Q3 2021 Amerant Bancorp Inc Earnings Call

Yes.

Good day, and thank you for standing by and welcome to the.

Bancorp third quarter 2021 results conference call.

At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded and.

And if you require any further assistance. Please press star zero on when I like hand, the conference over to your Speaker today, Laura Rossi head of Investor Relations. Please go ahead.

Thank you Victor.

Good morning, everyone and thank you for joining us to review <unk> Bancorp's third quarter 2012.

On the results.

Also on today's call are Jerry plush, our Vice Chairman, President and Chief Executive Officer, and Carlos <unk>, Our executive Vice Chair, Vice President and Chief Financial Officer.

As we begin please note that the company's press release, our discussion on today's call.

'twenty one responses to your questions contain forward looking statements.

Amarin business and operations are subject to a variety of risks and uncertainties many of which are beyond its control and consequently actual results may differ materially from those expressed or implied.

Please refer to the.

And already notices regarding forward looking statements in the company's earnings release and presentation.

For a more complete description of these and other possible risks. Please refer to the company's annual report on Form 10-K for the year ended December 31, 2020 in our quarterly report on.

<unk> 10-Q for the quarter ended June 30th 2021.

And in our other filings with the S E T.

You can access these filings and the SEC's website.

Amarin has no obligation and makes no commitment to update or publicly release any revisions to forward looking statements.

On for them in order to reflect new information or subsequent events circumstances or changes in expectations, except as required by law.

Please also note that the company's press release earnings presentation and today's call include references to certain adjusted financial measures also known as.

<unk> financial measures.

<unk> two in appendix one of the company's press release and earnings presentation, respectively contain a reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measures.

I will now turn it over to our CEO Jerry flush.

Thank you Laura and good morning, everyone and thank you for joining average third quarter 2021 earnings call I am pleased to be here today to report on our results for the quarter and the progress our team has made focusing on the key priorities. We set out during the first quarter of 2021 earnings call. I will also comment later on this.

This morning on some significant initiatives, we have underway to further improve our future results and set the company up for growth in the coming years.

But before going to the results I want to first thank all of my Amgen colleagues for their dedication and effort again this quarter and.

For their continued support and to pursue.

I've, even better results in the future.

So I will now provide a brief overview of our performance in the third quarter and then Carlos will go over the details so let's turn to slide three so here you can see a summary of our third quarter highlights. We are pleased to report further improvement in our results compared to the second quarter of.

Net income attributable to the company of $17 million is up six 7% quarter over quarter, primarily driven by higher net interest income and lower noninterest expense. Our total loans were $5 5 billion and total deposits were $5 6 billion, they're both down slightly from last quarter. Nonetheless.

No.

We're happy to report continued improvement in the deposit mix as core deposits increased we had solid growth in noninterest bearing deposits this quarter.

Our capital levels continue to remain very strong, we recently announced our intention to affect the cleanup merger in order to have one class of common stock going forward.

Nonetheless, we are looking forward to having our shareholders approve this in mid November.

In addition, our board has approved a new repurchase program for up to $50 million, which we expect will commence here in the fourth quarter.

So let's move to the core <unk> slide number four.

We're pleased to show continued growth in.

D PNR of $18 3 million, an 8% increase compared to the $16 9 million reported last quarter. We believe this reconciliation is essential to show the true net revenue growth of the company. We want all of our investors to easily see our results, excluding any onetime gains or losses or severance or other.

The restructuring charges. So they can see what is really happening regarding core earnings power.

If we turn now to slide five our key actions here, we list them out for what has taken place during the third quarter Youll note that a number of these strategic measures, we're focused on driving lower future funding costs.

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And operating expenses as well as set the stage for future growth.

So first on nonperforming classified and special mention loans decreased 31, 7% 31, 3% and 16, 4% compared to last quarter, respectively. We are diligently working.

Cost of further reductions here in the fourth quarter, we have instituted weekly sessions of key personnel to focus on driving to resolution on as many credits as possible to get the non earning assets off of our books and the proceeds are reinvested into earning assets.

We continued downward repricing of customer time deposits.

Further lowering the cost of such funding by approximately 70 basis points, which translates into annualized savings of approximately $2 2 million and we prioritize core deposit growth, which totaled $141 7 million in the quarter.

We closed one branch located in Wellington, Florida as of October.

<unk> 2021, and we've announced a new downtown Miami branch that we anticipate opening late in 2022, the comment period regarding this branch expires next week, we also significantly reduced our future space needs as illustrated by our announcements.

Regarding our new 56000 square.

Where foot operation Center in Miramar, Florida that will take occupancy in the fourth quarter of 2022.

This will reduce our operation center by over 40000 square feet and our annual rental expense by nearly $1 million.

We continued to build out our treasury management team and have completed adding team members.

Members to both sales and service in Florida, as well as in Texas.

We recently completed the business transformation initiatives with a well known third party to improve customer experience and drive additional efficiency. We're finalizing the next steps and we expect to announce this outcome in the very near future.

As we continue on our digital transformation and efficiency efforts. We're excited about our recent announcements regarding leading technology platforms outlining click switch alloys, leading identity decision platform will allow us to automate the identity verification process when onboarding deposit accounts for both business and.

And individual customers.

<unk>, which on the other hand, we will improve the customer experience by simplifying the conversion of consumer and small business accounts.

They transition direct deposits and automatic payments to amarin.

We're confident that these new platforms can help improve our customer experience overall and grow stronger banking.

Relationships.

We also launched our new brand awareness campaign based on the tagline imagine the bank via Billboard in Social media and also announced the new branding partnership with the Florida Panthers in the NHL for the 2021 2022 season.

And our soon to be released investor deck this quarter.

Banking provide examples of the brand and marketing campaigns for your information.

And then lastly, we recently appointed our chief diversity and inclusion officer in September as just one more step in demonstrating our commitment to ESG I'll have some more comments on this initiative in a few minutes.

So if we turn to.

To slide six here, we have outlined our key performance metrics, which show improvement across the board. This quarter. These results are reflective of our continued focus on core deposit growth and improving the net interest margin, which helps drive higher operating profitability. We also maintained a robust capital position and very strong.

Well for coverage, which while it's lower than prior quarter is that a very healthy 159% of total loans.

Slide seven is new this quarter, we wanted to add this focused solely on ameren mortgage outlining the growth in people applications and show the increasing revenue quarter.

Over quarter as a reminder, we started taking applications in late May of this year and we've recently been focused on adding additional sales personnel to the team.

And we are currently in the process as bond boarding an even greater number of experienced personnel this quarter to drive future results.

So with all that said I'll now turn.

Credit Carlos who will walk through the results for the quarter in more detail Carlos Thank you Gerry and good morning, everyone. So turning to slide eight I'll begin by discussing our investment portfolio.

Third quarter investment Securities balance was $1 4 billion slightly up from the $1 3 billion in the previous quarter and flat compared to the third.

At over 200 over 2020.

The duration of the investment portfolio has extended to three seven years due to lower expected repayments net of higher long term interest rates.

We continue to select investments to meet the gave the impact of a prepayment risk over the portfolio.

Floating portion of our investment portfolio continue.

Representing 11% as of the end of the third quarter.

Continuing on slide nine let's talk about the loan portfolio.

At the end of the third quarter total gross loans were $5 5 billion down two 3% compared to the end of the last quarter. The decline was primarily.

Due to approximately 320 million prepayments received in both CRE and CNI plus a portion of the C&I closings, having been moved to the fourth quarter.

Consumer loans as of September 30 were $360 million, an increase of $48 million or 15% quarter over quarter.

During the third.

2021, we purchased an additional $80 million of higher yielding indirect loans for a total of $263 million on that specific portfolio.

Turning to slide 10, we will provide updates on the new loan portfolio.

As we announced during the second quarter call. The New York City loan production office has.

Has officially been close.

At the close of the third quarter 30 loans totaling $220 million were classified as available for sale and a little over 400 million still remains in the newer portfolio.

We have elected to market that position.

Portfolio now classified as available for sale in.

Order to shorten duration and significantly reduced the number of loans being serviced as we sell them.

We have accepted a proposal to sublease, our newer coffees and soup, then and expect to start in the fourth quarter of 2021.

Turning to slide 11, let's talk about the credit quality of our loan portfolio.

Portfolio credit quality.

City remains sound and reserve coverage is strong the allowance for loan losses at the end of the third quarter was 83 million down 20% from the 104 at the close of the previous quarter.

We released 5 million from the allowance for loan losses in the third quarter in which the relief of approximately 2 million.

<unk> was a result of power grids payoffs and Paydowns of nonperforming loans and special mention loans.

A release of the remaining $3 million was due to the loan portfolio reduction and the classification of the loans as available for sale.

Charge offs for the quarter worth $17 million from week.

$5 7 million were in connection with the coffee trader relationship to account for delays as allocation of liquidation proceeds has been subject to objection from certain lenders. We continue to monitor this process and have been in close contact with liquidation Adrian regarding the collection process on prospective distribution.

We will.

Continue to report the development in this relationship as we move along through this process.

Nonperforming assets totaled $93 million at the end of the third quarter of 2021, a decrease of foremost $30 million or 24% compared to the second quarter of 2021.

An increase of $6 million or 7% compared.

<unk> to the third quarter of 2020.

The ratio of nonperforming assets to total assets was 124 basis points down 37 basis points from the second quarter of 2021, and up 16 basis points from the third quarter of 2020.

In the third quarter of 2020, the ratio of reserve to nonperforming.

Loans increased to one 1% from 86%.

And the second quarter of 2021, and a decrease from 135% at the close of the third quarter of 2020 as.

As we have done since the declaration of the COVID-19 pandemic. There is a detailed information on the <unk> section of this deck regarding deferrals for.

Portfolio under escalated monitoring given the continued credit quality improvements in our portfolio. We may discontinue some of the slides for future quarters to streamline the earnings deck.

Continuing to slide 12 total deposits at the end of the third quarter were $5 6 billion down 9%.

<unk> from the end of the second quarter, while domestic deposits were slightly down by $50 million compared to the second quarter International deposits went up slightly by one 4 million showing continuum continued evidence.

As stabilization in this portfolio.

Deposits, excluding customer Cds and brokered deposits.

<unk> increased $185 million during the quarter. This increase partially offset an 11% reduction in customer Cds compared to the previous quarter. As we continued to lower CD rates focus on increasing core deposits on emphasize multi product relationship instead of a single product high cost.

Cds.

We're encouraged to see our deposit mix continuous improvement towards higher percentage of core deposits.

During the third quarter of this year brokered deposits decreased $98 million or 18, 5% out of which $55 million came from time and $43 million from sight deposits.

The decrease in total customer Cds and brokered deposits were partially offset by an increase of $185 million or 5% in customer transaction accounts.

