Q3 2023 Amerant Bancorp Inc Earnings Call

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Okay.

Speaker 1: Good day and thank you for standing by. Welcome to the Amerit Bank Corp third quarter 2023 earnings conference call. At this time all participants

Good day, and thank you for standing by.

Welcome to the Merit Bank Corp, third quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

Speaker 1: After the speaker's presentation, there will be a question and answer session.

After the Speakers' presentation, there'll be a question and answer session.

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Speaker 1: I would now like to hand the conference over to your host today, Laura Rossi, Head of Investor Relations and Sustainability. Please go ahead. Okay.

I would now like to hand, the conference over to your host today, Laura Rossi head of Investor Relations and sustainability. Please go ahead.

Speaker 2: Thank you, Liz. Good morning, everyone, and thank you for joining us to review Amaranth Bancorp's third quarter 2023 results.

Thank you Liz and good morning.

Everyone and thank you for joining us to review <unk> Bancorp's third quarter 2023 result.

Speaker 2: On today's call are Jerry Plosh, our Chairman and Chief Executive Officer, and Charimar Camarone, our Executive Vice President and Chief Financial Officer.

On today's call are Jerry plush, our chairman and Chief Executive Officer, and Sharon Malka, let alone our executive Vice President and Chief Financial Officer.

Speaker 2: As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities and Exchange Act. In addition, references will also be made to Homeland Financial

We begin please note that discussions on todays call contain forward looking statements within the meaning of the Securities Exchange Act. In addition references will also be made to non-GAAP financial measures.

Speaker 2: Please refer to the company's earnings release for a statement regarding forward-looking statements as well as for information and reconciliation of non-GAAP financial measures to GAAP measures.

Prior to the company earnings release for a statement regarding forward looking statements as well as for information.

non-GAAP financial measures to GAAP measures.

Speaker 2: I will now turn it over to our Chairman and CEO , Jerry.

I will now turn it over to our chairman and CEO Jerry.

Speaker 3: Thank you, Laura. Good morning, everyone, and thank you for joining Ameren's third quarter 2023 earnings call. We're happy to be here today to update everyone on the continued progress we made during the period.

Thank you Laura good morning, everyone and thank you for joining Amarin third quarter 2023 earnings call. We're happy to be here today to update everyone. On the continued progress we made during the period.

Speaker 3: So during the third quarter, we focused on improving balance sheet composition, which included the continued prioritization of organic deposit growth, which enabled us to reduce higher cost institutional deposits, which are highly rate-sensitive and therefore subject to flight risk. We provided more granular information on the sources and type of deposits in today's perturbing presentation. And I'll go into that in detail very shortly.

So during the third quarter, we focus on improving balance sheet composition, which included continued prioritization of organic deposit growth, which enabled us to reduce higher cost institutional deposits, which are highly rate sensitive and therefore subject to flight risk we provided more granular information on the sources and types of deposits in today.

Earnings presentation, and I'll go into that in detail very shortly.

Speaker 3: We also entered into an agreement to sell the single largest credit exposure in our discontinued New York City portfolio. And you'll see that in Loans Health for sale. And that's closing this schedule to take place today.

We also entered into an agreement to sell the single largest credit exposure in our discontinued New York City portfolio and you'll see that in loans held for sale and that closing is scheduled to take place today.

Speaker 3: We continue to work on further reductions in non-performing assets, and we've now reached the marketing stage with our real estate owners.

We continue to work on further reductions in nonperforming assets. We've now reached the marketing stage without real estate owned.

Speaker 3: We also spent considerable time and energy on the upcoming core conversion in November and I'll provide more information on that shortly as well.

We also spent considerable time and energy on the upcoming core conversion in November and I'll provide more information on that shortly as well.

Speaker 3: So while this was not an asset size growth quarter like recent periods, as loans and deposits overall were relatively flat quarter to quarter, and in fact, the key driver of our asset size decrease this quarter was from our using a hundred million in excess cash on hand to pay down advance.

So while this was not an asset sides growth quarter like recent periods as loans and deposits overall were relatively flat quarter to quarter and in fact, the key driver of our asset size decrease this quarter was from our using the $100 million in excess cash on hand to pay down advances we.

Speaker 3: We made a lot of progress on many fronts which we will cover as we review the upcoming slides. And as an aside, which Sherry will cover later in her remarks, the loan and deposit pipelines for the fourth quarter are very strong and we expect to be back in growth mode in 4Q. And in fact, we've already booked 90 million in loan production month to date, which has resulted in a $71 million net increase in loans as of yesterday.

We made a lot of progress on many fronts, which we will cover as we review the upcoming slides and as an aside which Jerry will cover later in her remarks, the loan to deposit pipelines for the fourth quarter are very strong and we expect to be back in growth mode in four Q.

And in fact, we've already booked 90 million in loan production month to date, which has resulted in a $71 million net increase in loans as of yesterday.

Speaker 3: So let's turn to slide three, and here we provide a summary of our third quarter highlights. Then income attributable to the company was 22.1 million, compared to the 7.3 million in 2 Q2 3. This increase was primarily driven by lower provision for credit losses in 3Q, as the provision recorded in 2Q was substantially higher.

So, let's turn to slide three and here, we provide a summary of our third quarter highlights net income attributable to the company was $22 1 million compared to $7 3 million in Q2 'twenty. Three this increase was primarily driven by lower provision for credit losses, and three Q as the provision recorded in Q2 was.

Speaker 3: The net interest margin was 3.57% compared to the 3.83%. We reported last quarter. A few basis points lower than we originally expected. This was driven primarily than higher than expected funding costs and lower loan originations as we continue to prioritize relationships venture originations and not renew or pursue non depository finance.

Actually higher than.

Net interest margin was 357% compared to the 383% we reported last quarter, a few basis points lower than we originally expected.

Was driven primarily by higher than expected funding costs and lower loan originations as we continue to prioritize relationship centric originations and not renew were pursued non depository financing.

Speaker 3: So again, back to asset size, we decreased 174 million compared to Q23. Our gross loans were 7.1 billion compared to 7.2 billion last quarter, a decrease is 74 million. And our total deposits were 7.5 billion relatively flat to the 7.6 billion last quarter.

So again back to asset size, we decreased $174 million compared to two 223, our gross loans for $7 1 billion compared to $7 2 billion last quarter, a decrease of $74 million and our total deposits were $7 5 billion relatively flat to the seven $6 billion last quarter.

Speaker 3: Federal Home Alone Bank advances were 595 million, a decrease of 175 million or 23 percent compared to the 770 million and 2Q due to prepayments we made in 3Q23 as part of our asset and liability.

Federal home loan bank advances were $595 million, a decrease of $175 million or 23% compared to the $770 million in Q2 due to prepayments we made in <unk> 'twenty three as part of our asset liability management.

Speaker 3: The company's capital levels continue to be strong and well in excess of the minimum regulatory requirements to be considered well-capitalized as of September 30 of 2023. Our tangible common equity ratio remains strong at 7.44% as of September 30. As we classify the majority of our investment portfolio as available for sale, the market on this portfolio is deducted from tangible common equity. We'll get into more detail regarding capital and capital ratios short.

The company's capital levels continue to be strong and well in excess of the minimum regulatory requirements to be considered well capitalized as of September 32023.

Our tangible common equity ratio remains strong at 7.44% as of September 30th as we classify the majority of our investment portfolio as available for sale the Mark to market on this portfolio is deducted from tangible common equity will get into more detailed regarding capital in our capital ratio shortly.

Speaker 3: Also during the quarter, we paid out the previously announced cash quarterly dividend of $0.9 for share on August 31st of 2023.

Also during the quarter, we paid out the previously announced cash quarterly dividend of <unk> <unk> per share on August 31, 2023.

Speaker 3: And then lastly, regarding stock repurchases, as you know, we have a $25 million class A common stock to share repurchase program in a place.

