue to assess that as we move forward.
We're not saying that this is the one and done. But again, at the period of time, when were doing our CECL calculations for the first time ever, we thought this was the most prudent and predictable forecast that we had at the time. So yes, we do feel we're adequately reserved. Additionally, the fees we will, I guess, taken from the PPP loans to provide additional capital raise, we expect we would get about $30 million in those fees at some point. But we will report on that as those fees come in as we haven't received any of them yet.
Next slide, we're showing -- the industry we've identified has been particularly susceptible to the shutdowns in our area and probably will have lingering effects going forward. We certainly will have enhanced monitoring of all of these customers, and we continue to look for additional areas of concern as the current shutdown unfolds and additional businesses come to us and ask for some kind of relief or we just see some weakness. We're continuing to look at all areas of our loan portfolio for any signs of weakness, and certainly in the press and just generally what we see being reported.
We continue to work with our borrowers who ask resistance. For each one of those borrowers, we assess their financial positions and craft custom strategies to help them get through this crisis to make sure that we are partnering with them on what the workout plans are. To date, we've granted 275 loan moratoriums, which totaled $371 million in balances, which is 9.9% of our total loan balances in exposure. So you can see here the breakdown by this broad categories of where we've been at and have granted some of these moratoriums, and we will continue to report on these as we go forward. Generally, these are all 3-month moratoriums or forbearances and various, whether it's principal interest or principal interest depending upon the individual situation as discussed.
When the crisis was first ramping up and before the PPP program became something that was existing, we did offer 79 loans of kind of an emergency loan relief program to some of our customers who needed immediate liquidity. These are small loans to be able carry customers through a period of time where they needed to have some kind of support. These were -- so 79 loans totaling $4.2 million with an average size of $53,000. And we suspended this program as soon as the Payroll Protection Program became existing. And speaking of the Payroll Protection Program, I'll hand it back to Kevin to discuss our efforts in that and to wrap up the call and ask questions.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thank you, John. I think I just -- the last slide that I think tells it all for us from the standpoint of Paycheck Protection Program, the PPP program. This is obviously something that we took very personally. We recognized this was certainly a way for us to help our communities and our customers. Our employees embraced it, and fully one-third of our employees are probably engaged in this at some point in time over the last -- again, it seems like three months, but it was really three weeks. We were able to do almost $700 million around one, and as importantly, and I think it's a testament again to our people, that $700 million was probably funded within two or three days of getting approved.
We again jumped back in. We've been able to take advantage, quite honestly, of other people in our markets that may have not been as successful, and we're able to do another $200 million and -- $200 million plus in round two. We're still continuing. Although, I think the bulk of that is done for us. I think it's important to note that how much of these loans are quite honestly, very small loans. As we see here, the average loan was a little less than $250,000. The median is less than $100,000. They're across all industries. And what has been nice for us that -- from a standpoint, it's honestly provided an opportunity for our employees to feel like they're making a contribution back to the communities in which they live and serve. And it's also provided us a great opportunity.
And I know we're not alone as a community bank that we stood out. In the course of the first -- I guess, went out through the month of April, we've opened up close to 2,000 new accounts. Some of those are new accounts for existing customers as they want to sort of segregate this money. But as best we can get is between 1,200 and 1,500 that are new accounts from customers that either bank with us -- are banking with us as part of being this PPP program, or from the publicity we've got for the success of that have come over.
So I think that this has been a great opportunity for our institution and our industry to demonstrate that we can rise up when necessary. I think the criticism or the SBA is out there, but I think it'll look in hindsight that they've probably done a reasonable job dealing with an incredible undertaking. So we were happy to participate. I think our employees, while tired, are grateful to have been part of the solution instead of being part of the problem. And obviously, I think John has highlighted those fees. And when we ultimately get the first check, we'll figure out what we'll do with it.
We have not -- none of which have yet received any money. But we recognize that this is something that along with other revenue that we make will help us as we continue to navigate these difficult times. So with that, I probably will turn it over to questions because I'm sure there are some people chopping in the bit to ask us what's going on.
Questions and Answers:
Operator
[Operator Instructions] And our first question today comes from Alex Twerdahl from Piper Sandler. Please go ahead with your question.
Alex Twerdahl -- Piper Sandler -- Analyst
Hey, good morning guys.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Good morning, Alex.
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Hey Alex.
