Q3 2022 Fulton Financial Corp Earnings Call
243 years, serving as CEO for the last decade and during that time. It has been my honor and pleasure to.
I've worked with the thousands of Fulton team members.
Who fully understand what it takes to fulfill our company's purpose.
Of changing lives for the better.
And as you know Curt Myers will succeed me as chairman CEO and President on January one 2023.
With current at the helm.
And the talented members of our senior management team, adding their expertise.
Im confident that full 10 will be in good hands.
Look forward to continuing to serve on the holding company and Bank Board of directors after I retire.
And now I'll turn the program over to Kurt.
Well, thank you Bill and good morning, everyone.
Before I discuss the quarter I want to thank Phil for the many contributions he has made to strengthen our company and for the legacy that he leaves behind during.
During his decade as CEO , Phil enhanced our company's financial strength.
By growing the bank significantly.
Doubling the quarterly run rate for operating earnings from $39 2 million a quarter.
$85 million this past quarter. This improvement allowed us to nearly double our quarterly common cash dividend from eight to.
<unk> to <unk> 15 per share over that time, plus provide shareholders with an annual special dividend.
Almost every year over his tenure.
They'll also focused on shaping our culture and empowering our team to change lives for the better.
He led the formation of our Fulton forward initiative, and the establishment and funding of the Fulton forward Foundation. The foundation helps improve the communities we serve in the areas.
Affordable housing and homeownership job training and workforce development financial education, and economic empowerment, and diversity equity and inclusion Phil.
<unk> executed on key strategic initiatives by consolidating our sixth subsidiary banks into Fulton bank to improve our operating efficiency and position the company for growth and we also resumed our status as an active acquirer through the purchase of a number of investment advisory firms as well as Prudential Bancorp.
This past quarter there.
There are many more examples but as you can see Phil has made a tremendous impact and I along with other members of our leadership team are committed to driving future success.
Going forward, we will continue to lead your company prudently.
<unk> smart growth and make the changes necessary for future success, we will remain committed to our customers committed to our communities committed to our employees.
And committed to you our shareholders. Thank you Phil for all that you have done for Fulton financial and for me personally Youre positive impact as a lasting one that will be felt for many years to come.
Now I'd like to switch gears, and let's talk about <unk> third quarter performance. The third quarter of 2022 was another good result, and we are pleased with our overall performance opt.
Operating earnings per diluted share, which excludes merger related expenses of the Prudential Bancorp acquisition were <unk> 48.
And represented an increase of <unk>.
Over operating earnings last quarter, and <unk> <unk> above the year ago period.
Operating earnings this quarter represent an all time high for Fulton.
Several factors helped drive this performance our net interest income benefited significantly from rising interest rates, we saw solid loan growth overall, we have the first full quarter effect of the Prudential Bancorp acquisition and fee income was consistent with the prior quarter.
These positives were offset by some of the realities of the current economic environment.
<unk> continue to migrate higher due to wage pressure and elevated performance based compensation accruals.
And our provision for loan losses increased linked quarter.
As of July one we completed the acquisition of Prudential Bank Corp, and in early November we expect the conversion to occur.
We're excited to welcome Prudential bank's team members and customers into the <unk> family and we believe our opportunities for continued growth in the Philadelphia region remained strong.
With the Prudential Bank Corp acquisition closed we have doubled our loan portfolio and expanded our deposit base threefold in the Philadelphia market.
Turning to the quarterly business results. Our overall loan growth was strong for the quarter at $776 million or 16, 4% annualized excluding our acquisition of Prudential Bancorp loans still grew $232 million or five 2% annualized.
Commercial loans were essentially flat for the third quarter as we experienced consistent originations, but accelerated prepayments.
Consumer loans still produce solid overall growth as we continue to book adjustable rate mortgages in the portfolio and experienced slower prepayment speeds.
