Q3 2022 Independent Bank Corp (Massachusetts) Earnings Call
Good day and welcome to the I N D. B Independent Bank Corp, third quarter 2022 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded before proceeding. Please note that during this call we will be making forward looking.
Looking statements actual results may differ materially from these statements due to a number of factors, including those described in our earnings release and other F. T. SEC filings, we undertake no obligation to publicly update any such statements. In addition, some of our.
Our discussion today may include references to certain non-GAAP financial measures information about these non-GAAP measures, including reconciliation to GAAP measures may be found in our earnings release and other FCC filings. These S. E C filings can be accessed via.
The Investor Relations section of our website I would now like to turn the conference over to Chris <unk>, President and CEO . Please go ahead.
Uh Huh, Thank you, Dave and good morning, everyone.
And thanks, everybody for joining us today.
I'm once again joined by Mark <unk>, our Chief Financial Officer, and Rob because one our chief operating officer.
I'd like to begin by pointing out that the underlying strength of our franchise was on full display in the third quarter.
For our long term investors you know that for years, we have asset emphasized building core relationships.
Having a transaction Oh business orientation.
No matter, what the rate environment, our liquidity needs, we have incentive colleagues to expand existing relationships and build new ones.
As a result, we continue to generate record new core deposit accounts. This is occurring at both the absolute level and at the average per branch level as well.
While our core deposit franchise has always been a source of tremendous economic value with a rising interest rate environment. We are now seeing the impact in our NIM and net income.
Net income for this past quarter rose to $71.9 million or $1.57 per share well above both prior quarter and prior year results.
The returns in the quarter were quite strong as well with a return on assets of one 4%.
Turn on tangible common at 15, 3%.
Mark will be taking you through the quarterly details shortly but highlights include revenues were the major driver for our farmers rising 10% over prior quarter levels.
Our balance sheet management and asset sensitivity has positioned us quite well to capitalize on the rising rate environment as evidenced by the significant increase in net interest margin and mark will be expanding on this topic in his comments.
While loan levels were essentially flat this quarter due to paydowns and refinancings were still experiencing robust loan activity. Despite the slowing economy total loan closings exceeded $800 million in the third quarter, while commercial pipelines were actually up this quarter.
Core deposits rose to 88% of total deposits, which include a healthy growth in non interest bearing deposits, while higher price deposits continuing to trace the.
The value of our powerful core franchise toward deposit franchise simply cannot be understated.
Fee revenues rose once again this quarter and it was marked by strong retail transaction activity within investment management, our assets under administration levels held pretty constant as a continuing high volume of new money inflows is help counter the reduction in market valuations expense levels continue to be intelligently manage those.
Our operating efficiency measure it dipped below 50% this quarter credit quality remains in good shape with negligible net losses lowered the languages and stable nonperforming levels experienced in the third quarter and capital levels remained at comfortable levels, giving our board the confidence to approve a new stock repurchase program.
As covered in our earnings release.
Beyond the quarter, we continue to advance the franchise on various fronts. For example, we recently appointed Dan loved for it as our Chief risk Officer, Dan Couch to us with over two decades of experience in our risk management audit and quality assurance. This is an important step in achieving our goal to deepen our enterprise risk management infrastructure.
Sure.
We also continue to recruit experienced senior talent into our company or attractive at both our business potential and operating culture.
This continued in the third quarter key hires into our commercial lending and investment management ranks such higher and will also serve to help us capitalize on the new business opportunities that we see in our former east Boston savings bank customer bases and markets.
We've also recently began deployment of and seen that was industry leading loan operating system.
With online origination capabilities for small business on soon to follow.
And lastly in line with the growing strength of recognition of the Rockland Trust brand, we've embarked on a new advertising campaign that highlights our success in providing credit banking services and advice to local business owners.
Turning to the economic picture I'm sure you all noticed that inflation continues decline despite.
The fed hiking rates at a blistering pace not seen in 40 years. In fact, the recent inflation report shows price increases are pretty broad based in any case ample momentum for further upward movement consumer spending has flattened, but consumers remain resilient leaning on accumulated savings and tapping sources of credit to bolster spending.
I think a cooling in the CAC economic activity does seem inevitable.
This combination of a surging inflation, a looming potential recessions and the unprecedented speed of fed hikes does make for uncertain operating environment.
As it all such prior periods, we're bringing a healthy mix of caution and preparedness that potential downside scenarios as I've said before we will remain disciplined and not engage in competitive practice not to our liking, especially on the credit side.
