Q3 2022 Cadence Bank Earnings Call
The new Sonic branding has been has exceeded even our highest expectations.
As to our financial results for the quarter, we reported adjusted net income available to common shareholders of $143 7 million or <unk> 78 per diluted common share even with the intense focus on our conversion. This performance represents another record quarterly earnings for cadence and another increase in adjusted <unk>.
<unk> to $189 8 million or adjusted earnings and <unk>, both increased approximately 7% compared to our second quarter results.
Moving to the balance sheet, we had another solid loan growth quarter reporting net loan growth of $936 million or 13% annualized this.
This brings our year to date total to $2 4 billion or 12% annualized.
Our loan growth for the quarter was again very diverse both from a geographic and product standpoint.
Which positively reflects the economic environment in our footprint as well as our team's ability to remain forward focused throughout this integration.
For the quarter, we reported growth across several regions of our community Bank led by the Texas region, and our corporate banking group had a great quarter across the board, including C&I energy and real estate, along with certain other specialized industry verticals.
We reported a decline in deposits for the quarter of $1 2 billion nearly half of which was public funds and correspondent bank balances and the remainder is reflective of slightly lower average account balances across our footprint.
The core funding provided by our community bank positions us very well from both a deposit retention and cost standpoint in this environment.
Our liquidity position has allowed us to be disciplined on pricing more rate sensitive deposits. Our bankers are doing a phenomenal job protecting our core customer relationships.
Our credit quality continues to be stable and reflected in the 3% decline in total nonperforming assets compared to the second quarter and no provision for credit losses for the quarter.
We did see a slight increase in net charge offs to nine basis points for the quarter after five consecutive quarters of reporting net recoveries. However.
However, this increase was entirely related to one acquired energy credit that was reflected as a PCB credit at the merger date without the charge off of this acquired credit we would have posted another quarter of net recoveries.
Of course credit remains a key focus for us, particularly with the significant increase in interest rates and the recessionary winds blowing.
As a reminder, when we completed our merger with cadence. This time last year, we were able to assess nearly half of our loan portfolio and provide for any credit marks deem necessary at that time, we believe that process on top of our one 4% ACL coverage.
With our consistent approach to credit is positioning us very well in this credit environment.
Wrapping up I'd like to briefly mentioned, our operating efficiency revenue growth for the quarter contributed to improvement and improvement in our adjusted efficiency ratio to 63% for the quarter. Despite some moving parts in our expenses that Valerie will go over with you in more detail.
With our core conversion now behind US we expect to further benefit from merger efficiencies as we finished the year and move into 2023.
This combined with the interest rate environment should provide a catalyst for continued improvement in our operating performance as we look forward to next year.
With that I'd like to turn it to Valerie for her comments Valerie.
Thanks Pam.
Jim spoke to the meaningful growth in our earnings highlighted by another great quarter at the level of growth, which improved our earning asset mix as well as.
<unk> margin.
Stable credit quality.
Adjusted net income of $143 7 million increased $9 5 million during the quarter and was adjusted for merger related expenses of $26 6 million as well as the pension settlement charge of $2 9 million.
Referencing slides four and five we reported net interest income of $355 million for the third quarter, an increase of over 9% compared to the second quarter of this year.
Net interest margin was 328% for the third quarter up 22 basis points from the linked quarter and up 26 basis points, excluding the impact of accretion.
The pace of interest rate changes has had a significant impact on our loan yields as our yield on net loans. Excluding accretion was four 7% for the third quarter up 58 basis points from the prior quarter.
<unk> impact to our securities yields was lower at seven basis points as we continue to deploy the cash flow from those securities to fund our loan growth.
Regarding deposit cost with nearly 80% of our deposits driven by our core community banking platform, we have been able to maintain a low deposit beta during this increasing rate environment for.
For the third quarter, our total deposit beta was 13% and our total cost of deposits increased to 35 basis points up 17 basis points in the quarter.
Our cycle to date deposit beta is only 9%. This compares to the third quarter's loan beta excluding accretion of 41% and 32% cycle to date.
Our balance sheet remains asset sensitive with approximately 50% of our loan portfolio of $14 6 billion re pricing in the next 12 months and with $12 4 billion of that actually repricing within the next three months.
Noninterest revenue highlighted on slide seven with stable at $124 5 million this quarter with the decline of mortgage banking revenue offset by improved revenue in our limited partnership investments and other fee revenue.
Our insurance team continues to perform very well with a year over year revenue increase of over 11%.