Core deposits, which consist of total deposits. Excluding all time deposits were $4 2 billion. So at the end of the third quarter, an increase of 142 million.

Dollars or three 5% compared to the previous quarter. This amount includes noninterest bearing a $1 2 billion or 21, 5% of deposits.

So at the end of the third quarter, which also includes <unk> increased from $1 7 billion or 19% from the previous quarter.

Now I will discuss.

Net interest income on slide 13 on net interest margin.

During the during the third quarter net interest income was $52 million up three 7% quarter over quarter and 14% year over year.

Over quarter increase can be primarily attributed to the following key factors first lower overall cost of deposits.

Deposits, resulting from declines in average CD balances downward repricing of Cds on increasing the average noninterest bearing deposit balances.

Higher average loan and investment yields with the loan yield increased due to a higher amount of consumer loans.

Third higher investment.

Portfolio average balance due to the company's redeployment of excess cash and cash equivalents fourth lower costs and average balances on FHA advances and other borrowings following the company's repayment and rate modifications of FH Obi.

Lower loan balances during the.

We're due to high prepayment activity in both CRE and CNI, while loans closing some some delays at quarter end does not offsetting the prepayment activity.

Moving on the margin the third quarter interest margin was 294% up 13 basis points quarter over quarter and up 55 basis points year.

The quarter as in the previous quarter, we continue to focus on offsetting ongoing NIM pressure by decreasing the cost of funds through strategic repricing of customer time on commercial relationship money market as well as proactively seeking to increase spreads in loan origination.

Continue to noninterest income.

Over year 2014, the third quarter was $13 4 million down 14, 6% from the second quarter.

The decrease during the third quarter, what's the remind me the result of nonrecurring items recorded in the second quarter, such as $3 8 million in net gain in connection with the sale of $95 million in PPP loans.

<unk> 5 million net loss on early extinguishment of FHA advances.

And one 3 million net gain on sale of Securities also contributing to the lower non interest income was a decrease of $1 $8 million in customer derivative income in the third quarter of 2021.

The decrease in noninterest income was partially offset by an.

In <unk> 2 million in fees from brokerage advisory and other fiduciary activities on mortgage banking income from $7 million.

Ameren assets under management totaled $2 2 billion also at the end of the third quarter up $56 million or two 6% from the end of the second quarter predominantly.

<unk> Green, increasing net new assets our team remains focused on growing assets under management, both domestically and internationally. In addition, we're excited to announce <unk>.

And we are up and live with the new digital wealth platform powered by <unk>.

Turning to slide 15 third quarter.

Italy from interest expense was $48 4 million down $2 7 million or five 3% from the second quarter and up $2 9 million year over year.

Over quarter decrease was primarily driven by lower salaries and employee benefit expenses, resulting from the second quarter, including the nonrecurring $3 3 million.

Quarter notes ever in expenses, we did last quarter.

Also had lower occupancy and equipment expenses, resulting from the nonrecurring point 8 million lease impairment charge in connection with the closing of the New York Health deal last quarter.

Lastly, there were lower consulting legal and other professional fees as well as various other noninterest expense.

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The efficiency ratio was 74, 2% in the third quarter of 2021 compared to almost 78% in the previous quarter and 69, 3% in the third quarter of last year.

The quarter over quarter decrease was driven by the significantly lower severance expenses incurred during the third quarter of 2021.

On the.

The year over year increase in efficiency ratio Westbury, Marty attributed to higher salaries and employee benefits in connection with the mortgage business.

Core efficiency ratio would adjust for nonrecurring items was 73% in the third quarter of 2021 compared to 74 five.

25% in the second quarter of 2021 and 70.

$76 five <unk>.

Last year lastly, as we've previously announced we have closed a Wellington branch.

<unk> 15 this month.

The goal of optimizing our branch network performance and better aligning our desire footprint with strategic objectives, we have announced an addition.

One of our new branch in downtown Miami, which we anticipate will open in late 2022.

Moving onto interest rate sensitivity on slide 16, our balance sheet continues to be asset sensitive as of the end of September over half of our loans either floating.

<unk> structures or mature within a year.

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Sensitivity and mitigate the impact on our financial margin, we continue to actively manage our loan and investment portfolio. These include implementation of flow rates on our loans and capitalizing on higher yielding securities and longer durations.

I will now turn it back to Jerry to talk about the omron progress on the near and long term initiatives.

Thank you Carlos on slides 17, and 18 this quarter, we provided some details on each of the six key priorities this quarter.

Other than going into a lot of discussion on the call as we did in the last two quarters. We felt providing this detail on these slides will be helpful. Needless to say what is shown.

Here confirms that we continue to make progress on all key initiatives.

Guarding deposits first we continue to move closer towards achieving our stated targets and as previously noted have added key personnel and Treasury management and all of our business areas are focused on continuing to grow low cost deposits.

Regarding brand awareness, our new CMO, along with Zimmerman advertising, our new advertising agency are hard at work on creative and branding ideas, including the recently launched out of home and other advertising using our new tagline of imagine a bank and a new limited time only checking campaign among other initiatives.

We're also very excited about our recently announced partnership with the Florida Panthers, who are proving to be terrific to work with.

Regarding rationalizing our business lines and geographies, we continue to find new fintech to partner with as we previously stated we announced new deals with alloy and click switch and then we also applied for approval.

<unk> of our new downtown Miami location.

Moving onto path to 60% efficiency, we continue to downward reprice maturing time deposits and emphasize growing core deposits improving the mix and lowering the cost of funding, we're not replacing maturing brokered time deposits and we continue to right size certain.

Ruble areas and as previously mentioned I'll provide some additional comments on the business transformation initiatives, we've been working on in just a few minutes.

Now for capital optimization again, as we previously referenced we announced the cleanup merger to convert our existing class B shares at a fixed conversion rate for class a shares in order to simplify.

By our capital structure.

This is on track and subject to vote too.

To approve at a clean the cleanup merger at a special shareholders meeting on November 15th of this year. We also announced that our board approved a new buyback program for $50 million of common stock as well and finally regarding ESG.

We announced our chief diversity officer, we developed a new governance structure and implementation plans and we're actively working to publicly share our new corporate social responsibility report. In addition, we expect to release our first ESG report in early 2022.

So before we go to Q&A I.

I thought I would provide a few comments on several significant items were currently working on or that was worked recently concluded will happen in the fourth quarter.

So let's talk about growth first we continue to build for the future. We're looking to significantly add to our business banking team, both in South, Florida and in Houston.

And we're in the process of hiring six additional business bankers here in South, Florida, and we are currently looking to add three more in Houston will report on our progress next quarter and.

In mid November we will be adding six private bankers to our team here in South Florida. We believe this is another area of significant opportunity for us to.

You start to build in this business vertical as the opportunity here for concierge service to mass affluent or high net worth customers is significant.

This builds on the team of three people we added this quarter in Houston, who are already making an impact on deposit growth.

We also recently signed to sublease in Tampa.

Florida, we have our first team member there who will be focused on Cree opportunity and already has in the market generating leads we intend to add other commercial personnel in 2022 so.

So in summary, please know we are continuously looking to add more business development talent to our organization.

Tampa regarding non earning assets. This quarter's results showed a reduction in nonperforming loans.

Some of the decline is definitely from write downs against reserves, we already held against these problem credits and others from resolution. We are focused on driving the remaining nonperforming loans to resolution as soon as practical as we want to get them.

Off our books and get the cash reinvested back into the performing credits.

So also in that vein. We're currently in discussions regarding the sale and leaseback of our corporate headquarters here at $2 20, Alhambra, We think is appropriate to explore such an opportunity indicate cash in hand, and reinvest versus holding this fixed asset long term.

In order to take such proceeds and considered a utilization in more of a buyback stock. We're looking to have this transaction completed before the end of the fourth quarter and to announce the results at that time and finally, we are in the process of wrapping up the final stage of our business transformation initiatives, we intend to announce the results of this.

Initiatives no later than mid November.

So as you can see we will have more to brief you on shortly giving these in process items that are going on as we speak.

So in summary, the progress we are making and the results being reported really do speak for themselves.

Cited about updating everyone on even more progress in that.

Coming days as I, just previously noted.

It's an exciting time for all of US here at Amarin as we are working diligently to continue to improve our future results even more in the coming quarters. So with that we'll be happy to take your questions. Victor. Please open the line for Q&A.

Sure.

To ask a question.

We will need to press star one on your telephone.

To withdraw your question just press the pound key.

And while we compile the Q&A roster.

Our first question comes from the line of Michael Rose from Raymond James You May begin.

Hey, good morning, and thanks for taking my questions.

Let me just start them Hey, how are you.

Just wanted to start on the on the loan side I appreciate the color.

On the New York wind down and moving some of those loans to held for sale. So they see their contractual maturities.

Super helpful. But is the plan to do our best efforts sale for each of those loans.

Hey, Mike if you can just remind us how big that portfolio is number number of loans at this point, just just trying to get a sense for.

When we could see an inflection in the in the loan balance now that PV P is just about gone.

We are quickly.

Accelerating some of those efforts to to.

In New York.

Yes, Michael Thank you for your question it's Gerry.

I think Carlos and I will tag team. The response on this one first I'd like to just say that the thought process behind the classification of roughly half the credits is to reduce basically and the majority of those are longer term.

The wind down if he knows their 2023 and beyond maturities and so and it's also roughly half the number of credits. So the thought process was to really focus on those and we do expect in the fourth quarter to be announcing a move on a on a number of these.

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In terms of the portfolio I think it's no surprise to everyone that the minute, we announced the wind down of Newark operations that we're gonna be Subletting the office space were down too.

Our key player who is in that particular office overseeing the wind down that you would expect that.

Tumors would be actively looking to.

Refinance away and we're starting to see that and so I think just in terms of you know.

Carlos will give a couple of comments on the specifics on the on the loan portfolio, but I believe were roughly down to about six.

Hunter correct slightly above $600 million in current receivables I think the number 627 right. Yeah. It's about 630 cause that's right. It is so we classified these two 'twenty as available for sale as we intend to be actively marketing. This as part of the portfolio and as you can see those are the objective was.

The cost increase the loan count as much as possible because we will start selling those loans from from Miami. So that was one of the reasons and maturity as well.

Yeah, and Michael in fairness I'd like to just add I think.

The steps forward.

<unk> is great news for us.

And I think the step forward of.

For everyone from the analysts and Investor community recognizing that we're trying to bring this to resolution for clarity. So the we can move forward, we've got great growth opportunities in our other markets as we've talked about before and we're continuing to look.

That's too bad business personnel.

Customer facing personnel in both markets. So we're excited to be working hard at the replacement and our pipeline is pretty robust at this stage both in there.

CRE in the C&I space.

Okay, that's helpful and.