Alex Twerdahl -- Piper Sandler -- Analyst
Just for a minute, I want to stay on this PPP, which is obviously pretty large relative to the size of your balance sheet, etc. Can you just talk a little bit -- and you kind of alluded -- touched on a little bit at the end, Kevin, but the percentage that was to existing customers versus some new opportunities, and how you kind of frame that -- the opportunity that potentially could come from potentially helping out some customers where they weren't getting any love from their existing banking institution?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
I think in the first round, it was probably -- over 15% were non-existing customers. And I may be understating that a little bit, but we're all trying to gather information. In the second round, I think it's closer to 35% or 40% were non-customers. As I said, we've opened 1,000-plus new accounts. And as I understand, we've already done remotely 300 installations of treasury management products for these newer customers. So always very sensitive to value created in these difficult times. But I think people are recognizing the value of knowing a banker. I think we're at the sweet spot of size. We were large enough to have the resources to throw it at and throw it at this program without sort of belaboring the point.
The first round of this, there was no ability to use technology to any great degree, and that's what the larger banks had a big disadvantage because when you're processing hundreds of thousands of applications, you have to adopt technology. If you're a smaller bank, you don't have the tech, you don't the resource to throw at it. We kind of call it -- we used the brute force method. We had 10 people with SBA sign-ons working 24/7 and get this done, which -- and we've got some nice publicity. I will say that it was a -- we got a television interview that followed on a customer who was with a larger bank that didn't get in the first round.
We were able to reach out to him afterwards PBK make customer round trip for us. So I think that this -- and I know I'm not alone in my -- with my colleagues as community banks view this as -- this is a point time when you need a banker, not a bank.
Alex Twerdahl -- Piper Sandler -- Analyst
Yes. That's great. Thinking about overall loan balances heading into the second quarter, probably going to have some moving parts here with, obviously, business activity slowed substantially in your markets. If we exclude the PPP loans, how should we think about different buckets of loans going into the second quarter and throughout the rest of the year?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
So there's still activity, there's still loans getting closed. I would say that there is still some level of commercial real estate activity happening, and we closed some loans over the past couple of weeks. I would say -- I would hope that as we come out of this initial phase where people can kind of get their bearings and see what's going on, the activity will pick that up. I am not sure that in the near term, in the second quarter, ex-PPP, we're going to see the level of activity we've seen through the past 2 quarters, certainly. We're kind of in our models. I think it ramped down the overall, again, core loan growth to something like 6% annualized.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
I mean I think somebody -- we have to get back to what is the new normal. I think there's still just -- I think there's a shell shock point right here. And Alex, you live in the same marketplace we do, and we recognize that we went from opening April 30 to May 15 to who knows when for certain aspects. And so I think that -- I know there's been a lot of talk on some of these calls about widening spreads and maybe widening spreads on smaller volumes, quite honestly. So I think the -- getting through an opening or understanding what opening is, going back to work, whatever that means to, I think the -- the second half of the year is you really have to see how this tracks.
Alex Twerdahl -- Piper Sandler -- Analyst
Yes. Understood. And then just on the CECL piece of the reserve or the provision, can you give us some color on what assumptions you're using for that $4 million additional reserve?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
So the assumptions basically were a severe downturn in 2020 with recovery in 2021, assuming that whatever the Fed is doing and pent-up demand will bring us back. That said is -- in the CECL model, that was the economic assumption that we selected and that drove the provision down by the additional $4 million. We don't necessarily have statistics that link unemployment and those kinds of things to our CECL model because quite truthfully, in our historical evaluation, as we implemented CECL, there wasn't a correlation in our historical charge-offs to the unemployment rate.
So it was more of a broadened economic assumption about -- severe economic, kind of -- in the low level of severe economic downturn in the near term. And this -- and I think the CECL projection goes out 2 years, so that we had a severe economic downturn for the next 6 to 9 months, then the recovery in 2021.
Alex Twerdahl -- Piper Sandler -- Analyst
Okay. That's helpful. And do you use the Moody's forecast for that stuff?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Pardon me?
Alex Twerdahl -- Piper Sandler -- Analyst
Do you use the Moody's forecasts that a lot of other banks use for that?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Yes. We did. We incorporated that in how we selected from the scenario that we had was.
Alex Twerdahl -- Piper Sandler -- Analyst
Understood. Okay, thanks for taking my questions.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thanks Alex.
Operator
Our next question comes from Erik Zwick from Boenning and Scattergood.
Erik Zwick -- Boenning and Scattergood -- Analyst
Good morning guys. Hope you all are well there?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Same to you, Erik.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thank you, thanks Erik.