Moving onto expenses referenced on slides eight nine and 10 total adjusted noninterest expense was $290 2 million for the third quarter up from $271 8 million for the second quarter.
Driven by compensation and the result of several nonrecurring benefits that we highlighted on our second quarter results.
We added slide nine to help clarify some of these moving parts.
Adjusted salaries and benefits expense increased 8.8 million linked quarter with approximately $4 million of that due to the annual merit increases effective July one with the remainder driven by increased performance linked incentive compensation as well as a decrease in salary deferrals, which is a contra expense.
Due primarily to lower mortgage originations.
Additionally, foreclosed property expense for the third quarter included a $1 1 million loss on sale, while our second quarter results included a $1 1 million gain resulting in a $2 2 million variance between the quarters.
Similarly, our second quarter results included a $2 5 million credit and intangible amortization expense as we finalize the merger intangible asset valuations, resulting in an increase to our normalized third quarter expense.
The increase in other miscellaneous expense linked quarter also included several of these non routine reductions to expense impacting the second quarter. It's a lot of moving parts, but in summary, the $290 million and adjusted expense. We incurred this quarter is a reasonable run rate to consider as we go forward, knowing we have yet to realize the.
<unk> of our merger related saves coming in the next few quarters.
Regarding the non operating items, we incurred a $2 9 million pension settlement expense this quarter due to an elevated number of retirements in the second half of the year.
We anticipate this activity to continue through year end with another settlement expense charge in the fourth quarter.
Merger and merger related costs increased to $26 6 million this quarter as we accelerated the finalization of our conversion.
We anticipate merger related costs to continue in the fourth quarter as we finalize the conversion in October and we will be consolidating 17 branches in the fourth quarter as well.
We added slide 10 to the deck to highlight a comparison of our third quarter 2022 expenses to combined pro forma third quarter 2021 expenses the quarterly period, just prior to our merger last year.
Over the last year, our total adjusted quarterly expenses increased four 7%.
We estimate that inclusive in that we have already realized approximately $8 million in quarterly merger related savings with those savings in various categories, including overhead people facilities and systems.
Excluding these merger related savings are year over year adjusted expense increase would have otherwise been seven 5%.
When you compare us to peer banks reporting thus far there year over year average organic expense increase has been nine 6% or over 25% higher than cadence of seven 5% pre merger saves increase and more than twice our actual adjusted expense increase of $4.
7%.
When we layer on the remaining merger related saves we expect to realize in the coming quarters. We anticipate continued improvement to our efficiency ratio and our pretax pre provision net revenue.
Sam spoke to the loan and deposit activity during the quarter as well as our stable credit performance.
Regulatory capital remained solid with little change in our common equity tier one ratio of 10, 3% and total capital ratio of 12, 8%.
As we step back and assess this quarter, it's easy to be pleased with where we are positions. This quarter. We once again continued to demonstrate our ability to generate quality loan growth meaningfully improve our net interest margin.
Enhance our operating efficiency and PNR quarter over quarter and maintained stable credit performance.
Additionally, we are well positioned as we look forward with our asset sensitivity additional merger saves to be realized and now as strong singular brand and platform under which to serve our customers across our Texas and southeast footprint.
There is an excitement at cadence and hopefully you can see why.
Operator, we would like to open the call now to questions.
Thank you we will now begin the question and answer session.
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Thank you.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Michael Rose with Raymond James. Please go ahead.
Hey, good morning, everyone.
Good morning.
A few questions here, so just back to the expenses, which I think has.
Been a headwind for some people for the stock Valerie I think you said $2 90 was kind of a good run rate going into the fourth quarter I'm sorry, if I missed this but can you just remind us.
How much cost savings you have remaining I know the systems conversion, which was completed and I think at the beginning of the year when we didn't anticipate.
The increase in minimum wage and then.
The bump up this quarter.
Annual salary.
Increases but.
Just trying to get a sense beyond that 290 like would you actually expect expenses on a quarterly basis to actually fall.
As we get into next year, just from the cost savings just trying to put all the pieces together.
Yes, Thanks, Michael.
So just to be clear, we've already estimated that we've incurred about $8 million or $32 million annualized cost saves included in our run rate and that's really for a variety of things that have happened over the year, but particularly more recently in this latter half of the year as we've neared the conversion.
Based on our original estimate that leaves another $46 million to be realized and we anticipate that we'll be able to capture that over the next couple of quarters fourth quarter is going to continue to be a little noisy because obviously, we have the conversion we had the branch closures et cetera, but as we look into the beginning of 2023, that's when we will see.
