Q3 2022 Banner Corp Earnings Call
<unk> loans represent 139% of total loans down from 163% linked quarter and compared to 2.45% as of September 30th 2021, nonperforming assets declined by $3 5 million and now totaled $15 6 million or 0.10% of total assets and our.
Primarily our nonperforming loans totaling $15 2 million.
And very briefly touching on asset quality adversely classified loans continued to decline reducing by $18 million in the quarter and are down $89 million or 40% year over year.
Due to continued strong loan growth in the third quarter as well as the impact of increased economic uncertainty, we posted a $6 $3 million provision for loan losses and it relates to 205000 of the reserve for unfunded commitments.
Loan losses continue to be modest and were once again more than offset by recoveries.
After the provision our ACL reserve totaled $135 9 million or 138% of total loans as of September 30th an increase of two basis points from the linked quarter and compares to a reserve of 152% as of September 32021.
The reserve currently provides 895% coverage of our nonperforming loans.
Looking at the loan portfolio, we again reported strong loan originations core portfolio loan growth, excluding PPP loans was $388 million or four 1% for the quarter and 16, 3% on an annualized basis, if we exclude the growth in the one to four family portfolio the annualized growth rate remains strong at <unk>.
10, 7%.
C&I activity remained healthy in the third quarter in spite of the rising rate environment commercial loans, excluding PPP grew by nearly 5% or $53 million in the quarter, which is an annualized rate of 18% and balances are now 18% higher than that reported as of September 2021.
Additionally, there was strong growth in the small business scored portfolio up 5% or $41 million quarter over quarter balances have increased 17% over the past 12 months.
<unk> utilization is up 2% in the quarter and compares to levels not seen since mid 2020.
A review of the new volume confirms that exposures continue to be modest in size much of it to existing clients and diversified both by industry and geographic location.
Commercial real estate balances were relatively flat the reduction within the Investor CRE portfolio was due to expected pay offs and the increase in the owner occupied CRE portfolio with a mix of new property acquisition as well as rate and term refinance is for existing clients.
The growth in the multifamily portfolio represents both new term loans as well as the conversion of completed multifamily construction projects.
And I will remind you that our multifamily portfolio is split approximately 55% affordable housing and 45% market rate and remains granular and exposure and geographically diversified within the footprint.
Construction and development loan balances grew by 3% in the quarter, primarily due to the continued draws on residential and multifamily construction projects.
This is in spite of significant residential payoffs that continued in the quarter at project completion.
As I've said before we do expect that the increasing mortgage rates will have an impact on the velocity of home sales within our residential spec portfolio. However, through the third quarter, our residential builder clients have been continuing to move completed homes.
Court the cancellations on pre sales to date have not been material and in reaction to the rising rate environment. We are beginning to see them slow new start our.
Our total residential construction exposure remains acceptable at six 8% of the portfolio with nearly 40% of that comprised of our custom one to four family residential mortgage loan product when.
When you include multifamily and commercial construction and land. The total construction exposure remains at 14, 7% of total loans.
The growth in the agricultural loans continues to reflect the seasonal draws on lines of credit through September 30th with balances up 8% year over year, excluding PPP loan.
And as noted in the earnings release, we again reported significant growth in the consumer mortgage portfolio. This was primarily the result of holding completed construction mortgage loans on balance sheet, many of which would have previously been refinanced for a lower rate and sold into the secondary market upon completion.
Reflecting the success of the summer home equity loan promotion HELOC balances also added materially to the growth up $39 million or 8% again, this quarter compared to growth of $36 million in the linked quarter.
Lastly, the growth in the consumer loans is in other consumer loans is the result of purchasing a small portfolio of consumer pleasure boat loans within our footprint that was completed in the quarter.
With that I will wrap up my comments, noting that the economic environment continues to be uncertain and ever more pessimistic still as I said last quarter Banner's credit culture is one that is designed for success through all business cycles, you've heard us say many times before that our credit quality metrics can't get any better than they currently are and that is certainly true.
<unk> today.
If or I should probably say when the effects of a recession began to emerge we will not be immune, but our consistent underwriting will be to our benefit as well our solid reserve for loan losses and robust capital base, we continue to be well positioned to move through the next phase of this economic cycle with that I'll turn the microphone over to Peter for his comments.
Peter.
Bill.
Previously and as announced in our earnings release, we reported net income of $49 million or $1 43 per diluted share for the third quarter compared to $48 million or $1 39 per diluted share for the second quarter.