<unk> ability is key here and we're focused on remaining nimble.
In the near term, we will continue to benefit from the rising rates owing to our asset sensitivity.
Also look to generate growth from existing operations.
What is constant is our intense focus on building relationships combined with our caring respectful or relationship oriented culture.
It served us well over these many years, we believe that a great place to work leads to a great place to bank lease to solid financial performance and that allows us to invest in our colleagues and customers.
Boston Globe has recognized us as a top place to work for over a decade J D power ranked as number one our retail satisfaction in new England and the results speak for themselves.
Our disciplined and careful management of our business prepares us well when a weak economy your underlying crisis emerges.
Emerges.
And the reminder, that we emerged from the great financial crisis.
Stronger capital and a more robust customer base, if we enter a more difficult economic waters. We believe we continue to we will continue to distinguish ourselves.
We have the capital core deposit franchise competitively advantaged businesses attractive markets and skilled colleagues manage anything that comes our way.
I'll turn it over to Mark.
Thanks, Chris I'll speak primarily to the earnings presentation deck that was included in our 8-K filing last night and is also available on our website and today's investor portal.
Jumping to slide four of the deck 2022 third quarter GAAP net income rose to $71 9 million and diluted EPS was $1 57, reflecting 16, and 19% increases respectively from the prior quarter results.
As Chris said this performance serves as a great example of our core franchise value and profitable balance sheet positioning while remaining disciplined in this challenging environment.
Third quarter results produced a 1.43% return on assets of 990% return on average common equity and a 15.26 return on tangible common equity for the quarter all up significantly from the prior quarter results.
In addition, this slide also summarizes the main drivers of the quarter performance that Chris just covered.
Not reflected here, but worth noting tangible book value per share dropped 75 to $39 56 as of September 30th as a result of the repurchase of 443000 shares during the quarter and additional other comprehensive losses offsetting the strong earnings in the quarter the REIT.
Purchase activity completes the program announced earlier this year and as noted in our announcement last night and other $120 million share repurchase program was authorized providing additional flexibility and optimizing our capital position moving forward.
Turning now to the components of the quarter's results slide five provides a high level summary of the loan portfolios for the quarter.
As noted here reported balances are relatively flat and when excluding PPP activity growth for the quarter was one 3% on an annualized basis.
Similar to last quarter, the consumer portfolios experienced strong growth.
And on the commercial side, despite very competitive pricing in the northeast market new commitment activity remained robust with total balances decreasing as a result of continued elevated payoff activity within the commercial real estate category.
Slide six provides some additional details around the loan activity for the quarter.
As noted in new commercial commitments for the quarter was strong at $522 million, though down slightly from the prior quarter. While the approved pipeline of 383 million should suggest similar closing activity heading into Q4.
In terms of commercial activity, we continue to see good opportunities across a number of asset types in diversified industries with a few highlighted on this page.
And what should be our last noteworthy impact from P. P. P. You can see the PPP balances paid down to $11 million as of September 30th generating $400000 of net fees recognized this quarter compared to $1.8 million in the prior quarter with immaterial amounts left to be recognized going forward.
As noted on the right side of the slide the consumer portfolios again yielded strong growth in balances is approximately 90% of the quarters mortgage activity was retained in the portfolio.
Solid home equity demand and increased line utilization led to overall growth in that category.
Moving to slide seven again, echoing what Chris just stressed in his comments deposit activity reflects the strong balance sheet position and we discussed last quarter.
As overall decreases resulted from our ability to allow for the outflow of highly rate sensitive balances and time deposits, while staying focused on core relationships and operating accounts.
With core deposits comprising 88% of total deposits as of September 30th the cost of deposits increased from five to 15 basis points in the quarter, representing representing only a 5% cumulative deposit beta for the current rate hike, so far or slightly over 7% when isolated to interest.
Bring deposits only.
As an aside both numbers are slightly higher when you're looking at Q3 fed increases only.
With deposit pricing well in check slide eight shows additional details over the reported margin as well as a break down a volatile or nonrecurring items to reconcile back to our core net interest margin.
Our overall asset sensitivity is clearly reflected in the results shown with the core net interest margin results, which exclude net P. P. C. P. P. P fees purchase accounting and other nonrecurring items, increasing 36 basis points as compared to the prior quarter.
Also benefiting the margin our decision to be patient in deploying excess liquidity has allowed for a measured build of higher yielding securities balances into a gradually improving market, while still benefiting from yield increases on meaningful cash balances.