And then lastly regarding stock repurchases as you know we have a $25 million of class a common stock share repurchase program in place and year to date, we've repurchased 260000 shares for $5 million at an average price of $19 per share or nine times price to book value availability remaining under this.

Speaker 3: And year to date, we've repurchased 260,000 shares for $5 million at an average price of $19 for share or at .9 times price to book value. Availability remaining under this program was 20 million hours of quarter.

Program was $20 million as of quarter end.

Speaker 3: So let's turn to slide four and take a look at what happened in shares outstanding during the quarter. And here you can see that during 3Q we continue to prunently use our 25 million share repurchase program. At WeRepurchase 142,000 shares of common stock at an average price of $19.

So, let's turn to slide four and take a look at what happened in shares outstanding during the quarter and see here you can see that during <unk>. We continued to prudently use our $25 million share repurchase program and we repurchased 142000 shares of common stock at an average price of $19.

Speaker 3: We can transition now to slide five, and we'll show you our capital position relative to regulatory minimums. As of 3 Q2 023, our total capital ratio ended at 12.7% and our CET1 was 10.3%. Our tangible common equity ratio, which includes 106 million of AOCI resulting from the aftertacks change in the valuation of our portfolio was 7.44%.

We can transition now to slide five and we'll show you our capital position relative to regulatory minimums as of <unk> 2023, our total capital ratio ended at 12, 7% at our CET. One was 10, 3% our tangible common equity ratio, which includes a $106 million of Aoc.

Resulting from the after tax change in the valuation of our portfolio was seven 4%.

Speaker 3: Regarding our tangible common equity ratio, we also show here for reference purposes the impact of adding to 26 million and unrealized losses from our held to maturity portfolio and what that does to TCE, which would result in an adjusted tangible capital ratio, it was 7.2%, a relatively small impact it included, and tangible book value for share also adjusted for held to maturity stood at 19.9 as a quarter-round.

Regarding our tangible common equity ratio. We also show here for reference purposes, the impact of adding the $26 million in unrealized losses from our held to maturity portfolio and what that does to TCE, which would result in an adjusted tangible capital ratio of seven 2% a relatively small impact that's included.

And tangible book value per share also adjusted for held to maturity stood at $19 nine as of quarter end.

Speaker 3: We will now take a look at on slide six, on deposits and give you an overview of the deposit base. Our total deposit to the end of the third quarter was $7.5 billion, and that's down 33 million from the previous quarter. This very slight decrease was driven primarily by reductions in higher cost institutional deposits of $292 million, which was partially enabled by organic deposit growth of $2008.

We will now take a look at on slide six on deposits and give you an overview of the deposit base. Our total deposits at the end of the third quarter were $7 $5 billion and that's down $33 million from the previous quarter. This very slight decrease was driven primarily by reductions in higher cost institutional.

Deposits of $292 million, which was partially enabled by our organic deposit growth of $208 million.

Speaker 3: Of note is non-interest bearing deposits increased by 77 million and time deposits increased by 220 million and as of course customers continue to seek higher returns on the deposits.

Of note is noninterest bearing deposits increased by $77 million and time deposits increased by $220 million and as of course customers continued to seek higher returns on their deposits.

Speaker 3: Note that this increase in time deposits, however, includes broker time deposits in the amount of 92 million, which was a strategic move to obtain two to five year funding, again, as part of asset liability management. And at the same time, as I just mentioned, we reduced federal and low bank advances by 175 million, which were down to 595 million in quarter.

Note that this increase in time deposits. However includes broker time deposits in the amount of $92 million, which was a strategic move to obtain two to five year funding again as part of asset liability management and at the same time as I just mentioned, we reduce federal home bank advances by $175 million, which were down to 590.

Speaker 3: Please know we remain committed to maintaining our current ratio of loans that are positive with a target of 95% and not to exceed 100%.

$5 million a quarter right.

Please note we remain committed to maintaining our current ratio of loan to deposit with a target of 95%.

Not to exceed 100%.

Speaker 3: So we'll turn to slide seven and look at our deposit diversification and you'll look at the stability we have in this portfolio. And as you can see, it's composed of domestic and international costs.

So we will turn to slide seven and look at our deposit diversification and Youll look at the stability. We have in this portfolio and as you can see it's composed of domestic and international customers. Our domestic deposits now account for 67% of total deposits totaling $5 1 billion as of the end of the third quarter, that's down 46.

Speaker 3: Our domestic deposits now account for 67% of total deposits, totaling 5.1 billion as is the end of the third quarter. That's down 46 million or 1%. Compared to the previous quarter and international deposits, which account for 33% of our total deposits, totaled 2.5 billion up 13 million or 0.5% compared to the previous quarter. Our domestic deposits include over 48,000 accounts with an average size of 100,000.

1% compared to the previous quarter in international deposits, which account for 33% of our total deposits totaled $2 5 billion up $13 million or 5% compared to the previous quarter.

Our domestic deposits include over 48000 accounts with an average size of 100000, while our international deposits are approximately 57000 accounts with an average size of 40000, which reflects the granularity of our deposit base and stability of this funding source and.

Speaker 3: while their international deposits are approximately 57,000 accounts with an average size of 40,000, which reflects the granularity of our deposit base and stability of this one.

Speaker 3: And as I've shared in previous calls, we intend to take advantage of our infrastructure and capabilities and emphasize international deposit gathering as a source of funds given more favorable pricing while also adding more diversification to our fund.

And as I've shared in previous calls, we intend to take advantage of our infrastructure and capabilities and emphasize international deposit gathering as a source of funds given more favorable pricing, while also adding more diversification to our funding base.

Speaker 3: Our court deposits defined as total deposits, excluding all time deposits, were 5.2 billion as of the end of the third quarter. A decrease of 254 million or 5% compared to the previous quarter. The 5.2 billion in court deposits included 1.4 million in non-intersparing demand, up to 77 million by previously referenced or 6% compared to the prior quarter. Despite customer demand for higher rate products and in line with our continued efforts 5.

Core deposits defined as total deposits. Excluding all time deposits were $5 2 billion as of the end of the third quarter, a decrease of $254 million or 5% compared to the previous quarter to $5 2 billion in core deposits included $1 4 billion in noninterest bearing demand up to $77 million I previously referenced.

6% compared to the prior quarter, despite customer demand for higher end products and in line with our continued efforts to prioritize deep customer relationships.

Speaker 3: 2.4 billion in interest-bearing deposits down for inter 56 million or 13% versus the previous quarter, primarily driven by the previously referenced reduction in institutional deposits, and 1.5 billion in savings and money market deposits up 26% or 2% versus the previous quarter. So at this point, I'm gonna turn things over to Sherry, we'll go over the key metrics, other balance sheet items, and results for the third quarter in more detail.

$2 4 billion in interest bearing deposits down $356 million or 13% versus the previous quarter, primarily driven by the previously referenced reduction in institutional deposits and $1 5 billion in savings and money market deposits up 26% or 2% versus the previous quarter.

So at this point I am going to turn things over to Sherri, who will go over the key metrics other balance sheet items and results for the third quarter in more detail.

Speaker 4: Thank you, Jerry, and good morning, everyone. As part of today's presentation, I will share more color on our financial position and performance. With trainings of light eight, I'll begin by discussing our key performance metrics and their changes compared to last quarter.

Thank you Jerry and good morning, everyone as part of today's presentation I will share more color on our financial position and performance.

As of May eight ill begin by discussing our key performance metrics and your changes compared to last quarter.

Speaker 4: Non-intervarying deposits, the total deposits, increased to 18% in due to 17% in the previous quarter.

Noninterest bearing deposits to total deposits increased to 18% in Q compared to 17% in the previous quarter.

Speaker 4: This reflects our deposit's first focus and our efforts to increase demand default.

This reflects our deposits first focus and our efforts to increase demand deposit account.

Speaker 4: This positive trend also speaks us to the value of building relationships and all the efforts in our markets despite the challenges of customer seeking higher interest rates and the market.

This positive trend also speaks to the value of building relationships and all the African market. Despite the challenges of customers seeking higher interest rates and the market competition.

