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uh good afternoon thank you for joining us for today's webinar breaking down 2020 results and looking ahead at 2021 uh my name is sean o'brien i'm the president of quick rate and i am pleased today to be joined on the webinar uh with by david ruffin uh david as many of you may know joined us in 2019 to start up a new division here at quick rate called in telecredit uh so if you haven't had a chance to speak to david i'd encourage you to do so uh after the after the webinar uh just a few things that we're going to touch on today we'll talk a little bit about what the 2020 looked like in the rear view mirror thank goodness we'll talk about how economic indicators are improving we'll take a quick peek at the results from our qcbi uh quick analytics community bank index results uh david will touch on this true state of credit quality and then we'll close it just showing you what's new at quick analytics uh and in telecredit uh as we discussed on a number of webinars last year uh really the the course of the economy is really beholden to the virus uh the fed made that point in july of last year and we continue uh to believe that that's going to be the case here in 2021 as you know as we look back at this is a chart uh complements of the st louis fed um you can see the downturn that began late in the first quarter and then the precipitous drop in gdp output in the second quarter that was immediately met with fiscal relief and fed support and you can see the bounce back we had into the third quarter but now as that fiscal support is drying up we are in need of more as the as the economy has again uh begun to slow um that's borne out in the numbers as you can see um the big spike up in the third quarter gdp trailing off here at the end of the end of the year all told the economy shrunk by three and a half percent last year um debt to gdp exceeded the size of the economy for the full fiscal year that was the first time that's happened in more than 70 years and i think we just have to come to grips with the idea that we are going to deal with an overhang of debt and an increase in federal debt for the foreseeable future that's a problem we'll have to worry about down the road uh you know currently the if you think about the economy being a patient we got to treat the problem at hand and that's jump starting the economy so um you know again we believe uh as the fed has indicated that the the path of the economy is going to depend significantly on the on the virus um you know a lot of the fiscal debate is just about government spending it's not always the answer but in times like this it is most certainly the answer this is what government does is try to support an economy that's you know that's under pressure you can see the size of the increase of the budget deficit as a percentage of gdp last year was unprecedented 2021 will probably include another year of unprecedented support um but it's necessary to to get the job done because again uh you know this this is this is where uh you know government spending can really actually uh have an effect uh it is not solely uh an american problem right if you look uh at this chart and look around the world right governments across the country are excusing across the world are supporting their economies and i think that will continue into this year with new rounds of stimulus support relief however you want to phrase it all all with the point of getting economies going and getting uh people back back to work as i mentioned uh you know economic indicators are improving uh you know a lot of the employment gains have stalled and uh you know i think you can see that here these uh you know some bullet points from a article from uh schwab charles schwab's chief economist but you know the fact of the matter is that uh in you know there's parts of the economy that are improving uh others that are struggling you know retail sales are a good example completely recovered but most of them are occurring online uh and then certainly sales or retail where people are required to gather such as dining out or traveling are still are still recovering housing remains a source of strength housing supply is clearly uh you know low across the country but has been a good backdrop of support for consumers across the country interestingly enough consumer confidence is low but improving but ceo confidence is at its highest level seen since 2009 and 20 and i just saw a typo in my presentation producer prices are rising but consumer prices you know remain a bit subdued and then clearly as we all are aware of the money supply has really grown uh ex exponentially but the velocity is not and that's really the driver of inflation right when you start to see velocity pick up along with the slack in the employment market you know go away that's when you start to have inflation so i just don't think and i don't believe the fed thinks that inflation is right around the corner um because uh you know we just haven't seen the upticks in velocity uh or the uh decrease in the labor slack to uh to really spur on inflation um all said all told then you know payroll uh payrolls have you know kind of stalled and you think about the fed mandate right they're focused on inflation and employment so they're going to continue to do what they can with their uh powers to to try to improve the prospects for uh for employment uh while you know keeping their eye on inflation the job numbers are kind of born out here you know again once the relief came into the market last year we saw really strong numbers through the beginning of the summer but as you can see in the final three months of the year we really stalled to really know virtually no new job creation the last three months of the year and that's why there's you know more support is needed needed we just uh that the job numbers have just not improved like we