The <unk> increase in earnings per share was due to an increase in net interest income, partially offset by lower noninterest income higher noninterest expense and a larger provision for loan losses this quarter.
Our revenue excluding gains and losses on securities changes in fair value of financial instruments carried at fair value and gains on the sale of sole branches increased $13 $2 million from the prior quarter due to an increase in net interest income partially offset by a decline in mortgage related non interest income.
Noninterest expenses, excluding banner forward increased $4 1 million due primarily to lower capitalized loan origination costs, along with increased bonus commissions and marketing expense.
Turning to the balance sheet.
Total loans increased $385 million from the prior quarter and as a result of increases in held for portfolio loans.
Offset by an $18 million decline in PPP loans.
Excluding PPP loans in held for sale loans portfolio loans increased $388 million or 16, 3% on an annualized basis.
One to four family real estate loans grew $157 million in the current quarter as a result of directing residential custom construction and jumbo mortgage loans on the portfolio.
We anticipate a slower pace of on balance sheet mortgage production in coming quarters.
Ending core deposits increased $56 million from the prior quarter end due to normal seasonal factors.
Partially offset with outflows of rate sensitive balances.
Time deposit balances declined by $34 million from the prior quarter end driven by higher cost Cds continuing to roll over at lower retention rates.
Net interest income increased by $17 4 million from the prior quarter due to an expansion of the net interest margin coupled with growth in average loan outstandings and lower balances of lower yielding overnight interest bearing cash.
Compared to the prior quarter loan yield increased 28 basis points due to increases on floating and adjustable rate loans.
Partially offset by a decline in PPP loan forgiveness processing fees.
Excluding the impact of PPP loan forgiveness prepayment penalties and interest recoveries in acquired loan accretion.
Average loan coupon increased 33 basis points from the prior quarter.
Due to increases in floating in a desperate and adjustable rate loans and higher yields on new fixed rate term loan.
Total average interest bearing cash and investment balances declined $340 million from the prior quarter, while the average yield on a combined cash and investment balances increased 52 basis points due to a lower mix of overnight funds and higher yields on both the securities portfolio and overnight funds driven by higher market rates.
Yeah.
Total cost of funds increased two basis points to 13 basis points due to modest increases in deposit deposit rates and repricing of junior subordinated debentures.
The total cost of deposits increased one basis point to seven basis points, reflecting small increases in money market rates.
The ratio of core deposits to total deposits remained steady at 95% the same as the last quarter.
The net interest margin increased 41 basis points to 385% on a tax equivalent basis the.
The increase was driven by higher yield on securities overnight cash and loans, coupled with a larger mix of loans and a lower mix of overnight cash within the earning asset base and.
In the coming quarters, we anticipate anticipate a slowdown in the pace of margin expansion as price sensitive deposits move off balance sheet loan growth moderates overnight cash levels decline in deposit rate increases accelerate extra.
Excess overnight cash is anticipated to decline in coming quarters to fund continued loan growth and deposit outflows.
Total noninterest income declined $11 6 million from the prior quarter. The prior quarter benefited from a $7 $8 million gain on the sale of four branches.
Core noninterest income excluding gains on the sale of securities gain on the sale of the branches and changes in investments carried at fair value declined $4 2 million.
Total deposit fees increased 450000, while mortgage banking income declined $3 9 million due to declining residential mortgage production, coupled with a fair value write down of multifamily loans held for sale.
Total residential mortgage production, including both loans held for investment and those held for sale declined 9% from the prior quarter.
Held for sale loan production declined 33% from the prior quarter.
Selecting the headwinds of higher rates and a slowdown in home sales.
Within residential mortgage production the percentage of refinance volume continued to decline as a function of rising rates dropping to 12% of total production down from 18% in the prior quarter.
Multifamily loan production ramped up modestly in the third quarter. However, the fair value of the loans held for sale was negatively impacted by the rise in the long end of the yield curve during the quarter, resulting in a $2 $2 million write down.
Miscellaneous fee income decreased 362000, due to lower swap and SBA related fees.
Total noninterest expense increased $3 million from the prior quarter, primarily due to lower deduction for capitalized loan origination costs increased compensation marketing and deposit insurance costs, while banner, Florida implementation costs declined $1 1 million to 400000 in the current quarter.
Excluding banner forward noninterest expense increased $4 1 million.