Speaker 4: Our efficiency ratio was 64.1% compared to 65.6% last quarter. And ROA and ROE were higher this quarter at 0.92% and 11.93% respectively. As a result of the lower provision and one time charges during the period.

Our efficiency ratio was 64, 1% compared to 65, 6% this quarter and ROE and <unk> were higher this quarter at 92% and 11, 93% respectively. As a result of the lower provision and one time charges during the period.

Speaker 4: For consistency and transparency, we show the three core metrics of RWA, RLE, and operating efficiency, excluding non-routine items, so you can more easily see underlying performance for the poor.

We're consistent interest bearing fee, we showed the three core metrics of ROA ROE and operating efficiency, excluding non routine items, where you can more easily see underlying performance for the quarter.

Speaker 4: As an example, chlorophytian C is 62.1% compared to 60.3% in 2Q23, which excludes non-riching charge.

As an example, where efficiency of 62, 1% compared to 63% in Q Q, 'twenty, three which excludes nonrecurring charges.

Speaker 4: These results include turning costs of main applications and services to be used after conversion in parallel with current applications and

These results include certain cost of new applications and services to be used after conversion in parallel with current applications in place.

Speaker 4: This parallel use of applications will also occur for the full fourth quarter of 2023 until we complete the commissioning applications in early 2024 and therefore reduce these.

This paralleled the use of applications will also occur for the full fourth quarter of 2023 until we complete decommissioning applications in early 2024, and therefore, we do this call.

Speaker 4: Due to this, we expect higher efficiency ratio temporarily until early 2022.

This is.

With a higher efficiency ratio temporarily until early 2024.

Speaker 4: Lastly, the coverage of the allowance for credit losses to total loans decreased to 1.40% compared to 1.48% in two cubes. As a result of charges previously received.

Lastly, the coverage of the allowance for credit losses to total loans decreased to 140% compared to $1, 48% in Q.

Result of charge offs previously reserved however, excluding reserves for loans individually evaluated the coverage remains stable at 128% unchanged from Turkey.

Speaker 4: However, excluding reserves for loans individually evaluated, the coverage remains stable at 1.28% unchanged from 2Q. Continuing on to slide nine.

Casino onto slide nine I will discuss our investment portfolio.

Speaker 4: Our third quarter investment security balance was at 1.3 billion, which remains unchanged compared to the previous quarter. When compared to the prior quarter, the duration of the investment portfolio has extended to 5.3 years as the model anticipates longer duration due to higher mortgage rates and therefore slower propane.

Our third quarter investment Securities balance was at $1 3 billion, which remains unchanged compared to the previous quarter when compared to the prior quarter. The duration of the investment portfolio has extended to five three years as the model anticipates longer duration due to higher mortgage rates and therefore slower prepayments.

Speaker 4: As we did last quarter, I would like to discuss the impact of interest rates on the valuation of depth securities available for-

As we did last quarter I would like to discuss the impact of interest rates undervaluation of debt securities available for sale.

Speaker 4: As of the end of this September , the market value of this portfolio decreased approximately 19 million after tax, compared to a decrease of 13.5 million into Q23. This decrease was driven by right-

As of the end of the September the market value of this portfolio decreased approximately $19 million after tax compared to a decrease of $13 5 million into Q3.

This decrease was driven by rising rates during the third quarter.

Speaker 4: It is important to note that 75% of our available for so portfolio has government guarantees while most of the remaining securities are rated investment grades. Also, as of the third quarter, our corporate ZEP portfolio had 120 for million and subordinated debt securities issued by financial institutions compared to 121 million into Q as a result of higher market valuation.

It is important to note that 75% over available for sale portfolio has the government guarantee.

Of the remaining securities are rated investment grade.

Also as of the third quarter, our corporate debt portfolio had $124 million in subordinated debt securities issued by financial institutions compared to $121 million into Q as a result of higher market valuations.

Speaker 4: are available for sale portfolio represents 79% of the total investment for folio while helping maturity securities represent 17.5.

Our available for sale portfolio represents 79% of the total investment portfolio, well health and maturity securities representing 17, 5%.

Speaker 4: Continuing on to flight 10, let's talk about the Loan Bridge.

Convener continuing on to slide 10, let's talk about the loan portfolio.

Speaker 4: At the end of the third quarter, total growth loans were 7.1 billion down slightly 1% compared to 7.2 billion at the end of two

At the end of the third quarter total gross loans were $7 1 billion down slightly 1% compared to $7 2 billion at the end of Q2.

Speaker 4: The decrease was primarily driven by reduced originations, given tighter credit quality requirements and relationship-focused originations.

The decrease was primarily driven by reduced originations given tighter credit quality requirements and relationship focused origination this.

Speaker 4: This was noticeable in the commercial loan portfolio which decreased $124 million to $1.45 billion compared to $1.6 billion into $220.

This was noticeable in the commercial loan portfolio, which decreased $124 million to $1 45 billion compared to $1 6 billion into Q3.

Speaker 4: The single family residential portfolio was 1.39 billion and increased of 58 million compared to 1.16 billion into Q20.

The single family residential portfolio was 139 billion, an increase of $58 million compared to $1 16 billion into Q23 days.

Speaker 4: This amount includes 82.5 million and loans originated and purchased year in the quarter, primarily done with private banking customers and other strategic relations.

This amount includes $82 5 million in loans originated and purchased during the quarter, primarily done with private banking customers and other strategic relationships.

Speaker 4: Consumer loans as of 3223 work 439 million, a decrease of 64 million or 13% quarter over quarter.

Consumer loans as of 323 were for $139 million, a decrease of $64 million or 13% quarter over quarter.

Speaker 4: This includes approximately 255 million in higher yielding in dirt loans, which were a tactical move for us to increase yields in prior periods.

This includes approximately 255 million in higher yielding indirect loans, which were a tactical move for us to increase yields and prior periods.

Speaker 4: As we mentioned last quarter, we are focusing on organic growth and have not been purchasing any new productions since the end of 2020.

As we mentioned last quarter, we are focusing on organic growth and have not been purchasing any new production. Since the end of 2022, we estimate that at current prepayments speeds. This portfolio will run off over the next few years.

Speaker 4: We estimate that a current prepayment speed this first fully will run off over the next week.

Speaker 4: During 3Q, we also continue to run up our New York City theory portfolio. We transferred our single highest exposure in our New York City theory portfolio to help for sale and recorded evaluation allowance of $5.6 million upon trend.

During <unk>. We also continue to run off our New York City CRE portfolio, we transferred our single highest exposure in our New York City theory portfolio to held for sale and recorded a valuation allowance of $5 6 million upon transfer.

Speaker 4: This loan had a 43.3 million balance net of allowance at the end of 3Q and we have scheduled the sale of this facility for later today.

This loan had a $43 3 million balance net of allowance at the end of <unk> and we have scheduled the sale of this facility for later today.

Speaker 4: The resulting New York City Theory portfolio Health Reinvestment was 240 million as of 3Q and consists of 23 facilities.

The resulting New York City theory portfolio held for investment was $240 million as of <unk> and consisted of 23 facilities.

Speaker 4: We also had 26 million in Long Hill for sale in connection with Amran Mortgage compared to 50 million in the previous quarter. Given recent industry events in connection with shared national credit portfolio, it is important to note that our exposure to deep loans is limited. As of 3Q, we had 177 million in shared national credit, 2.5% of the total loan portfolio. This amount includes the CRB loan helper.

We also had $26 million and loans held for sale in connection with Ameren mortgage compared to $50 million in the previous quarter.

Given recent industry events in connection with shared national credit portfolio. It is important to note that our exposure to these loans is limited.

<unk>, we had $177 million in shared national credits to one 5% of the total loan portfolio.

This amount includes the CRE loans held for sale I just mentioned.

Speaker 4: Also, it is important to note that approximately half of these borrowers have relationships with them. Turning to slide 11.

Also it is important important to note that approximately half of these borrowers have relationship with us.