Erik Zwick -- Boenning and Scattergood -- Analyst
Thanks. First, I just wanted to say, thanks for all the additional information you provided in the supplement today. That was very helpful. And then if I can start on the net interest margin, with the Fed funds rates cut happening later in the first quarter and LIBOR continuing to come down here in 2Q, and I know you mentioned in the press release and in the comments, John, I think you mentioned that the margin ended the quarter in March at 3.29%. Can you just walk us through your expectations for the margin in 2Q, kind of including the drivers, but excluding the impact of PPP? I think you kind of made some allusions to it in the comments, but wondering if you could just kind of quantify that a little bit more for us?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Sure. I can tell you the drivers. I'm not sure I know how the drivers are going to pan out, but. So like last year, when -- well, certainly -- in the beginning of the year, before the Fed even cut, we had begun to revisit additional deposit rate drops with some of our customers as we had been in the environment for a while, we felt we could reach lower deposit rates a little bit more. And then certainly, when the Fed stepped in, in March, we would jump back in at the more aggressive rate cuts. And I think it was pretty -- I don't think we got much pushback this time than last -- I think everyone kind of knew what was going on and why it was happening.
So that was part of the lift we got, especially in the month of March, and it wasn't even the full month. On the asset side, what we're hearing and what we're experiencing is that spreads are really widening out on loan pricing, whereas in the past you would be looking at a 1.75 spread to swaps, some sensing it really was getting tight there into the end of the year now. I think all of our local competitors are kind of holding at mid to high 3s on multifamily and CRE and also on even on C&I loans, kind of the spreads we're getting to prime or LIBOR have widened out. 1-month LIBOR was the reason why we were able to borrow that money at a negative spread kind of using swaps and home loan bank advances because 1-month LIBOR hadn't come down until recently.
Certainly, we do have some of the swap -- back-to-back swaps that we did on loans into the fourth quarter versus LIBOR. I think those yields will come down. But again, I think the holding of -- the widening of the spreads on loan pricing generally in this marketplace would be beneficial and not have as much of a corresponding impact like the deposit rate drops that we're doing.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
I also think as we look forward on the margin, John, I think you alluded to sort of the margin ex PPP. I think there's a lot of sort of ex things you'll be looking at in the margin. I mean I think John highlighted that going into this, I think we and probably like some other banks build up a little extra liquidity. We have some money sitting quite honestly at the Fed. Even in anticipation of what we might have needed for PPP that, quite honestly, we haven't.
The nature of what's happened in PPP on bank balance sheets is we literally debit loans and credit media, and so it's a 1% spread. And so until we borrowed some money thinking we were going to need it, and money is really not left. It's going to dribble out over the next 8 weeks, some amount of it. We don't -- we're not even going to open the conversation about forgiveness. But at this point in time, that money sitting in DDA accounts, it's earning 1%, whenever we get paid. And then we've also got extra liquidity, went out and borrowed a little bit of money to basically be prepared. So the noise in the second quarter on the margin, I think, will take a lot of explanation. I think John hit on the core part. I think we did a nice job lowering deposit rates.
We think loan spreads are widening. We think the additional draws customers have made on their lines of credit is also wind up in their checking accounts because they're just looking for liquidity. I think one of the interesting things is, in this environment, too, and it's not totally -- for me, what your question is, overdrafts are actually lower than they've been. I think there's been -- the people who are holding their cash, they're not paying their bills. And so they're not overdrawing their accounts. So this second quarter is going to have so many moving parts, the challenge for any of us to -- I think we understand it to explain it in a way that can be modeled will be a challenge for you guys.
Erik Zwick -- Boenning and Scattergood -- Analyst
Sure. No, that's all helpful. I understand the challenges there. And kind of hitting on one of the comments you mentioned there, Kevin, just about the increased draws in C&I, kind of those utilization rates. I'm curious, how much of the $79 million increase in C&I loans this quarter would you characterize as organic kind of new business versus just increased line utilization for people wanting to hold more cash?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Very little.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
I think it was probably less than between 20% and 30%, which probably draws a line. That happened more in the month of April. We have a couple on 1 -- I can name 2 big ones. One was a person for -- quite honestly, they took it to basically have that liquidity, and they took it in a sitting in their checking cab. And then we have one customer who was a unique individual in the company, and he went from making high-tech things for the MTA to making ventilators. And he drew on his line to actually finance that conversion of his business. So that's a great story. But it's -- I think, obviously, as we get into April, there are more people drawing on it, I think utilization numbers went from 48% to 52%, I think, in aggregate.