need them to improve to keep the keep the economy going um more importantly as well not only have the numbers stalled but the number of long-term unemployed has continued to stay stubbornly high uh and so you know just just you know again reinforcing the the notion that more support is is necessary uh nothing happens overnight right no matter what uh what happens you know it's just going to take some time if you think about you know trying to recover about 10 million jobs that are still shy of pre-pandemic levels of employment if if the economy creates 200 000 jobs a month it's going to take about four years to get back to pre-pandemic levels if you can get those numbers up to 300 jobs 300 000 jobs a month you know now we're down to a little over two and a half years so again clearly we need uh relief support stimulus whatever you want to call it um to get job creation uh going again so you know where does that leave us um you know i ours estimation right the outlook for credit is still expected worse than over the first half of this year but it's certainly better uh than forecast at this time last year uh you know we saw in the fourth quarter many banks uh you know cut back on provisions some even reduced their reserves after building them up throughout 2020 and i think there are a number of reasons to be pot continue to be positive right net charge-offs are low um you know the industry is full of capital and liquidity we've got another round of ppp loans coming um you know there's a belief in an economic uh improving economic forecast um bank valuations are rising you know bank stocks since probably november have rallied about 30 to 35 percent um so i think that will lead to you know uh you know more m a activity this year um where it really had you know fallen off the cliff last year um so just a number of reasons to think that as the year goes on and we are able to get people vaccinated that we'll see stronger stronger signs in the economy um i wanted to put this chart in uh in the quarterly webinars we did last year we made uh mention of you know jp morgan and uh you know how they had really kind of ramped up the reserves and you know uh 75 of the increase of the reserve uh increase they attributed to to pandemic uh you know potential losses or you know credit losses versus just the increase for cecil so you can see in the fourth quarter they they rolled over a little bit but uh you know still uh you know 100 higher than they were at the end of of 2019 um as i mentioned consumer confidence is rising albeit slowly uh but again i think you know with another round of support with pvp better weather i just uh you know i i would expect to see the consumer uh become more confident and hopefully that translates then into spending which wouldn't turn into you know again and improving and improving the economy um a couple of other things just to think about again a lot of the the uh you know economic signs are strong um you know i think the the biggest challenge again is as david's gonna touch on here is main street is still wounded but will hopefully begin healing in 2021 and i think that's the you know really kind of highlights the economy of our economy right now we have a stock market uh and wall street going higher but there's still problems on main street and if you think about it and i you know live in a small town in illinois and if you think about it right uh you know a lot of our local restaurants and service industries are struggling um and if they go they'll be replaced by by chains national chains that are still here that are perhaps more well capitalized than the smaller ones but that's not great for our local economy and the community banks have done a great job of supporting our local uh you know our local businesses uh and again i think we'll continue to do so in 2021 excuse me but that's what you know really kind of highlights that economy of you know that even though wall street's doing great main street is still still suffering and david again is going to touch on that and in 2021 we'll probably really start to unravel what the true state of our our borrowers are um i left this next point in here about this fed forecast from the gdp forecast from the atlanta fed um this is uh just a little over a month they have raised their forecast along with almost every other um wall street house right that the the almost daily the the forecasts are improving uh given the amount of stimulus that is expected to be uh introduced into the economy so again uh the the path is still going to depend on the course of the virus but uh you know the government is certainly throwing all it can to try to try to jumpstart this thing and get it moving as quickly as possible um but there is still work to do right this uh chart from mckinsey just illustrates the amount of people and just resources that it's going to take to vaccinate the entire country and you can see it's a you know significant uh investment in man hours and people um so you know there's still work to do be done but every day you know clearly more people are getting vaccinated which should translate into you know just better economic uh outlook and activity uh throughout 2021. so uh before i hand this off to david i just want to you know take you through some numbers um from quick analytics uh you know quick analytics and the qcbi is an index that we use that just you know really kind of discusses performance at the community bank level uh it's really designed around the the fdic's definition of a community bank i'm not sure there's a better community bank state than the state of minnesota uh you can see there's 270 uh eight banks in the state a little over five thousand uh still across the country uh almost you know 87 of the banks in minnesota are under 500 million so again just speaking to the strength of the of the community bank market in the in the state um if we look at you know asset