Turning to deposits on an ending balance basis, we achieved total growth for the quarter a $233 million included in this total was $400 million of customer deposits from the Prudential Bancorp acquisition. So excluding that impact we did see a decline of $167 million during the during.
During the period driven by declines in noninterest bearing demand accounts as well as time deposits.
To date declines and deposit balances are driven by inflationary spending pressure rebuilding of inventories and capex spending and are not related to customer attrition <unk>.
Commercial and consumer households, both showed modest organic growth during the quarter, but a decrease in average balances per account led to an overall decline in deposits.
From a rate perspective, we continue to actively monitor and price our deposits in order to both retain and grow deposit customers.
Moving to our fee income businesses, we were pleased with our overall performance despite a challenging economic environment for some of our businesses.
Total fee based revenue was up 771000 from the prior quarter or five 3% annualized our card and payments businesses grew during the quarter as did our capital markets. These positives offset a decline in wealth management and mortgage banking revenues.
Moving to credit our provision for credit losses of $19 million included $8 million related to our acquisition of Prudential Bank Bancorp and the seasonal day one charge.
Excluding this our provision increased by $11 million, despite showing net charge offs for the quarter of only $100000 factors contributing to this increase include growth in the overall portfolio a few accounts migrating to non performing as well as an increase in the reserve of our office building portfolio.
So now let me turn the call over to Mark to discuss our financial performance and outlook in a little more detail.
Thanks, Kurt and good morning to everyone on the call unless I note otherwise quarterly comparisons I will discuss with the second quarter of 2022.
And the loan and deposit growth numbers I will be referencing our annualized percentages on a linked quarter basis.
Starting on slide three operating earnings per diluted share this quarter were 48.
On operating net income available to common shareholders of $80 5 million.
This is up from 42 in the second quarter of 2022.
The operating <unk> exclude $15 5 million of merger related charges recorded during the quarter with $7 $5 million of this reported in operating expenses and intangible amortization and $8 million reported as additional provision for credit losses under Cecil merger accounting rules.
Moving to the balance sheet commercial lending, excluding the impact of Prudential was relatively flat linked quarter.
Within commercial organic loan growth was $51 million within C&I lending on commercial real estate declined $71 million during the period.
Commercial line utilization increased slightly during the quarter to 22, 5%.
Consumer and small business lending produced organic growth, excluding prudential of $262 million or 17% during the quarter residential mortgage loans grew $210 million as we saw homebuyer shift to adjustable rate products during the period.
Application volumes did decline, 35% linked quarter due to the sharp rise in interest rates. So we would expect residential loan growth to moderate going forward.
As Curt noted total deposits grew $233 million during the quarter and excluding the acquisition of Prudential Bancorp total deposits declined $167 million consistent with broader market trends.
You should expect to see our deposit betas increase at a faster pace in future quarters versus what we've seen thus far in the cycle.
With respect to the investment portfolio balances declined modestly during the period decreasing $181 million to $3 9 billion at quarter end.
As part of our overall asset liability strategy, we've opted to pare back on securities growth in the near term.
Putting together all of those balance sheet trends on slide four our net interest income was $216 million of $48 million increase linked quarter.
This increase was a function of both sharply rising interest rates as well as the Prudential Bancorp acquisition.
Loan yields expanded 65 basis points during the period, increasing to $4, two 1% versus three 5% to 6% last quarter.
Our cost of deposits increased seven basis points to 18 basis points during the quarter.
Therefore, our net interest margin for the third quarter was three 4%, 354% versus three 4% last quarter.
The 50 basis points of linked quarter increase resulted primarily from loan betas being higher than deposit betas during the period.
Going forward I would expect our net interest margin to expand with additional rate increases, but at a reduced rate due to both higher deposit betas as well as changes in the composition of our funding.
Our loan to deposit ratio increased from 89, 5% at June 32.
92, 1% currently.
Kurt gave you an overview of our credit quality results I would only add that our allowance for credit losses to total loans increased four basis points during the period ending at 135% at September 30.
