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TCF Financial Corporation (NYSE:TCB)
Q2 2020 Earnings Call
Jul 28, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to TCF's 2020 First [Phonetic] Quarter Earnings Call. My name is Mike and I will be your conference operator today. All the lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] Please note, the conference call is being recorded.

At this time I would like to introduce Mr. Tim Sedabres, Head of Investor Relations, to begin the conference call. Sir, the floor is yours.

Timothy Sedabres -- Head of Investor Relations

Thank you, Mike, and good morning everyone. Thank you for joining us for TCF's second quarter 2020 earnings call. Joining me on today's call will be Craig Dahl, President and Chief Executive Officer; Tom Shafer, Chief Operating Officer; Dennis Klaeser, Chief Financial Officer; Jim Costa, Chief Risk Officer; and Brian Maass, Deputy Chief Financial Officer and Treasurer.

In just a few moments, Craig, Brian, Dennis and Jim will provide an overview of our second quarter results. They will be referencing a slide presentation that is available on the Investor Relations section of TCF's website at ir.tcfbank.com. Following their remarks we'll open up for questions.

During today's presentation we may make projections and other forward-looking statements regarding future events or the future financial performance of the Company. We caution that such statements are projections and that actual events or results may differ materially. Please see the forward-looking statement disclosure in our 2020 second quarter earnings release for more information about risks and uncertainties which may affect us. The information we'll provide today is accurate as of June 30th, 2020 and we undertake no duty to update the information.

I would now like to turn the call over to TCF President and CEO, Craig Dahl.

Craig R. Dahl -- President and Chief Executive Officer

Good morning and thank you all for joining us today. Our results for the second quarter demonstrate the resiliency and strength of TCF during this period of economic uncertainty, low interest rates and global pandemic. As we continue to navigate an ever-changing economic outlook, we are working hard to ensure we continue to run the business, serve our customers and support both the safety and well-being of our team members.

Our integration activities continued during the quarter and now just about a year after closing of the transaction we can see the end in sight for our integration program as our final system conversion is scheduled for completion in the next two weeks. I'm very proud of our team's efforts to support our integration activities and we have continued to remain on track with key timelines even while overcoming challenges due to work-from-home in the face of the pandemic. These efforts were no easy task. However, our team's ability to execute reflects the power of our purpose and beliefs and our ability to rally the organization around a set of shared objectives.

In addition to integration activities, our teams have not skipped a beat continuing to serve our customers through our active involvement in the PPP program, supporting 16,000 borrowers with PPP loans as well as working with our customers to provide loan deferrals or other support to help them through the current environment. Regarding our financial results for the second quarter which Dennis and Brian will cover shortly in greater detail, we reported earnings per share of $0.14 and adjusted for merger-related and notable items totaled $0.54 per share.

We saw strong deposit flows given the levels of stimulus and PPP proceeds. Loan balances declined modestly from the first quarter, driven primarily by lower inventory finance balances which were down $1.5 billion from the first quarter as dealers saw strong sell-through rates and lower resupply levels in all product categories. Excluding the lower inventory finance balances, loans otherwise were up 3%, which included $1.8 billion of growth due to PPP loans.

On our first quarter call we shared that inventory finance balances have the potential to remain elevated and sales cycles could slow depending on demand. However, as we indicated earlier in June, we saw second quarter dealer sales volumes much stronger than expected as the level of demand for Lawn and Garden, Powersports, RV and Marine were all areas where consumers continued purchasing products to support changing travel and recreational plans. This is a substantial credit positive as strong sell-through rates are exactly what we like to see with quicken asset turn times.

Now the counter to the strong sell-through is a decline in balances and associated lower revenue from outstandings as many of the manufacturers had their plants idled due to state regulations and were not producing equipment to ship and [Indecipherable] inventory being sold. As we sit here today, those plants are beginning to or have reopened, which should help improve our growth outlook from the low level in the second quarter, but it will take some time to refill the inventory gaps.

From a credit perspective, our second quarter results were strong with just 4 basis points of net charge-offs and we again added reserves in the quarter given the economic outlook which Jim will cover with additional details later in the call. We continue to be well positioned with strong capital levels and substantial liquidity and our lending portfolios benefit from diversification across both geographies and asset classes with no unnatural concentrations resulting from our merger of equals.

Slide 4 highlights our completed integration milestones to-date as well as couple of the remaining integration activities slated for completion this quarter. A highlight of our work in the second quarter was the upgrade of the digital banking platform for legacy Chemical customers who now have added functionality and an upgraded experience for mobile and online capabilities, matching what TCF has built and assembled. The overall digital enrollment from our legacy Chemical customers has exceeded our expectations and the response has been very encouraging as over 80% of eligible customers have already enrolled and we are seeing strong utilization trends for bill pay and mobile deployment.

This combination of the FIS IBS core, paired with our D3 digital banking platform represents the system architecture and ultimate end-state solution we will operate going forward. Now, it is a core system conversion and this requires a good deal of hard work but the customer interface and applications used today will not change and we expect it to be much less disruptive to customers as the biggest changes are in the back office systems. Earlier in July we completed our mock conversions to prepare for the upcoming events and where there are always selected items to enhance and refine, we were very pleased with the execution feedback from our integration teams.

Additionally, we will be consolidating 13 banking centers that overlap as a result of the conversion, primarily in Southeast Michigan. These banking centers on average have another location within two miles. We are working our way through the integration program and the remainder of the expense synergies will come from both vendor contracts driven by system consolidations and from lower staffing from the groups to support the systems, which will be sunset [Phonetic] it. The end result of our integration program will be one TCF operating on a streamlined efficient core system with the agility and nimbleness to continue to deploy new features and functionality to customers.

The technology platform we will have at the end of the day we believe is scalable to support TCF for many years to come and eliminates the legacy technology anchors that many other banks struggle to upgrade and optimize. Upon completion of the integration, we are confident we will deliver on the cost synergies we committed to as part of the merger. Additionally, we could see adjusted expenses for the fourth quarter below our $321 million target. There are a lot of moving pieces depending on the level of COVID-related expenses as well as the timing of when travel and business development expenses pick back up.