growth over there the last 12 months again you know exceedingly strong uh you know 83 of the banks had a greater than 10 uh asset growth it was kind of realized by banks of all sizes uh loan growth you know uh was a little over five percent uh you know again you know one little over one out of three banks saw a ten percent growth um surprisingly a little bit is there were you know over 30 of the banks didn't see any uh loan growth and that's i will say that is a bit bit surprising to me but uh again you know good strong growth uh you know in the in the state uh needless to say deposit growth was incredibly strong uh 85 of the banks saw you know deposits grow by over 10 percent and as you can see in the bottom chart by asset size you know again uh experienced and realized uh across the board um certainly we we see that at quick rate right just banks are flush flush with cash but it does you know again reiterate the fact that the industry as a whole is is you know is is really equipped both from the liquidity and capital standpoint uh much better than we have in previous uh downturns that we've that we've gone through oops uh performance numbers uh not surprisingly with the drop in interest rates we have seen the yield on loans drop cost of funds dropped by over 20 basis points lower than the national trend this red line on all these charts are the national trend numbers so you know clearly banks in minnesota are managing uh their institutions extremely well uh nem did roll over that is a continuing source of concern uh you know as we are all for the most part you know nim lenders right that's really our driver of earning uh and so we never like to see that number roll over like it did in 2020 um so it'll be under increasing pressure hopefully it will stabilize here but still above the national trend uh even even with the the drop in 2020. uh non-interest income just kind of stayed steady uh you know bit below the national trend and then again a credit to all of you uh just the continued you know kind of drive down inefficiency ratio right we just uh every year uh minnesota banks are getting you know better at just containing their costs and just uh running you know really outstanding outstanding banks and that's borne out here in these efficiency ratio numbers uh a couple of other just kind of high level things we looked at at quick analytics just comparisons between 2020 and 2019 um you know two almost two out of three banks saw a decrease in their roa almost every bank in the country experienced asset growth you know four out of more than four out of five banks did see a decrease in their nim uh in the same way uh you know four out of five banks saw a decrease in their loan to deposit ratio and we really are a decade lows as an industry in terms of uh loans uh two deposits okay uh just a couple couple of final uh slides here again roa not surprisingly rolled over a bit but again well above the national trend same way with core operating earnings core operating earnings is a kind of a pre-provision pre-tax type of assessment we think it's a great way to compare banks it really speaks to the earning powers that banks possess and you know again really strong actually increased in 2020 uh which is a bit unusual given the backdrop but uh and and i think as you look far to the right both in terms of roa and core operating earnings um you know really strong numbers from even from the smallest banks up to the 1 to 10 billion uh banks so you know just a really good story uh for for community banks in minnesota and then here are the roa and roe numbers again above the national trend and really strong median numbers across asset sizes of all banks so you know uh not surprisingly hats off and congratulations to all of you uh for continuing to manage and run you know just outstanding banks in the state of minnesota uh and at this point i'm going to turn it over to david uh who can who is going to take you through the second half of the presentation david great uh sean i hope you can see my screen yes again look forward to speaking to uh i had the pleasure within the last month to speak to a linda group that uh sponsored by cbm and i always love speaking with minnesota bankers i'm kind of the credit guy on the presentation today but i want to hasten to for disabuse you i'm not here to speak bloom and doom as so many credit that people tend to want to talk about i think the operative word however here is uh uncertainty and i think we are ealing with in the our industry probably uh unprecedented levels of credit uncertainties leading into 2021 and and therefore rather than any kind of gloom and doom i think really vigilance is also kind of the word now why are we in somewhat of a a a almost a a surreal atmosphere with credit quality at this point uh 2020 was virtually a a high performing year for virtually every bank certainly what kind of expectations were being tatted about in the spring of 2020 far exceeded that the armageddon has from covet it has just not materialized yet in terms of credit quality and metrics at the 10 000 foot level clearly imply uh nothing onerous has yet occurred and there's a lot of temptations to claim victory in the industry you know we're just that good at managing our institutions through a national disaster and and by the way making money doing so we're certainly as sean indicated the beneficiaries of years of building more capital and hopefully of course with the vaccines and therapies improving the worst of this coveted disaster hopefully is is beginning to be over and most importantly i think in many ways unlike a decade ago no blame can be ascribed to our industry whatsoever relative to the mortgage crisis that we had like a decade or so ago because quite just the reverse the community financial institutions are deservedly getting a lot of plaudits uh in survey after survey about the role that you all are playing in the