Turning to slide 11, let's take a closer look at credit quality.

Speaker 4: Our credit quality remains sound and reserves coverage is strong. The allowance for credit losses at the end of the third quarter was 99 million, a decrease of 6.8 per cent from 106 million at the close of the previous quarter.

Our credit quality remains sound and reserve coverage is strong the allowance for credit losses at the end of the third quarter was $99 million a decrease of $6, 868% from $106 million at the close of the previous quarter.

Speaker 4: We recorded a provision for credit losses of 8 million and the third quarter, which comprised of 7.6 million to cover charge off, 1.4 million with the loan composition and volume changes, and 600,000 added to the provision for credit contingency, which is recorded in other liabilities.

We recorded a provision for credit losses of $8 million in the third quarter, which comprised of $7 6 million to cover charge offs, one 4 million into loan competition and volume changes and 600000 added to the provision for credit contingency, which is recorded in other liabilities.

Speaker 4: These provision requirements were often by 400,000 released due to credit quality and factor updates, and 1.2 million released due to recode.

These provision requirements were offset by 400000 released due to credit quality and partner updates and one $2 million release due to recovery.

Speaker 4: It is important to mention that, consistent with previous quarterly disclosure in 2023, the quarterly 2022 provision for credit law has no reflects the desegregated impact of Cecil implementation for those specific periods.

It is important to mention that consistent with previous quarterly disclosures in 2023, the quarterly 2022 provision for credit losses now reflects the disaggregated impact of Stifel implementation for those specific period.

Speaker 4: During the third quarter of 2023, there were net charge of the 14.6 million of which 6.4 million were related to indirect consumer loan. And 9.3 million were related to multiple smaller commercial loans of which 5.7 million had already been reserved in a prior period. This was upset by 1.2 million recall.

During the third quarter of 2023, and there were net charge offs of $14 6 million of which $6 4 million were related to indirect consumer loans and $9 3 million were related to multiple smaller commercial loans of which $5 $7 million had already been reserved in the prior period. This was offset by $1 2 million of recoveries.

Speaker 4: are non-performing loans to total loans are down to 46 basis points compared to 65 basis points last quarter. This was primarily due to the charge of mention, 8.4 million due to loan sold, 2.6 million due to pay downs, and 0.4 million due to up.

Our nonperforming loans to total loans are down from 46 basis points compared to 65 basis points last quarter.

This was primarily due to charges mentioned $8 4 million to two loans sold $2 6 million due to pay downs and <unk> 4 million due to upgrade.

Speaker 4: Number-forming assets total 53.4 million at the end of the third quarter, a decrease of 14 million compared to 2Q23, primarily due to the decrease in NPL.

Nonperforming assets totaled $53 4 million at the end of the third quarter, a decrease of $14 million compared to <unk> 23, primarily due to the decrease in npls.

Speaker 4: The ratio of non-performing assets to total assets was 67 basis points, down 14 basis points from the second quarter of 2020.

The ratio of nonperforming assets to total assets with 57 basis points down 14 basis points from the second quarter of 2023.

Speaker 4: In the third quarter of 2023, the coverage ratio of Lundla reserves to non-performing loans close at three times up from 2.2 times at the end of last quarter and down from 4.1 times at the close of the third quarter of

In the third quarter of 2023, the coverage ratio of loan loss reserve to nonperforming loans closed at three times up from two two times at the end of last quarter and down from four one times at the close of the third quarter of last year.

Speaker 4: As we did last quarter, we brought up flight 12 from our loan supplement section to discuss our theory for folio and further deep.

As we did last quarter, we burn up quite well from our loan supplement section to discuss our theory portfolio in further detail.

Speaker 4: We have a conservative-witted average loan survival of 59%, and that service coverage of 1.4 as well as strong sponsorship tier profile, based on AUM, net worth, and years of experience for response.

Have a conservative weighted average loan to value of 59% and debt service coverage of one four as well as strong sponsorship tier profile based on AUM net worth and years of experience for a sponsor.

Speaker 4: As of the end of Q23, we have 30% of our theory portfolio in top tier bar.

So at the end of <unk> 'twenty, three we have 30% of our CRE portfolio and top tier borrowers.

Speaker 4: We have no significant tenon concentration in our theory retool loan portfolio as the top 15 tenants represent 22% of the total.

We have no significant tenant concentration in our CRE retail loan portfolio at the top 15 tenants represent 22% of the total.

Speaker 4: Major tenants include recognized national and regional grocery stores, pharmacy, food, and clothing retailers and

Major tenants include recognized national and regional grocery stores pharmacy, food and clothing retailers and banks.

Speaker 4: Our underwriting methodology for CRE includes sensitivity analysis for a variety of C-risk factors like interest rates and their impact over death service, death service Atch indicative and elites are addressing the crucial areas ofourd bearable risk.

Our underwriting methodologies for CRE include sensitivity analysis analysis for a variety of key risk factors like interest rates and their impact over desktop debt service coverage ratio vacancy antenna retention. Please.

Speaker 4: Please note that 49% of our theory for full view has been hedged by the borrowers via interest rate capture swaps, wishing term protects them against rising rate and value.

Please note that 49% over CRE portfolio has been hedged by the borrowers would be of interest recapture swap which in term protect them against rising rate environment.

Speaker 4: Next, I'll discuss Net Interest Income and Net Interest Margin on Light Third.

Next I'll discuss net interest income and net interest margin on slide 13.

Speaker 4: Net interest income for the third quarter was 79 million down 5 million or 6% compared to the previous quarter. The decrease was primarily driven by higher average rates on total interest varying liabilities for both total deposits and official advancements and higher average balances of customer time.

Net interest income for the third quarter was $79 million down $5 million or 6% compared to the previous quarter. The decrease was primarily driven by higher average rates on total interest bearing liabilities for both total deposits and official be advances and higher average balances of customer time deposits.

Speaker 4: As rates continue to increase during the quarter, we experience higher beta via the combined effect of rate increases in transactional deposits, reprising of time deposits that had not reprised the current market rate, as well as higher balances in time deposits at current market.

As rates continue to increase during the quarter, we experienced higher beta the combined effect of rate increases and transactional deposit repricing of time deposits that had no repriced at current market rates as well as higher balances and time deposits at current market rates.

Speaker 4: As you can see in the graph, we observed the beta of approximately 43 basis points on a cumulative basis since the beginning of the interest rate of cycle, but around 104 basis points quarter on quarter compared to 196 in the previous quarter.

As you can see on the graph, we observed a beta of approximately 43 basis points on accumulative basis since the beginning of the interest rate cycle, but around 104 basis points quarter on quarter compared to 196 in the previous quarter.

Speaker 4: Moving on to the net interest margin, as Jerry mentioned, NIM for the third quarter was 3.57%. Down by 26 basis points quarter over quarter. This was slightly higher than we had originally guided as we saw lower than expected long-floating during the quarter based on our deposit first and relationship-focused lending process.

Moving on to the net interest margin as Gerry mentioned NIM for the third quarter was 357% down by 26 basis points quarter over quarter. This was slightly higher than we had originally guided as we saw lower than expected loan closings during the quarter based on our deposits first and relationship focused lending practices.

Speaker 4: We expect the margins to continue to be pressured given substantial market competition for domestic deposits and demand for higher rates. I'll provide some additional color.

We expect the margin to continue to be pressured given substantial market competition for domestic deposits and demand for higher rates.

Some additional color on NIM in my final remarks.

Speaker 4: Moving on to interest rates and fatigues life routine, you can see the asset sensitivity of our balance sheet with 53% of our loans having floating restructures and 52% reprising within

Moving on to interest rate sensitivity on slide 14, you can see the asset sensitivity of our balance sheet with 53% of our loans, having floating restructured and 52% repricing within a year.

Operator: Good day, and thank you for standing by.

Operator: Welcome to the Amerant Bancorp third quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

Speaker 4: As we have said in previous calls, we continue to position our portfolio for a change in race cycle by incorporating race floors when originating adjustable loan. So current we currently have 51% of our adjustable loan portfolio with flow rates. Additionally, you can see here that within the variable rate loans 37% are indexed so.