As always our allowance for credit loss trends could change in future periods based on new loan origination volumes, our loan mix net charge off activity and larger and longer term economic projections.
Turning to slide six I'll provide some additional color on fee income business results.
Commercial banking fees grew 450000 to $28 million with increases in cash management and capital markets, leading the way.
Driven by interest rate swap activity.
Consumer banking fees grew $800000 to $13 3 million led by increases in payments and overdraft fees.
As a reminder, in June we announced some changes to our overdraft products and services. These changes will be effective in the fourth quarter of 2022.
They are not expected to have a material impact to 2022 results less than $1 million and this reduction is reflected in the 2022 guidance provided at the end of my comments.
Wealth management revenues declined during the quarter to $17 6 million from $18 3 million in the prior quarter.
New business activity did continue with all of the revenue declined due to a decrease in the value of managed assets as of the beginning of the quarter.
At September 30th the market value of assets under management and administration increased modestly to $12 7 billion up from $12 6 billion in the prior quarter.
Mortgage banking revenues declined and were driven by a decline in mortgage loan sales offset in part by an increase in gain on sales spreads to two.
202 basis points during the third quarter versus 190 basis points last quarter.
Moving to slide seven noninterest expenses, excluding merger related charges were approximately $162 million in the third quarter.
Up $14 million linked quarter.
This increase was driven by the following factors additional.
Additional performance based compensation accruals of $2 6 million.
Additional expenses of $3 6 million related to Prudential Bancorp.
$1 million contribution to our Fulton forward Foundation.
An additional calendar day during the third quarter, which added approximately $1 3 million.
Additional technology costs of $1 $7 million due.
Due to the timing of certain projects.
A material amount of the cost savings and the Prudential Bancorp acquisition will not be realized until later in the fourth quarter due to the timing of our systems conversion.
We do expect operating cost to come down in the fourth quarter and this is reflected in our refresh guidance at the end of my remarks.
Slide eight provides more detail on our capital ratios.
As of September 30, we maintained solid positions over the regulatory minimums in our bank and parent company liquidity remained very strong.
Accumulated other comprehensive income decreased $139 million during the quarter.
This impacted our tangible common equity ratio as well as our tangible book value per share offset by strong net retained earnings.
Our tangible common equity ratio was six 7% at quarter end down from 7% last quarter excluding.
Excluding the impact of OCI, our tangible common equity ratio increased during the quarter to eight 3% up from eight 2% at June 30.
During the quarter, we did not repurchase any common shares or $75 million share repurchase authorization remains in place before expiring at year end.
With Prudential Bank core now completed we are currently weighing macroeconomic conditions and their possible impact on OCI and tangible capital.
As a result, we will likely pause until deeper in the fourth quarter before we would.
Consider repurchasing common shares.
On slide nine we are providing updated guidance for 2022.
Our guidance now assumes a total of 125 basis points of additional fed funds increases occurring in 2022 as follows.
75 basis points in November and 50 basis points in December .
Based on those assumptions our revised guidance is as follows we expect our net interest income.
<unk> basis to be in the range of 770 $780 million.
We expect our noninterest income excluding securities gains to be in the range of $225 million to $230 million.
We expect noninterest expenses to be in the range of $615 million to $620 million for the year and note that this operating expense guidance excludes merger related charges related to the Prudential Bancorp acquisition.
And lastly, we expect our effective tax rate to be in the range of 18% plus or minus for the year.
Many of you look at pre provision net revenue or <unk> as a key metric to assess the profitability of core operations.
Our version of this metric is included in the financial tables of our press release.
<unk> has increased 25% year over year and 27% linked quarter.
As a result of our 2021 balance sheet restructuring, earning asset growth over the past year and core margin expansion from our asset sensitive balance sheet.
With that I will now turn the call over to the operator for your questions normal.
Thank you.
To ask a question you will need to press star one on your telephone. Please wait for your name to be announced please standby, while we compile the Q&A roster.