Capitalized loan origination costs decreased due to lower construction, one to four residential mortgage and HELOC loan production in the third quarter.
Compensation expense increased by 800000 due to increases in bonus and loan production related Commission expense.
Occupancy and equipment costs declined due to facility exit costs in the prior quarter.
Advertising and marketing costs increased as a result of new promotions and seasonal increases in CRA contributions.
Deposit insurance increase due to asset mix rate factor adjustments.
<unk> remains on track, we just completed the fifth consecutive quarter of implementation and approximately 82% of the initiatives from our program value perspective have been executed and are reflected in the current quarter run rate.
We are now seeing lift from revenue related initiatives reflected in the form of a higher pace of loan growth and increase in deposit service charges.
A portion of the elevated expense this quarter was tied to loan production related variable costs that are anticipated to reduce in coming quarters and.
And we anticipate further improvement in the Companys core efficiency ratio.
In closing the company continues to benefit from rising rates as evidenced by further margin expansion this quarter and a stable low cost deposit base and strong diversified loan growth.
This concludes my prepared remarks Mark.
Thank you Jill and Peter for your comments.
That concludes our prepared remarks, and Adam we will now open the call and welcome your questions.
As a reminder, if you'd like to ask a question today. Please press star followed by one on your telephone keypad now from the parent to ask a question. Please ensure you have fully booked in a muted locally.
One talk about.
First question today comes from Jeff Bridges from D. A Davidson please.
Go ahead your line is open.
Thanks, Good morning.
Good morning, Jeff.
Question on the.
Expense line.
I think you sort of alluded to the banner for efficiencies or those initiatives largely to be captured in <unk>.
So the fourth quarter.
Could you speak to what you would think any additional costs of the initiative maybe in the fourth quarter and then.
Kind of narrowing into our expense run rate.
Hum.
Kind of the puts and takes this quarter in the mid nineties.
Well as a 23 growth rate given the banner for efficiency initiatives are largely will be baked in by year end.
Okay.
Yes, Hi, Geoff it's Peter Yeah in terms of.
The first part of your question, we don't anticipate any material additional.
Toward restructuring costs going forward.
There are some modest remaining efficiencies.
To be captured here over the next two to three quarters.
Around some facilities optimization.
And to a much lesser extent some staff efficiencies.
And a couple of remaining areas, but they're very modest.
The comment I made earlier about kind.
Kind of our variable costs and the commission.
Compensation line items are really a function of there's a bit of a mismatch between production and the recognition of the expense to generate that production this quarter.
Expect to moderate down in.
In the fourth quarter.
That being said, we are experiencing some wage inflation and some general inflation in the cost of running our operations that continue to impact our core run rate. So at this stage.
We're looking at the low Ninety's core run rate going into <unk> into 'twenty three given the inflationary pressures in some of the.
Wage inflation that we've seen.
That's being moderated somewhat by some of the remaining efficiencies it'll be recognized next year, but the majority of our efficiency initiatives are behind us at this point.
Okay, just to clarify that.
Sub 90 million quarterly expense run rate.
Low it would be low ninety's, so low nineties.
Okay. Thank you.
Sure.
I just wanted to touch on the core deposit.
It'd be confidence.
You see that maybe.
Maybe.
How you manage public funds, maybe drifting lower maintaining the core deposit base I guess as we kind of get through this cycle.
Kind of how do you view the core deposit is that more of a hope to maintain balances or what your visibility is.
Could you continue to grow that into 'twenty three.
Yes, I think what we're seeing is we're seeing more.
Evidence of our peer bank.
<unk>.
Peer bank group that we really.
Price against in the market beginning to offer some rate specials and begin to beginning to elevate some other.
Standard operating rates so.
Vacation is we'll see some acceleration in our deposit beta.
Part of our strategy is.
Some of them are price sensitive deposit balances are expected to run run off a bit, albeit modest.
So our look forward would suggest you'll see some of that surge or excess balance it's price sensitive run off the balance sheet, albeit very modest at the same time, we're continuing to acquire new clients, especially around our small business and commercial teams to generate new deposit growth for us.
That will mitigate some of that runoff, but I wouldn't anticipate.
Material deposit growth.
In aggregate going into next year, given that two countervailing forces some pricing.
Coupled with continued client acquisition.
Small business and commercial side, so basically our expectations will tread water more or less and that'll be a function of the rate environment and the pace of competitive.
Deposit pricing across our footprint.