As we have said in previous calls we continue to position our portfolio for a change in recycled by incorporating rate floors, when originating adjustable loans. So.

So currently we currently have 51% of our adjustable loan portfolio with Fleury. Additionally, you can see here that within the variable rate loans, 37% of our index is still fair.

Speaker 4: Our NIM sensitivity profile remains stable compared to the previous quarter. We include the sensitivity of our AFS portfolio to showcase our ability to extend additional negative valuation changes. I would like to take a moment to discuss the change in organic improvement in AOCI, which is lower than discussed in previous quarters. The smaller amount result from revised market expectations regarding easy monetary policy not taking place in the short term as had been expected earlier in the...

Our NIM sensitivity profile remains stable compared to the previous quarter. We include the sensitivity of our asset portfolio to showcase our ability to extend additional negative valuation changes I would like to take a moment to discuss the change in organic improvement in <unk>, which is lower than discussed in previous quarters does matter and that result from revised market expectations regarding easing monetary.

Operator: Please be advised that today's conference is being recorded.

Laura Rossi: I would now like to hand the conference over to your host today, Laura Rossi, head of investor relations and sustainability. Please go ahead. Thank you, Liz.

Laura Rossi: Good morning, everyone, and thank you for joining us to review Amerant Bancorp third quarter 2023 results.

Policy not taking place in the short term as had been expected earlier in the year.

Laura Rossi: On today's call, our Gary Plush, our Chairman and Chief Executive Officer, and Sharymar Kaladon, our Executive Vice President and Chief Financial Officer. As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Extinct Act. In addition, references will also be made to non-gov financial measures.

Speaker 4: We will continue to actively manage her balance sheet to best position her band for the remainder of 2023 and looking into 2020.

We will continue to actively manage our balance sheet to best position our bank for the remainder of 2023 and looking into 2024.

Speaker 4: Continuing to life 15, non-interestingim and death recorder was 22 million, down by 4.7 million or 18% from 27 million in the second quarter of 2022.

Continuing to slide 15, noninterest income in the third quarter was $22 million down by $4 7 million or 18% from $27 million in the second quarter of 2023.

Speaker 4: As the reference earlier, 7 million of non-interesting from were non-retinaite.

As referenced earlier 7 million of noninterest income were non routine items.

Speaker 4: The decree was primarily driven by lower gains on the early extinguishment of official B.A. Francis and lower mortgage banking.

Laura Rossi: Please refer to the company's earnings release for a statement regarding forward-looking statements, as well as for information and reconciliation of non-gov financial measures to gut measures.

The decrease was primarily driven by lower gains on the early extinguishment of <unk> advances and lower mortgage banking income. This increase in noninterest income was partially offset by higher loan level derivative income due to higher volume of derivative transactions with clients and the absence of the one of the $1 2 million loss in connection with the sale of one corporate debt securities available for sale.

Speaker 4: This decrease in non-interest income was partially offset by higher loan level derivative income due to higher volume of derivative transactions with clients. And the absence of the 1.2 million loss in connection with the sale of one corporate debt security available for.

Gerald Plush: I will now turn it over to our Chairman and CEO, Jerry Sush. Thank you, Laura.

Gerald Plush: Good morning, everyone, and thank you for joining Amerant's third quarter 2023 earnings call. We're happy to be here today to update everyone on the continued progress we made during the period. So during the third quarter, we focused on improving balance sheet composition, which included the continued prioritization of organic deposit growth, which enabled us to reduce higher cost institutional deposits, which are highly rate-sensitive and therefore subject to flight risk. We've provided more granular information on the sources and type of deposits in today's earnings presentation, and I'll go into that in detail very shortly.

Speaker 4: Amherens asked the Thunder Management Tutorial 2.1 billion as of the end of the third quarter, down 55 million or 2.6% from the second.

Ameren assets under management totaled $2 1 billion as of the end of the third quarter down $55 million or two 6% from the second quarter. This decrease.

Speaker 4: This decrease was primarily driven by lower net new assets and market valuation.

It was primarily driven by lower net new assets and market valuation.

Speaker 4: When compared to the same quarter a year ago, we saw an increase of 281 million or 15.5%. Primarily driven by net new assets, which were 162 million and higher market value rates.

When compared to the same quarter a year ago, we saw an increase of $281 million or 15, 5%, primarily driven by net new assets, which were $162 million in higher market valuation.

Speaker 4: Of note, this week the company approved a restructuring of its Bancom life insurance program as we surrendered and reinvest in higher yielding policies, well also increasing team member participation. We expect to improve earnings of approximately 2 million per year in future peer.

Of note. This week the company approved a restructuring of the bank owned life insurance program as we surrendered and reinvest in higher yielding policies. While also increasing team member participation. We expect improved earnings of approximately 2 million per year in future periods.

Gerald Plush: We also entered into an agreement to sell the single largest credit exposure in our discontinued New York City portfolio, and you'll see that in loans held for sale, and that's closing this schedule to take place today. We continue to work on further reductions in non-performing assets, and we've now reached the marketing stage with our real estate owned. We also spent considerable time and energy on the upcoming core conversion in November, and I'll provide more information on that shortly as well.

Speaker 4: Turning to slide 16, their quarter non-interest expenses were 64.4 million, down 8 million or 11 percent from the second quarter.

Turning to slide 16 third quarter noninterest expenses were $64 4 million down $8 million or 11% from the second quarter.

Speaker 4: As Jerry covered earlier, we consider 6.3 million of our expenses as a quarter as non-routine expense.

As Gary covered earlier, we consider $6 3 million of break method this quarter as non routine expense items.

Speaker 4: including these items, cornered interest expenses were 58 million and the third quarter of 2020.

During these items core non interest expenses were $15 million in the third quarter of 2023.

Speaker 4: The quarter over quarter decreased was primarily driven by the absence of many of the items that were included in Tukyu that were no longer in this quarter, as well as lower advertising expenses resulting from campaigns in connection with our partnerships with professional sporting teams. And lower professional fees in connection with call center services that are no longer needed as a result of the engagement with FIS and the absence of additional consulting expenses in Tukyu 23.

The quarter over quarter decrease was primarily driven by the absence of many of the items that were included in <unk>. There were no longer in this quarter as well as lower advertising expenses, resulting from campaigns in connection with our partnerships with professional sporting team and lower professional fees in connection with call Center services that are no longer needed as a result of the engagement with the FAA and the absence of <unk>.

Gerald Plush: So while this was not an asset size growth quarter like recent periods, as loans and deposits overall were relatively flat quarter to quarter, and in fact, the key driver of our asset size decreased this quarter was from our using 100 million in excess cash on hand to pay down advances. We made a lot of progress on many fronts, which we will cover as we review the upcoming slides, and as an aside, which Sherry will cover later in her remarks.

Consulting expenses into Q3.

Speaker 4: The decrease in non-interest expense was partially offset primarily by evaluation expenses related to the transfer of a new year of the New Year's base theory loan from loan health investment to loan health.

The decrease in noninterest expense was partially offset primarily by evaluation expenses related to the transfer of any year of the New York based CRE loans from loans held for investment loan held for sale.

Gerald Plush: The loan and deposit pipelines for the fourth quarter are very strong, and we expect to be back in growth mode in 4Q. And in fact, we've already booked 90 million in loan production month to date, which has resulted in a 71 million dollar net increase in loans as of yesterday. So let's turn to slide three, and here we provide a summary of our third quarter highlights. Net income attributable to the company was 22.1 million compared to the 7.3 million in 2Q, 23.

Speaker 4: In terms of our team, we insta-quartered with 700FTs, slightly lower from 700FT and we had into Q. Out of the 700 members, 600 and two are employed by the bank and 98 by MRA mortgage. On that note, let's turn to slide 17.

In terms of our team we ended the quarter with 700 Ftes slightly lowered from 710, we head into Q.