Look to ask Jerry you, you've outlined some targets to get to an efficiency in ROA and ROE target by the end of next year.

It seems like Youre, making really good progress on that.

Any thoughts on maybe achieving that sooner than the fourth quarter of next year just.

Just with some of the additional moves that you announced including a potential sale of the headquarters things like that but.

It could potentially get you there a little bit sooner.

Sure.

Great question, what I would say is we're continuing to build.

The operating income side.

Then you can see we just had a slight decrease this quarter over quarter on the fee side, but very strong.

Net interest income growth and we expect that to continue so clearly.

On that trajectory the ROA ROE will continue to improve assuming we continue to execute the way we.

We believe we will we will the issue is can we do something with the transformation project that we just referenced that could help us.

Potentially get there sooner or certainly help assure getting there by the state of date that we had of getting to 60.

Per cent no later than the fourth quarter of next year, so more to come on that but I would say that we feel confident that you know getting closer to the ROA and ROE targets in the interim certainly appears more likely the efficiency is still something that's a work in progress.

Very helpful and maybe just two quick.

Quick ones.

Before I wrap up just on the the amarin mortgage.

When would you expect that to hit profitability and then separately I noticed that on the foreign deposits, while Venezuela continues to.

No decline.

Deposits have actually increased pretty nicely over the past few quarters. So if you could just give us some color on what's what's driving that thanks.

Yeah, let's talk about the deposit side first and then we'll go back you don't want to.

The international deposits, we see great opportunity, where we're in two markets that.

There is significant potential for international business and so both out of Miami.

In South, Florida in general as well as in Houston, It's definitely going to be an area, where we'll see opportunity to grow we feel comfortable in the space and we'll continue to.

Other opportunities to expand there you know in.

In terms of the.

The original core base I think one comment Carlos has made in the past that I think is really important to note is that has really stabilized in comparison to prior periods, where we saw a more significant.

Look for a claim we.

We think the fact that those customers now have the opportunity to utilize zelle.

Has been a real game changer in terms of you know how useful the account is for paying in dollars and so we think that that will continue to see that start to level off more.

More and more over time.

Yeah, and there is another important trend that we have been seen in some of the commercial international side.

There is since we implemented also the zale for core commercial we also have seen improved traction on the commercial accounts on the international side and.

As you said there is also the increase in other countries due to the Oh operations in Houston than we have been gathering deposits from.

Our countries.

Hey, Michael and forgive me what was the first part of your question on mortgage.

Okay.

Yes, I've got two if I can sorry, I got a little excited here to answer that part of your question.

On.

I think in terms of Ameren mortgage one of the things we've elected to do and.

The thought here is be opportunistic.

The team identified a group of.

So that can really contribute to our.

Future earnings and so when I gave the reference of adding a team. The impact is we're going to bring a team of over 22 people on in the fourth quarter. We've got eight already onboard with 22 in total that we expect.

<unk> to be here. So I would tell you fourth quarter will continue to be an investment in terms of making 2022, you know at the beginning of breakeven and then contribution to profitability, but you know in this particular space. We're excited we're a little behind where we were wanted to.

When we didn't get to open until late May.

But I think at this stage, we're very excited about.

All the work that's gone into the infrastructure build and we wanted to just continue to be opportunistic where we can build this out.

Effectively and efficiently for the future.

Yeah, that's fair I appreciate all the colors.

Okay.

Thanks.

Yeah.

Next question will come from the line of Stephen Scouten from Piper Sandler you may begin.

Hi, good morning, everyone.

Hey, Steven.

I wanted.

Follow up maybe on kind of loan growth trends I know you noted some of those CRE and C&I payoffs.

Just kind of curious if you have any data around what those pay offs have been in previous quarters to kind of give us a feel for that on a relative basis as well as maybe.

Maybe any data on quarter over quarter pipeline trends I know you noted.

The particular strength in your pipeline.

Yes, so the quarter was particularly high in prepayments are we recorded more than 300 million in prepayments, but at the same time the pipeline was.

Very promising.

Pretty much.

We had a.

A lot of closings before quarter end, but then there were orders that were delayed.

Until October and November actually worked closely and as we speak more loans that were initially under on the pipeline. So it looks very robust in general Hey, Stephen I would just add to that.

<unk>.

One of the things the team here is doing.

I'm proud to say is we're staying pretty disciplined on our pricing.

As well as on structure.

We're not.

Increasing ltvs increase we're not matching some of the low pricing that we're seeing.

Competitively and we're looking for folks that want to bank with us and want a relationship with us and I think that that's a there's a lot of competition out there, which is why I think youre seeing some pop in the prepayments, but that doesn't mean I would say, though that our team is not generating a significant.

Growth quarter over quarter in the pipe.

And so our feeling is look we've got the headwinds of New York, REIT and a little bit on this prepayment side, but that's why we're doing the investment we're doing in new personnel, we're going to continue to look to add basically in all our verticals, where we can find.

Good people that can help us.

A lot of the work I just have to say one of the reasons I made the comments I did in my closing remarks on growth.

A lot of what we've been focused on is around restructure.

Has been around right sizing about transformation all of these other words.

We're really focusing on building the company.

For future success, and so the investment that we're making and frontline personnel, but we're also going to make.

And select areas in order to improve our customer service experience.

That's really sort of the transformation next steps.

That we're doing here at Ameren.

Got it okay and.

Do you have any data to frame up that kind of 300 million plus in prepayments I'm just trying to figure out if that was.

Double what you've seen in previous quarters and that was really the driver of the loan decline or if it was a mix of somewhat elevated prepayments in somewhat.

What about your levels.

No I would say it wasn't mix in general he came from the CRE and C&I, but mostly CRE and also accounting on those 300, where a couple of New York prepayments as well that came in and dose the intention we're not to renew them. So that was another.

Item against the production.

Okay.

And Jerry you kind of answered. This question I think to a degree just a second ago, but I'm curious how you guys think about this kind of push pull of investing in the future growth as a franchise, but still trying to hit this kind of a sub 60% efficiency ratio target.

Set out.

Yes.

My question is really would you guys be fine with maybe missing that target in the near term. If there were really good opportunities to hire new talent and invest in the long term success of the franchise.

Yes.

Absolutely I think investing in the long.

Term value view value of the franchise is absolutely essential.

That said, we're still laser focused I think you'll you'll know more.

I mentioned within the next couple of weeks on business transformation and what that will mean for us on a go forward basis on the efficiency.

<unk> side and also on the effectiveness side, but I would just say that we're turning the shift toward.

Trying to really invest to get the personnel. We know we can we.

We need in order to be a high growth higher growth company and.

And so we're overcoming a lot of headwinds obviously.

We're pulling out of one.

Hundreds of millions of dollars that we're sitting on this balance sheet that were related to New York and then we're also coming out of Covid, where basically the pipeline at the beginning of the year was was pretty bare.

So I think the build that's happened quarter.

Patient quarter, adding more people.

We need to add revenue I think Stephen maybe the best way I could sum that up is achieving efficiency is a combination of revenue growth as well as us looking at the efficiency and effectiveness of our operations and so.

This wasn't just gonna be a cost.

Cost cutting exercise. This is a you know and again I think people use right sizing a little bit too much but I think it's adjusting the franchise to set ourselves up for success that we can leverage the foundation and really grow without having to add to the back office and be able to grow production and so that's.

Over it was really the way I'm thinking about it. So again it just gets back to the earlier question, we're focused on getting the D. R.

ROA Roe.

In a really good place and the efficiency might lag, but again remember we've laid that efficiency out for the end of 2022, because we know it's going to take.

Time to continue.

Progress in that and we hope to report continued progress each quarter. So you'll see that we're marching our way there.

Definitely definitely okay. That's great color. Thank you guys for the time I appreciate it.

Absolutely take care.

Our next question from the line setting.

Strictly from Janney Montgomery you may begin.

Hey, good morning.

Good morning.

I'm just curious it was great to see some.

Some of the reduction in classified and special mention.

At the coffee trader relationship drive a decent portion of that or.

Some time was that kind of just a general improvement across the board maybe some other credits.

No we took a.

Charge in the quarter basically we've been carrying a specific reserve against that relationship.

And we've got it now to the stage, where we think this is the most likely outcome.

Or for us.

You know the the issue that's happened in that particular, one is as you know it's part of our Bank group.

That's involved in this particular.

Situation and trying to get everyone aligned on dish distribution.

Distribution is critical I think we've talked before on.

Outcome previously $200 million exposure, there is cash sitting to the tune of almost $100 million and so all of us are anxiously awaiting to try and see how much of this.

These distributions in various phases can come and we were hopeful that more would be coming Q3.

Q4, it looks like it could be potentially delayed into 2022. So our view was take the write down now on the specific reserve where roughly.

$14 million.

Total exposure in terms of remaining exposure and we feel comfortable.

But with our position in terms of getting paid on that and those forward and we're going to continue to monitor it right. I mean, obviously in these situations everything gets in front of a judge you know in terms of determining who gets distributed and how much at what period of time, but we think it's the right way.

Comfortable to be looking at this one.

And those carried those 14 million carried six five in the specific reserves.

Got it.

And then.

That's right I remember you guys discussing that so the classified and special mention improvement was independent of this coffee.

Sure because you had already kind of set aside yes, what you are saying you got it yet.

One of the things that that I referenced in my comments was I think as a team. We are laser focused this is why I think the comment when you think about the sale leaseback. You know this is a you know the.

Fixed asset investment that we've got here at our corporate headquarters you sort of look at that you look at all of the non earning assets that are sitting on the books, we got to get those numbers driven down you know back to some of the earlier questions about how do we continue to improve the efficiency ratio. It's all of these little things that are critically important to execute.

The relations that are going to add earnings back into the organization going forward. So the more we can get deployed.

To maintain.

Adequate liquidity, but also to get as much possible into earning asset categories.

That's critically important for getting to that 60%.

Got it got it and I apologize if you covered this earlier I was having a little bit of technical difficulties, but are you guys seeing.

Any kind of the same wage inflation stuff, we've been hearing about especially I think I've heard it more from the bigger banks and smaller banks, but.

Are you seeing you out on the frontline or back office.

So even when you're hiring lenders.

Yeah, no. It's a great question I think there's lots of market competition for quality people. I think this is a time of year, where it probably gets even more challenging to try and add folks because they burned.

But where they are today.

Based on some of the production unless they've been getting paid out quarterly.

It gets to be a little bit.

Price here to try and add people.

Time of year.

Look we're in the candidly in two of the hottest markets in the country, we've talked about this before.

Demand for people is high I think what is good for the Amarin story is people know that.

We're streamlining our processes I think our business development people would tell you that we've got into Penn two our credit people if things are in accordance.

For our policies, we're executing much quicker on credit Decisioning I think also our story of continuing to improve and catching.