Thanks, and then last one on the loan growth side, maybe for Joe.
Okay.
Really strong growth this quarter there is.
And your tone of cautiousness as we all can see sort of the economic projections, but I guess, if we could translate that into kind of fourth quarter and into 'twenty three expectations on a on a net growth I mean, either a number or just broadly speaking the pace of net growth really strong in the third quarter.
What are expectations ahead.
Sure, Jeff the way I would practise.
Practice that are started on office, but certainly the loan growth expectations can be negatively impacted by continued worsening economic environment and.
The earnings release did show that origination slowed in the third quarter, albeit loan growth picked up so.
Put those two things together and I still feel good that we'll maintain a mid to upper single digit growth rate in the fourth quarter and as we're seeing increased utilization rates I anticipate similar similar level levels going into 2023, barring a significant economic downturn.
Great. Thank you.
Yeah.
Thanks. Your next question comes from Andrew.
Andrew Liesch from Piper Sandler Your line is open. Please go ahead.
Alright, thanks for taking the questions.
Just wanted to talk a little bit more on the on the margin guide here I'm, just curious where new loan.
We added during the quarter relative to the.
The average.
Yeah, Andrew it's Peter Yeah, they're coming on in the in the mid size mid to upper fives.
The range this quarter.
Getting a lot of it.
Floating rate loans are tied.
Tied to prime.
Or or LIBOR now silver.
Spreads and so we're seeing a lot of lift here coming on the floating rate side. We're also seeing to a lesser degree some.
The.
Increased yield on the term fixed loans, there was a deposit beta effect as you know as rates move up.
We don't fully capture all of that market.
Increase in loan spreads, but we continue to see.
Positive.
Positive capture on the loan yields coming in the new quarter in there they are accretive to our current.
Current loan portfolio yield.
Yeah.
And then just on the deposit beta is basically zero, so far where do you expect them to rise to or what does the modeling that you guys are incorporating into your outlook.
Yes.
They've been obviously very low so far we expect.
The deposit betas will catch up on a cumulative basis as we get further into the rate cycle.
And.
The deposit betas look.
Our expectation and modeling assumptions will look similar to what they looked like back in 2017 for banner right. So if you were to look back at what Dan or did and how we responded to the last rate cycle in terms of deposit betas and how we repriced our expiring.
Counts that would be a good a good model for what we expect going into this rate cycle, albeit with much longer lags, but we think a cumulative deposit beta will be similar.
From our perspective, we've never been a high price payer on deposits and we werent in the last cycle. So to the extent there were.
Any price sensitive clients in our deposit base.
Of them had left in the last rate cycle.
So we expect a high level of resiliency in our deposit base and I'll remind you we've got a very granular deposit base and it's very geographically diversified between metro and rural markets.
And so that that works for advantage.
Top of that we have a high level of noninterest bearing balances that are linked to operating accounts of our small business and commercial clients that are really used for operations and not for yield. So we think we've got a good a good position going into this one but you know we're always going to be somewhat conservative in our guidance.
Assume that the beta experience will ultimately be similar at the end of the rate cycle as it was the last one for us.
Got it alright, thats really helpful.
Good way to think about it on the provision here just curious how much of that was related to the growth how much of that was from.
Any sort of economic outlook and then are you seeing any changes in the seasonal model.
Was any of it related to.
The qualitative factor for a potential recession.
Hi, Andrew So as I always say the drivers for provisioning are a function of the economic data the portfolio growth and the overall mix. This quarter. It was certainly driven by our loan growth.
Terms of qualitative factors and how those play into the modeling we review the qualitative factors quarterly with an eye towards changes in the general economic sentiment.
Applied to the Moody's forecast that was recently published in <unk> and in light of our own current market data and we make changes here and there to those factors that are applied to different loan segments as we deem appropriate, but what I can say is that the overall impact of qualitative factors on the level of the reserve has been consistent over the past several quarters.
Got it alright that is very helpful. Thank you for taking the question I'll step back.
Thank you Andrew.
The next question is from Andrew <unk> from Stephens. Please go ahead. Your line is open.
Hey, good morning.
Good morning.
Hey, maybe for Peter just to round out kind of some of the balance sheet growth.
Items I guess is it fair to think.
The bond book should continue to decline from these levels moving forward and then can you just remind us what the quarterly cash flows look like from the bond book.
Sure Andrew Yes, yes, so we expect the bond portfolio.