So when business returns to more normalized state, we will also likely see higher commissions based on originations and production levels. With that being said, we are ready to manage the Company in a fluid environment where if we see growth opportunities as we head into 2021, we may look to invest some of those incremental savings in supporting revenue synergy that we've already identified. However, if the economic outlook worsens or we do not see the growth in revenue opportunities, we will be disciplined in expense management and could look to further improve operating efficiency.

Slide 5, taking actions to support our team members, customers and communities. At TCF, we took quick action to respond to actions affecting the communities where we live and work, including the COVID global pandemic, civil unrest and the call for it racial equity and the dam break and flooding in Midland, Michigan. First, on the COVID pandemic; we are continuing to respond to the COVID impacts which are affecting our local economies and communities. We have reopened our banking center lobbies, ensuring customers have access to vital banking services, while maintaining the safety of our team members. We are continuing to work with our borrowers to help them manage through this difficult time.

We have been offering loan deferrals to support our customer base and as at the quarter end we had $1.8 billion of loan balances in deferral across the Bank. Our trends and timing were similar to many others as we saw strong demand early on for loan deferrals and over the past couple of weeks we were seeing very limited new deferral requests or requests for a second 90-day deferral. Time will ultimately tell and we are still cautious given the uncertainty heading into the back half of this year. However, the recent trends have been encouraging.

Secondly, on the civil unrest and call for racial equality. This topic is close to home as the murder of George Floyd happened in Minneapolis, which is one of our primary markets. TCF strongly condemns all form of bias, racism and violence. We continue to be very active in supporting our team members and communities through this dialog and call to action. Just last week we were proud to announce a $1 billion loan commitment for minority- and women-owned small businesses. Small businesses are the backbone of our neighborhoods. But we know that many minority-owned and women-owned small businesses historically have not had strong access to credit from many banks. We recognize the crucial need for change and we are in a position to help these business owners.

Another way we can support these communities is by making it easier for people to purchase their own home. We announced the expansion of our Heart and Home program to assist low-to-moderate income buyers by providing grants up to $3,000 to help cover closing costs. Internally we have worked to make sure our employees have a voice in a forum for discussion. We have implemented listening sessions with our executive team to facilitate candid conversations and we have rolled out mandatory training across the Bank on topics such as unconscious bias. We have also shared stories of our team members across the Bank who choose their own words, share personal experiences of racism and inequity in their daily lives.

TCF also celebrated Juneteenth as a company, taking the opportunity for a deeper dialog and education on racial equity. We hosted a panel discussion for all team members, including me, and selected Board members [Indecipherable] and diversity officer and renowned community leaders from the ACLU and AACP and Michigan Roundtable for Diversity and Inclusion. This [Indecipherable] starts with our Board of Directors and I'm proud to say that we have a very diverse group in terms of race, gender, experience and expertise. This includes five women and four directors representing racial diversity. We believe it is time to create meaningful change. One way we can do that is to invest in programs and policies to address disparities and we are Chairman to be an authentic part of this movement.

Now, third on the flooding in Midland. So one of our local communities was impacted by a significant flooding event in Midland, Michigan. TCF has deep roots in Midland as a market with significant operations and employees. I'm proud of TCF's response to this event and the response of our team members as our belief of caring like a neighbor continued to be at the forefront of our actions. We provided financial support to local community organizations, established a Hardship Lending Program to support impacted residents and businesses, and launched an employee assistance fund for impacted team members.

So with that update, I will turn it over to Brian to cover additional second quarter financial results.

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Thank you, Craig. Slide 6 shows total loan balance activity during the quarter. Although loans declined modestly from the first quarter, the driver of which was the strong seasonal decline in inventory finance balances mentioned earlier, which were down $1.5 billion quarter-over-quarter. Excluding the lower inventory finance balances, loans otherwise increased by 3%. Although this is a near-term headwind from a balance and revenue perspective, overall we are pleased with the resulting credit impact as these inventories are selling through and the channels and dealer networks remain open for business with robust activity levels.

As a result, the inventory finance balances continued to come down into the end of June at $2.5 billion and our expectations for the second half of the year for this business will be largely dependent on the timing of shipments of inventory from the manufacturers. It could take a quarter or two for inventory levels to refill. We hope to see the trough of balances in the third quarter, consistent with prior year trends and our potential rebuilding of balances heading into the fourth quarter. In general, we are seeing lower levels of customer demand in the other commercial portfolios while the mortgage origination pipeline has remained very strong.

Our overall loan growth outlook for the rest of the year will be largely dependent on the level and pace of commercial loan demand, which we do not expect to return to normalized levels in 2020. While there are many factors that can impact demand, we expect to see low-to-moderate loan growth, excluding PPP loans, by the fourth quarter. This outlook could change if borrower sentiment improves, but we will continue to be prudent on where we deploy our capital and disciplined on which asset classes we originate.

As we think longer term, when we get back to a more normal operating environment, we remain bullish on our ability to generate stronger than peer loan growth given the product and geographic breadth we have as a result of the merger and the numerous business synergy opportunities in front of us.

Turning to slide 7, we generated $3.4 billion of deposit growth during the quarter, which was supported by stimulus checks, PPP funds and reduced spending levels from many customers. This strong deposit growth is coming while we continue to run-off CD balances, which were down over $300 million in the second quarter. We would expect to see total deposit balances decline during the second half of the year as a portion of this recent growth is transitory. However, we continue to expect deposit growth to remain strong on a year-over-year basis.

With our excess liquidity, run-off of CD balances and improved market pricing, our cost of deposits declined 29 basis points from the first quarter. This includes the cost of our non-CD deposits nearly being cut in half. We believe there remains opportunity to continue to bring down our cost of deposits into the second half of the year. Based on actions we have already taken during the prior two months, our third quarter results should reflect a full quarter impact of those actions and we are continuing to bring down deposit pricing across the board.

Turning to slide 8, we saw incremental pressure on net interest income and margin as expected, given the full quarter impact of the Fed rate cuts and lower LIBOR rates. Net interest income and margin were impacted by both purchase accounting accretion and PPP loans during the quarter. We saw $18 million of accretion in the quarter, which had a 16 basis point benefit to the margin. We would expect this to continue to come down by a few million dollars each quarter as we move throughout the back half of the year.