The remainder of those saves really flow in to to the bottom line.
You are right there have been some of the headwinds and that's also why we added that additional slide if you haven't seen it I would encourage you to take a look at slide 10 in our slide deck that shows really kind of the combined pre merger numbers.
To where we are today and shows that even with those headwinds that we believe that we are performing better than peers and then when we layer in these additional cost saves that it'll it'll position us well as we go into next year slide details our outlook.
$8 million, we think we've already harvested aspects too.
Yeah.
Got it okay very helpful.
One other question.
Like the criticized are substandard.
Loans ticked up and I think that's that's obviously.
Caught some people's attention last night this morning, but as I look at your criticized are criticized sub standard loan ratio looks like it's only one 8%.
Of loans ex PPP, which seems pretty low relative to history. So if you can just kind of talk about what drove that increase and so you might have been in the C&I bucket and just.
If you guys have any concerns or is it just proactive classification et cetera.
Thanks, I appreciate that I don't think that we have any concerns I think we're starting at a base that is not sustainable would be the starting point when youre talking about credit quality. It's been so good for so long I think a more normalized credit environment is what we would be expecting I don't think we're concerned about this at all Chris. Thank you guys want to jump in here now I'll add the color that it was.
A couple of three C&I credits, we've got good visibility on them I think one of them may have already actually been remediated or paid off since that quarter and so we're not seeing any trends or themes or industry specific issues and those numbers I think given the new book compared to legacy <unk> book, its youre going to see a little bit.
More.
Maybe movement in some of that because some of the average credits are bigger and as we as we migrate.
And actively manage those credits Youll, probably see more movement than maybe you would have seen in our numbers two years ago.
Alright, very helpful I'll jump back in queue. Thanks.
Sorry that was well said.
Nothing yet.
Thanks, Michael.
Your next question comes from Brad Milsap with Piper Sandler. Please go ahead.
<unk>.
Hey, good morning, Thanks for taking my questions.
I think previously you guys had talked about maybe a mid <unk> type deposit beta just kind of curious you know as things have evolved do you still feel comfortable with that number and then Valerie could you maybe just talk about the borrowings that you did add in the quarter and how.
What was the average cost there and how those also might play into if you think about.
NII and NIM guidance going forward.
Yes, sure absolutely so.
Obviously, our deposit beta.
Cycle to date, 9% has continued to be very very low and actually lagged more than what we had originally anticipated. So that's been a benefit for us we are still anticipating the 28% cycle.
Deposit beta and so obviously, that's going to take a few quarters of fairly significant bump in deposit beta.
We anticipate that that'll be going forward.
As we as we see some of the additional increases in our rate hikes, but believe that will continue to lag.
Potentially many of our peers simply because of the 80% of our deposit base that is in the community banking platform and.
The beta on those deposits is about 60% of what we see on the corporate side.
So that continues to benefit us and it will continue to benefit us in our net interest margin as we look forward, we did add a little bit of borrowings. So what are the things that we've been doing is actually funding our loan growth by our securities portfolio run off we continue to have good maturities and cash flow from that portfolio.
And.
It serves two things one being able to fund the loan growth, but then to also kind of.
Getting us closer to a more normalized securities to total assets mix.
That became really.
Exaggerated over the Covid time period.
So in the meantime, with the deposit mix that we've had about $500 million or so in public funds and financial institution correspondent banks that ran off and then a little bit of average deposit.
Our average balance decline in some of our customer accounts, we funded that with federal home loan bank borrowings Theyre all very short term so very close to your your fed fund rates plus just a few basis points.
And that will continue to be the strategy to fund kind of what we believe are temporary.
Needs on the funding side.
So I hope you Deborah.
Yes, that's very helpful. Maybe just as my follow salaries, it's still about 600 million $5 million to $600 million a quarter in cash flows from the bond portfolio that you expect under that numbers can move around a bit and it's not perfectly linear but just.
Is that pretty close.
So that's that is pretty close to what we're expecting in the fourth quarter now when we look into 2023.
There is another $3 5 billion of maturities and cash flow that we have scheduled out for 2023 as we have some.
Maturities that actually come into play there so between now and the end of 2023, we're looking at $4 2 billion of maturities and cash flow coming off that securities book.
Okay. That's all would be to fund your growth to that and then pay down borrowings.
With any excess.
That's exactly right.
And then back home here and apologize Brian I think when.