Gradually amortize over time or not anticipating putting any more into the investment portfolio.
It's been basically cashing about 75 to 80 million a quarter right now given the current rate outlook.
And then we have the option of liquidating some of it without any loss.
A portion of that portfolio is it shorter at the shorter end of the.
Yield curve.
We need to down the road, but we still have sufficient overnight cash to support loan growth for quite a while.
Any potential deposit run off so.
In the short in the near term, we don't expect any decline in the securities portfolio save for some modest cash flow amortization.
Okay understood I appreciate it.
And I wanted to ask on just the TCE ratio kind of in the low six territory. Your regulatory capital is obviously in a fine position.
I was curious if TCE played into kind of your thinking around execution of a buyback.
Or any kind of capital actions I, just would love to hear kind of thoughts on Tc ratio, where it is.
Yes.
We didn't repurchase any shares this quarter.
In part due to the.
Uncertainty and a tightened volatility in the economic and interest rate outlook.
And so we are looking for some.
In a period of more stability into 'twenty three before we.
Resumed share repurchases.
The TCE number we model that on a regular basis.
Under various rate scenarios.
Looking at the current rate outlook.
Economic consensus in Bloomberg and <unk> from Moody's the.
The most recent one if we apply that yield curve outlook into 'twenty three 'twenty four.
TCE ratio naturally cured itself right through the diminishment of ACI with the passage of time and the.
Pace of retained earnings we are generating.
And effectively a modest moderation in asset growth all of that suggests that the TCE ratio will will move up.
Our Tc ratio is most of our Aoc is most highly correlated with the five year Treasury.
Inversely related to the five year treasury. So so it goes with five year and really drives the OCI number but.
Outside of a real sharp increase in the five year, our expectation is the TC number one naturally.
Grow and cure with the passage of time.
For the reasons I mentioned.
Understood. Thanks.
Last one for me I apologize if I missed it but did you provide any kind of fee income run rate heading into the fourth quarter. I know there were some moving parts in the <unk> numbers.
Yes.
Our fee income number.
We had.
Mark on the multifamily loans held for sale.
This quarter in that.
Mark is also correlated with the five year Treasury.
And what we expect going forward as mortgage will continue to.
I have a soft landing here, our residential mortgage business, albeit we don't anticipate.
Mark of the magnitude we had in the third quarter going forward. So we should expect some rebound in our fee income going into Q4.
Associated with that.
Lack of having a mark of the size, we had in Q3 on the multifamily portfolio.
Okay. That's helpful. Thanks for taking my questions.
Thank you Andrew.
The next question comes from Kelly Motta from K B W. Kelly. Please go ahead your line is open.
Okay.
Kelly from K PW. Your line is open please ask your question.
Hi, sorry, I was muted.
Thanks, Thanks for the question and great quarter today.
Most of my questions have been asked and answered, but I did want to circle back to.
The expense guidance that you provided and just a clarification there I believe you said low nineties.
Is that.
Does that include or exclude the CDI amortization.
The business and use taxes.
Yes that would include a Kelly.
Okay. So so all in expenses around around 90.
Low nineties.
Got it.
And is there seasonality there too as you know we tend to run a little high in the first quarter due to payroll taxes.
And then it gradually declines and then we have some seasonality on marketing and CRA related costs typically increase in the second half. So just just a little bit of input from a modeling perspective.
Got it.
And I apologize if you've covered this already but.
At your your deposit base, you had some inflows of noninterest bearing demand deposits. Just wondering if there was anything seasonal there are any.
Anything unusual and.
What's your outlook for them.
Kind of maintaining noninterest bearing accounts at these levels.
Yeah, we typically have a seasonal increase in noninterest bearing deposits in the third quarter.
Typically have a bit of an outflow.
In the second quarter, primarily due to tax payments, both business and personal so we normally do experienced an increase.
Seasonally in noninterest bearing deposits and core deposits in the third quarter.
This quarter, we saw some some of that was mitigated by some deposit outflows.
Going forward as I said earlier, we were sort of in a mode here of treading water.
Our total deposit balances.
Subject to rate competition, and some of the higher price sensitive deposits seeking higher yields.
Going forward, we normally in a normal year without the rate environment. We're in today, we'd see a plateauing of our deposit so we'd have an increase in Q3, and then plateauing of deposits in Q4.
This this and this cycle and for Q4, we expect.
Potentially some moderation and potentially some modest outflow in Q4, given that we don't really don't have any seasonal.