Out of the 700 members 602 are employed by the bank and 98 by Ameren mortgage.

On that note, let's turn to slide 17, which focuses on ameren mortgage.

Speaker 4: On a standalone basis, Amar Morgge had a negative PPNR of 1.6 million in 3Q23, which was consistent with two queries.

On a standalone basis, Ameren mortgage had a negative <unk> of $1 6 million in <unk> 'twenty, three which was consistent with Q2 results.

Gerald Plush: This increase was primarily driven by lower provision for credit losses in 3Q, as the provision recorded in 2Q was substantially higher. The net interest margin was 3.57 percent compared to the 3.83 percent we reported last quarter. A few basis points lower than we originally expected. This was driven primarily than higher than expected funding costs, and lower loan originations, as we continue to prioritize relationships ventric originations, and not renew or pursued non depository finance.

Speaker 4: Our efficiency ratio, excluding the activities from Amher Mortgage, improved from 64.10% to 62%.

Our efficiency ratio, excluding the activities from Ameren mortgage improved from 64, 7% to under 62%.

Speaker 4: During the third quarter, the company originated and purchased approximately 84 million loans through AMRA mortgage. And as noted on the slide, these are related to the bank's customers and relationships. The current pipeline shows 107 million in process or 266 applications as of October 18, 2023, with 84 million in race locks. And to provide some color.

During the third quarter the company originated and purchased approximately 84 million in loans through Ameren mortgage and as noted on the slide these are related to the bank's customers and relationships. The current pipeline shows $107 million in profit or 266 applications as of October 18, 2023, with $84 million and rate locked.

And to provide some color on our expectations for next quarter.

Speaker 4: Regarding Rose, we estimate our balance sheet to grow between 250 and 300 moons.

Gerald Plush: Johnson. So again, back to asset size, we decreased 174 million compared to Q23. Our gross loans were 7.1 billion compared to 7.2 billion last quarter, a decrease is 74 million, and our total deposits were 7.5 billion relatively flat to the 7.6 billion last quarter. Federal 770 million in QQ due to prepayments we made in 3Q23 as part of our asset and liability management. The company's capital levels continue to be strong and well in access to the minimum regulatory requirements to be considered well-capitalized as of September 30 of 2023.

Regarding growth, we estimate our balance sheet to grow between 250 and 300 million.

Speaker 4: We foresee deposit growth to continue to be strong. We will use any excess overt net loan growth to further reduce higher cost institutional deposits and wholesale funding, including our renewing maturities in forage.

We foresee deposit growth to continue to be strong we will use any excess over at net loan growth to further reduce higher cost institutional deposits and wholesale funding, including our renewing maturities in <unk>.

Speaker 4: Given competition for the process, we expect the names to continue to decrease in the fourth quarter, but clearly to a lesser degree than in 3Q. While there are significant maturities of customer time deposits in 4Q, the gap to cover between the average previous rate and the current one is lower. Also, there was a significant emphasis on non-interest burden products as noted in this quarter's results, and we intend to continue to pursue additional growth as we onboard new relations.

Given competition for deposits, we expect the NIM to continue to decrease in the fourth quarter, but clearly to a lesser degree than in <unk>. While there are significant maturities of customer time deposits in for Q. The gap to cover between the average previous rate and the current one is lower also there was a significant emphasis on noninterest bearing products as noted in this quarter's results and we <unk>.

Tend to continue to pursue additional growth as we onboard new relationships.

Speaker 4: Regarding non-interesting, we expect it to be similar to 3-2 levels.

Regarding noninterest income, we expect it to be similar to <unk> levels.

Speaker 4: We expect operating expenses to include non-recurring expenses related to the upcoming conversion. Well, we finalize the commissioning services currently utilized after conversion. Note that there are services that must run in parallel with the new FIS systems that will be discontinued throughout 4Q and in 1Q of 2020.

We expect operating expenses to include nonrecurring expenses related to the upcoming conversion, while we finalize the commissioning services currently utilized after conversion note that there are services that must run in parallel with any refi assistance that will be discontinued throughout <unk> and in first Q of 2024.

Gerald Plush: Our tangible common equity ratio remains strong at 7.44 percent as of September 30. As we classify the majority of our investment portfolio is available for sale, the market on this portfolio is deducted from tangible common equity. We'll get into more detail regarding capital and capital ratios shortly. Also, during the quarter, we paid out the previously announced cash quarterly dividend of $0.9 for share on August 31 of 2023. And then lastly, regarding stock repurchases, as you know, we have a $25 million class A common stock share repurchase program in place.

Speaker 4: Finally, we expect probation for credit losses to be in or around 8 to 10 million next quarter as we do expect asset growth as I previously mentioned. I'll know pass it back to you.

Finally, we expect provision for credit losses to be in or around eight to 10 million next quarter as we do expect asset growth as I previously mentioned.

Speaker 3: Thanks, Sherry. So before I conclude the presentation this morning, I thought first we should give you an update on the upcoming conversion that we mentioned earlier in the call. So here on Slide 18, we start with the first thing and most important. We're still on track for our conversion to FIS, which will take place in early November .

I'll pass it back to Jerry.

Thanks, Sherry so before I conclude.

The presentation. This morning, I thought first we should give you an update on the upcoming conversion that we mentioned earlier in the call. So here on slide 18, we start with the first thing and most important we're still on track for a conversion to SaaS, which will take place in early November.

Gerald Plush: And year-to-date, we've repurchased 260,000 shares for $5 million at an average price of $19 per share, or at 0.9 times price to book value. Availability remaining under this program was 20 million hours of quarter rent. So let's turn to slide forward and take a look at what happened and shares outstanding during the quarter. And here you can see that during 3Q, we continue to prudently use our 25 million share repurchase program that we repurchase 142,000 shares of common stock at an average price of $19.

Speaker 3: Our primary objective is to move to a state-of-the-art course system in modern stack. This in-course will create a simplified and fully integrated ecosystem of application.

Our primary objective is to move to a state of the art core system and modern stack and this of course will create a simplified and fully integrated ecosystem of applications.

Speaker 3: And what result in a significant strengthening of cybersecurity and information security infrastructure?

It resulted in a significant strengthening of cyber security and information security infrastructure.

Speaker 3: We're very confident in partnering with a well-known and recognized provider and financial services that recently rededicated themselves to focus solely on financial service.

We're very confident in partnering with a well known and recognized provider in financial services that recently re dedicated themselves to focus solely on financial services and above all things, even though I've listed a couple of other items here. We believe that the transition will provide the technological platform that was adequately and exceed the.

Gerald Plush: We can transition now to slide five, and we'll show you our capital position relative to regulatory minimums. As of 3Q, 2023, our total capital ratio ended at 12.7 percent, and our CET1 was 10.3 percent. Our tangible common equity ratio, which includes 106 million of AOCI resulting from the aftertacks change in the valuation of our portfolio was 7.44 percent. Regarding our tangible common equity ratio, we also show here for reference purposes the impact of adding to 26 million and unrealized losses from our held and maturity portfolio and what that does to TCE, which would result in an adjusted tangible capital ratio is 7.2 percent, a relatively small impact that's included.

Speaker 3: And above all things, even though I've listed a couple other items here, we believe that the transition will provide the technological platform that will adequately and exceed the expectations supporting our...

Expectation supporting our company's growth.

Speaker 3: We'll turn a physical transformation and give a quick update here on the efforts going on. We've completed the rep for Ash with five branches year to date and I've two more to be completed before you rent. And this will complete our entire network, which is essential for our team members and customers to have the common look and feel of the Amherent experience in all locations.

Alternative physical transformation and give a quick update here on the efforts going on we've completed the refresh of five branches year to date and have two more to be completed before year end and this will complete our entire network, which is essential for our team members and customers to have the common look and feel of the amarin experience in all locations.

Speaker 3: We have several new locations in the works in downtown Miami and Los Olis, which is downtown Fort Lauderdale in Tampa and in San Felipe in River Roaks in the Houston Marketplace. The consolidation of our Edgewater Florida location will occur here in the fourth quarter.