And being part of an organization at our size and not having to deal with the layers of management and oversight are are very common it much.

Larger institutions.

Clearly I hope it is clear to everyone that.

We're decisive we move quickly and that's part of what we wanted to maintain and actually become even better known for and I think that's really attractive to folks. So I think we are positive.

Debt.

Again, as we've mentioned look at the teams of people that are that are coming our way.

I think it's a it's important to note that I think people are excited about all the things that are going on here.

Wanting to be part of it so I would say certainly there's been a couple of times where we've.

We've looked in Marvel then we move on right. It's just like the way some banks or are willing to do higher ltvs, and cray or lower pricing and Craig right.

We're we're finding very good people that wanted to be part of our story and so I would say that while it's very competitive out there.

We're definitely having success in attracting people.

To complement I believe it's at and I'm going to to your question cost of living is something that is definitely impacting our jurisdiction. That's a you can tell by the Ah.

Residents are in general the housing market.

Increasing and affordability is decreasing.

Our markets. So that's that's a point out we definitely are seeing around and something to report to you based on your question.

Got it thanks for the color guys.

Appreciate the time.

Sure. Thank you.

You.

Our next question comes from the line will Jones from K B W. You may begin.

Hey, good morning, guys.

Good morning will.

So it was great to see the announcements intra quarter on the cleanup of those class B shares you got your shareholder vote coming up here in about three weeks.

I was assuming that approval comes through could you just walk us through the timeline of conversion I guess just more so as a modeling question on the share count.

Sure. So the the shareholders meeting will be held on the 15th of November.

So the boarding process will be done.

November 15th at four correct.

To be specific and so.

So once everything if it gets approved and through the right channels of approval.

We will get the conversion completed early December.

So we.

In fact, we anticipate that.

If everything goes as planned we will have a reduction of probably 500 or close to a 125000 maybe shares once the BS are converted into <unk> and then we will have a fraction of going into a new onboarding us with describing the 8-K.

We experience that's super helpful and I knew the cash payout not probably not going to be a huge number but any preliminary estimate of what that may be for those who arent receiving the class C shares.

Yeah.

So we'll just to clarify you are talking about the small yes.

Yes, all the kind of guy.

The fractional shares with one dose.

Yeah good.

So does that amount and wouldn't exceed the $8 million. So the small shareholders are to run and.

We will be around $8 million, so it's not significant.

Gotcha Gotcha, Okay, that's super helpful.

Just moving on thinking about the buyback.

You guys announced that alongside the class B share cleanup.

It's great to see your class a shares youre not as cheap as they have been trading at about one three times tangible.

There is not as cheap as they were when you repurchase shares in the past.

Feel fairly attractive.

And then just do you feel like the buybacks still makes sense for Ameren.

That program commences in December or you thought really just.

Hold the cash and continuing to reinvest internally.

Look.

I think buyback programs are critical to have.

For us to be opportunistic.

When you look.

And I think too.

Just looking at what's happened in volatility in the last quarter that there's opportunity for us to execute there but.

It's a good question you know as our valuation continues to improve.

To be a little bit more.

<unk> as it relates to.

The higher thats getting as to what we would do but I am firmly committed I think our board is firmly committed I can say.

Comfortably we all believe it's very important for us to have it on the shelf and to be able to use.

As consistently as we possibly.

<unk> Chan.

To be opportunistic.

If ahead of par the the compared to some peers with steel undervalue at 125, or so so just to keep that in mind as a reference for buybacks.

Great.

Totally makes sense and maybe last one just housekeeping.

Is there any PPP loans left.

I know you guys sold quite a few months, but.

Probably less than 5 million very little.

Got it great. Thanks, guys.

Thanks will.

Yeah.

And our next question will come from Brody Preston from Stephens you may be.

Your line is open.

Good morning, everyone.

Good morning Bernie.

I just want to say thanks again for all the disclosure in the deck I really appreciate it, especially on the mortgage and the New York City portfolio.

Couple of housekeeping questions real quick just the tax rate I.

I wanted to get a sense for why it popped up this quarter and.

What should we should expect for an effective rate moving forward.

Yeah, Great question. So there is.

Probably three components that.

That impacted the effective tax rate one of then was related to.

Executives are earning more than a million dollars remember that we have on during the last quarter and Douglas release, the Chief operating officer retire for an institution so the incremental portion north.

North of the million dollar was and.

Excluded from the.

He is not part of the expenses for tax purposes, So that was one.

We captured that in this.

Quarter in particular, and then the other two components were in New York State and city tax.

Recalculation that we had base.

Based on.

And some adjustments on previous periods. So he was.

<unk> this quarter. So those are the main components.

So a structural basis, we continue to.

Manage.

The effective tax rate with the usage of our REIT portfolio.

No.

It consolidates with the bank. So we are.

Planning to enhance that so it should be stabilized.

On the 'twenty two 'twenty three 'twenty, two 5% approximately effective tax rate for the full year.

Okay $22 five you said for the full year.

Uh huh.

Okay. So thats like what like 21% on a go forward basis.

Exactly.

Okay.

And then just do you have.

You repurchased a little bit of shares this quarter it looked like.

Could you just give us could you just give us a number of what the the number.

Class B shares outstanding as currently.

It's about $8 5 million.

Class B shares.

We bought on the remember that once we announced the conversion of the BS in two ways. We just hugged the buyback of the B. So probably we reach a total of nine.

<unk> 5 million approximately in total purchases.

Yeah.

And that would be close to a 17 16, five maybe average price and on the purchase of those were.

Approximately the number but this quarter, we didnt buy that much because we announced.

<unk> average at the same time, we were correct.

The cleanup.

We terminated to be buyback and announced a new one.

That will commence.

The reconstituted wine class right yes.

Yes.

Okay.

And then my random.

So just on the New York City portfolio.

Gerry I heard you earlier say that you.

It sounds like you have some.

A decent amount of sales that are going to come through in the fourth quarter. So just from a modeling perspective as I think about the size of that Hff's portfolio.

Through next quarter.

Question I expect the bulk of the $2 19 to be sold or how should we be thinking about that.

Yes, I think thats.

Thank you could easily say that maybe it to half and half.

Quarter to quarter.

The reality is as we see some of those very relation.

<unk> ships are seeking to pay off two right. So.

It's a combination I think that'll happen in those reductions of sales that will take place coupled with payoffs.

Okay.

Okay and what are the.

What's the yield on that portfolio.

<unk> so the average for the near portfolio was close to the three 7% approximately.

There is a combination between fixed and floating the floating portion reprise with LIBOR. So there may be a single items that are 2%, but generally speaking the weighted is three 7%.

Okay great.

And.

No.

I like to move to FFS, just because it kind of accelerates the clean up on it but as you think about kind of the short term negative implications.

Bulk sailing the $2 19 and potentially doing more.

Gary how do you think about.

Sort of the the short term kind of earnings headwinds that would create and as it relates to the <unk>.

ROE ROA and the efficiency ratio targets.

There's sort of a fine line to walk between cleaning it up and then creating a little bit of a near term haul that might catch people's by surprise. So how do you.

How do you kind of thread that needle.

Yeah, and I actually think that.

Great question, and I think Thats why youre seeing it is half the number of credits, but it's only $200 million, that's actually moved into <unk>.

Our expectation is there'll be a combination on that balance that yields.

To see some prepayment activity on that over the course of 2022.

But I mean, our expectation was growing.

Brody.

We referenced this a little bit earlier in the comments there.

Juruti on that 2019 that was classified or the longer.

Longer term credits and so you know our expectation is somewhere between 22 and 'twenty. Three is really what we were aiming for to see that portfolio either in a combination of either shale activity or payoff activity.

Run off it could obviously be sooner.

I'll start look every borrowers got the right to initiate.

A payoff on their credit or refinanced away from us but.

Our view is this was a prudent way to look to reduce the servicing.

Of that portfolio and keep the focus since we're now down.

One key person overseeing there in some key personnel here in South, Florida being involved with those relationships to actively manage the wind down over time.

The other item that you should also think about is the.

The fact that.

Two ones.

Typically the settlement of alone it takes a little bit longer than so.

Even though we committed to sale a portion of it maybe the proceeds will come later so from the point of view of earnings generation, We still will have the impact of this portfolio.

<unk> income wise for the rest of the quarter.

Got it.

Alright, well those are are those are all my questions everyone. Thank you very much for the time.

Awesome. Thank you have a good day.

And we have one other question from the line.

Michael Young from Trulia.

Okay.

Yeah.

Good morning, Thank you.

Morning. Thanks for the question I wanted to just ask on on the reserve or allowance I think.

One times coverage of Npls seems maybe a little bit lower relative to kind of the industry as a whole right now obviously you've kind.

Your line some credit clean up and had some pretty significant charge offs. This quarter should we expect some other sizable charge offs and do you have any color on what may be remaining in that reserve in terms of specific reserves on credits.

Yes look I think what you see in the Npls right now.

Is that we've done.

On a thorough review that Michael Great question by the way that that's why we're doing these weekly reviews.

To continue to monitor that.

It relates to working that portfolio off our books as quickly as possible I mean, we're not taking haircuts were trying to.

Dust.

The speed up the resolution on these things our expectation is that we can continue to significantly lower that in Q4.

With a goal towards reporting on continued improvement without additional charge offs, because we think from evaluations.

Endpoint that we've done a good job in that in addition, we are still holding in our reserves of about $15 million that we'll call it sort of COVID-19 related.

Reserve that in the event that we've got any type of potential exposure that pops up that.

We're in a good position.

<unk> to cover it off.

Okay, and then just switching gears quickly on deposit costs come down nicely I think 44 basis points.

There is still some room for those to come lower but where do you kind of envision those bottoming out or is it sort of the mid thirty's or.

Or any color there would be helpful.

Yes, that's accurate so we're projecting being in the closer to the 40 basis points for our cost of deposits for Q4.

And yes, you are totally right as we continue to reprice more and more time deposits.

Trend is.

Right.

Ultimately the number you had mentioned.

Yes.

Michael Great question, and I think one thing we will add disclosure wise is what our maturities look like for quarters going forward. So that you guys can see both on the brokered and.

The time deposit side.

What.

The opportunity there is for continued downward repricing in that portfolio.

Okay, Great. That's all for me thanks.

Sure thing Thank you Ed.

Thank you I'm not showing any further questions in the queue at this moment.

Okay.

Well. Thank you everyone for joining our third quarter earnings call. We're very excited to be able to share our progress today and about the bright future ahead for amarin.

You have a great day and thank you again for your continued support and interest in our organization.

This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

[music].

[music].

Okay.

[music].

Good day, and thank you for standing by.

I walked into the online Bank Corp, third quarter 2021 results conference call.