One moment for your first question.
And our first question comes from Justin Crowley with Piper Sandler Your line is open.
Hey, guys. Thanks for all day.
Good morning.
Morning.
Good morning, guys first I want to congratulate Phil on his coming retirement as well.
Phil it's been a real pleasure and good luck with everything from here.
Thanks Frank.
I just.
Just to follow up on your comments Mark about the <unk>.
Growth in the.
Card and payments business.
Do you could you talk a little bit more about opportunities there and whether you see that.
Significant offset.
The change in overdraft that will flow through more in 2023.
Yes, Yes, I think we do Frank when you when you look at at our payments businesses in total I mean, they show up in a couple of lines on our income statement, but when you look at the merchant and card within commercial banking as well as consumer card. That's a business that through three quarters is $40 million in revenue for us.
And.
So we think going forward that the changes to overdraft again less than $1 million. This quarter now we're implementing those sort of mid October .
If you annualize that that gets then maybe around $5 million impact for next year. When we made that assumption for that guidance that was based off of incident levels that were occurring early in the year and as you saw here in the third quarter, we did.
Don't have an increase in overdraft I'd just based on increased incident levels. So I.
I think exactly where that number ends up for next year will be reflected in our 2023 guidance that we gave in January but definitely as you have seen the momentum in both consumer and commercial card.
Are both up.
Between five four and 8% over last year, and we think that there will be continued growth as the economy continues to reopen.
Okay, great. So the real driver there I guess.
As overdraft income that is that right.
That will drive interchange Robyn.
Correct, Yes, yes interchange.
On merchant and on the consumer side.
Also based on this incident levels of usage.
And Frank it's Curt I would just add too we're really focused on growing the customer base, adding accounts, adding transactional accounts that add to overall growth in all of those transactional fee areas that that help offset.
That lost income and overdraft that you see linked quarter overdraft was up it was up because of increased accounts and increased activity within within those accounts.
Okay.
And then just just given your commentary around buybacks and TCE levels wondering your updated thoughts on further M&A here.
That's something that's also unlikely in the near term just given the likely impact of marks on things like TCE.
What's your appetite for further M&A.
And frankly, I think it depends on the opportunities obviously it is a factor as we look at M&A.
Going forward.
But we will look at are good M&A opportunities and work through the math on that we'd like to continue to be.
Activity at least in smaller transactions.
As we look forward given some of the dynamics in the marketplace.
Okay could you just remind me is there any threshold.
Thresholds in terms of the tangible book dilution that you'd be willing to.
To take with a with the deal.
Yes.
With.
That really always depends obviously on the relative size and then the relative earnings accretion that comes back from that.
We've been wanting to announce tangible.
Dilution earn back within three years, generally mean and the Prudential deal I think ended up being one one years.
And.
But out of the gate dilution is going to be a function of the size of the deal if we stick to that sort of 1% to $3 billion transaction size and you're generally going to see dilution in that.
1% to 4% kind of range.
And.
Earned back within three years generally.
Great. Okay. Thank you.
Thank you thanks, Brian .
Thank you for your question one moment for our next question.
And our next question comes from Daniel <unk> with Raymond James Your line is open.
Thank you good morning, guys.
We then.
So when you're just starting on the deposit betas.
I guess your commentary on that.
Expecting those to accelerate going forward, but can.
Can you just let us know kind of how youre thinking about.
What those who may be or what the.
Forecasts are internally kind of through the cycle. How are you thinking about those or how we should be thinking about them.
Yes through the cycle I think we're going to be in the 30% range, but to get to 30% range from where we are today, depending on how you calculate it appears looking at the quarterly levels that we report we've gone from <unk>.
11 basis points to 18 basis points. So thats seven bps on 300 bps. The right moves at the beta kind of at least on a quarterly average basis of two 3% to date.
So that would imply that to get to a 30% beta we'd obviously.