ppp programs and i think uh as paul harvey the uh late uh radio commentator used to be famous for pivoting in a certain story and said now now the rest of the story we have experienced as sean has alluded to in a highly quantitative way uh unprecedented amount of regulatory relief um i call it regulatory respite in 2020 in the uh tdr suspensions the more liberalized extensions and modifications again as sean alluded to massive levels of federal economic stimulus certainly in the early months of the pandemic we are flushed with liquidity and non-organic loan growth um through the ppps sba initiatives and so forth uh but you know most of the bankers that i speak with and particularly those that are in the credit or risks side of banking just intuitively understand that credit tails almost inevitably outlive the economic shocks that usher in a so-called new credit cycle and we all know that the federal government lifelines eventually will have to cease um but again as sean alluded to our i wrote an article in december entitled uh our commercial banking credits live on main street not wall street and it behooves us to remind ourselves and remember main street is still in a distinct recession and you know many of our borrowers particularly in the commercial area are really more focused at this particular point in time on their survival as a business than investing for growth and for us credit people that nominally would be considered a genuine red flag in credit but these are not ordinary times so the 2020 credit realities i think are that while we've avoided an economic calamity i believe that all of these initiatives that occurred in 2020 created potentially the greatest masking effect of underlying credit risk in modern banking history and again unlike a decade ago when we had the last the great recession crisis covet has left the banking industry which i consider to be maybe our most its most vexing legacy and that is its impact across a number of divergent industries are going to have to be assessed by bankers it's not just one such as wonderful family housing and i think that there's a lot of uncertainty among all stakeholders from different perspectives certainly boards and management never like to be put in a position to not uh being succinct and and and accurate as much as they can in terms of projecting where they are from a credit perspective risk managers whether they be general risk or chief credit officers and rep and credit analysts they that's their primary function is to be on top of emerging and existing credit risk certainly investors and investment bankers have expressed to me i think largely that was the reason we had such depressed bank stocks for much of 2020 was the tremendous amount of uncertainty again i've had investment bankers tell me personally they've never seen this level of uncertainty trying to project into the next couple of years around what really is the legacy of this code disaster uh embedded in loan loan portfolios and of course regulators and i think that's critically important because i've talked to some regulators and i've certainly heard third party from bankers that have had reasonably recent regulatory uh examinations that regula regulators now feel that they're somewhat back in a more normalized uh examination process and there's going to be as a very strong impetus on their client constituent banks rather to make sure that you're on top of what really is the embedded risk in your portfolios as we get into the kind of postcoded world and we all know that uncertainty of its nature is is anathema to managing credit risk we can't eliminate it we're in the risk business we certainly always aspire to at least minimize it and at least quantify it as much as we can uh and again i think that's going to be priority one for this this coming year other challenges uh we've we've got some indication that some uh investigations are beginning to increase on instances of ppp fraud again doesn't appear to have any issue of liability for banks but it could be another example of kind of paperwork bureaucratic distractions that bankers will have to go through the cecil is not going away i know a number of bankers were hoping that frankly that was going to be the first victim of covid but uh not to be and it's been extended to some degree but certainly is here to stay remember uh 2021 is a year of labor transition the interagency guidance about a month ago came out reminding banks to be absolutely sure that your proper documentation is in place around any kind of move off of libor to an alternative measurement in pricing and of course we always live with uh money laundering bank secrecy act and cyber risk which are ubiquitous in our world today uh and of course the inexplicable question is uh how long the tie to the government to both abate our risk and enhance our growth and again as i said before and i think as sean alluded to it was arguably quite necessary to avoid an economic calamity but in many ways the banking industry has benefited uh from these government initiatives uh in a way that is not even normal from from a banking industry standpoint so let's spend some time talking about minnesota the national and regional credit metrics and and the way we go about this uh not unlike uh everything sean alluded to in quick analytics our sister division we uh for these presentations we look at uh 10 billion dollars is kind of our ceiling because we think that gives a better kind of a peer analysis a peer compare rather to your uh the world that you operate in and remember being part the newest division of the quick rate family of products and services and telecat also sees uh community financial institutions as our natural uh client base so and in all of the data i'm going to present to you from a peer standpoint you'll see the minnesota graph in the blue line you'll see the midwest tier states in the burnt orange and the