At this time all participants are in a listen only mode. After the speaker presentation. There will be a question answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.

And if you require any further assistance please press star zero.

And then I can hand, the conference over to your speaker today.

Laura Rossi head of Investor Relations. Please go ahead.

Thank you Victor.

Good morning, everyone and thank you for joining us to review run Bancorp's third quarter.

<unk> 2021 results.

Also on today's call are Jerry plush, our Vice Chairman, President and Chief Executive Officer, and Carlos <unk>, Our executive Vice Chair, Vice President and Chief Financial Officer.

As we begin please note that the company's press release, our discussion on today's.

And our responses to your questions contain forward looking statements.

<unk> business and operations are subject to a variety of risks and uncertainties many of which are beyond its control and consequently actual results may differ materially from those expressed or implied.

Please.

It's called her to the cautionary notices regarding forward looking statements in the company's earnings release and presentation.

For a more complete description of these and other possible risks. Please refer to the company's annual report on Form 10-K for the year ended December 31, 2020 in our quarterly.

The report on Form 10-Q for the quarter ended June 30th 2021 and in our other filings with the S E T.

You can access these filings on the SEC's website.

Amarin has no obligation and makes no commitment to update or publicly release any revisions to forward.

Looking statements in order to reflect new information or subsequent events circumstances or changes in expectations, except as required by law.

Please also note that the company's press release earnings presentation and today's call include references to certain adjusted financial measures also.

Also known as non-GAAP financial measures.

<unk> two in appendix one of the company's press release and earnings presentation, respectively container reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measures.

I will now turn it over to our CEO Jerry flush.

Thank you Laura and good morning, everyone and thank you for joining <unk> third quarter 2021 earnings call I am pleased to be here today to report on our results for the quarter and the progress our team has made focusing on the key priorities. We set out during our first quarter 2021 earnings call I will also comment later on this.

This morning on some significant issue so that we have underway to further improve our future results and set the company up for growth in the coming years.

But before going to the results I want to first thank all of my Amgen colleagues for their dedication and effort again this quarter and for their continued support and the pursuit.

<unk> of even better results in the future.

So I will now provide a brief overview of our performance in the third quarter and then Carlos will go over the details so let's turn to slide three so here you can see a summary of our third quarter highlights. We are pleased to report further improvement in our results compared to the second quarter of.

Net income attributable to the company of $17 million is up six 7% quarter over quarter, primarily driven by higher net interest income and lower noninterest expense. Our total loans were $5 5 billion and total deposits were $5 6 billion.

Both down slightly from last quarter none.

Nonetheless were happy to report continued improvement in the deposit mix as core deposits increased we had solid growth in noninterest bearing deposits this quarter.

Our capital levels continue to remain very strong, we recently announced our intention to effect a cleanup merger in order to have one class of common stock going forward.

We are looking forward to having our shareholders approve this in mid November.

In addition, our board has approved a new repurchase program for up to $50 million, which we expect will commence here in the fourth quarter.

So let's move to the core <unk> slide number four.

We're pleased to show continued growth in.

Core <unk> of $18 3 million, an 8% increase compared to the $16 9 million reported last quarter. We believe this reconciliation is essential to show the true net revenue growth of the company. We want all of our investors to easily see our results, excluding any onetime gains or losses or severance or other.

The restructuring charges. So they can see what is really happening regarding core earnings power.

If we turn now to slide five our key actions here, we list them out for what has taken place during the third quarter. You'll note that a number of these strategic measures, we're focused on driving lower future funding costs.

And in operating expenses as well as set the stage for future growth.

So first our nonperforming classified and special mention loans decreased 31, 7% 31, 3% and 16, 4% compared to last quarter, respectively. We are diligently working.

Cause further reductions here in the fourth quarter, we have instituted weekly sessions of key personnel to focus on driving to resolution on as many credits as possible to get the non earning assets off of our books and the proceeds are reinvested into earning assets.

We continued downward repricing of customer time deposits further.

On the cost of such funding by approximately 70 basis points, which translates into annualized savings of approximately $2 2 million and we prioritize core deposit growth, which totaled $141 7 million in the quarter.

We closed one branch located in Wellington, Florida as of October 15.

<unk> 2021, and we've announced a new downtown Miami branch that we anticipate opening late in 2022 comp.

The comment period regarding this branch expires next week, we also significantly reduced our future space needs as illustrated by our announcement.

Regarding our new 56000 square.

Foot Operation Center in Miramar, Florida that will take occupancy in the fourth quarter of 2022.

This will reduce our operation center by over 40000 square feet and our annual rental expense by nearly $1 million.

We continue to build out our treasury management team and have completed adding team members.

<unk> to both sales and service in Florida, as well as in Texas.

We recently completed the business transformation initiatives with a well known third party to improve customer experience and drive additional efficiency. We're finalizing the next steps and we expect to announce this outcome in the very near future.

As we continue on our digital transformation and efficiency efforts. We're excited about our recent announcements regarding leading technology platforms outlining click switch alloys, leading identity decision platform will allow us to automate the identity verification process when onboarding deposit accounts for both business and.

Visual customers.

<unk> on the other hand, we will improve the customer experience by simplifying the conversion of consumer and small business accounts as they transition direct deposits and automatic payments to amarin.

We're confident that these new platforms can help improve our customer experience overall and grow stronger banking.

And into relationships.

We also launched our new brand awareness campaign based on the tagline imagine the bank via Billboard in Social media and also announced the new branding partnership with the Florida Panthers in the NHL for the 2021 2022 season.

Our soon to be released investor deck this quarter.

We will provide examples of the brand and marketing campaigns for your information.

And then lastly, we recently appointed our chief diversity and inclusion officer in September as just one more step in demonstrating our commitment to ESG I'll have some more comments on this initiative in a few minutes.

So if we turn to.

To slide six here, we've outlined our key performance metrics, which show improvement across the board. This quarter. These results are reflective of our continued focus on core deposit growth and improving the net interest margin, which helps drive higher operating profitability. We also maintained a robust capital position and very strong.

Coverage, which while it's lower than prior quarter is that a very healthy 1.59% of total loans.

Slide seven is new this quarter, we wanted to add this focused solely on ameren mortgage outlining the growth in people applications and show the increasing revenue quarter.

Creditor as a reminder, we started taking applications in late May of this year and we've recently been focused on adding additional sales personnel to the team.

And we are currently in the process as Boeing Board and an even greater number of experienced personnel this quarter to drive future results.

So with all that said I'll now turn it.

It over to Carlos who will walk through the results for the quarter in more detail Carlos. Thank you Gerry and good morning, everyone. So turning to slide eight I'll begin by discussing our investment portfolio.

Third quarter investment Securities balance went to $1 4 billion slightly up from the $1 3 billion in the previous quarter and flat compared to the third.

Third quarter of 2020.

The duration of the investment portfolio has extended to three seven years due to the lower expected repayments net of higher long term interest rates.

We continue to select investments to meet the gave the impact of a prepayment risk over the portfolio.

Floating portion.

And portfolio continue to.

Representing 11%.

And after the third quarter.

Continuing on slide nine let's talk about the loan portfolio.

At the end of the third quarter total gross loans were $5 5 billion down two 3% compared to the end of the last quarter. The decline was primarily.

Approximately 320 million prepayments received in both CRE and CNI plus a portion of the C&I closings, having been moved to the fourth quarter.

Consumer loans as of September 30 were $360 million, an increase of 48 million or 15% quarter over quarter.

During the third quarter.

Due 2021, we purchased an additional $80 million of higher yielding indirect loans for a total of $263 million on that specific portfolio.

Turning to slide 10, we will provide updates on the new loan portfolio.

As we announced during the second quarter call. The New York City loan production office has.

Quarter of truly being closed.

At the close of the third quarter 30 loans totaling $220 million were classified as available for sale and a little over 400 million still remains in the newer portfolio.

We have elected to market that position.

Folio now classified as available for sale in order.

Order to shorten duration and significantly reduced the number of loans being serviced as we sell them.

We have accepted a proposal to sublease, our New York Office and Soup, then and expect to start in the fourth quarter of 2021.

Turning to slide 11, let's talk about the credit quality of our loan portfolio.

Has sufficient credit quality remains sound and reshape coverage strong the allowance for loan losses at the end of the third quarter was 83 million down 20% from the 104 at the close of the previous quarter.

We released 5 million from the allowance from loan losses in the third quarter in which the release of approximately 2 million.

<unk> was a result of power grids payoffs and Paydowns of nonperforming loans and special mention loans.

A release of the remaining $3 million was due to the loan portfolio reduction and the classification of the loans as available for sale.

Charge offs for the quarter worth 17 million from which.

7 million were in connection with the coffee trade a relationship to account for delays as a location of liquidation proceeds has been subject to objection from certain lenders. We continue to monitor this process and have been in close contact with liquidation agent regarding the collection process on prospective distribution we will.

I am pleased to report the development in this relationship as we move along through this process.

Nonperforming assets totaled $93 million at the end of the third quarter of 2021, a decrease of four almost $30 million or 24% compared to the second quarter of 2021.

An increase of $6 million or 7% compared.

Can <unk> third quarter of 2020.

The ratio of nonperforming assets to total assets was 124 basis points down 37 basis points from the second quarter of 2021, and up 16 basis points from the third quarter of 2020.

In the third quarter of 2020, the ratio of reserves to nonperforming.

<unk> increased to one 1% from 86%.

And the second quarter of 2021, and a decrease from 135% at the close of the third quarter of 2020 as.

As we have done it seems the declaration of the COVID-19 pandemic. There is a detailed information on the <unk> section of this deck regarding deferrals for.

<unk> portfolio.

Andre escalated monitoring given the continued credit quality improvements in our portfolio. We may discontinue some of this slide for future quarters to streamline the earnings deck.

Continuing to slide 12 total deposits at the end of the third quarter were $5 6 billion down 9%.

From the end of the second quarter, while domestic deposits were slightly down by $50 million compared to the second quarter International deposits went up slightly by $1 4 million showing continuum continued evidence.

Stabilization in this portfolio.

Deposits, excluding customer Cds and brokered deposits.

<unk> increased $185 million during the quarter. This.

This increase partially offset an 11% reduction in customer Cds compared to the previous quarter as we continued to lower CD rates focus on increasing core deposits on amtrust side multi product relationship instead of a single product high cost.

Cds.

We're encouraged to see our deposit mix continuous improvement towards higher percentage of core deposits.

During the third quarter of this year brokered deposits decreased $98 million or 18, 5% out of which 55 million came from time and $43 million from sight deposits.

The decrease in total customer Cds and brokered deposits were partially offset by an increase of $185 million of 5% in customer transaction accounts.

Core deposits, which consist of total deposits. Excluding all time deposits were $4 2 billion. So at the end of the third quarter, an increase of 142 million.