Erik Zwick -- Boenning and Scattergood -- Analyst
Got it. And then kind of maybe another thought, then you mentioned fewer overdraft, as you look at 2Q and we'll potentially get a full quarter impact of lower business activity. Do you see kind of additional headwinds to noninterest income in 2Q? And if so, how are you thinking about expenses and potentially opportunities to manage expenses with a lower revenue outlook?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Well, I mean, I think you will see some probably drop in service charge and overdraft fees. I think that -- I can't speak to the time of business, I don't think there's been -- I don't know what's going on in the city, east end. Although I think if you would argue that there's a lot of people that may make a decision. They rented everything you can potentially rent in the Hamptons. And there are people trying to buy something now, and there was an article, I guess, in some -- I think it was The Times or something today by people deciding, I may never go back to New York City and when I rent it in the Hamptons or rent it upstate, I may now want a home so that could drive title business.
On the expense side, I think John alluded to it. Obviously, we probably have not hired any in the last two months. We even -- there is normal attrition, if you will. We have probably one of the things -- everybody loves work from home. But I think it's great to basically maintain everything. I'm not sure new ideas happen at that home and new projects get started. So I think it's going to be sort of pulled in place on expenses, if you will.
Erik Zwick -- Boenning and Scattergood -- Analyst
Got it. Thanks. And one last me -- one last question for me, and then I'll drop out. Have you noticed the pace of kind of forbearance request? Has that dropped off since the initial surge? And I guess how would you expect that to trend once the second round of the PPP is exhausted?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
I think it's been holding steady. I think the ones that came in early, come in early. And I've not seen that. I think it can kind of potentially happen after the -- for all the great stories that we've heard about people who've gotten to PPP, some of them come with some sad stories around it. So again, that's why I think we -- what is yet to happen is what we have to see.
Erik Zwick -- Boenning and Scattergood -- Analyst
Great, thank you so much for taking my questions.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thanks Erik.
Operator
[Operator Instructions] Our next question comes from Dave Bishop from D.A. Davidson. Please go ahead with your question.
Dave Bishop -- D.A. Davidson -- Analyst
Yeah good morning, gentlemen. How are you?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Good morning, Dave.
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Hey Dave.
Dave Bishop -- D.A. Davidson -- Analyst
A quick question in terms of the multifamily market there. We're hearing some of the the rent rolls and collections are sort of under pressure here given the stress in the environment here. Just curious what you're seeing in terms of rent collection efforts at this point through the cycle?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
It's funny. You see, obviously, I know this came up yesterday because there was some different differentiation on some of the calls. The best that we can get, I think, April saw the mid-80s and higher and Long Island, 100%. So what happens in May is certainly the big question. I think -- and that's the interesting point is just the moratoriums. People have some moratoriums even though they're probably still getting paid. So one of the things we've done is spend a bit more time. I want your monthly rentals. And we're going to enforce that. We're going to look at that. And at the end of 3 months, if you've really gotten paid something and it may be slowing, I feel like some of that money net. And so that's going to be the dialogue, and that gets back to working with customer's character.
I know that sometimes that gets lost and mixed up with LTVs and debt service, but relationship banking is just that. And so our goal is to ongoing dialogue and making sure that while there -- we should all get a piece of whatever you collect when you collect it, and at certain point in time, we'll continue to work with you. The LTVs will provide some opportunity and some incentive to make sure that you keep the buildings and do all that you should do. But I think all of us in this business are worried about what's May and June on collections, and certainly -- and it depends where your buildings are too, right? And what part of the boroughs, what part of get Long Island, the rental community out here has made up a lot of professionals and people like that. So I said right now, it's 100%.
Dave Bishop -- D.A. Davidson -- Analyst
Got it. That's good color. And then in terms of -- noticed the strong deposit inflow. Any seasonality in terms of some of the deposit inflows were might be in the first quarter?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Usually, the first quarter is dead. We're finding the tide. Usually, that -- if you think about -- certainly in our legacy markets, it's when all the business customers spend their liquidity to basically keep the lights on and the rents paid, and it starts to build in the second quarter and peaks in the middle of the third quarter. So we fight that tide every year. We have this conversation with analysts and investors.
In April, at the time, deposits are lower than they were at the end of the year. Now some of that may be offset a little bit because they do have to pay some of their taxes, although corporate taxes won't pay, May 15, it was April 15 I think. So I take that back. But since there is a seasonality to our deposits. And I think what we've discovered, too, there is a seasonality even in the western markets where you don't think it should be, but I think there still is sort of people -- there's a lot of activity business-wise as you get to the end of the year and the colder monsoon seems to slow down, and we do have some construction businesses too for the West, and that has an impact on it. So long answer, yes, there's still seasonality, I apologize.