national and the green in the simplest of terms i always say to even bank boards take a look at your inventory of problems the chart to your left and then you've got one or two things to do with the inventory you either charge them off or you reserve for them in this case uh not unlike again the plaudits that sean gave you in terms of collective performance in minnesota is on the best side of both of these you have the lowest uh acknowledged level of npls charge-offs are inconsequential as we know industry-wise wide and then you also have a higher level of aggregate for 10 billion dollars and under aggregate level of reserves so you've got lower problems higher reserves let me speak just a moment to the npl chart and this is maybe indicative of what i've been alluding to about masking underlying credit risk i was speaking to a good friend of mine in banking about a month ago and he was bragging that he ended 2020 with lower npls than he began the year with and he said who would have ever thought that would be possible facing code and i asked him because i could do so without the risk of insulting him with good friends i said okay how much of that is driven by the are you benefiting from extended extensions and or modifications and he said laughed he said you caught me point being is some of that is again artificially the the beneficiary of some of this regulatory relief we've been given in 2020 but again the main point here is minnesota on a comparative basis performing exceedingly well in this an inverse of of looking at that is to say again a great story for minnesota you're covering roughly over two and a half times your acknowledged problems as we sit today again we all know that the current inventory of problems is is still extremely low uh sean touched on this in terms of loan growth um what you can see however that's coming largely from the banks uh over a billion dollars but also with all that uh you know average we we kind of do this on a last 12 month trailing average basis if you look at the fdic quarterly banking profile chart that it was issued as of the third quarter of 20 uh remember these are year-end numbers that we're using it shows a drop-off a significant drop-off and largely that's indicative of the fact the industry really didn't see much traditional organic loan growth after the big spike up in the first round of ppp loan originations concentrations is something we all live with in banking in terms of risk management we almost always go to the immediacy immediately to cre as a concentration you'll see the chart to the right is the broader 300 percent guidance chart to the left is the subset of that the 100 guidance on construction and development again minnesota extremely in good shape in that regard there are only five banks in minnesota that have exceeded the guidance of 100 percent for construction development only nine banks that have exceeded uh these are under 10 billion that have exceeded the 300 percent guidance remember that's guidance not regulation um but you know uh cre and then then we we take a look at others because i think again as i said earlier kova is going to leave us with a a absolute need to understand where we are on all concentrations no matter whether it's real estate or not but again uh this this the middle chart here cni is a little bit misleading i think nationally because it it really is indicative of a lot of the ppp spike up which we all know is is non-organic loan growth but i'm going to speak to that in a moment in terms of a potential opportunity to convert those into more uh organic ongoing business for you ag of course again this is data coming from the commercial banking world it's not inclusive of the farm credit system but minnesota not surprisingly is a little ahead of the peer states and and well ahead of the nation in terms of exposure to to agreement why is concentration so important the fdic sponsored an excellent survey published in july of 2020 the findings of which really would not surprise any of us but it did kind of quantify or make official what many of us just intuitively thought that was a 70 percent of the bank failures of the last crisis had cre lending as a focus that there were high concentrations of late cycle growth or what we call vintages which prove the point that we've known for a long time that loans made late in a healthy or benign credit cycle often become the most toxic when credit becomes more stressed and the very fact that it had a high car they had these banks had high correlations to collateral dependence which you know again uh proves the old point that those of us in the banking credit world know uh intuitively and unfortunately by a tough experience is that when you have to revert to collateral to get out of a bad loan it often has already been devalued in the marketplace so it's a double whammy and of course there were state and regional market forces that would prove to be critical covariance in all this this next chart shows from the federal reserve that as of 2019 cre as a general lending [Music] type had had really gone to par with residential lending i would argue i don't have numbers for 2020 and i don't certainly don't have numbers for the community financial institutions i would presume that the latter would show that has significantly exceeded even by the residential lending so cre is a in and of itself remains a big issue for us and because we all know what covet has done to two particular uh subsets of cra one is is office space income property in that regard it probably has changed forever how we think of the requirements for for formal office space outside of people that can work from home and certainly what e-commerce has done to brick-and-mortar retail so all of those things have to be factored into our loan portfolio in terms of risk assessment another way of looking at this is also frankly having to acknowledge the structural