Or three 5% compared to the previous quarter. This amount includes noninterest bearing a $1 2 billion or 21, 5% of deposits.

And so at the end of the third quarter, which also includes <unk> increased from $1 7 billion or 19% from the previous quarter.

Now I will discuss.

Interest income on slide 13, net interest margin.

During the during the third quarter net interest income was $52 million up three 7% quarter over quarter and 14% year over year.

Quarter over quarter increase can be primarily attributed to the following key factors.

First lower overall cost of.

The net resulting from decline in average CD balances downward repricing of Cds on increasing the average noninterest bearing deposit balances.

Higher average loan and investment yields with the loan yield increased due to a higher amount of consumer loans.

Third higher investment.

<unk> average balance due to the company's redeployment of excess cash and cash equivalents fourth lower costs and average balances on FHA advances and other borrowings following the company's repayment and rate modifications of <unk>.

<unk> during the May 2021.

Lower loan balances during the.

Portfolio, where due to high prepayment activity in both CRE and C&I, while loans closing some some delays at the quarter end does not offsetting the prepayment activity.

Moving on the margin the third quarter interest margin was 294% up 13 basis points quarter over quarter and up 55 basis points year.

Over year as in the previous quarter, we continue to focus on offsetting ongoing mean pressure by decreasing the cost of funds through strategic repricing of customer time, and commercial relationship money market as well as proactively seeking to increase spreads in non or origination.

Continue to noninterest income.

The quarter of 14, the third quarter was $13 4 million down 14, 6% from the second quarter.

The decrease during the third quarter, what's the remind me the result of nonrecurring items recorded in the second quarter, such as $3 8 million in net gain in connection with the sale of $95 million in PPP loans.

<unk> 5 million net loss on early extinguishment of it you'll be advances.

And $1 3 million net gain on sale of Securities also contributing to the lower non interest income was a decrease of $1 $8 million in customer derivative income in the third quarter of 2021.

The decrease in noninterest income was partially offset by an.

Increase in <unk> 2 million in fees from brokerage advisory and other fiduciary activities on mortgage banking income from $7 million.

Ameren assets under management totaled $2 2 billion as at the end of the third quarter up $56 million or two 6% from the end of the second quarter.

Imminently.

Italy from increasing net new assets our team remains focused on growing assets under management, both domestically and internationally. In addition, we're excited to announce <unk>.

And we are often live with the new digital wealth platform powered by <unk>.

Turning to slide 15 third.

Quarter noninterest expense was $48 4 million down $2 7 million or five 3% from the second quarter and up $2 $9 million year over year.

After over quarter decrease was primarily driven by lower salaries and employee benefit expenses, resulting from the second quarter, including the nonrecurring $3 three.

Severance expenses, we did last quarter.

We also had lower occupancy and equipment expenses, resulting from the nonrecurring 8 million lease impairment charge in connection with the closing of the New York Health deal last quarter.

Lastly, there were lower consulting legal and other professional fees as well as various other noninterest.

Spencer.

The efficiency ratio was 74, 2% in the third quarter of 2021 compared to almost 78% in the previous quarter and 69, 3% in the third quarter of last year.

The quarter over quarter decrease was driven by the significantly lower severance expenses incurred during the third quarter of 2021.

On the.

The year over year increase in efficiency ratio Westbury margin attributed to higher salaries and employee benefits in connection with the mortgage business.

Core efficiency ratio would adjust for nonrecurring items was 73% in the third quarter of 2021 compared to 74.

5% in the second quarter of 2021 and 70.

Six five.

Last year lastly, as we previously announced we have closed the Wellington branch.

Silver 15 this month.

With the goal of optimizing our branch network performance and better aligning our desire footprint with strategic objectives, we have announced an additional.

70, <unk> branch in downtown Miami, which we anticipate will open in late 2022.

Moving onto interest rate sensitivity on slide 16, our balance sheet continues to be asset sensitive as of the end of September over half of our loans either floating.

<unk> structures or mature within a year.

Good.

One of our new sensitivity and mitigate the impact on our financial margin. We continue to actively manage our loan and investment portfolio. These include implementation of flow rates on our loans and capitalizing on higher yielding securities and longer durations.

I will now turn it back to Jerry to talk about Amarin progress on the near and long term initiatives.

Thank you Carlos on slides 17, and 18 this quarter, we provided some details on each of the six key priorities this quarter.

Other than going into a lot of discussion on the call as we did in the last two quarters, we felt providing this detail on the slides would be helpful. Needless to say what is shown.

<unk> confirms that we continue to make progress on all key initiatives regarding deposits first we continue to move closer towards achieving our stated targets and as previously noted have added key personnel and Treasury management and all of our business areas are focused on continuing to grow low cost deposits.

Here regarding brand awareness, our new CMO, along with Zimmerman advertising, our new advertising agency are hard at work on creative and branding ideas, including the recently launched out of home and other advertising using our new tagline of imagine a bank and a new limited time only checking campaign among other initiatives.

We're also very excited about our recently announced partnership with the Florida Panthers, who are proving to be terrific to work with.

Regarding rationalizing our business lines and geographies, we continue to find new fintech to partner with as we previously stated we announced new deals with alloy and click switch and then we also applied for approval.

<unk> of our new downtown Miami location.

Moving onto the path to 60% efficiency, we continue to downward reprice maturing time deposits and emphasize growing core deposits and improving the mix and lowering the cost of funding, we're not replacing maturing brokered time deposits and we continue to right size certain.

But areas and as previously mentioned I will provide some additional comments on the business transformation initiatives. We've been working on in just a few minutes.

Now for capital optimization again, as we previously referenced we announced the cleanup merger to convert our existing class B shares at a fixed conversion rates of class a shares in order to simplify.

<unk> our capital structure.

This is on track and subject to vote too.

Approve at a clean the cleanup merger at a special shareholders meeting on November 15th of this year. We also announced that our board approved a new buyback program for $50 million of our common stock as well and finally regarding ESG.

We announced our chief diversity officer, we developed a new governance structure and implementation plans and we're actively working to publicly share our new corporate social responsibility report. In addition, we expect to release our first ESG report in early 2022.

So before we go to Q&A I.

To provide a few comments on several significant items were currently working on.

Or is that with work recently concluded will happen in the fourth quarter.

So let's talk about growth first we continue to build for the future.

We're looking to significantly add to our business banking team, both in South, Florida and in Houston.

We're in the process of hiring six additional business bankers here in South, Florida, and we are currently looking to add three more in Houston will report on our progress next quarter end.

In mid November we will be adding six private bankers to our team here in South Florida. We believe this is another area of significant opportunity for us to.

Start to build in this business vertical as the opportunity here for concierge service to mass affluent or high net worth customers is significant this.

This builds on the team of three people we added this quarter in Houston, who are already making an impact on deposit growth.

We also recently signed a sublease in Tampa.

Tampa, Florida, we have our first team member there will be focused on Korea opportunity and already has in the market generating leads we intend to add other commercial personnel in 2022.

So in summary, please know we are continuously looking to add more business development talent to our organization.

Regarding non earning assets. This quarter's results showed a reduction in nonperforming loans.

Some of the decline is definitely from write downs against reserves, we already held against these problem credits and others from resolution. We are focused on driving the remaining nonperforming loans to resolution as soon as practical as we want to get them off.

Books, and get the cash reinvested back into performing credits.

So also in that vein. We're currently in discussions regarding the sale and leaseback of our corporate headquarters here at $2 20, Alhambra, We think it is appropriate to explore such an opportunity indicate cash in hand, and reinvest versus holding this fixed asset long term.

Term where to take such proceeds and considered a utilization in more of a buyback of stock. We're looking to have this transaction completed before the end of the fourth quarter and to announce the results at that time and finally, we are in the process of wrapping up the final stage of our business transformation initiative, we intend to announce the results of this.

All part of it no later than mid November.

So as you can see we will have more to brief you on shortly giving these in process items that are going on as we speak.

So in summary, the progress we are making and the results being reported really do speak for themselves.

Knighted about updating everyone uneven more progress in the <unk>.

<unk> engaged as I just previously noted.

It's an exciting time for all of US here at Ameren as we are working diligently to continue to improve our future results even more in the coming quarters. So with that we will be happy to take your questions. Victor. Please open the line for Q&A.

Sure.

To ask a question.

You will need to press star one on your telephone.

Great question press the pound key.

One moment, while we compile the Q&A roster.

Our first question comes from the line of Michael Rose from Raymond James You May begin.

Hey, good morning, and thanks for taking my questions.

Hey, Mike if I could just start on the Hey, how are you.

Just wanted to start on the on the loan side I appreciate the color you know.

On the New York wind down and moving some of those loans to held for sale. So they see their contractual maturities that's super helpful. Both of you.

Plan to do our best efforts.

For each of those loans.

If you can just remind us how big that portfolio is number number of loans at this point, just just trying to get a sense for when we could see an inflection in the AR in the loan balance now that PV P is just about gone and you're you're quickly.

Accelerating some of those efforts to.

In New York.

Yeah, Michael Thank you for your question it's Gerry.

I think Carlos and I will tag team. The response on this one first I'd like to just say that the thought process behind the classification of roughly half the credits is to reduce basically and the majority of those are longer term.

The wind down if he knows their 2023 and beyond maturities and so and it's also roughly half the number of credits. So the thought process was to really focus on those and we do expect in the fourth quarter to be announcing a move on a on a number of these.

<unk> you know in terms of the portfolio I think it's no surprise to everyone that the minute, we announced the wind down of Newark operations that we're gonna be Subletting the office space were down too.

Our key player who was in that particular office you know overseeing the wind down that you would expect that.

Tumors would be actively looking to do.

Refinance away and we're starting to see that and so I think just in terms of you know.

Carlos will give a couple of comments on the specifics on the on the loan portfolio, but I believe were roughly down to about six.

Cost correct slightly above $600 million in current receivables I think the number 627 right. Yeah. It's about 630, that's right and as we classify these two 'twenty as available for sale as we intended to be actively marketing. This part of the portfolio and as you can see those are the objectives.

Hunter degrees the loan count as much as possible because we will start serving those loans from from Miami So that was.

One of the reasons and maturity as well.

Yeah, and Michael in fairness I'd like to just add I think you know the.

The steps forward of the sublet is great news for us.

That's good because I think the step forward of you know for everyone from the analysts and Investor community recognizing that we're trying to bring this to resolution for clarity. So the we can move forward, we've got great growth opportunities in our other markets as we've talked about before and we're continuing to look.

Look to add business personnel.

Customer facing personnel in both markets. So we're excited to be working hard at the replacement and our pipeline is pretty robust at this stage both in.

CRE in the C&I space.

Okay, that's helpful and.