Be ramping that up a lot more in the back half of the cycle and when I say cycle I guess I, usually think of it as kind of a full year. After the fed would reach a terminal fed funds rate.
Okay. That's very helpful. Thank you.
And then I guess just.
Not meaningful numbers by any means but non accruals have picked up for a couple of quarters in a row here.
Looks like this quarter. It was in primarily in commercial real estate I was curious if you have any more color on the type of credits there.
That that drove that and then how you feel about the rest of that book.
Yes, Dan it's Curt just a little more color as we look throughout this year, we had an uptick last quarter, an uptick this quarter as well.
<unk> really been individual account by account and health care.
Account in C&I.
And an office account that are the bigger numbers in there as we look through the overall year and they tend to be individual accounts with supply chain issues are leasing issues things like that.
So thats really whats driven the non accrual increased as we monitor those portfolios.
Office.
Overall.
First on the last quarter relationships over $10 million.
That portfolio aggregated to about $560 million 60.
65% loan to loan to value that portfolio stands at $553 million at the end of this quarter, we continue to closely monitor that.
<unk> leases.
Up.
And the composition of that office space changes, we do expect certain accounts to have challenges. So thats the portfolio that were.
Particular attention to.
Okay, that's great. Thanks, Kurt.
And then lastly, just just in terms of reserves.
Just curious how you think about it.
The amount of qualitative within that.
Bucket in terms of how much maybe wiggle room youll have to.
Adjust those numbers when we start to get changes in macro.
Forecast thanks.
Well, yes.
I mean overall we have.
Qualitative factors on several items, we've taken since we've implemented see slowly we had we had COVID-19 reserves related reserves at one point qualitative.
And currently.
We do have an over overlay.
<unk> reserves related to our office portfolio and we'll continue to monitor that and if we think it's prudent to add more in future periods, we will.
But based on our best estimate of the economic outlook today.
And with the overlays that we have as a part of that as of Sept 30, we feel that the reserves at the right level.
Okay. Thanks for the question Eric Thanks for the answers guys I appreciate it that's all for me.
Thank you for your question.
One moment for our next question.
And our next question comes from Chris Mcgratty with <unk>. Your line is now open.
Hey, good morning.
Mark maybe a question for you on just deposits.
The 64000 dollar question at the industry level.
Can you just help us dig into what at this point might be risk of outflow or.
Further migration I'm, just trying to get a sense of balance sheet size.
Yes, so I think our I think our loan to deposit ratio I think it's safe to say that thats going to continue to drift upward over the next couple of quarters.
<unk>.
One of the things Chris when you look at the third quarter for us.
We have historically have a municipal deposit portfolio.
It fluctuates between about historically between one six and $2 2 billion.
So generally from trough to peak and you'd see that peak in the third quarter that'd be about a $600 million increase in September .
Was about half that.
This year.
We felt that we had room to hold the line a little bit more on pricing.
In that portfolio and as a result, we did not see as much in <unk>.
We would see in past quarters now the $1 million.
You said 64, I think the $1 million question or more but.
<unk> is how much of that portfolio and others do we see outflows.
In in the next couple of quarters as Curt referenced.
We did see growth in both consumer and commercial households, and.
And both in consumer and commercial checking accounts from June to September . So what we're experiencing right now is not a loss of households are customers were experiencing loss of the <unk>.
<unk> per customer.
And that's again really to be expected when the government stopped their stimulus and people are spending money again.
Okay, Great and then maybe a follow up what's the.
Yes.
I guess, what's the monthly or quarterly cash that's coming off the bond portfolio.
Is the assumption you just take it all of it and put it into the loan book or will you maintain the.
The size of the investment portfolio.
Yes, we don't let that run down the <unk>.
Last two quarters.
It's not much it's about $25 million a month is our current cash flow.
But our intent would be at least going into the fourth quarter here to continue to allow that to.
<unk> a little bit.
And then and then going into 2023 at some point I would expect us to then grow the portfolio commensurate with growth in overall, earning assets.