We have several new locations in the works in downtown Miami, and Los Angeles, which is downtown Fort Lauderdale, and Tampa, and San Felipe and River Oaks in the Houston marketplace. The consolidation of our Edgewater, Florida location will occur here in the fourth quarter.

Gerald Plush: And tangible book value for share also adjusted for held and maturity stood at 19.9 as a quarter rent. We will now take a look at on slide six on deposits and give you an overview of the deposit base. Our total deposit to the end of the third quarter was 7.5 billion, and that's down 33 million from the previous quarter. This very slight decrease was driven primarily by reductions in higher cost institutional deposits of 292 million, which was personally enabled by organic deposit growth of 208 million.

Speaker 3: We'll coincide with the opening of our downtown Miami brand.

Will coincide with the opening of our downtown Miami branch and as we've previously announced we have new regional headquarters currently in process bulk in Broward County, So plantation, Florida in Tampa, Florida.

Speaker 3: And as we previously announced, we have new regional headquarters currently in process, both in Broward County, so Plantation, Florida and in Tampa, Florida.

Speaker 3: And then we'll turn to give an update on brand awareness. So on this slide, we show the key partnerships we have in place to support and enhance our brand awareness.

And then we'll turn to give an update on brand awareness. So on this slide we show the key partnerships, we have in place to support and enhance our brand awareness during the quarter, we announced we entered into a multiyear extension of our partnership with the University of Miami Hurricanes, which comes with significant additional branding opportunities.

Speaker 3: During the quarter we announced we entered into a multi-year extension of our partnership with the University of Miami Hurricanes, which comes with significant additional branding opportunities.

Gerald Plush: Of note is, non-interest bearing deposits increased by 77 million, and time deposits increased by 220 million, and as of course, customers continue to seek higher returns on their deposits, of it. Note that this increase in time deposits, however, includes broker time deposits in the amount of $92 million, which was a strategic move to obtain two to five year funding again as part of asset liability management. And at the same time, as I just mentioned, we reduced federal and low bank advances by $175 million, which were down to $595 million in quarter-rent.

Speaker 3: We also build on our already strong partnership with the Florida Panthers, as we are now the naming rights partner of Amor and Bankerina in Broward County. We traded back the helmet sponsor rights which gave us national exposure for much improved regional focus with naming rights.

We also build on our already strong partnership with the Florida Panthers as we are now the naming rights partner of Ameren Bank Arena in Broward County.

We traded back the helmet sponsor rights, which gave us national exposure for much improved regional focus with naming rights. We also view the naming rights of the Broward County owned arena as a strategic step as part of our recently announced expansion plans there.

Speaker 3: We also view the naming rights of the Broward County-owned arena as a strategic step as part of our recently announced expansion plans there. And please note that we do not expect to increase marketing expense as a result of any of these partnership agreements.

Please note that we do not expect to increase marketing expense as a result of any of these partnership agreement. The new deals. We believe that these and our other partnerships position ameren for unmatched brand recognition and business growth in the markets. We serve so I'll give a couple of closing remarks on where we are today.

Gerald Plush: Please note we remain committed to maintaining our current ratio of loans deposit with a target of 95% and not to exceed 100%. So we'll turn to slide seven and look at our deposit diversification and you'll look at the stability we have in this portfolio. And as you can see, it's composed of domestic and international customers. Our domestic deposits now count for 67% of total deposits totaling $5.1 billion as of the end of the third quarter.

Speaker 3: We believe that these and our other partnerships position amaran for unmatched brand recognition and business growth in the markets we serve.

Speaker 3: So I'll give a couple of closing remarks on where we are today. So if you turn to the last slide, here you can see we're near the end of our transformation.

So if you turn to the last slide.

Here you can see we are nearing the end of our transformation phase. We're excited to have the executive leadership team set and we remain focused on attracting the right people to complement our existing team to achieve our strategic objectives.

Speaker 3: We're excited to have the executive leadership team set and we remain focused on attracting the right people to complement our existing team to achieve our...

Gerald Plush: And that's down 46 million or 1%. Compared to the previous quarter and international deposits, which account for 33% of our total deposits totaled $2.5 billion up 13 million or 0.5% compared to the previous quarter. Our domestic deposits include over 48,000 accounts with an average size of 100,000, while our international deposits are approximately 57,000 accounts with an average size of 40,000, which reflects the granularity of our deposit base and stability of this funding source.

Speaker 3: And I'll note we've continued to add more experienced commercial business development team members here in the fourth quarter. And as I just mentioned, we're going to be completing the transition to FIS, which will provide the technological platform to support our growth.

And of note. We've continued to add more experienced commercial business development team members here in the fourth quarter as I just mentioned, we're going to be completing the transition to SaaS, which will provide the technological platform to support our growth initiatives.

Speaker 3: And as I also just mentioned, our plan new locations are nearing completion. So banking centers and downtown Miami Fort Lauderdale River of Stampa are new regional headquarters, much of which will happen either in the fourth quarter of 23 or early in the first quarter of next year.

And as I also just mentioned our planned new locations are nearing completion, so banking centers in downtown Miami Fort Lauderdale River Oaks tamper, our new regional headquarters.

Much of which will happen either in the fourth quarter of 'twenty. Three are early in the first quarter of next year.

Gerald Plush: And as I've shared in previous calls, we intend to take advantage of our infrastructure and capabilities and emphasize international deposit gathering as a source of funds given more favorable pricing, while also adding more diversification to our funding base. Our core deposits defined as total deposits excluding all time deposits were $5.2 billion as of the end of the third quarter. A decrease of 254 million or 5% compared to the previous quarter. The $5.2 billion in core deposits included $1.4 billion in non-interest-mering demand of the $77 million, my previously referenced, or 6%, compared to the prior quarter.

Speaker 3: But at the same time, please know that we will be reducing square footage in other corporate locations by subleasing or exiting space as an offset.

At the same time, please know that we will be reducing square footage and other corporate locations by sub leasing we're exiting space as an offset.

Speaker 3: And lastly, we're very proud to say that for the second consecutive year, Emernd Bank was recognized as one of Newsweek's top 100 most love work place.

And lastly, we are very proud to say that for the second consecutive year Ameren Bank was recognized as one of Newsweek's top 100, most loved workplaces.

Speaker 3: So before we move to Q&A, I just want to take a moment and say thank you again to all of my Emmer and team members for their dedication, energy and effort once again in this quarter.

Before we move to Q&A I, just wanted to take a moment and say thank you again to all of my Ameren team members for their dedication energy and effort once again this quarter.

Speaker 3: So with that, I'll stop and Sharon, I will look to answer any questions you have. Aparator, please open the line.

So with that I'll stop and sharing I will look to answer any questions. You have operator, please open the line.

Gerald Plush: Despite customer demand for higher rate products and in line with our continued efforts to prioritize deep customer relationships. $2.4 billion in interest-mering deposits down for inter 56 million or 13% versus the previous quarter, primarily driven by the previously referenced reduction in institutional deposits, and $1.5 billion in savings and money market deposits, up 26% or 2% versus the previous quarter.

Speaker 1: As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by when we compile-

As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone telephone and wait for your name to be announced.

To withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Speaker 1: Our first question comes from a line of Michael Rose with Raymond J.

Our first question comes from the line of Michael Rose with Raymond James.

Sharymar Yepez: So at this point, I'm going to turn things over to Sherry. We'll go over the key metrics, other balance sheet items, and results for the third quarter in more detail. Thank you, Jerry, and good morning, everyone. As part of today's presentation, I will share more color on our financial position and performance. The trainings of flight eight, I'll begin by discussing our key performance metrics and their changes compared to last quarter. Non-interest-mering deposits, the total deposits, increased to 18% in three two compared to 17% in the previous quarter.

Speaker 5: Hey, good morning, everyone. Hope you're doing well.

Hey, good morning, everyone help euro hope you're doing well.