You are looking at US today in a 400 branch community Bank network, we feel really good about our deposit gathering capabilities I think what we've continued to see today is as we saw the average commercial balances declined significantly more almost double.
<unk> consumer balance decline.
We've been very careful when we're competing out there in deposits, we feel good about our deposit gathering capabilities.
That's great. Thank you very much I'll hop back in queue.
Our next question comes from Jennifer Dunbar with <unk> Securities. Please go ahead.
Thank you good morning.
Hey, good morning, Jennifer.
Two questions first one is on net interest margin Valerie can you just talk about the net interest margin outlook over the near term we've seen some companies.
Sorry, they think they have more expansion from Boston.
They bleed there have peaked or very close to peaking.
Yes, absolutely no. We don't believe that we've peaked and we certainly believe that we've got some improvement in our future.
Multiple reasons there one is obviously.
The amount of repricing loans that we have with 50% of our loans repricing over the next year.
Then that also leaves.
When you just look out past this first year another 50% that's actually re prices in the following years and so that provides really kind of a nice catalyst for us in a period that is looking to be higher rates for longer and you combine that with the fact that we are using really the lower yielding securities right.
Now to fund some of the loan growth that mix shift certainly adds to an earning asset yield increase.
And then once we actually start reinvesting in the Securities book will be doing so at a much higher yield than obviously, where the legacy or the existing portfolio is yielding so really a whole number of catalysts that.
<unk> that are very favorable for our net interest margin right now.
Great. Thank you and my other question is on.
Your charge offs.
The purchased energy credit would you have any other energy credits that you feel might be charged off over the near term or was that that's the only one of real concerns.
The one that was identified coming into the merger and that was originated back in them.
16, 17 timeframe I don't know that we have anything else. Thank you Scott.
And all of the above come on hanging there you go. Thank you finally got that works out so.
At the portfolio the energy portfolio, we feel very good about we did says and then identified issue early on and there was some characteristics of it being in a basin that is hard to.
Make profitable and also theyre, having labor issues and so this was the appropriate thing for us to do at this time. This particular credit had been nonperforming for more than a year prior to our merger. So this this has had a long history of <unk>.
With it but it's not consistent with the remaining portfolio.
Okay great.
Okay I'll jump back in the queue. Thank you.
Thanks Robert.
Our next question comes from Kevin Fitzsimmons with D. A Davidson. Please go ahead.
Okay.
Hey, good morning, good morning, Kevin.
I just wanted to ask about the philosophy on.
Provisioning and the allowance on the one hand, you reserve ratios.
Well higher than tier levels.
And then.
The credit metrics it seems perfectly legitimate.
The model spits out you don't need a provision then that's fine.
I'm just curious how we should think about that going forward with what.
The forecasts are saying and how youre feeling about this point in the credit cycle in terms of.
Whether you will provision and how much and how you view that allowance ratio from here. Thanks. So thats a good question I think we've got our model that we're working within I think when we look forward. There is certainly a question marks and the economy in front of us.
What happens from here forward and what does that do to credit I think everybody is concerned and watching.
The headwinds that were flying into but also I also think that just normal growth is going to we can't be at zero forever. So just if we continue to show the growth that we're showing we're going to be provisioning for loan losses through the normal course of business. The unknown is the economy and what the economy does to us, but we feel really good about where we are today when you when you lay off.
Not only the provision that's there, but remember about half the portfolio was marked one year ago. This month.
So we feel really good about where we are.
Yes, that's a good point Dan you just made on the on the percentage of the portfolio that's been marked.
And in talking about loan growth, which was pretty healthy this quarter like how are you feeling about it.
Forward, both from the standpoint of what Youre seeing in pipelines, but also maybe any deliberate.
Tapping of the brakes in certain loan segments, just given the uncertainty out there. Thanks.
Yes, I like our underwriting process I like our team that's out front of US I think that we've got good loans in the pipeline coming our way I think we are being.
Prudent when we talk about what's coming through the pipeline. This morning, there was a lot of loans to talk about this morning. The team does a great job at looking at that I suspect we will our footprint is going to continue to give us growth at least in the near term and I think that we need to be very prudent in how we're doing that Chris you want to jump in or high.
I'll take a stab at that.
Tap the brakes question I think theres been some self correction out there just in the market itself rates, obviously have slowed down some segments I think see it probably mostly in the in the community bank side and maybe some of the consumer rates specifically around the mortgage book and because rates are just high so thats.
Maybe some slowness there, but we're still seeing opportunities.
On the corporate side, we're still seeing great opportunities.