PPP loans added $9 million to net interest income, including both PPP fees and interest recognized during the quarter, offset by the cost of funds. In total, the PPP loans reduced net interest margin by 1 basis point during the quarter due to the 1% coupon rate on the loans, partially offset by the amortization of PPP loan origination fees. As a result, net interest income, excluding accretion and PPP, declined from $376 million in the first quarter to $351 million in the second quarter while core net interest margin declined from 3.53% to 3.20%.

We are optimistic that net interest margin, excluding accretion and PPP, can trough and rebound from this 3.20% level given several tailwinds including further deposit repricing, which could offset some incremental pressure we see on loan yields as we move into the second half of the year. Ultimately, we expect net interest margin expansion, excluding accretion and PPP, in the second half of 2020 to support net interest income growth, the magnitude of which will be dependent on the pace of loan and earning asset growth.

With that, I'll turn it over to Dennis.

Dennis L. Klaeser -- Chief Financial Officer

Thank you, Brian. Turning to slide 9. Non-interest income totaled $133 million for the quarter and included a $14.7 million gain on the sale of our Arizona branches and an $8.9 million loan servicing rights impairment. Excluding these notable items, adjusted non-interest income was $127 million. The decline from the first quarter was driven by lower banking-related fees due to COVID-19 impacts, including fees and service charges, and card and ATM revenue.

During the quarter we saw higher account balances from stimulus payments, which drove lower levels of deposit fees and service charges, and lower transaction volumes impacted debit card and ATM revenues. In addition, other non-interest income declined due to the lower swap fee income, which declined by $9 million from the first quarter given the lower commercial origination activity.

Although we saw pressure on fee revenue in the second quarter, we saw stronger results in May and June off the lows from April. These trends give us optimism that we would see fees grow from this level into the second half of the year, dependent on activity levels and economies in our markets remaining open.

Gain on sale revenues of $29 million in the second quarter were driven by strong mortgage banking performance and mortgage gain on sale of $25 million compared to $14 million in the prior quarter. Given strong origination levels and mortgage, it is possible we will see continued strength into quarter three and quarter four. This is a key revenue synergy for us and we are operating with one mortgage team and platform across our entire footprint and we have substantial opportunity to gain our fair share of origination volumes, matching our consumer market share.

Leasing fees increased by $3 million from the prior quarter and are likely to be dependent on the level of customer demand and transaction volumes heading into the second half. We saw a significant decline in applications in the Capital Solutions business in April and May, down from prior levels. However, June applications started to rebound. Wealth management fees are tied to assets under management and reflect the underlying assets under management levels. We call our trust business, includes a mix of equity, fixed income, as well as cash and liquid products.

In addition, servicing fees income of $3 million for the second quarter provides a good run rate going forward as it reflected the first full quarter after completing the sale of the legacy TCF auto finance portfolio. Partially offsetting this revenue reduction is lower related loan servicing expenses.

Turning to slide 10, we continue to execute on our integration and cost synergies and we remain on track to achieve the $321 million or lower expense level in the fourth quarter. We had better-than-expected cost control in the second quarter with adjusted non-interest expense of $317 million, excluding $82 million of merger-related expenses and $1.5 million of notable items. As a result, our adjusted non-interest expenses are already below our targeted level of $321 million for the fourth quarter.

We saw lower levels of expenses during the quarter in areas such as employee benefits, medical expenses, occupancy and equipment and other non-interest expenses, including advertising and marketing and travel expenses. These are partially offset by higher COVID-related expenses, including premium paid for certain team members and costs related to cleaning, sanitation and supplies.

Given that we still have cost synergies yet to be realized, the majority of which will come from vendor and systems, we expect to see adjusted non-interest expense below our $321 million target in the fourth quarter. How far below $321 million level we can get on a core and recurring basis will depend on a variety of factors, including the level of additional COVID-19 expenses, the timing of when travel and business development expenses pick back up and the timing and lumpiness of federal historic income tax impairment expenses.

We may see higher federal income tax credit amortization expense in the second half driven by the completion of various projects. But as a reminder, tax expenses from these projects generate associated tax credits which come into the income tax line item and more than offset the related expense in the P&L. Based on these factors, it is fairly likely that our fourth quarter expenses will be lower than the $321 million that we have targeted.

As Craig mentioned, we have levers to pull depending on the growth outlook we see as we head into next year. We believe we have the optionality to either redeploy additional expense synergies into revenue-producing areas to support topline revenue growth or if we see more anemic economic outlook we have the ability to pursue further expense and efficiency opportunities to counter potential additional revenue headwinds into 2021.

As we move into the fourth quarter, we expect to have a better sense on 2021 opportunities as we finalize our budget for next year. Our adjusted efficiency ratio for the quarter totaled -- was 59.8%. We continue to expect to produce an adjusted efficiency ratio below peer median upon completion of our integration activities and cost synergies once we return to a more normalized operating environment.

On a pre-provision net revenue basis, while we recognize pressure we have seen from the revenue side due to rates and recent fee income trends, we are optimistic PPNR can drop and begin to grow with modest net interest margin improvement and recovery in fee revenues. From a tax perspective, excluding any discrete tax items, we expect our effective tax rate to be between 20% and 23% for 2020.

Turning to slide 11, we remain well positioned in this environment from a capital standpoint with common equity Tier 1 ratio of 11.1% at the end of the second quarter, which we expect to put us in the top quartile of our peers. Given the economic uncertainty, our primary focus from a capital perspective will be on maintaining robust capital levels while continuing to serve our customers.

As part of our earnings announcement, we declared our quarterly $0.35 common stock dividend that will be payable in September. I believe we remain in a strong position to continue our dividend at this level given the earnings power we see on the horizon once we get past the end of our merger-related expenses. However, this will depend on economic conditions as we move throughout -- as we move through the coming quarters.

We also want to ensure that we are in a position to take advantage of any platform or portfolio opportunities that may become available as the macro environment stabilizes and improves. Buybacks under our share repurchase program continue to remain suspended. We currently have $89 million remaining under existing authorization and there is no preset program expiration. Overall, we have a strong capital and liquidity position. We remain focused on doing everything we can to support our employees, customers and communities.

With that, I will turn it over to Jim to provide an update on credit.

James M. Costa -- Chief Risk Officer

Thank you, Dennis. Turning to slide 12, as Craig mentioned earlier, our credit results in the second quarter remains strong as net charge-offs came in at 4 basis points, down 2 basis points from last quarter. The level of net charge-offs we are seeing continues to be below expectations we set prior to the COVID pandemic for 2020.