This strategy is anchored in our interest rate management approach summarized in the bottom right section of the slide.
Net of our hedging portfolio, which now totals $1 5 billion in notional, we anticipate 20% to 25% of our loan portfolio will immediately reprice with any future rate increases.
And our deposit rate increases will likely accelerate going forward, we are still very well positioned to benefit from future rate increases while continuing to layer in predict protection to a downrate scenario.
Moving on to asset quality slide nine provides some key metrics worth highlighting non.
Nonperforming loans stayed consistent at $56 million the.
The activity for the quarter included a positive resolution of a $24 million commercial real estate loan pay offs, which resulted in a $1 3 million dollar recovery of previously deferred interest, which was offset by a new to nonperforming $24 million C&I loan.
As a result of the commercial real estate nonperforming payoff I just mentioned total delinquencies dropped significantly to only 17 basis points of the portfolio as the new to nonperforming C&I loan is under a forbearance agreement and considered current and.
Net charge offs were essentially zero for the quarter.
In conjunction with the category shifts in nonperforming assets and a relatively stable credit outlook $3 million of provision for loan loss was recognized slightly increasing the allowance for credit loss as a percentage of loans to 1.08%.
Shifting gears to noninterest items Slide 10 provides details on noninterest income results for the quarter.
All of which I will highlight.
Deposit account interchange and ATM fees, all increased nicely from the prior quarter.
Regarding investment management income strong net inflows helped offset market depreciation as assets under.
Under administration dropped by only 65 million to $5 1 billion at September 30 of them.
Modest reduction combined with the usual seasonal decrease in tax preparation fees led to an overall investment management income decrease of approximately $900000 for the quarter.
The $267 million of gross new money you noted on the slide is reflective of our sales force team experiencing great momentum in both the legacy and newly acquired markets and geographies.
And lastly, mortgage banking and loan level swap income continued to be challenged in this rising rate environment as both of these income streams are impacted by our current position and ability to retain more fixed rate volume on the balance sheet as part of our strategy to protect against future down rate scenarios.
Turning to the next slide total operating expenses of $92 7 million reflect a two 4% increase from the prior quarter, driven primarily by increased salaries and incentive compensation as well as some larger nonrecurring items, such as elevated office equipment spend and lastly, the tax rate for the quarter rim.
Relatively consistent at 24, 4%.
In conclusion and moving on to slide 12, I'll finish with a few updates regarding 2022 fourth quarter guidance as we will provide full year 2023 guidance next quarter.
As we think about our year to date results and the relative uncertainty over the general economic environment, we anticipate relatively flat loan and core deposit balances over the fourth quarter with some modest level of continued reductions in time deposits as.
As I noted before we feel very good about our overall balance sheet position and we'll continue to stay disciplined in our pricing always focused on growing core relationships on both the loan and deposit side of the ledger commensurate with overall economic growth.
As a byproduct of this disciplined approach assuming no changes to overall economic conditions, we anticipate credit loss and provision levels to be well contained.
Regarding the net interest margin without predicting the level of additional federal reserve rate hikes. In Q4, we do anticipate further margin expansion in Q4, driven by the following assumptions, 100% cash balance betas, 20% to 25% loan betas net of our hedges and will also be applicable.
<unk> to the late September rate increase not yet reflected in the Q3 results.
Offset with a slight increase in the total deposit beta as I referenced earlier to a 15% range.
Regarding noninterest items total noninterest income could experience modest decreases driven primarily by seasonal declines in deposit and interchange income.
Regarding our overdraft program, we continue to work through expected program changes and anticipate an implementation date later in the year as such we will provide the dollar impact as part of our full year 2023 guidance next quarter.
Noninterest expenses are expected to increase in the low single digit percentage range and lastly, the tax rate for the fourth quarter should approximate 25%.
That concludes my comments and with that we'll now open it up to questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Yeah.
The first question comes from Mark fits Gibbon with Piper Sandler. Please go ahead.
Hey, good morning, guys Happy Friday.
Alright, thank you.
Mark quick question on your deposit beta assumptions for the fourth quarter of 10% to 15% I E.
Just strikes me add low given the speed with which rates have gone up here.
What gives you so much confidence.
You know that you're not going to see more pressure than that or are you not feeling it from your commercial customers today.
We certainly feel pressure mark we feel that mostly in pockets and I think that's the reason why we we continue to stress just the value of our deposit franchise.