challenges that smaller banks always have to face when when face when when faced with higher credit stress coming down the pipe this is really in three areas one is the just the nature of capital capability to flush emerging credit uh the second is that subjective quality that rides with the fact that you in many cases actually know these borrowers making it much more difficult to pull the plug if you will but the third is probably the most impactful and that is the fact that we as an industry community banking is so tied to real estate which is clearly arguably the most illiquidum of all problem assets once credit uh stress reaches that subset um so and even in minnesota it's it's you've got the it's really the under 500 million dollar banks particularly 500 to a billion and 100 million to 250 that are holding the largest acknowledged inventory of problems as we speak today which is as we alluded to already almost insignificant and not really consequential but if we had for example a spike a wave of of credit deterioration that just seemingly couldn't be avoided because of the magnitude of the cut post covered recession um then i think we're we're i think this is proving the point of the smaller banks uh uh vulnerabilities if you will uh to having to manage increased credit risk there are certainly changes afoot in lending we'll look at it from two perspectives the more production side and then the risk side the production side we're looking certainly at new prospective borrower paradigms what we used to think of as the typical or prototypical pool of prospective borrowers has clearly shrunk because of code and this is where i think you should really aggressively take steps to convert your ppp loan programs to much more stable organic loan pool customers and that is a huge advantage that i think again the community banks have and every survey i'm aware of is community banking is coming out well ahead of the mega banks in in their perception of the small business people who think that community banks truly are living up to their image of being you know reliable provider of of capital and funds uh for small business survival today and again just capitalizing on the goodwill related to all those we polluted alluded to um i do think it's incumbent on most banks now to fully embrace the whole array of the government guarantee programs for growth uh frankly i wouldn't look at it anymore as just a one-off uh step child of lending oh yeah we've got an sba group over here doing loans i think for in my opinion for a number of years to come we're probably going to need to embrace the whole attractiveness of the government guarantee programs as legitimate strategies for enhancing our organic loan growth it clearly brings goodwill continued goodwill it's got profitability from the fees and secondary market sales and again i think that of course presumes the efficacy of the guarantees in place from the risk perspective i think we're already having to do again a bit of a piv t over to understanding your ppps and from a credit risk management standpoint whatever after effect of the covid related modifications and extensions that went down during 2020 there may be in some cases a need to start assessing talent capabilities if we do have acknowledged credit stress increases i think one specific recommendation would be for you all to tweak your policies and and if nothing else remember regulators and and rightfully so hold you accountable uh to acting out or performing per your policy and some policies have not been tweaked to even reflect the unusual nature of the covet environment and don't get entrapped by having not done that so i think even if you do it in a somewhat temporary basis i think that would be time well spent to begin to kind of reflect what is the real world and covet in your environment as opposed to being held accountable frankly by regulators for policies that may not necessarily be pertinent in some areas i do think focusing on conservatism with that overreaction is going to be the the theme of the next couple of years with particularly uh the last sub-bullet here focusing more on reserves and uh than charge-offs i do think that because of our aggregate capital position in the last financial crisis there was an almost inevitable uh knee-jerk reaction often at the behest of regulatory subject strong suggestions to go ahead and charge off but again i think with the cushion of more capital in the uh in our industry now we're going to be seeing much more reliance on our reserves as opposed to just a a quick fix of charge-offs i do think loan review has to be looked at uh has to be looked at in 2021 and 22 to in effect catch up uh in many cases there's been some lag in in scopes uh and and a lot of that was driven by just the practical logistics of doing loan reviews during some of the worst parts of the coven uh in experience for banks but regulators i know of are already talking in those terms there better be a very robust uh and effective loan review process in place uh to to kind of deal with this level of uncertainty i've been alluding to through the whole presentation again with m a activity uh likely to spike up again we have to find a way to to allay these as i said unprecedented levels of uncertainty that a lot of the investment banking world uh tends to talk in terms of i think we'll be in it will if you're in an m a scenario be a lot of what-if scenarios i think there'll be a lot of focus on cultural synergies uh whether or not that's gonna work culturally as opposed to just a fixation on kind of credit mark uh discounts that often drive m a deals uh and again i think even the mechanics of calculating the credit mark may change well beyond just a net charge off it'll include things like you know non-accruals or gross charge-offs or loans with repayment patterns history repayment issue patterns a much more liberalized if you will definition