Our 90-day delinquencies also remained very low at just 2 basis point. We did see a slight uptick in non-accrual loans and leases which increased $41 million or 16% from the first quarter. C&I non-accruals increased by $14 million and is primarily driven by four credits, all of which either have collateral value in line with the outstanding balance or are on track for pay off or refinance out of the Bank. The increase in CRE non-accrual of $10 million was driven by a handful of smaller [Indecipherable], the largest of these in a couple of million dollars.

If I turn to slide 13, in Q2 we added $76 million to reserves for a total allowance for credit losses of $504 million. This includes $43 million of reserves for unfunded commitments. Allowance as a percentage of loans increased from 119 basis points to 142 basis points in the second quarter. Excluding our $1.8 billion of PPP loans, our allowance was 149 basis points or 1.49% of loans.

Keep in mind, we also have $149 million of fair value discount on acquired loans, which provide additional credit protection. In total, our allowance for credit losses and discount on acquired loans would represent 194 basis points of loans, excluding PPP. Total provision expense declined from $97 million in the first quarter to $79 million in the second quarter with the elevated provision expense is driven by the economic impacts of COVID-19.

While COVID-19 related provision in the first quarter was driven by a qualitative review and modeling of various economic scenarios which set the potential impacts from the pandemic, provision in the second quarter was driven by our quantitative models based on economic scenario deterioration compared to the first quarter as well as supplemented by indepth portfolio reviews. It is difficult to predict the future given the various COVID uncertainties as well as fiscal and monetary stimulus. However, the situation will continue to become more clear over time. As the economic environment changes we will continue to assess likely scenarios related to COVID and adjust our reserves accordingly.

Our recent credit performance has been very strong so far this year and we are seeing deferral balances starting to come down as an early positive indicator. However, we continue to operate in a very fluid environment yet believe TCF is well positioned given the enhanced diversification of lending we have as a result of our merger of equals.

At this point let's turn to slide 14. It's important to note that we have one of the most granular diverse lending portfolios of our peers with no single business representing an overweight position. It is also worth noting there are many areas of concern in the industries for other banks where TCF has little or no exposure. For example, no material, oil and gas lending exposures, we do not have any aviation lending to commercial airlines or cargo operators, we do not participate in railcar lending or leases, no credit card portfolios, etc. However, we have learned more over the past few months as we have completed eight portfolio reviews which incorporate our estimation of the potential impacts of COVID.

As a result we have called out the portfolio as listed here on slide 14 where we believe there may be a higher relative risk due to the impacts from COVID. As you can see these portfolios include hotels, motor coach and shuttle bus, which is within Capital Solutions, a portion of our CRE retail portfolio, franchise and fitness, and retail trade in C&I. Our overall balance of loans on deferral at quarter end was $1.8 billion and that number has come down substantially over the quarter. Many of the initial deferral requests came in when the level of uncertainty was much higher and we saw borrowers taking a very defensive position given that uncertainty.

What we have seen since then is the initial deferral periods have started to fall off and substantially lower requests for a second 90-day deferral periods as well. That activity has resulted in our deferral total at quarter end being less than 40% of the original deferral requests. Subsequent to quarter end, during the month of July we have continued to see lower total outstanding balances on deferral. However, we are monitoring deferral trends across these portfolios and have reviewed the component of those which we believe has an elevated level of risk due to COVID, which is what we are sharing with you here.

Hotel lending, as an example, is one of the COVID-impacted portfolios, which totaled $775 million. It represents 2% of total loans. This is a modest component of our total CRE mix, here we have reviewed our portfolio and are monitoring occupancy levels among other metrics. Not surprisingly, 53% of that portfolio was on deferral at quarter end and we believe that approximately $600 million of those balances represent elevated risk to COVID.

Our focus on this sector has been on sponsored with expertise and liquidity, operating flagged, limited service properties, generally in the Midwest. We benefit from lending the properties, primarily can drive two locations versus fly two destinations. And we do not have material exposure to large downtown or convention center types of hotels in this portfolio.

The motor coach and shuttle bus is another sector we'd like to call out which totaled just over $400 million and represents 1.2% of total loans. Consistent with our comment last quarter, this portfolio is heavily impacted by reduced travel activity which continues to see low [Indecipherable]. Deferrals have been higher -- portfolio and we will likely see a longer road to recovery for these areas to get back to closer to normal state.

Retail CRE totaled $1.3 billion and represents just under 4% of total loans, which is another area we're calling out. Here we have seen fairly low levels of deferral requests to date. This portfolio is supported by its diverse and granular nature and as an example, the average size of loan with deferral book is just $1 million.

Franchise and fitness totals $300 million or just under 1% of total loans. To date, we have seen modest deferral activity here. However, we do believe there is approximately half of the portfolio that could carry an elevated COVID risk given the impact from potential second phase of shutdowns or restrictions.

On the franchise side, these credits are largely to borrowers affiliated with large national brand name chains which provide more stability and support to the business program and are generally quick-serve restaurants, which has seen less revenue decline than other dining room-only businesses. On the fitness side, the primary concern here is the status of restrictions in various states as it relates to reopening guidelines. Borrowers in this space are primarily associated with large national chains and mass market membership basis, which we believe are more recession-resistant than the premium segments of the market.

Finally on the retail trade sector of our C&I book which totaled just over $350 million, we have also seen very modest level of deferral activity to date. We are watching the status of reopening across our footprint and that will drive the outlook for this portfolio. Importantly, here again the book has strong diversification. While we cannot specifically call out consumer portfolios on this list, we continue to monitor trends in these books, given the potential changes to unemployment rates as well as the support from stimulus programs. However, we do not view this portfolio as having the same level of risk as the other portfolios that we have highlighted.

With that, I'll turn it back to Craig.

Craig R. Dahl -- President and Chief Executive Officer

Thank you, Jim. So to wrap up on slide 15, our priorities remain as follows. First, we will continue to prioritize the health and safety of our team members. Next, we are committed to continuing to serve our commercial and consumer customers. We have a full suite of products and services to meet the diverse needs across our customer base and we remain open for business.

Third, the finish line of our integration journey is in sight and we will remain focused on a smooth final transition. Despite the continued challenges brought about by the COVID pandemic, we remain on track for completion in the third quarter, thanks to the hard work and dedication of our team members. Given the current environment, we will be very focused on our risk profile and the credit quality and trends within our portfolio.