Then Jerry you you've outlined some targets to get to an efficiency and an ROA and ROE target by the end of next year.

It seems like you are making really good progress on that.

Any thoughts on you know, maybe achieving that sooner than the fourth quarter of next year just.

With the additional you know them.

Moves that you announced including a potential sale of the headquarters things like that that you.

It could potentially get you there a little bit sooner. Thanks.

Sure Great.

Great question, what I would say is we're continuing to build.

The operating income side.

Just with some can see we just had a slight decrease this quarter over quarter on the fee side, but very strong.

Net interest income growth and we expect that to continue so clearly.

That trajectory the ROA ROE will continue to improve.

Assuming we continue to execute the way we.

As usually we will the issue is can we do something you know with the transformation project that we just referenced that could help us.

Potentially get there sooner or certainly help assure getting there.

The state of date that we had of getting to 60.

Per cent no later than the fourth quarter of next year, so more to come on that but I would say that we feel confident that you know getting closer to the ROA and Roe targets.

In the interim certainly appears more likely the efficiency is still something that's a work in progress.

Very helpful and maybe just two quick.

Quick ones.

Before I wrap up just on the the Ameren mortgage.

When would you expect that to hit profitability and then separately I noticed that on the foreign deposits, while Venezuela continues to.

No decline.

Other.

Deposits have actually increased pretty nicely over the past few quarters. So if you could just give us some color on what's what's driving that thanks.

Yeah, let's talk about the deposit side first and then we'll go back you know when the.

The international deposits, we see great opportunity, where we're in two markets that.

Other there is significant potential for international business and so both out of Miami.

In South, Florida in general as well as in Houston, It's definitely going to be an area, where we'll see opportunity to grow we feel comfortable in the space and we'll continue to.

Opportunities to expand there you know in.

In terms of the the original core base I think one comment Carlos has made in the past that I think is really important to note is that has really stabilized in comparison to prior periods, where we saw a more significant.

Look for a cline.

We think the fact that those customers now have the opportunity to utilize zelle.

Has been a real game changer in terms of you know.

How useful the account is for.

For paying in dollars and so we think that that will continue to see that start to level off more.

More over time.

Yeah, and there is another important trend that we have been seen in some of the commercial international side. There as soon as we implement that also the zale for poor commercial we also have seen improved traction on the commercial that counts on the international side and.

As you said there is also the increase in other countries due to the Oh operations in Houston than we have been gathering deposits from from other countries.

Hey, Michael and forgive me what was the first part of your question on mortgage.

Okay.

Yeah, I got to it I'm, sorry, I got a little excited here to answer the question.

You know I think in terms of Ameren mortgage one of the things we've elected to do and if you know the the thought here is be opportunistic.

The team identified a group of.

Of folks that can really contribute to our.

Future earnings and so when I gave the reference of adding a team. The impact is we're going to bring a team of over 22 people on in the fourth quarter. We've got eight already onboard with 22 in total that we expect.

To be here. So I would tell you fourth quarter will continue to be an investment in terms of making 2022, you know at the beginning of breakeven and then contribution to profitability, but you know in this particular space. We're excited we're a little behind where we were wanted to.

When we didn't get to open until late May, but I think at this stage, we're very excited about.

You know all the work that's gone into the infrastructure build and we wanted to just continue to be opportunistic where we can build this out.

You know effectively and efficiently for the future.

Yeah, that's fair I appreciate all the colors.

Yep Yep.

Okay.

Thanks.

Next question will come from the line of Stephen Scouten from Piper Sandler you may begin.

Hi, good morning, everyone.

Hey, Steven.

I wanted.

To follow up maybe on kind of loan growth trends I know you noted some of those CRE and C&I payoffs.

Just kind of curious if you have any data around what those pay offs have been in previous quarters to kind of give us a feel for that on a relative basis as well as maybe.

Maybe any data on quarter over quarter pipeline trends I know you noted.

Particular strength in your pipeline.

Yeah. So the quarter was particularly high in prepayments are we recorded more than $300 million in prepayments, but at the same time the pipeline was it's very promising.

Promising them pretty much.

We had a.

Now a lot of closings before quarter end, but then there were orders that were delayed until October and November actually worked closely and as we speak are more loans that were initially under on the pipeline. So it looks very robust in general Hey, Stephen I would just add to that.

One of the things the team here is doing.

I'm proud to say is we're staying pretty disciplined on our pricing.

As well as on structure.

We're not increasing ltvs increase we're not matching some of the low pricing that we're seeing.

And competitively and we're looking for folks that want to bank with us and want a relationship with us and I think that you know thats a theres a lot of competition out there, which is why I think youre seeing some pop in the prepayments, but that doesn't mean I would say, though that our team is not generating a significant.

Growth quarter over quarter in the pipe.

And so our feeling is look we've got the headwinds of New York, REIT and a little bit on this prepayment side, but that's why we're doing the investment we're doing in new personnel, we're going to continue to look to add basically in all our verticals, where we can find.

Good people that can help us.

A lot of the work I just have to say one of the reasons I made the comments I did in my closing remarks on growth. There's a lot of what we've been focused on is around restructure.

Has been around right sizing about transformation all of these other words.

We're really focusing on building the company.

For future success, and so the investment that we're making and frontline personnel, but we're also going to make.

And select areas in order to improve our customer service experience.

That's really sort of the transformation next steps.

Fine doing here at Ameren.

Got it Okay and do you have any data to frame up that kind of 300 million plus in prepayments I'm just trying to figure out if that was.

Double what you've seen in previous quarters and that was really the driver of the loan decline or if it was a mix of somewhat elevated prepayments in somewhat.

That we're doing we're working on two levels.

It wasn't mix in general they came from the CRE and C&I, but mostly CRE.

Also accounting on those 300, where a couple of New York prepayments as well that came in and dose. The intention we are not to renew them. So that was another.

Item against the production.

Okay.

And are you kind of answered. This question I think to a degree just a second ago, but I'm curious how you guys think about this kind of push pull of investing in the future growth of the franchise, but still trying to hit this kind of sub 60% efficiency ratio target.

Set out.

Yes.

My question is really would you guys be fine with maybe missing that target in the near term. If there were really good opportunities to hire new talent and invest in the long term success of the franchise.

Yes.

Absolutely I think it's the investing in the long.

<unk>.

View value of the franchise is absolutely essential.

That said, we're still laser focused I think you'll you'll know more.

As I mentioned within the next couple of weeks on business transformation and what that will mean for us on a go forward basis on the efficient.

Terribly side and also on the effectiveness side, but I would just say that we're turning the ship toward you know trying to really invest to get the personnel. We know we can.

We need in order to be a high growth higher growth company and.

Patient so we're overcoming a lot of headwinds obviously.

We're pulling out of.

Hundreds of millions of dollars that we're sitting on this balance sheet that were related to New York and then we're also coming out of Covid, where basically the pipeline at the beginning of the year was was pretty bare.

So I think the build that's happened quarter.

Over quarter, adding more people.

We need to add revenue I think Stephen maybe the best way I could sum that up is achieving efficiency is a combination of revenue growth as well as us looking at the efficiency and effectiveness of our operations and so.

This wasn't just going to be a cost.

Selling exercise this is a and again I think people use right sizing a little bit too much but I think it's adjusting the franchise to set ourselves up for success that we can leverage the foundation and really grow without having to add to the back office and be able to grow production and so.

That's really the way I'm thinking about it. So you know again it just gets back to the earlier question, we're focused on getting the D. R.

And a really good place and the efficiency might lag, but again remember we've laid that efficiency out for the end of 2022, because we know it's going to take.

Some time to continue.

Progress in that and we hope to report continued progress each quarter. So you'll see that we're marching our way there.

Definitely definitely okay. That's great color. Thank you guys for the time I appreciate it.

Absolutely take care.

Yeah.

Our next question from the line setting.

Strickland from Janney Montgomery you may begin.

Hey, good morning.

Got it.

I was just curious if it was great to see some of the reduction in classified and special mention.

Did the coffee trader relationship drive a decent portion of that or.

Was that kind of just a general improvement across the board maybe some other credits.

No we took a.

Charge in the quarter basically we've been carrying a specific reserve against that relationship.

And we've got it now to the stage, where we think this is the most likely outcome.

Outcome for us.

You know the the issue that's happened in that particular, one is as you know it's part of our Bank group.

That's involved in this particular stitcher.

The situation and trying to get everyone aligned on dish distribution.

Distribution is critical I think we've talked before on.

Or previously $200 million exposure, there's cash sitting to the tune of almost $100 million and so all of us are anxiously awaiting to try and see how much of this these distributions in various phases can come in you know we were hopeful that more would be come in Q3 in.

Q4, it looks like it could be potentially delayed into 2022. So our view was take the write down you know now in the specific reserve where roughly.

$14 million.

Total exposure in terms of remaining exposure and we will we feel comfortable.

Comfortable with our position in terms of getting paid on that and those work and we're going to continue to monitor it right. I mean, obviously in these situations everything gets in front of a judge you know in terms of determining who gets distributed and how much at what period of time, but we think it's the right way.

Sure.

To be looking at this one.

And those carried those 14 million carry six five in the specific reserves.

Got it.

So then that's right I remember you guys discussing that so the classified and special mention improvement was independent of this coffee.

So because you had already kind of set aside it but yes, what you are saying you got it yes.

And you know if any one of the things that I referenced in my comments was I think as a team. We are laser focused this is why I think the comment when you think about the sale leaseback.

As a.

Fixed asset investment that we've got here at our corporate headquarters you sort of look at that you look at all the non earning assets that are sitting on the books, we got to get those numbers driven down you know back to some of the earlier questions about how do we continue to improve the efficiency ratio. It's all of these little things that are critically important to execute.

The relation that are going to add earnings back into the organization going forward. So the more we can get deployed.

To maintain.

Adequate liquidity, but also to get as much possible into earning asset categories.

That's critically important for getting to that 60%.

Got it and I apologize if you covered this earlier I was having a little bit of technical difficulties, but are you guys seeing.

Any kind of the same wage inflation stuff, we've been hearing about especially I think I've heard more from the bigger banks and smaller banks, but.

Are you seeing you out on the frontline or back office.

On hiring lenders.

Yeah, no. It's a great question.

I think there's lots of market competition for quality people I think this is a time of year, where it probably gets even more challenging to try and add folks because they burned.

Wherever they are today.

Based on some of the production unless they've been getting paid out quarterly.

It gets to be a little bit.

Price here to try and add people this time of year.

Look we're in the candidly in two of the hottest markets in the country, we've talked about this before.

Demand for people is high I think what is good for the Amarin story.

As people know that.

We're streamlining our processes I I think our business development people would tell you that you know we've got in the Penn two our credit people if things are in accordance.

And our policies, we're executing much quicker on credit Decisioning I think also our story of continuing to improve and catching.