100, <unk> focus on core operating accounts, primarily on the consumer side.
Our result in the majority of our deposit base being less rate sensitive. So we certainly have pockets, where we're feeling pressure.
When you look at third quarter results you look at drops in our municipal deposits some larger commercial customers as well.
And that's where we have been and will continue to stay aggressive in deposit pricing, but we think we really have a nice balance of.
Not having to go to outside the norm across the majority of the deposit base and continue to stay focused on those deposits that are more rate sensitive and that combination we.
We believe we will continue to land us in a spot that that performs better than most of the industry.
Great and then secondly could you speak.
I know you Didnt give specific guidance on the fourth quarter for the margin.
But I guess, if you just assume you know rates move with the forward curve.
Can you help us think about the magnitude of the margin change in <unk>, yes.
So the forward curve certainly pricing and now another 75 in November and 50 expected in December if that comes to fruition I think you'd see our margin.
Increase to the tune of about 20 to 25 basis points.
Okay great.
And then.
On the buyback I guess I was curious how you think about tangible book value.
Dilution from that given your appetite to repurchase stock at north of two times tangible.
Are you concerned about that you're not worried about that.
Fox there would be great.
Well, we certainly do worry about that I think we've we've talked about this mentality last quarter as well and that is this program is in place to really be opportunistic if we do and see any pressure on our stock price I think the levels.
You just noted mark at two times tangible that typically leads to an earn back period that we most likely would not be comfortable with.
I don't want us suggest any sort of dollar threshold or our earn back thresholds.
But we take that certainly into account and I think recognize in which price level. We believe is appropriate for an earn back is going to drive any decisions on executing on that.
Program going forward, but this is to have in place is just another lever for us to to capitalize them given our excess capital position and just gives us flexibility to deploy that capital.
Okay.
And then shifting gears on the credit front.
You guys had a little uptick in C&I non accruals this quarter and some other banks in your market have kind of seen the same thing on the C&I side I guess I was curious are you seeing and I know your levels of delinquencies non performers are really low but are you seeing any particular pockets of.
Areas that are challenged or sectors that you're concerned.
Concerned about.
No not necessarily market I think we're.
We've had a pretty similar message over the last couple of years and that is with our commercial portfolio, we often see.
Our unique situations lead to individual credits.
Degrading into nonperforming. So that's that's exactly what happened here in the third quarter. This is a one off.
Unique situation, we don't see it as being pervasive across the portfolio or and.
<unk> of any specific industries.
That we're concerned about where we obviously are staying very cautious where.
That reflects in our loan growth we stick to vary.
Disciplined underwriting and pricing guidelines, but were still feeling.
<unk> good about our credit and this this one movement into NPA is not reflective of anything to our greater scale what industry wasn't mark.
This is a.
Manufacturer sort of slash distribution industry.
And then lastly.
It was impressive that you had positive flows in the wealth management business and.
In each of the last four quarters.
Get sort of bucking the market.
Trend.
Where is that coming from is that high net worth is that institutional or any other color around that would be great. Thank you.
Yeah, it's been it's really I mentioned being able to capitalize on the new markets. So we have seen some success.
Yeah, it's still early innings, but we've been able to see some opportunity.
As a result of the East Boston acquisition, we had some key hires in this space that I've really just hit the ground running.
And have had really good success out of the gate and coming over to US. So it's it's widespread mark it's well diversified across our kind of overall with wealth management customer base.
But they they have a lot of great momentum minutes, it's something where we're very excited to see.
The level of a positive inflow that they've been able to generate yeah I'd like to add something there. This is Chris.
It really years ago, we have.
Cracked the code and developing confidence among our branch.
Colleagues, and especially our commercial banking colleagues to make referrals of their price customers into our wealth management business.
This is up.
Uh huh.
This is difficult to do.
And we have a culture here of doing that and that's what's really generating a lot of this volume and as we buy new franchises that just adds more markets too.
To bring our services to and especially in a market like East Boston savings Bank data. They didn't have any of these capabilities. So this is a brand new <unk>.
<unk> ability and.
Hum.
Showing success.
Thank you.
Our next question comes from Laurie Hunsicker.
With Compass point. Please go ahead.
Yeah, Hi, Thanks, Chris Rob and Mark Good morning.
I Wonder if you wondered if we could go back to Q2, the Cree loan that debt.
Secured in the quarter I think you mentioned it was $1 3 million.