We took many actions to date that put us in a strong position coming into this crisis and I think the nature of our portfolio positions us well to understand the current economic environment and thrive and emerge on the other side. Lastly, we remain focused on achieving our financial targets. After we complete our merger cost savings and once we return to a more normalized operating environment, we believe we will be well positioned to generate top quartile adjusted ROATCE along with a below peer median adjusted efficiency ratio.

So with that, I'll open it up for questions.

Questions and Answers:

Operator

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Jon Arfstrom of RBC Capital Markets. Please go ahead.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Thanks, good morning.

Craig R. Dahl -- President and Chief Executive Officer

Good morning.

Dennis L. Klaeser -- Chief Financial Officer

Good morning.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Maybe just going to the P&L, certainly expenses were a high point for the quarter and I understand, difficult to give us a little really precise guidance. But maybe, Dennis, can you talk about the magnitude of some of the expenses that you're -- expense savings you're expecting from vendor and systems conversions. And then maybe a flip side of it, we can do our own math, but any idea of how depressed some of the activity based spending, what is for the quarter, like some of the travel and business development expenses?

Dennis L. Klaeser -- Chief Financial Officer

Yeah. A number of puts and takes there. So in terms of our overall expense savings, in the last quarter we indicated that we're about two-thirds through. We're now about three quarters through our expense savings and most of the incremental savings are related to our vendors and system expenses. So we do have some of those expenses in Q, but there's a variety of areas where expenses were down more than we expected in the second quarter, sort of inter-related to COVID-19.

So for example, marketing, travel and medical expenses alone, those three items were $10 million trended down in the second quarter. As we return to normalized activities, those expenses, medical, travel, marketing will trend back up to the more normalized levels, offsetting a good portion of those incremental operating expense savings that we still have from the merger.

But there is a variety of other areas where we found incremental expense saves. And so as we trend into the fourth quarter we do expect to be below the prior guidance. But again, some of that is due to just the slower economic activities. As we look to the latter part of the year and into next year we are bullish about the recovery of the various fee revenue items, loan volumes, loan origination volumes, and with that we would see the expenses sort of migrating back to that more normalized level.

And as we commented that if there is continuously significant headwinds, there are levers we can pull to manage down the operating expense levels appropriately. But I think we remain bullish that there is going to be those revenue growth opportunities and we do see opportunities to have incremental hires really across the franchise that will help drive the revenue synergies that we expect from the merger.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Thank you for that. And then, Brian, you talked about net interest income growth and one of the comments you made, it's dependent on the pace of loan and earning asset growth. And I guess, can you dig a little deeper and just let us know what you're thinking on some of the third quarter starting points for loans, is it the period end, is the guidance that you've giving us versus the average, are you expecting some further pressure in the period end balances, just to get some starting point.

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah. No, thanks for the question, Jon. What I would say is when we said kind of slow to moderate growth, that's speaking kind of to by the end of the year. So it's kind of speaking from a point in time perspective and obviously is going to depend upon economic outlook, pace of commercial demand.

We're more confident that we can have that growth in fourth quarter, that's typically when we see Capital Solutions have more growth, it's one we're more confident, we're going to see inventory finance balances start to grow because in fact just like previous periods, we will see inventory finance balances likely still trend down a little bit here in the third quarter from the end of second quarter.

So it's really NII kind of growth, you know, more confident that that's fourth quarter than in the third quarter, but we do see it's driven both by the troughing of net interest margin rate, as well as seeing growth come back in the portfolio in the second half.

Jon Arfstrom -- RBC Capital Markets -- Analyst

All right, thanks guys.

Operator

Next we have Steven Alexopoulos of JP Morgan.

Steven Alexopoulos -- JP Morgan -- Analyst

Hey, good morning everybody.

Craig R. Dahl -- President and Chief Executive Officer

Good morning.

Dennis L. Klaeser -- Chief Financial Officer

Good morning.

Steven Alexopoulos -- JP Morgan -- Analyst

Maybe to follow-up on Jon's expense question, when we look at this quarter, the $317 million of operating expenses, is that a good base run rate as we head into the third quarter. I know, Dennis, you mentioned, maybe $10 million or so depressed tied to work-from-home things like that, but that will stay the same for third quarter. So is that a good run rate for us to build from moving into 3Q?

Dennis L. Klaeser -- Chief Financial Officer

Yeah, I think it's probably a good base level. Some of these expenses we'll come back a little bit, medical expenses, for example, people are going back to the doctors again, but some of that expense growth would be offset by the incremental expense saves that will start coming in, particularly in the latter part of the third quarter. So again, there is some puts and takes there, but it's probably a good number to work from.

Steven Alexopoulos -- JP Morgan -- Analyst

Okay. And then as you mentioned on the fee income that you saw an improvement in May and June. Could you give us a sense of -- I know we're basing on a one-month, but if you looked at the June fee income, like what would that -- what would the run rate of that be, like how much are we net back?

Dennis L. Klaeser -- Chief Financial Officer

Yeah, I don't know if I want to give you the specific revenue of specific month. But clearly, there was a distinct rebound occurring as economic activity start to pick up in our economies. But we're still down significantly year-over-year, we're well below our normalized levels and the trajectory at which that continues, whether it continues on this steep trajectory that we saw sort of May to June or whether it levels off a little bit depending on the pace of the economic recovery. I think suffice it to say, we do expect sort of a full recovery to normalcy as the economy recovers. Exactly the pace at which we get there, whether it's latter in the third quarter or latter in the year, early next year and it depends on the pace of economic activity.

Steven Alexopoulos -- JP Morgan -- Analyst

Okay, that's helpful. Maybe just one, final one, for Jim. If we look at slide 14 where you're calling out the hotel exposure in the $609 million at risk, can you give us an idea, what's occupancy like for those loans on deferral and where do they need to be for breakeven and maybe then LTVs in that portfolio? Thanks.

James M. Costa -- Chief Risk Officer

I appreciate the question, Steve. This is Jim. So it varies. The reason that there is a fairly higher proportion of the $775 million as high risk because the occupancies haven't rebounded to what we would like. We saw the occupancy in the single digits at the onset of COVID. We're now seeing some of our more distressed properties showing up with 20% to 40% occupancy level, which is good. That's still not what we're looking for in terms of a breakeven. And it really does vary by asset.