Great. Thank you.
Yes.
Thank you for your question one moment for our next question.
And our next question comes from David Bishop with Fig.
Your line is open.
Yes, good morning, gentlemen.
Hey, David.
Good morning, Yes, the funding side the equation I think I heard maybe or maybe I missed interpreted on the preamble.
GNC in terms of as you move into 2023.
The funding mix changing in terms of how you view funding anticipated loan growth.
Do more wholesale or brokered dirty and you see the ability to fund that through sort of the commercial and consumer channels.
I don't necessarily see a large increase in wholesale deposit channels.
But.
But I would expect if you go back historically to sort of where we were pre pandemic before we received a lot of the stimulus money, it's normal for us to either have both FHA advances of which we've had none for a loan a couple of years running now.
And <unk>.
<unk> overnight borrowings as well.
Got it and then as it relates to loan growth it sounds like.
Commercial line utilization up a little bit as you look at your Crystal ball and targeted commercial clients.
As we head into the last quarter of the year the next year.
Do you think youll maintain our potential.
Potential pickup as you move into the for the region with greater.
Greater exposure on the commercial side or.
I'm just curious what you think the outlook is there in terms of loan growth on the commercial side heading into next year.
Yes, we look at our pipeline quarter linked quarter comparison pipelines.
That's pretty much exactly the same as it was.
We are seeing that pull through rate of that pipeline, we expect to come down.
Because we have customers, saying handler to delay this project because of cost.
Can't get employees, there are still headwinds in <unk>.
Spending.
One project, so I think our pull through rate is going to come down.
So our.
Our loan growth on the commercial side.
I think going to be consistent as we look forward.
With the benefit of increased line utilization at this point really line utilization has not moved at all but we're seeing the outflows of average balances on deposits, which customers are going to spend their own money first and then borrow so that combination of.
Eventual increased line utilization and pretty consistent.
Pipeline and origination we think is going to keep us in a consistent range of organic commercial growth.
Great. Thank you.
Thank you.
One moment for our next question.
Okay.
And our next question comes from Matthew Breese with Stephens. Your line is open.
Good morning.
Matt I was just going to touch on on Mark Your NIM commentary.
First what is kind of the NIM outlook. These next couple of quarters. I know you had mentioned that it would expand but less than the pace. We saw this quarter.
Pretty high bar constrained the NIM was up 50 bps and then secondly.
Given your rate outlook, when and where do you see the NIM kind of peaking in 'twenty three.
Yes, great question Matt.
So for the month for the month of September margin was $3 60.
And the month of September obviously didn't have the full impact of the last 75 basis point rate increase.
So you can expect to see in the fourth quarter.
Certainly margin expand some from the third quarter.
And again with our assumption that there's going to be a 75 basis point rate increase coming here in a couple of weeks first week of November .
As far as when the margin peaks.
I think thats really dipped.
It depends on your bias of when you think terminal fed funds are achieved.
If we hit a terminal fed funds rate in the first quarter, which I think the dot plot. Currently shows that then I would expect that either deep in the first quarter or sometime in the second quarter, maybe on an individual month basis is when you'd see your your Max on margin and then as your deposit beta starts to catch up.
To that loan beta, which will be tempered somewhat by repricing of Av.
Fixed fixed rate assets that mature.
But but clearly youre going to see deposit betas, we think right now on our own forecast deposit betas will be faster than loan betas in the back half of 'twenty three.
Okay.
And then maybe touching on the loan yield side of things first.
Could you provide a blended loan yield for the pipeline or maybe bucket by bucket CRE C&I.
What are you getting for loan yields today and then the other question I had is.
If I look at loan yields relative to fed fund moves youre looking at about a 75 basis point increase in loan yield was 300 basis points of fed hikes. It feels a little light to me.
When do you expect to see a ramp up in loan betas and I think 50% of your book is floating rate when do you expect to get to see the full re price there.