Really all across all segments, so I think our ability to.
We haven't we are balance sheet structured net right now with loans I think we can play in almost every segment in every segment. So theres been no deliberate tapping of the brakes on our side and we're seeing some good opportunities, but there are some interest rate headwinds I think for everybody that they're thinking about.
Yes, let me just build on it Chris.
We look at the pipelines for the fourth quarter in 2023, we have seen some moderation, but theyre still active so I'm encouraged obviously the demand will be a function of when we talked about the economy and how that plays out in 2023.
Spend a lot of time with the client throughout the footprint and there is one real message that we're hearing from them from our clients and our teammates that theres. Some caution for next year, which I think is appropriate.
As I mentioned, we haven't seen any real deterioration in the credit so that seems positive. The one headwind that we're seeing throughout is labor and the ability to get good labor and teammates and thats going to be expensive.
Going forward and that will certainly impact clients and.
And in years to come.
So when you look at the loan growth that we published in this quarter. It was across the board, it's exciting to see us be able to grow geographically diverse industry diverse product line diverse.
I couldnt be more proud of the team that we've got Paul you want to jump in I know you've talked to clients all the time.
Well I think.
That's a good summary, and what I like is that we know that we have the conversion done and we're all one brand and we're all pulling together I think we will see some more cross sell opportunities and some revenue synergies and that of course, we didn't ever put in the model, but they are.
Real and.
The team is out calling and looking for business and that pays off over time.
So I'll cover for you Kevin.
Yes, no thats perfect. Thank you very much guys.
Thank you.
Your next question comes from Katherine Miller with TCW. Please go ahead.
Thanks, Good morning, Hey, Catharine good to hear from you.
Thanks, just one follow up on the expense conversation so it's Lee.
Your comments are really helpful. Just thinking that we've got another $46 million.
Of savings to come in next year, so yes.
As we think about what a run rate could be next year is it fair to take.
That 11 ish million of quarterly savings number off of.
The 290 run rate that we are in the back half of this year or is it fair to assume that.
<unk> run rate is also a little bit elevated just because you are in the middle of the conversion.
So really the decline in expenses could be greater than just that cost savings number as we get into next year.
Yes, I think the.
Starting base that Youre talking about is the $2 90, you can pull off what you are talking about then you've got a lay back on the normal inflation, but normal increases that would be out there and then.
You've asked us before.
The $78 million that we published out we're confident we're going to get.
The real question is is can we exceed that in cost savings I think when we continue to look for ways to trim. Our operations I think we continue to look for those opportunities Valerie I think you said it well.
Yes start with the 290 and Thats why we tried to clarify that because we know that it was a little bit of a noisy noisy move this quarter.
Lay around those expense saves don't forget in the first quarter, there's the <unk>.
Payroll taxes, and all those types of things that pop up.
But to Dan's point.
<unk>.
Once we get this this.
These savings integrated in.
Really looking for efficiencies on an ongoing basis is is part of the DNA and so we won't be.
Shopping youll continue to see us focusing on that as a combined company.
So more to come on that in the future obviously.
So as I look at consensus estimates then it looks like.
Mystery is higher than that on expenses for this year. So is it a fair statement to say that expenses are probably a little bit on the low side.
But obviously the revenue picture is a lot better just with where the margin is going and where the growth is going.
And then follow that so you've got that.
You've got to go through that one more time for me sorry.
So as I look at it as I look at expenses across the street it looks like.
<unk> kind of got an expense number next year I feel like.
Kind of in the queue.
At $2 70, the quarter range was clearly feels like Thats too low.
And so then as we think about it feels like if we look at forward estimates you probably have an expense headwind, but also the revenue picture seems to be significantly better.
Street modeling just kind of curious if you agree with that statement.
We haven't we haven't necessarily done specific comparisons to the street estimates in each of those categories, but I think youre right that our revenue opportunities are.
Pretty meaningful between both the growth mix and the margin improvement, we feel very positive about that.
As we look ahead.
We continue to see operating leverage we continue to see improving efficiency ratio, we continue to see improving bottom line number.
So the components of it and comparing it to the street I don't again I don't think.
We've done it that way, but I think we feel very positive about our future.
Great. Okay, and then my last question just back to the margin just on the loan yield the loan beta was a lot better.
Other than I was expecting this quarter is this 40% beta.
Similar something similar to what you think you will see in the next couple of quarters and then just maybe if you could talk Valerie just bigger picture about kind of the timing of your loan repricing, if I kind of have the view that.