So I would say, it really depends on the property, but we do stress them upon underwriting and we have put severe revenue pressures on the stressors in that portfolio to determine the allowance as well as the called amount as high risk and then raise the debt yield thresholds to levels that we would not normally underwrite to ensure that even under the most stressed times they can perform.

So circling back to the original underwriting, the equity would range anywhere from 20% to 30% in these portfolios, typically more like 30% in the last 18 months or so. That really is a strong equity position. What we're really finding is that the stress on occupancy is expected to be sustained for a long period of time that we just wanted to call this out and bring it to your attention.

Steven Alexopoulos -- JP Morgan -- Analyst

Okay, thanks for the color everybody.

Operator

And next we have David Long with Raymond James.

David Long -- Raymond James -- Analyst

Good morning, everyone.

Craig R. Dahl -- President and Chief Executive Officer

Good morning.

Dennis L. Klaeser -- Chief Financial Officer

Good morning.

David Long -- Raymond James -- Analyst

As it relates to the paycheck protection program, what are the remaining fees to be realized there and then on that note, on a quarter-to-quarter basis, absent forgiveness, are you accruing the fees on a straight-line method?

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah. So, Dave, this is Brian. What I'd say is our gross fees will likely be around $60 million as we called out. We recognized about $8 million of that this quarter. So there is $52 million left to be recognized. We're currently amortizing that $50 -- that remaining $52 million primarily over the two-year term, the term of the loans. That will get accelerated to the extent that there is forgiveness.

We are expecting a high percentage of these to likely be forgiven, could be 80%, 90% of them. We think a lot of that will happen here in the third and fourth quarter. So we would expect a lot of that remaining fee to get amortized in the third and fourth quarter, but obviously it's dependent upon borrower use of proceeds as well as the timing, it is kind of hard to predict at this point.

David Long -- Raymond James -- Analyst

Right, right. Got it. Thank you. And then you talked about the line utilization being down overall. Can you give us some color on the magnitude of where the line utilization is relative to where it was maybe December 31st and March 31st?

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah, Dave, this is Brian. What I'd say is, it was very immaterial for us. The movement that we saw in Q1, it was relatively flat. We did not experience big line draws in Q1. So when we say it's moved, it's marginal up and really marginally less today. So it's not material at all to our balances is what I'd say.

David Long -- Raymond James -- Analyst

Okay, got it. And then just the last thing I want to ask you was about the mortgage pipeline, I know it sounds like it's going to be a pretty good quarter. Any color on the pipeline today and how it compares to three months ago.

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah, it's -- I mean, what I would say, this is Brian, it's at very strong levels. I mean I think we have, it's probably a $1 billion plus pipeline at the end of the quarter. So origination refinance levels continue to be very strong. Hard to predict how much of that closes and how long this -- we stay at this high level, but it's one of the -- definitely the bright spots from a loan origination perspective.

David Long -- Raymond James -- Analyst

Got it, OK, great. Thanks, Brian. Appreciate it.

Operator

Next we have Ebrahim Poonawala, Bank of America Securities.

Ebrahim Poonawala -- Bank of America Securities -- Analyst

Good morning.

Craig R. Dahl -- President and Chief Executive Officer

Good morning.

Ebrahim Poonawala -- Bank of America Securities -- Analyst

I guess I just first wanted to follow-up with Jim on the CRE book. So I think Jim you mentioned, if I heard you correctly, the LTVs in the hotel portfolio are approximately 70%. Could you give us the LTVs for the CRE retail book and the rest of the CRE portfolio. And again the question essentially trying to handicap the equity buffer that's there in the event where you end up repossessing some of these properties and what we should expect in terms of what the loss severity could be on these loans?

James M. Costa -- Chief Risk Officer

Yeah, I appreciate the question, Ebrahim. Across all the different channels we probably wouldn't get into LTVs by segment and it really is tailored to the asset class. I would just remind you, as we've said in pre-COVID quarters that we have a very conservative underwriting and we underwrite two stress conditions, interest rate shocks, net equity question there, is meant to absorb those shocks as well as things like longer stabilization period, the lower occupancies.

The stresses that we're seeing now are quite extraordinary obviously. So that's why we're calling as relatively higher risks and the reserves associated to them are commensurate with the relatively higher risk position. But asset by asset, there are many factors that go into that including liquidity of the borrowers. So, I probably wouldn't call out specific LTVs by channel.

Ebrahim Poonawala -- Bank of America Securities -- Analyst

That said, I'll now -- so, thanks for that. And I guess just on that, I guess maybe a question for Craig. I think as you look through the -- I think the struggle right now is we saw things rebound in May and June, and the kind of stalled in terms of economic activity. If you can talk to just, when you look across your businesses, what's your expectation around the outlook, do you think things getting worse from here and what's the kind of pressure that you are seeing on your customers where if we don't see a little bit of a rebound over the next 30 to 60 days where things could get a lot more painful?

Craig R. Dahl -- President and Chief Executive Officer

Well, I think, Ebrahim, I have to break them down into the segments. On the consumer side, it's really where the employment status is. We're pretty comfortable where we stand because as Jim commented -- and Brian, we had a rush to deferral requests early on because people were doing it in a defensive way and we have been able to maintain good performance there and I'd say modest levels of deferrals.

So it's really just hard to say where the economy is going to come based on -- but our markets are not having -- our primary markets are not having some of the COVID issues that they are in the South and Southwest. And so we're just going to continue to monitor that.

On the commercial side, it's again -- it's -- you asked for a lot of detailed questions in there. I think the key is, we have low -- typically lower exposures. We have strong sponsors. Both banks in their historical origination process really relied heavily on the sponsor and I think that's staying in a good position with the sponsors is key for that, but I don't have a crystal ball as to where the economy is going and we're going to -- we know a lot more about our portfolio today than we did sitting here even on March 31st just based on completing all these COVID reliance reviews we've done both top-down and bottoms-up review as we understand where we have collateral shortfalls, we understand where we're relying on the sponsor to meet operating shortfalls, and all of those are -- have been going, we think really, really well.