Yes, so so a couple of things on that so first with respect to our loan book we have.
<unk>.
$19 $5 billion loan portfolio now about $8 billion of that is variable.
Or that it was was hedged.
Because we had kind of excess asset sensitivity.
Year, and a half ago. So you have about $7 billion.
Which is about 42% or so of the loan book is truly variable then we got another $4 9 billion that is.
Adjustable.
And then and then the remainder of about $6 billion is fixed or about a third of the portfolio is fixed.
When you think about just to give you a sense on some what we're getting on new loan yields coming in.
Four.
So I was flipping here.
In the third quarter overall blended yield for new assets is in the 5% range.
<unk>.
I'll take that one back.
To where we were in the first quarter, where it was blended closer to 3% for new originations in the third quarter, so were up pretty significantly.
Just take kind of either new originations or increases to existing loans, we've gone from blended around 3% range in the first quarter blended just a shade under 5% in the third quarter.
Right do you have the pipeline yields understanding what you already you put on the books this quarter.
Yes, Matt this is Kurt the going forward pipeline year, we've really.
Don't track yield in the pipeline.
Until we get to the the pricing point of new origination. So the visibility there are credit spreads.
We are pretty committed to.
So what changes that is just the change in interest rate based on the underlying index.
But we really don't track yielding till it gets to commitment that is going into than the loan book.
Within that three to $3 to 30 days.
Got it okay.
Last one for me is just in a static environment looking at the OCI.
Is the recapture.
25 million that Chris talked about a month I'm just curious how much that you'd look to you would think you'd get back if nothing else changes on a quarterly basis.
Yeah. So so we would we would recapture all of that AFC I hit which over the last two quarters combined maintenance did in our prepared comments with 130.
139, this quarter and was roughly the same amount I think the last quarter as well.
So all of that amount.
All other things being equal you would get that back over the duration of the portfolio, which with rising rates the effective duration of our investment books going from like Fortinet years' to five and half years.
So all other things being equal you would recoup that over that over the five year period of time, so that's roughly $50 million a year.
Perfect. Okay. That's.
All I had thanks for taking my questions.
Thank you for your question as a reminder, ladies and gentlemen that star one to ask a question one.
One moment for our next question.
And our next question comes from Manuel Nevada with D. A Davidson your line is open.
Hey, good morning.
Hey, good morning.
I guess Rodney.
A little bit on a follow up on the NIM trajectory.
Is there a point where you.
Take more steps to kind of protect it.
It's more something a consideration.
When you feel that fed funds, hence terminal or.
Some other steps you can take sooner.
Yes so.
So we are thinking about that.
And.
We are currently looking at and have executed in a small way awesome awesome cashless corridor trades.
We are a combination of a of a purchase Florida sold cap.
So.
We are.
Considering that and executing that.
In a small way too.
<unk> some of the edge is off of our net interest income volatility and they give us protection on the downside.
In addition to that I mean, we still have several billion dollars of loans today.
Floors.
Number is about $6 5 billion.
<unk> that already have floors. So we would be doing this cashless car door to give us additional protection for loans that do not currently have a floor.
Okay.
Yes.
Okay. Thanks, I appreciate that.
As a follow up.
Can you just kind of describe what are you seeing the most competition in your market.
Rob It's Brian .
Yes.
Yes, sure more color on that so we're really seeing it across the board in each market. We monitor each of the markets very closely some some markets are more CD driven some are more money market driven so we manage that.
Across the board I would say.
The markets that are most competitive or the markets that have banks.
Yes.
That had a really high.
Our loan to deposit ratio and really need to.
Grow deposits to fund their loan growth those markets.
To be more competitive right now.
Okay.
Alright, thank you.
Thank you and Im showing no further questions at this time I would like to hand, the conference back over to Mr. Myers for any closing remarks.
Well, thank you again for joining us.
The conference will begin shortly to raise Johan during Q&A you can dial one one.
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