In recovery and in.
The net interest income did I hear that correctly.
Laurie yes.
Okay, Okay, so about three basis points or so.
The guide that you just gave mark on 20 to 25 basis points was that a headline guide or was that core excluding that or.
That would be that yes that would be a core number and just back to that $1. Three Laurie we do show that and the and the table, where we reconcile to the core margin that's embedded in the I think it's we call it the non non accrual.
Impact there's a line item there you can see that was about 560000 I think of an impact in the third quarter. So thats reflective of one 3 million being backed out.
Offsetting by about five to $600000 of reversal of of interest on the new to nonperforming. So we always treat that as noncore.
And the guidance I gave is on a core basis.
Okay. That's perfect that's helpful.
Can you update us on where you are with new branches in terms of the new branches that you've got under deposit and just new branch down how you're thinking about that.
I'll, let rob speak to that good morning Laurie.
Hey, Mark.
Good to hear from you.
<unk> plan and the greater Western market now includes five branches three in the city of Worcester.
Which we believe to be a sufficient complement to certainly serve the city in the near term.
We also have two branches in the suburbs of Wister, one in Shrewsbury, one in Westborough Westborough being our most recent opening.
Total deposits in those five branches are about $65 million as of September 30th.
It is down a little bit not surprising given the rate environment, but our customer momentum continues to be quite strong. So we're pleased with.
The customer expansion that's happening there. In addition on the lending side, we're doing quite well in commercial.
With a full team there some treasury management folks.
As well as an IMG professional.
So all in all our expansion into western is going well, we don't have any new plans for branches on the docket at the moment I suspect that will budget for maybe one additional branch in 2023.
But we haven't finalized those plans and that would not be in the city of Worcester.
It would be in one of the surrounding towns.
Okay. That's great Alright, and then I guess, Chris last question to you I know, it's not an optimal M&A environment at the moment that you still have super strong currency can you just refresh us what you're thinking here with rising rates, how you're approaching M&A are you also considering yet just general thoughts would be helpful.
Thanks.
Laurie.
Earnings Conference call would not be the same without you asking those questions. So thank you for continuing the tradition.
So our posture has not changed which is why we were here with our strong currency when it when a bank board.
Hey, listen, we think mean lightwater chop onto Imdb currencies for a variety of reasons, whether it'd be scale investments in technology.
Instead of talent a whole variety of reasons, we are here and willing to talk and I know this current rate environment would make for some very interesting conversations, but the but the fundamentals of bringing and banks together and building scale are still there and we have to be careful not to <unk>.
Good.
Distracted by some sort of how we think about accounting.
So are we.
As usual I would.
Welcome those conversations.
Thank you.
Again, if you have a question. Please press Star then one our next question comes from Chris O'connell with K B W. Please go ahead.
Good morning.
Just wanted to start off on the loan portfolio side.
CRE has been under pressure year to date.
And based on the outlook for the fourth quarter it sounds like.
Could remain under a little bit of pressure here into the back end of the year.
I was hoping to get an update as to what youre seeing in the CRE market.
Where you are being cautious and maybe if there is.
Some lumpier larger loans remaining from the.
<unk> book.
That you're not planning to retain.
As they come due.
What what that what those amounts would be.
Yeah, I think your last point there Chris is a big driver of of the experience. We've had year to date you know when we closed on east Boston There was no secret we were.
We're pretty transparent about expectations and seeing run off in that book for a number of reasons.
And we're certainly seeing that and unfortunately, we've seen some level of outflow. In addition to what we were anticipating.
As you know.
They typically had larger on balance sheet holdings than we've historically underwritten.
And when you have big deals like that I'm, just a handful of pay offs.
Can certainly move the needle and we've continued to stay disciplined in terms of limiting our on balance sheet exposures to individual credits. So when you have payoffs in some cases at the $50 million to $60 million level.
We're still staying fairly disciplined in holding in most cases, only $35 million to $40 million of a new relationship. So that's going to create some pressure on growing the portfolio, but we knew that and we're comfortable with that result.
In terms of the outlook.
Like any other bank in this environment you know we were cautious about certain asset classes certainly office.
Comes to mind, especially downtown Boston Office.
There's still levels of vacancy in a number of facilities where.
There's still uncertainty around lease renewals upon termination of existing leases, where a lot of these buildings will end up with absorption.
So we're cautious in that space.
You know, where we're continuing to see opportunities on construction.
<unk> family condo apartment developments I think what we're finding is those.