Ebrahim Poonawala -- Bank of America Securities -- Analyst

Got it. And just one last question, if I may. I know coming into this, you talked a lot, Craig, about the investments you made on your retail banking online platforms, sort of the mobile app etc. Just talk to us in terms of what these lockdowns, the remote working mean for you in terms of customer acquisition on the retail front. And should we expect additional expense savings as we look out into '21. I mean I get all the guidance that was mentioned earlier, but does that comment more expense savings looking out into '21 as a result of this faster digital adoption? Thank you.

Craig R. Dahl -- President and Chief Executive Officer

Sure. I mean, we think it's quite remarkable. And all of this that we've stayed on track in our announcements. In addition, how we brought our TCF frontend to Chemical customers in the -- in this quarter and we have an over 80% adoption rate of the total customer base at this point. So we're very excited by that. We learned a lot of lessons. We do have a lot of branches. And so we used a lot of our drive up to service our customers, but that didn't necessarily always end up leaving a great customer experience. And so the adoption of digital could be huge there and we think we've got the freshest technology stack that's going to be out there when we go live in two weeks.

And so we're excited about where that can go and how -- and you saw we announced 13 banking centers, primarily in Southeast Michigan closing. We're going to continue to make those optimization decisions. But the only thing is we haven't really had a lot of marketing expenses that have gone in because we weren't trying to get people to open up an account, right in the [Indecipherable] to have a conversion.

And so we're looking forward to kind of resuming a more normal marketing spend as well. So there's lots of different factors that go in there, but the key is, we love our technology stack, we love the adoption we're getting now. We don't believe that conversion to the core is going to create a lot of disruption for the TCF customers and we're excited to run as one TCF.

Ebrahim Poonawala -- Bank of America Securities -- Analyst

Got it. Thank you taking my questions.

Operator

And next we will take Chris McGratty of KBW.

Chris McGratty -- KBW -- Analyst

Hey, good morning. Brian, I want to come back to -- just to make sure I'm clear on the NII guide. So you talked about the $351 million number for the second quarter, ex PPP and ex-accretion. I think you talked about stability and then growth. Was that kind of a fourth quarter comment and should we expect a modest dip in Q3? Are you suggesting Q3 should be modestly higher than Q2, that $351 million?

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah, I don't -- thanks for the question, Chris. I don't think I was giving -- being too specific about the quarters. What we're saying is, if we can hold NIM at this 3.20%, if that's a trough and it starts to increase, as we start to build back balances and more confident again and more growth in fourth quarter potential than likely third quarter just because of the headwinds still of inventory finance, you know, we're hoping that we can maintain and build NII. And I think I said in the second half. So it kind of -- it's a generic comment that covers both of them, more confidence toward 4Q than 3Q.

But we don't have --

Chris McGratty -- KBW -- Analyst

Thank you.

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah. Does that help?

Chris McGratty -- KBW -- Analyst

It does; yeah. And if I think maybe broadly, there's going to be some noise in the next six months with PPP and balance sheet liquidity being high, but if we see a sustained challenging rate environment, is that 3.20%, is that kind of how you're thinking about trough margin in this environment or do you think perhaps we could see a little bit of pressure if the curve stays where it is?

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah, well, obviously it will depend upon level of rates. I'm trying to kind of give views kind of looking out for the rest of the next -- the rest of this year. And when we look at the margin, there are several headwinds and there are several tailwinds. And I think we talked about them all, but inventory finance balances being less, that is one of our higher yielding assets, that's a little bit of a headwind. LIBOR will still continue to be fully normalized for all of 3Q where for 2Q LIBOR was in the process of normalizing. So that's a little bit of a headwind.

New loan yields are a little bit lower than probably the average portfolio yield. So those are all the headwinds. But on the -- what we're saying is the tailwinds are we think cannot weigh that. The tailwinds are deposit repricing. We're confident by some of the actions that we took right at the end of second quarter that we're going to see deposit costs continuing to come down in third quarter and into fourth quarter as well as we will have lower cash balances on hand.

So what we're signaling is that even though some o f those headwinds exist and we could have new loan yields to be down, we think at least for the next couple of quarters that we can hopefully offset that by deposit pricing and and having less excess cash balances. The excess cash balances will still persist for part of 3Q, but by the end of 3Q really all of our FHLB borrowings, everything rolls off and resets. So that's again -- there is more confidence in 4Q than in 3Q.

Chris McGratty -- KBW -- Analyst

That's great. And maybe if I could ask, just in for -- a question for Craig. You called out in your slide deck the potential for portfolio acquisitions once the economy gets more visibility. You talked about that last quarter as well. Are you seeing -- I guess two-part question, are you seeing more potential today than perhaps 90 days ago and does the transitory nature of the inventory finance make you all more or less likely to do something over the next 6 to 12 months? Thanks.

Craig R. Dahl -- President and Chief Executive Officer

On the first part, the portfolio the portfolio activity is -- I'm sure I had a message here. How they screen, but on the portfolio opportunities, again, Chris, what we talked about in the past is the reason for the sale, what's the reason for it. And if it's credit related or it's a segment and it's an untouchable segment, those kind of items are the first ones to come for sales in this time frame. What we're looking for is more where there is a capital or liquidity challenge or it's not a strategic business for them. So we continue to monitor that. And I'm sorry, I didn't quite catch the second question on the link to inventory finance.

Chris McGratty -- KBW -- Analyst

Just given the near-term pressure on loan balances, does deploying some of that excess liquidity perhaps grow in importance?

Craig R. Dahl -- President and Chief Executive Officer

I think we've talked about -- we've never changed that, we never chased loan growth for loan growth's sake. So, we're using very rigid and our tables and -- our F&B tables on the things that we're acquiring. And so there is some of that activity going on, but it's -- there is worse things to happen then have a loan pay-off in full. So we're not at all down on the inventory finance business.

We still like the business. I think it's been great for the dealer network across all of our asset classes to get liquidity to be -- they're selling a great margins and and they are very excited about it. And again, we talked about that at the first quarter call as a potential headwind for us and what it's turned out, it's a pretty, it's a pretty positive credit story that comes out of that at the same time.

So we're not going to do -- we're not going to chase anything simply for loan growth. We're going to use the same metrics that we continue to use and we're still as diligent to find those opportunity as we've ever been.

Chris McGratty -- KBW -- Analyst

Thanks a lot.