of what used to be the driver net charge-offs i have told our clients uh that i think there are five strategies that we may help you reduce the uncertainties one is to recognize the trap of just staying at your portfolio at large in terms of its its current performance or its credit metrics that can be uh i think somewhat misleading it kind of gives you a sense of them losing sight of the trees that are in in some degree of stress because my overall forest looks like it's in good shape again covet is going to leave us with a almost a mandate to create portfolio subsets identifying hot spots that may be operating in quite varying degrees of concern for us you certainly should have tools that your best to quickly identify or transition from your aggregate trends down to your specific borrowers or or troubled borrowers that may be creating those we've alluded to that to adopt some alternative portfolio servicing protocols again including enhancing your loan review and also i think the great benefit for these five steps would be your capability to write your own script before anybody including the regulators do it now what we do at intel credit is largely along the lines of this concept it is through either public data which is our system division quick analytics or non-public data which is the energy source for intel credit we kind of take this kind of top-down approach of peel the onion or drill down from the most obvious red flag aggregate trends to to the individual loan details and again in a revolutionary way we've tried to kind of bring loan review out of the wilderness and make it part of an interactive very dynamic diagnostic diagnostic process of your entire portfolio and remember that the external stakeholders uh of of our industry uh those that are the you know the investors and the peers and the regulators they largely see your bank through public data only you are privy to the non-public idiosyncratic loan data and it is within that data that gives you early warning signs and it also gives you i think your most important capabilities as we said in step number five to write your own script uh so that's basically our our our intellectual framework if you will around everything we've developed it in telecom so what are the values uh to you of taking these five suggested strategies again confirming you as captain of your own ship you do not want to be seen as a deer in the headlights about a regulator or even an investor in terms of being able not to be able to quantify where your portfolio looks like in the postcode environment one regulator told me years ago that they kind of used this uh simple four box matrix assessment of of all banks uh in terms of cooperation on the y-axis competence on the x and of course nobody would want to be either unseen as uncooperative or incompetent but again uh and as if that relates to credit it it it speaks specifically to what we're talking about here is the ability to avoid credit surprises in my long career in this industry i've never known a more toxic issue that could develop between a management and a board or even a bank and a regulator than to have just a constant stream of credit surprises uh bubble up we never can avoid all surprises for obvious reasons but i think there is always a goal to to minimize as much of that as we can and again i think one of the great benefits of implementing these strategies would be to support the proven correlation between early detection of or emerging credit risk and two outcomes one is your reduced levels of loss and non-performance and also your greater flexibility at in early detection of managing problems out of the bank uh frankly before they are they're yours and and yours only uh we know that the magnitude of today's credit uncertainties are still great and the challenges uh are are there but we certainly believe they can be overcome so i think with that sean i will hand it back to you and you can close up the webinar well again i've enjoyed being with you minnesota bankers quite a bit today thank you david i'm going to just get my screen going here again so again i encourage all of you if you haven't had a chance to speak to david or learn about what he's built for us here at uh in telecredit i'd really encourage you to do so uh we think we've got a a number of exciting new uh offerings and tools that we think will certainly benefit you and uh and certainly improve your loan review process um just uh kind of you know final couple things just to tell you about what we're doing here at quick analytics and in telecredit um just a reminder you know what we do at quick analytics is really bring data from a number of different sources and put that on your desktop um or any tablet or device uh really we want to take you out of the aggregation of data business and leave you in the analysis business right spend your time focusing on analyzing your data industry data other banks data and we make that process very easy for you so we're grabbing data from a number of different sources as you can see here and putting that into a very user-friendly visual format we have been continually developing this since 2013. uh 2021 will be no different we've got a number of enhanced enhancements uh if you haven't looked at our cecil solver we think it's a great way for community banks to address this and deal with it we will have a new camel's page coming out where we'll highlight the call report items that kind of go into and drive your camel ratings we'll show you trend changes quarter over quarter and year over year for any of the banks uh who uh need or are required by the sec to have an investor relations page we've made a or introduced a cost effective solution for you to do that uh and then if you haven't looked at us lately we introduced an excel add-in tool a couple of years ago we've enhanced that this year with uh by incorporating credit union data into that