Because you've got a greater piece that kind of adjustable.
Loading youll get kind of a longer tail on the repricing of your loan book over the course of this year.
Which kind of set jenny's point youre not going to be the kind of margin that pops in a stable or maybe even down the back half of the year you might see more of a gradual margin expansion as we move through 2023, just curious how you think about that yes.
Yes, no thats, a great point and part of I think why you saw a higher loan beta.
This quarter was really just because of the timing of when the rate increases started and while some of those loans reprice.
The 2020.
5% ish of those loans that reprice within the 30 day period, there are number that reprice within three months nine months et cetera, and so thats, what youre starting to see flow into that margin.
If we break it down we talked about we've got the floating debt re prices within the 30 day period, that's about <unk>.
Berry's between 2023% or so of the portfolio. Then we've got the portion that is between three months and 12 months.
And that's another close to 30% so between the two at least you are close to 50% repricing within the first year and then if you look out.
And the next one to three years, that's another 10% of the book.
Another between the three to five years, another 15% of the book and then beyond five years as kind of the remaining 25%. So youre right because of some of the products some of the variable rate product.
Some of them do have longer tails on them and that will serve to benefit is kind of on it.
Lag basis, if you will into our net interest margin as long as we're in kind of this higher rate environment.
And where are the new loan yields coming on today in terms of your new production are you seeing that still be competitive or are you seeing that move up with rates.
Yes, so in the quarter, our new production came on at about 5.25%.
And Thats, where rates went up at the end of the quarter, So where are we today yeah. Yeah. It's.
It's higher than that today.
Yes, I'd say break it down into buckets.
The arm book like the five one arms based community Bank space, that's coming on in the six range Youre seeing some six handles there is some competition lower than that some higher so it's kind of a six new book on the corporate side I think it's <unk> plus 200 to $2 50 that sweet spot you might see some lower than that and some higher than that just depend.
On the risk and the credits yes, the only thing that I would add to that is we are seeing.
Kind of a bank favorable pricing on CRE and so we're seeing about a 50 to 75 basis point increase on spreads in that particular portfolio the largest large CRE, yes, sir.
Alright, Okay. All very helpful. Thank you. Thank.
Thank you Catherine I appreciate the time.
Yeah.
Our next question comes from Matt Olney with Stephens, Inc. Please go ahead.
Hey, Thanks, everybody good morning, Matt.
Just a few more here on the margin outlook.
As far as the mix of deposits at the bank I think it was said that 80% of the bank's deposits are now at the community Bank, which is obviously, a lower beta and 20% is corporate did I get that mix right.
Yes, you did.
Well it actually there is public funds in there too but yes.
And thats actually within the community and the corporate bank.
80, 20 is a good mix.
Correct.
And then any color on the accretion income you expect from here.
Yes, so for the quarter, we had about $8 million in accretion that was lower down from $11 7 million last quarter looking forward to the fourth quarter. Our scheduled accretion is closer to $6 million and then if we look into 'twenty three.
It's between 22% and $23 million now that's just the scheduled a course of things pay off early that's when you get a little bit more increase in that but that's the schedule.
Okay.
Thanks for that and then I guess on thinking about capital and the buyback I didn't see any activity in the third quarter is it fair to assume that capital levels could start to build from here, especially with all the uncertainty out there.
So is there any level you are targeting.
Yes, Theres no level that we're targeting that obviously you know on a TCE ratio today were low.
It is not helping us on that front and so we have not been using our.
Our stock buyback program.
I would believe that stabilize here that maybe we can see some change there, but we also see the risks in the future how far or how far rates going to rise. So I think there is still an unknown around that and I think we want to continue to be conservative with capital, especially.
Looking at the economic and geopolitical headwinds that we see.
Okay makes sense thanks, guys.
Thank you Matt I appreciate your time.
Yes.
This.
A question and answer session I would like to turn the conference back over to the management team for any closing remarks.
Thank you very much we certainly appreciate the great questions in closing I'd like to commend our team on their commitment and their dedication through the integration process, we began over a year ago.
The teamwork and consistent focus on ensuring a positive experience for our customers was exemplary operating as one company under one brand will help us further leverage the inherent strengths of our company. The results we reported today for the third quarter and for the first three quarters of 2022, certainly demonstrate the value of our combined company and the talent of our bank.
There's in retaining and growing long term customer relationships across our business lines and geographies. We look forward to all that we will accomplish together for our customers and our communities is one cadence bank. Thank you very much.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.