Operator

Next we have Ken Zerbe, Morgan Stanley.

Ken Zerbe -- Morgan Stanley -- Analyst

Thanks. I guess just first question I had, in terms of inventory finance, I understand that this is sort of a seasonally weak quarter and it sounds like it's going be down a little bit in 3Q as well, but can you just help us understand the magnitude of this, like how different was this seasonality in terms of the decline in loan balances versus say, normal seasonality in previous years?

Craig R. Dahl -- President and Chief Executive Officer

Thanks; thanks for that question because we put a slide in the appendix, which shows inventory finance due to its seasonality. And so it's typically gone down anywhere between $400 million to $500 million. So for it to go down to $1.5 billion, you can figure that out. That's a very significant sell-through. And again the rationale is strong.

Attractiveness for these products and the dealers did remain open and the fact that the manufacturers did not remain open and most of the manufacturers were closed for anywhere from six to eight weeks. So some are still reopening, some have already reopened. But there is also again the seasonality of the attractiveness of the product. So all of those things have to work together for us to get a clear outlook. But you can see from that -- from -- on page 19. It's typically been $400 million to $500 million and this quarter, obviously $1.5 billion.

Ken Zerbe -- Morgan Stanley -- Analyst

Got it. Okay, that helps to lot. And then Craig, maybe a little more of a broader question. I appreciate all your opening remarks. It sounds like you guys are doing a lot for the community, including the $1 billion of loan commitments for minority- and women-owned businesses. But can you just help us size that, like I don't know if you have any data or if you can provide data, how much have you lent to minority- and women-owned businesses over the last year or two, just so we can size the $1 billion. Thanks.

Craig R. Dahl -- President and Chief Executive Officer

Yeah, it's going to be viewed as doubling the initiative for us over the five-year period. So that's really where we would say where that comes from.

Ken Zerbe -- Morgan Stanley -- Analyst

Got it. Okay, perfect. Thank you.

Operator

The next question we have will come from Jared Shaw, Wells Fargo.

Jared Shaw -- Wells Fargo -- Analyst

Hi, good morning.

Craig R. Dahl -- President and Chief Executive Officer

Good morning.

Jared Shaw -- Wells Fargo -- Analyst

So the $1.3 billion of COVID sensitive balances on slide 14 as well as the growth in non-performance this quarter, were those classified as PCD loans or are those -- are they not PCD?

Dennis L. Klaeser -- Chief Financial Officer

Those are not PCD loans.

Jared Shaw -- Wells Fargo -- Analyst

Okay. So -- no. Okay, all right. And then could you also give us an update on what the current balance of deferral is, you said it had come down since June 30. Where are we at today?

Dennis L. Klaeser -- Chief Financial Officer

We ended June 30, I think we said at $1.8 billion all in, it's continued to come down. But you know what, we are wanting to be careful about, Jared, is this deferrals have come through, we've seen a lot of payment activity during deferral period. Give you an example, roughly half of those home equity borrowers have continued to pay. It's not even a large deferral portfolio, but there's varying degrees and we wouldn't see that on the hotel side. So we want to let the quarter play out more before we give an update on where we are for the month of July, we wouldn't want to give you a false rate.

I would say, directionally, we're very encouraged. The surge did happen in Q1 at the onset of COVID, lot of defensive deferral. We were very discerning as to whether or not they were justified. So, the deferral asks were pretty robust. What was satisfied was less than that, and we ended the quarter at $1.8 billion, but we're encouraged by the level of decline in deferral activity and continued pay through across many of the channels. But I would say let's stay tuned and see how Q3 plays out.

Jared Shaw -- Wells Fargo -- Analyst

Thanks. And then just finally from me, when you look at the excess liquidity on the balance sheet, I hear you are saying that you expect to see some deposit outflows, should we still assume that you maintain a higher level of excess cash liquidity or could we see that head back down toward that $1.3 billion, $1.5 billion level by the end of the year?

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Yeah. So this is -- Jared, this is Brian. So kind of two questions there. What I'd say on the excess cash position, I think we had, I think we ended the quarter, like $2 billion at the Fed. So that's -- that was a drag, 6 basis points on margin. That will -- even if deposits didn't change, that excess cash will start to roll off. We can run-off all of our federal home loan bank balances if need be, they all mature by the end of third quarter. So that would relieve most of that excess cash by the end of September. So that's kind of one question.

As it relates to deposits, we do expect some of those inflow of balances, be it from the stimulus money, the PPP money that's come in, some of that is transitory. So we do think some of those balances will roll off by the end of the year. However, as I think I said in the prepared remarks, we still expect to have significant deposit growth on a year-over-year basis even by the time we get to the end of the year. So not all of that is lengthened, and so -- and the pricing is going to become much less as we get to 3Q and 4Q as well.

Jared Shaw -- Wells Fargo -- Analyst

Great. Thank you.

Operator

Well, thank you for your questions today everyone. I will now turn the conference call back over to Mr. Craig Dahl for any closing remarks. Sir?

Craig R. Dahl -- President and Chief Executive Officer

Thank you. Thank you all for listening this morning. Again, we look forward to completing our integration in the third quarter, which will result in one TCF brand. I wanted to commend our team members for their hard work, which has allowed us to remain on track as well as our frontline workers in our banking centers. It is not easy to manage your day job and additional integration work and all were working from home during a pandemic along with the civil unrest and severe flooding.

I think it is truly remarkable what this team has accomplished so far. What I want you to take away, we have a bank here with a strong management team, we've got a refreshed technology stack, we have preferred funding mix, we have strong core markets and we have strong capital and liquidity, and I continue to believe the best is still in front of us. Thank you.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Timothy Sedabres -- Head of Investor Relations

Craig R. Dahl -- President and Chief Executive Officer

Brian W. Maass -- Deputy Chief Financial Officer & Treasurer

Dennis L. Klaeser -- Chief Financial Officer

James M. Costa -- Chief Risk Officer

Jon Arfstrom -- RBC Capital Markets -- Analyst

Steven Alexopoulos -- JP Morgan -- Analyst

David Long -- Raymond James -- Analyst

Ebrahim Poonawala -- Bank of America Securities -- Analyst

Chris McGratty -- KBW -- Analyst

Ken Zerbe -- Morgan Stanley -- Analyst

Jared Shaw -- Wells Fargo -- Analyst

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