as well so a number of new enhancements uh more than you're even on this page and we didn't certainly invite you to to learn more about that through a demo another tool that we just recently released was an industry credit research function where you can research any loan category metric you can add research groups and banks research groups being meaning peer groups and then you can also overlay fred data onto that so if you want to see if there's been correlations between gdp unemployment other economic components that can be helpful for your q factors in cecil or just uh you know your own credit research this is a great tool to do that we'd invite you to learn learn more as i mentioned you can drop in research groups like your uh a national peer group or even your your state peer groups uh the investor relations page we make very easy for you to manage we are also capable of managing it for you uh again all designed to to you know take some of the cost out of this uh but still comply with the fbc rules this gives you a little bit of a flavor of what our page looks like we'll include your most current press releases you can write your own overview we'll put the stock price information and then you can see we'll populate all the necessary disclosures officers directors etc uh for many of you who have worked with uh quick analytics we've provided you with a portfolio level credit stress test we improved that this year by making it more interactive uh we allowed you to make additional inputs um to remove ppp loans other government guaranteed loans make changes uh to other financial uh peer group changes uh again making it more interactive but but suffice to stay we we started off with we've run a credit stress test at the portfolio level on every bank in the country so all you have to do is log in and you can see what kind of capital cushion you have under different different levels of stress no need to you know to spend a lot of money having a consultant prepare something for you that you can look at simply by logging in um again some of the assumptions and improvements we made we've allowed you to to make changes to your inputs both in terms of financial projections and assumptions uh for your bank historical losses we've changed or given you the ability to to update those even from the the three worst years that we used to default those with so a number of more personalized customizable knobs that you can turn to to best fit this uh to your to your bank so i invite you to to do a walkthrough of your numbers we can take you through uh the the stress test and show you your numbers uh as i mentioned the the excel add-in tool um you know is something you can download it'll put a quick analytics selection up on your toolbar you can pull in data about your banks and credit unions now you can pull in information on other banks other peer groups you've created so it's a great tool beyond what we've built in quick analytics this really allows you to import any piece of call report information into your own spreadsheet and then you can manipulate the data however however you see fit um you know i i i want to emphasize that you know at quick rate we've been you know uh serving you with the non-brokered cd marketplace for almost 35 well 35 years now um in 2021 and we've always kind of made as our our hallmark our foundation is that we want to build affordable easy to use solutions we believe we've done that now with quick analytics and in telecredit and certainly you know would invite you to to learn more um in terms of loan review we you know we welcome the opportunity to give you a quote let you see how david and his team have improved the process both from just a a process standpoint in in turning down and cutting down the cycle time in terms of getting through the review uh making you know the ability to clear exceptions in real time uh much more uh efficient so uh you know we think it can help you in terms of not only the process of loan review but give you more information and we can introduce you and give you a glimpse of the new portfolio analyzer and how you can uh you know incorporate that into your your loan and credit administration and risk management um in telecredit it at its heart is a cloud-based application consisting of a portfolio analyzer and smart loan review again we can do external loan reviews but if you're doing internal loan reviews or just annual reviews we've built functionality and templates to make that process uh again more efficient we have tried to and you can see it you know in your efficiency numbers in in minnesota everywhere you can deploy technology into your bank you can improve the process loan review just this function we don't believe there's really been anything introduced or made available to banks until now uh david and his years of experience uh he and his team have done this and built this for you and again we'd encourage you to take a look uh and see how we see what we've built and how it can help you finally for quick analytics just a reminder we really provide you a number of different tools uh you know primarily designed around bank and peer performance we have interactive bank pages that describes and takes your call report information and lays it out in easy to understand in usable formats and then where we can we've built regulatory tools including a cecil solver a credit stress test and then obviously the new introduce introduction of industry credit uh research um so we want to thank you for taking time to listen to our webinar today we encourage you to reach out to us at quick analytics and in telecredit and we'll certainly look forward to either seeing you at a future icbm event or a webinar that we would have the honor to uh to present to you again in the future so on behalf of david uh and myself thank you very much for listening today and we'll look forward to hearing from you soon bye now you