Anyway.
May see some some outflows on the higher price sensitive deposits this coming quarter.
Got it. Thank you so much for all the color I'll step back.
Thank you Kelly.
The next question is from David Feaster from Raymond James David. Please go ahead. Your line is open.
Hey, good morning, everybody.
Uh huh.
Maybe maybe touching on on the originations again, you know just just looking at the slowdown that you guys had most of that construction and consumer bucket.
My gut says, it's probably somewhat strategic but I'm just curious how much of the deceleration in originations is his strategic versus just slowing demand at higher rates impacting projects and maybe more more more of these deals falling out of the pipeline.
I don't know that I can quantify it exactly for you David but starting first with the consumer book that was if you remember we ran pro.
A special in the summer for home equity loans that really drove up the utilization and then.
So that was that stopped that was anticipated and we're still seeing the growth from the utilization on the lines that we booked but actual loan originations slowed on the residential construction side certainly it's a mix the builders themselves are choosing to slow take down and were slowing as well.
But no stopping no desire to pull out of that at this stage.
Okay.
And then we've talked we've talked in the past about a lot of the disruption around you from several larger M&A deals just curious whether you've started to see any opportunities to benefit from those and whether youre seeing more opportunity on the client acquisition perspective or the hiring front.
And just just any thoughts on hiring overall.
Yeah.
On the client acquisition, we are seeing some it's a slow process certainly people don't move quickly.
Have to wait for some more of that disruption to occur when they actually close and then do the converse system conversions and things like that but we have had client acquisition just from D. What is felt to be lack of responsiveness because of distractions at the institution in terms of employees, a little bit of that and it's not new.
It's a fairly from the.
Thanks that you would be thinking about in our market we're getting good.
Employee acquisition from the larger banks, both in the California market here in the local market, we really have some good new employees joining our team.
Alright.
David This is mark the only thing I'd add is.
From a personnel standpoint, we've had some very.
Attractive hires for the organization in terms of revenue producers, but also some of the back office as you already know some of the larger institutions in our footprint.
Certainly U S bank with the Union Bank combination along with Bank of America to some degree have repositioned their delivery channels and Thats really presented some great great opportunity for us.
Really the markets across our footprint. So we've been able to have some some fantastic hires and as you know when that when that occurs it becomes a self fulfilling prophecy once it gets out and people know who the good bankers that are in the good bankers are joining banner it becomes.
It becomes a well known and we get other opportunities along the way of additional hires so it's actually been very beneficial.
Yeah. Good good people fall of good people.
And then that's helpful and then maybe just.
Just any thoughts on how you're thinking about managing your rate sensitivity.
Obviously, just seeing your the rate shock analysis.
Great sensitivity has come down some but I'm just curious how you think about.
Managing that.
And whether there's any appetite to decrease sensitivity or.
Just overall, how you're thinking about managing sensitivity.
Yeah sure sure David It's Peter Yeah. So.
To your question Yeah art.
Our expectation and our actions are to gradually reduce the bank's asset sensitivity as we get towards the top of the rate cycle.
That happens organically through.
More and more of the loan originations being fixed or a longer term adjustable loans.
And then continued use of our excess cash today floating overnight with the fed.
The additional loan production. So we'll see kind of an extension of duration. If you will of our earning assets as we get towards the top of the rate cycle that will reduce the asset sensitivity.
Sequentially as we go quarter to quarter.
At the same time.
We'll continue to generate new deposit growth core deposit growth.
Older noninterest bearing base.
And limit.
Some of the downside effects of <unk>.
Having a higher duration on our liabilities our deposits. So we are managing that organically and what we expect to be less and less asset sensitive as we go.
Through through the next year and you'll see that show up in those disclosures.
Also have a we have as a practice, we put loan floors and all of our floating so we havent you know.
Embedded hedge there at a borrower level.
As we go as well to provide some additional <unk>.
Benefit on the downside.
Okay. That's helpful. Thanks, everybody.
Thank you David.
Nothing further in the queue at present, plus a phone a reminder, that stuff really really wanted to ask a question today.
Okay.
As we have no further questions I'll hand back to President and CEO , Mark West Convention for concluding remarks.
Thanks, Adam as I stated, we're very proud of the banner team and our solid third quarter performance.
Thank you for your interest in banner and joining our call today, we look forward to reporting our results to you again in the future.
Have a great day everyone.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
[music].
Yeah.