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Additionally, this is -- with the overall deposit number, we did ramp up some broker to an extent. And public funds is up. I think we've added some relationships. Things are kind of lagged because we talked about this in the year-end call and that in sub-accounting tax receivers, bills went out late. So where we would have more of a big surge at 12/31, that kind of led into the first couple weeks of January. Then as the tax receivers send the money to the taxing authorities, whether it's school districts or fire departments or library, that money is stuck around a little more. And we have a few more customers as well. So I'm not really sure if the dynamic is there, but it is another reason why deposits are up quarter-over-quarter.
Dave Bishop -- D.A. Davidson -- Analyst
Got it. And then, Kevin, maybe a too early big picture question here. But given the pandemic and the state of disruption in terms of the operating -- day-to-day operating strategy. Do you step back at all and see many -- as we come out post-COVID, any sense that this could change maybe the way you branch or just operate from a footprint perspective? And do you see any sort of fee change or any opportunity to get more efficient coming out of the back end of this?
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Well, I think you have to think that through. I mean, obviously, there are -- our branch -- of our 40 branches, we've only had to close 3 of them at different times. I think they're all open since day 1. Obviously, volume activity is down, but that's been an ongoing trend. We continue to try to figure out how to assess that model and basically space footprint, sometimes it's hard to control in a suburban market because everybody wants to drive-through and they usually come with bigger buildings. But we'll continue to see what we can shrink down and continue to look at creating greater efficiencies there. And I want to be careful here. I know that over time, the branch traffic and volume of transactions will go down. They need to have a spot in the community, actually be a little bit more solidified today based upon what we're seeing.
So I'm going to balance those two things. I know that I've seen people actually do their global footprints about how you're going to lay it out and evolve it in this because of spacing and things. But -- so we're going to make them smaller, but we're going to have people sit further apart. I think that's actually physically impossible. But certainly, I think the model will continue to evolve. There'll be less branch activity and more sort of remote and that kind of stuff.
Dave Bishop -- D.A. Davidson -- Analyst
Got it. And then just one final question, John. Just curious, 1-month LIBOR exposure, what percent of the portfolio sort of floats to 1-month LIBOR?
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
I want to say it's $300 million to $400 million. I mean you probably still have to -- I'd have to recalibrate that after the -- fourth quarter, we had a lot of activity there. But it's probably up around $400 million 1-month LIBOR exposure.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
And I'm sure we'll get you that answer by the time you're up -- at the time of the hours to up.
Dave Bishop -- D.A. Davidson -- Analyst
Thanks. Appreciate the color guys.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thank you.
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Thanks Dave.
Operator
[Operator Instructions] And at this time, I'm showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks.
Kevin M. O'Connor -- President, Chief Executive Officer and Director
Thank you. Listen, I think it's an overstatement to say we're in unprecedented times. And I think for all of us to think we understand what the future is going to look like. I think we're kidding ourselves. I think as I look at our institution and the track record we've had, the disciplined underwriting, that I'm at least taking some comfort on as we move forward and understand how this market reopens and what it means for our customers and our neighborhoods in the communities we serve. I think the opportunity of the PPP program to throw that lifeline to customers was great. I appreciate it, and I can't thank enough.
I know I have a number of our employees on the phone for the efforts they've put in, and they are the people that should be congratulated. They really stepped up and created a process. We became a factory for the last month, if you will, in getting things through from IT people who basically delivered 300-plus laptops in a matter of 1.5 weeks. This has been an all-hands approach to both serving our customers, delivering for you, our shareholders and basically feeling like they can make a difference in a crazy world. So I believe that this is -- the institution has weathered many storms. We're 110 years old. We've lived through a number of financial crisis. I think the team that's in place and how they viewed it and the customers that we've chosen to associate with will hopefully serve us well as we try to figure out how the balance of 2020 looks. But again, I thank you.
This has been our longest call, and I apologize for sort of rambling on here a little bit. But again, I thank you. If there's any further follow-up, please, John will be around. I will be around today. But thank you for your time and your patience with us.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
Kevin M. O'Connor -- President, Chief Executive Officer and Director
John Martin McCaffery -- Executive Vice President and Chief Financial Officer
Alex Twerdahl -- Piper Sandler -- Analyst
Erik Zwick -- Boenning and Scattergood -- Analyst
Dave Bishop -- D.A. Davidson -- Analyst