Projects that were already underway or or had some level of BNS activity on them. We're still seeing those PFS has hold up in.
And those projects are moving forward.
It's those projects, where maybe it was just very early stages, we are starting to see developers, possibly hitting the pause button and waiting through with what the level of uncertainty so.
There's a lot of moving pieces, it's dynamic as you can guess, but we are very much in the deal flow, we have great connections across a lot of the asset classes.
And I think it shows we continue to stay disciplined and selective about what fits our credit box.
Got it that's helpful and on the UBS UBS, the kind of legacy book.
As far as what Youre seeing what youre seeing for the remaining lumpier larger credits coming due over the next quarter or two I mean, how many of those larger credits do you have left that are earmarked and does that put you into a position where even being <unk>.
A little bit cautious on credit.
You are kind of returning to net growth in that book next year.
Yeah, I think that'd be the hope, Chris I mean I think.
The positive in all of this is the rate environment will help right. So what we've seen in most cases to date.
The opportunity for some of these larger deals to refinance out.
Believe it or not still at a lower rate.
That opportunity should certainly.
Subside, given where we are with current rates and continued for further rate increases so I take a lot of comfort in that.
The level and the pace at which we've been seeing the attrition should definitely runoff.
Slow down.
I think there's this.
There's probably a handful still out there that we think have probably a higher expectation of potentially still seeing attrition, but the pace will slow and if we can stay.
Addressed.
Aggressive in finding the right opportunities and continue to generate the new closings that we have in our approved pipeline heading into the fourth quarter is strong.
That combination we hope gets.
It gets us back to the positive as you suggest.
Great.
And on the liquidity deployment plans going forward, obviously, you know a good amount of cash deployed in an increasing the securities portfolio. This quarter has that continued into the fourth quarter given the loan growth outlook.
And Where's the right.
Cash level that you guys when you get to a longer term.
Yeah, I think it's fair to say, Chris I'd say, the pace at which we've grown the securities will certainly slow.
We're being very careful about not taken for granted our liquidity.
There's certainly a lot of pressure on the deposit base, we feel very good about our deposits, but I think it's wise to to ensure we can get continue to have a handle over.
What will happen with deposit balances going forward. So we're you know we're currently sitting at an 85% loan to deposit ratio.
These are very comfortable levels.
Historically operated in here, maybe a bit higher than that.
So I think all all of those reasons would suggest we probably will not get to much more aggressive and deploying excess cash I think where it's prudent to continue to repopulate. The runoff we're seeing in the securities and we May grow you know very low single digit percentage there.
But what we're going to be cautious with the deposit challenges.
Got it and for the Securities that were invested in this quarter I may have missed it but what were the rates that those are coming on that.
Yeah, the average for the quarter believe it or not was.
About 3.8%, but as you can imagine rates move significantly throughout the quarter. So just to give perspective, the last security repurchased in late September was at a high 4% yield around 490, so rates have moved up significantly it has a very attractive market. So.
<unk> yields now on security purchases are close to 5%.
Great.
<unk>.
And earlier.
You had mentioned on the deposit beta question.
Some lower betas within the overall retail deposit base.
Was hoping you could give a breakdown as to the amount of retail versus commercial deposit composition.
Yeah, right now where we're still.
Almost two to one consumer to business.
And then we have a sizable municipal book as you know about $1 2 billion in municipal deposits.
But the.
I don't have the exact number but it's it may be a little less than two to one but primarily consumer.
Overall business.
Yes.
That's helpful.
And then on the on the wealth management side.
Good good job keeping.
Relatively stable.
Given the market.
New client inflow.
Based on the way you guys bill and market movements.
So far late in the third quarter into the fourth quarter.
How do you see those fees coming in over the near term in the fourth quarter.
Yeah, I think certainly the market will drive where overall AUM lands I think I think in terms of net flows.
We still feel very optimistic.
Heading into the fourth quarter. So you know all things being equal if if we're able to maintain a U M. I think you'll see a slight uptick I want to say the the overall average AUM was a bit higher for the third quarter compared to where we landed so that that may create a little bit of noise, but.
Yeah at the end of the day, we should see pretty consistent hopefully maybe modest uptick in overall wealth management income.
Yeah.
Great.
Yes.
Thank you. Thank you.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks, great. Thank you, Dave and thank you everybody for joining US today, we look forward to talking with you again in January of 2023 regarding full year 2022 results have a good weekend.
Bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.