Being part of an organization at our size and not having to deal with the layers of management and oversight that are are very common it much.

Larger institutions.

Clearly I hope it is clear to everyone that were decisive we move quickly you know and that's part of what we want to maintain and actually become even better known for and I think that's really attractive to folks. So I think we are positive that.

That you know.

Again, as we've mentioned look at the teams of people that are that are coming our way.

I think it's a it's important to note that I think people are excited about all the things that are going on here and wanting to be part of it. So I would say certainly there's been a couple of times where we've.

Captain Marvel then we move on right. It's just like the way some banks or are willing to do higher ltvs, and cray or lower pricing and created right, where where we're finding very good people that wanted to be part of our story and so I would say that while it's very competitive out there.

We're definitely having success in attracting people.

To complement I believe it said and going to your question cost of living is something that is definitely impacting our jurisdiction. That's you can tell by the.

Residents in general the housing market it's.

We've linked creasing and affordability is it decreasing.

Our markets. So that's that's a point that we definitely are seeing around in and something to report to you based on your question.

Got it thanks for the color guys.

Appreciate the time.

Sure. Thank.

You.

Our next question comes from the line.

Jones from K B W. You may begin.

Hey, good morning, guys.

Good morning, well.

Hey.

It was great to see the announcements intra quarter on the clean up of those class B shares you got your shareholder vote coming up here.

Here in about three weeks.

Assuming that approval comes through could you just walk us through the timeline of conversion I guess just more so as a modeling question on the share count.

Sure. So the the shareholders meeting will be held on the 15th of November.

So the boarding process will.

Done on that.

For 15 to four correct.

To be specific and.

So once everything gets approved and through the right channels of approval.

We will get the conversion completed early December.

So we expect or anticipate that if everything goes as planned we will have a reduction of probably 500 or closer to 125000, maybe shares once the BS are converted into <unk> and then we will have a fraction of going into a new onboarding us with.

Describing the 8-K.

Great that's super helpful.

The cash payout not probably not going to be a huge number but any preliminary estimate of what that may be.

Who arent receiving the class C shares.

So we'll just to clarify you are talking about.

Small yes.

All tenant guys broaden the fractional shares.

Yes.

Yeah. Good question, so what does that amount and wouldn't exceed the $8 million. So the small shareholders are to run in.

We'll be around $8 million, so it's not significant.

Got you Okay. That's super helpful.

And then just moving on thinking about the buyback.

You guys announced that alongside the class B share cleanup.

It's great to see you.

Your class a shares are not as cheap as they have been trading at about one three times tangible.

There is not as cheap as they were when you repurchase.

Got it in the past.

I'm still fairly attractive though in these levels do you feel like the buybacks still makes sense for amarin.

That program commences in December.

Or is the thought really just.

Hold the cash and continuing to reinvest internally.

Okay.

Think buyback programs are critical.

Sure.

For us to be opportunistic.

And I think so.

You just look at what's happened in volatility in the last quarter that there's opportunity for us to execute there but.

It's a good question you know as our valuation continues to improve.

Okay.

It gets to be a little bit more challenging as it relates to.

The higher Thats getting as to what you would do but I am firmly committed I think our board is firmly committed I can say.

Comfortably that we all believe it's very important for us to have it on the shelf and to be able to use.

In Peru.

Consistently as we possibly can to be opportunistic.

Even if ahead of par.

Compared to some peers with steel.

Their value at 125, or so so just to keep that in mind.

Reference for buybacks.

<unk>.

Great.

That makes sense, maybe last one just housekeeping.

Is there any PPP loans left.

I know you guys sold quite a few months, but.

Probably less than $5 million.

Very little.

Got it great. Thanks, guys.

Thanks Bill.

And our next question will come from Brody Preston from Stephens you may be.

Your line is open.

Good morning, everyone.

Good morning, Brian.

I just want to say thanks again for all the disclosure in the deck I really appreciate it especially on the mortgage than the New York City.

Portfolio.

Couple of housekeeping questions real quick just the tax rate.

I wanted to get a sense for why it popped up this quarter and.

What should we should expect for an effective rate moving forward.

Yeah, Great question. So there is.

Probably.

The components that.

Impacted the effective tax rate one of then was related to.

Executives are earning more than a million dollars remember that we have our <unk>.

During the last quarter and Douglas released the Chief operating officer retire for an institution so the increments.

City proportion north of the million dollar was.

Excluded from the.

It's not part of the expenses for tax purposes. So that was one we captured that in this.

Quarter in particular, and then the other two components were in New York State and city tax.

Right.

<unk> calculation that we had based on the on some adjustments on previous periods. So it was <unk>.

<unk> this quarter. So those are the main components.

So a structural basis, we continue to.

<unk> manage the effective tax rate with you.

Usage.

<unk> REIT portfolio.

It consolidates with the bank. So we are.

Planning to enhance that so it should be stabilized.

On the 'twenty two 'twenty three 'twenty, two 5% approximately effective tax rate for the full year.

Okay $22 five you said for the.

Our full year yeah.

Okay. So thats like what like 21% on a go forward basis.

Doug.

Exactly.

Okay.

And then just do you have.

You repurchased a little bit of shares this quarter it looked like.

Could you just give us could you just give us.

A number of what the number of class B shares outstanding as currently.

It's about $8 5 million.

Class B shares.

Bob.

Remember that once we announced the conversion of the BS in two ways, we just hugged the buyback of the B, So probably we.

So total of $9 5 million approximately in total purchases.

And that would be close to a 17 <unk>.

$16, five maybe average price and on the purchase of those were.

Approximately the number but this quarter we didn't buy.

That much because we announced we announced it at the same time, we were correct.

<unk> clean up.

<unk> terminated to be buyback and announced a new one.

That will come.

The reconstituted one class right.

Yes.

And then my remaining questions are just on the New York City portfolio.

Gerry I heard you earlier say that you.

It sounds like you have some.

A decent amount of sales that are going to come through in the fourth quarter. So just from a modeling perspective as I think about the size of that Hff's portfolio.

You know through next quarter should I expect the bulk of the $2 19 to be sold or how should we be thinking about that.

Yes, I think thats.

I think you could easily say that maybe it to half and half.

Quarter to quarter look the reality is as we speak.

Some of those very relationships are seeking to pay off two right. So.

It's a combination I think that'll happen in those reductions of sales that will take place coupled with payoffs.

Okay.

Okay and what are the.

What's the yield on.

On that portfolio.

So the average for the footing near portfolio was close to the three 7% approximately.

There is a combination between fixed and floating the floating portion reprise with LIBOR. So there may be a single items that are sub 2%, but generally speaking the weighted is at three 7%.

Okay great.

And.

I like the move to FFS, just because it kind of accelerates the cleanup on it but as you think about kind of the short term negative implications of.

Bulk sailing.

<unk> hundred 19, and potentially doing more.

<unk>.

Gerry how do you think about sort of the short term kind of earnings headwinds that would create and as it relates to the ROE ROA and the efficiency ratio targets.

There's sort of a fine line to walk between cleaning it up and then creating a little bit of a near term haul.

All of that might catch People's by surprise. So how do you how do you kind of thread that needle.

Yeah, and I actually think that great question, and I think thats why youre seeing it is half the number of credits, but it's only $200 million, that's actually moved into <unk>.

Our expectation is there'll be a combination.

<unk> on that balance that youll start to see some prepayment activity on that over the course of 2022.

But I mean, our expectation was growing.

<unk>.

We've referenced this a little bit earlier in the comments.

Juruti on that 2019 that was class.

Side are the longer term credits and so you know our expectation is somewhere between 22 and 'twenty. Three is really what we were aiming for to see that portfolio either in a combination of either shale activity or payoff activity.

You know run off.

It could obviously be sooner.

Look every borrower it has got the right to initiate.

A payoff on their credit or refinanced away from us but.

Our view is this was a prudent way to look to reduce the servicing.

That portfolio and keep the.

The focus since we're now down to one key person overseeing there in some key personnel here in south, Florida being involved with those relationships to actively manage the wind down over time.

The other item that you should also think about is the.

<unk>.

The fact that when you typically the settlement of a loan it takes a little bit longer than so even though we committed to sale a portion of it maybe the proceeds will come later, so from the point of view of earnings.

<unk>, we still will have.

Correct.

Of this portfolio income wise for the rest of the quarter.

Got it.

Alright, well those are are those are all my questions everyone. Thank you very much for the time.

Awesome. Thank you have a good day.

And we have one another question from the line.

Michael Young from <unk>. Your line is open.

Good morning, Thank you.

Good morning. Thanks for the question I wanted to just ask on on the reserve or allowance I think.

A one times coverage of Npls.

As you know, maybe a little bit lower relative to kind of the industry as a whole.

Right now, obviously, you've kind of been doing some credit clean up and had some pretty significant charge offs. This quarter should we expect some other sizable charge offs and do you have any color on what may be remaining in that reserve in terms of specific reserves on credits.

Yeah look I think what you see in the Npls right now.

Now is that we've done a thorough review that that Michael Great question by the way that that's why we're doing these weekly reviews.

To continue to monitor that.

It relates to working that portfolio off our books as quickly as possible I mean, we're not.

<unk> taken haircuts were trying to just speed.

The speed up the resolution on these things our expectation is that we can continue to significantly lower that in Q4.

With a goal towards reporting on continued improvement without additional charge.

Josh because we think from evaluation standpoint that we've done a good job in that in addition, we're still holding at our reserves about $15 million that we'll call it sort of COVID-19 related.

Reserve that in the event that we've got any type of potential exposure that pops up.

Not that we're we're in a good position to cover it off.

Okay, and then just switching gears quickly on our deposit costs come down nicely I think 44 basis points.

Obviously, theres still some room for those to come lower but where do you kind of envision those bottoming.

Or does it sort of the mid thirty's or any color there would be helpful.

Yes.

Accurate so we're projecting being in the closer to the 40 basis points for our cost of deposits for Q4.

Yes, you are totally right as we continue to reprise more and more time deposits.

<unk> the trend is right.

Approximately the number you had mentioned yes.

Yes.

Michael Great question, and I think one thing we will add disclosure wise is what our maturities look like for quarters going forward. So that you guys can see both on the brokered and.

The time deposit side.

Deposit.

What the opportunity there is for continued downward repricing in that portfolio.

Sure.

Okay, Great. That's all for me thanks.

Sure thing thank you.

Thank you and I'm not showing any further questions in the queue.

Yeah.

Okay.

Well. Thank you everyone for joining our third quarter earnings call. We're very excited to be able to share our progress today and about the bright future ahead for Amarin Hope you have a great day and thank you again for your continued.

This worked in interest in our organization.

This concludes today's conference call. Thank you for participating you may now disconnect.