Speaker 5: Hey, that's so good morning. So, so, you know, the step down in core expenses was...

Hey.

Good morning, so so.

The step down in core expenses was better than we were kind of looking forward if I annualize that it.

Speaker 6: you know, better than we were kind of looking for. If I annualize that, it obviously sets a pretty good tone as we think about next year. Just as we think about expenses and understanding the FIS conversion will happen in the fourth quarter. So maybe a little bit of elevation there, but just to help us think about expenses near a term and as we think about next year, just given that the transformation efforts are kind of winding down and you're going to begin to reap, I think, you know, more of the rewards from the work that's been done over the past couple of years. new happiness. Do youinos?

And obviously thats a pretty good talent as we think about next year, just as we think about expenses and understanding the Fas conversion will happen in the fourth quarter.

So maybe a little bit of elevation, there, but just help us think about expenses near term and as we think about next year just given that the transformation efforts are kind of winding down and youre going to begin to reap I think more of the rewards from the work that's been done over the past couple of years. Thanks.

Sharymar Yepez: This reflects our deposit's first focus and our efforts to increase demand deposit account. This positive trend also speaks of the value of building relationships and all the efforts in our markets despite the challenges of customer seeking higher interest rates and the market competition. Our efficiency ratio was 64.1% compared to 65.6% last quarter, an ROA and ROE were higher this quarter at 0.92% and 11.93% respectively. As a result of the lower prohibition and one-time charges, you're in the period.

Speaker 3: Yeah, Michael, I, it's Jerry, I'll take that one and Sherry, please add your color commentary. You know, the thing that's really important to note is that our expense base will be elevated. Again, the bulk of that is related to the fact that we're going to be running parallel, right? So I mean, both sets of...

Yes, Michael.

It's Gerry I'll take that one and then Sherry please add your color commentary.

The thing that's really important to note is that our expense base will be elevated again, the bulk of that is related to the fact that we're going to be running parallel right. So I mean both sets.

Sharymar Yepez: For consistency and transparency, we show the three core metrics of ROA, ROE, and operating efficiency, excluding non-routine items, so you can more easily see underlying performance for the port. As an example, core efficiency is 62.1% compared to 60.3% in 2Q23, which excludes non-routine charges. These results include certain costs of new applications and services to be used after conversion in parallel with current applications in place. This parallel use of applications will also occur for the full fourth quarter of 2023 until we complete the commissioning applications in early 2024 and therefore reduce these costs.

Speaker 3: of applications both to new and existing will be for the quarter. And so in a lot of respects, that is, you know, from our perspective.

Of applications, both through new and existing will be for the quarter and so and a lot of respects that is <unk>.

Speaker 3: something that for the fourth quarter and certainly in part of the first quarter will dissipate, you know, starting no later than the second quarter of next year. So, you know, I think Sherry's comments were around.

Our perspective, something that for the fourth quarter and certainly in part of the first quarter will dissipate starting no later than the second quarter of next year. So I think sherri's comments were around you're going to see an elevation in our mind.

Speaker 3: You're going to see an elevation and in our mind, they're not really going to be part of the core expense base going forward as you'll see the bump up and the climb.

We're not really going to be part of the core expense base going forward as you will see the bump up in the decline look I think expenses are something I'm going to give an overall remark.

Speaker 3: Look, I think expenses are something, you know, I'm gonna give an overall remark, is something that we are gonna be continuously working on and certainly I hope you could tell with some of the comments that I made, that things that we're doing that are new, we are looking to offset them.

Sharymar Yepez: Due to this, we expect a higher efficiency ratio temporarily until early 2024. Lastly, the coverage of the allowance for credit losses to total loans decreased to 1.40% compared to 1.48% in 2Q, as a result of charge of previously reserved. However, excluding reserved for loans individually evaluated, the coverage remains stable at 1.28% unchanged from 2Q.

It's something that we are going to be continuously working on and certainly I hope you could tell with some of the comments that I made that the things that we're doing that are new we are looking to offset that so when you think about the marketing expense with doing some of those initiatives and theres. Other things that we're swapping out are not going to do going forward.

Speaker 3: So when you think about the marketing expense, doing some of those initiatives and there's other things that we're swapping out are not going to do going forward, not expecting increases, the same thing to be said about the facilities expense.

Sharymar Yepez: Continuing on to slide 9, I'll discuss our investment portfolio. Our third quarter investment security balance was at 1.3 billion, which remains unchanged compared to the previous quarter. When compared to the prior quarter, the duration of the investment portfolio has extended to 5.3 years, as the model anticipates longer duration due to higher mortgage rates and therefore slower procurement.

We're expecting increases the same thing to be said about the facility's expense Carlos is working tirelessly with his team on looking at opportunities to pair back we've talked about things like hotel, and which frankly fits really well with the mostly hybrid work model that we have.

Speaker 3: Carlos is working tirelessly with his team.

Speaker 3: on looking at opportunities to pair back. We've talked about things like hoteling, which frankly fits really well with the mostly hybrid work model that we've been using here at Amherst.

Sharymar Yepez: As we did last quarter, I would like to discuss the impact of interest rates on the valuation of debt securities available for sale. As of the end of this, I would like to[inaudible] into Q, as a result of higher market valuations. Our available for sale portfolio represents 79% of the total investment portfolio, while helping maturity securities represent 17.5%.

Using here at Ameren.

Speaker 3: So I would tell you there's a lot of moving parts in and around expenses that we're gonna continue as we know there's an increase and there will be an increase in technology expense. There's no absence or buts, but there are other things we're looking to do to reduce that. And we expect to gain additional efficiencies throughout 2024 as we start to see the benefits of having what I think is a much better integrated technology.

I would tell you theres a lot of moving parts in and out in and around expenses.

We're going to continue as we know there is an increase and there will be an increase in technology expense. There is no ifs ands or buts, but there are other things, we're looking to do to reduce that and we expect to gain additional efficiencies throughout 2024, as we start to see the benefits of having what I think is a much.

Better integrated technology stack.

Speaker 6: Okay, that's helpful. And then I guess just putting it all together, obviously some headwinds still here on rates, but I think as we move through the years, it moved through next year, is it fair to assume that we'll hit a point where we start to kind of achieve positive operating leverages that kind of a realistic goal is to think about the back half of the year. Thanks.

Okay. That's helpful and then I guess, just putting it altogether.

Obviously, some headwinds still here.

On rates, but.

I think as we move through the year as it moved through next year is it fair to assume that we'll hit a point, where we start to kind of achieve positive operating leverages that kind of a realistic goal as we think about the back half of the year.

Sharymar Yepez: Continuing on to slide 10, let's talk about the loan portfolio. At the end of the third quarter, total growth loans were 7.1 billion down slightly 1% compared to 7.2 billion at the end of Q. The decrease was primarily driven by reduced originations given tighter credit quality requirements and relationship focused origination. This was noticeable in the commercial loan portfolio, which decreased 124 million to 1.45 billion, compared to 1.6 billion into Q.23. The single family residential portfolio was 1.39 billion, an increase of 58 million, compared to 1.16 billion into Q.23.

Speaker 4: It is Michael. So when we think about the environment right now, I think there's consensus that we're either at the peak or close to it.

It is Michael so when we think about the environment right now I think there is consensus that we're either at the peak or close to it.

Speaker 4: So although there can be different views as to the timing of an inflection point or the speed of a downward trend, irrespective of that when we think about the maturity that we have.

So although there can be different views as to the timing of an inflection point or the speed of a downward trend irrespective of that when we think about the maturities that we have and the.

Speaker 3: And the gap of pricing that we would cover on those that are subject to reprising, I think it's going to, I think it's fair to say that the impact of pressures on the name will be lower in the, in the upcoming quarters, even more noticeable starting in 2024. Yeah, and you know, Michael, I mean, just to add to that, you know, Sherry and I, and obviously the Treasury team and our alcohol.

The type of pricing that we would cover on dose that are subject to repricing.

I think it's gone.

I think it's fair to say that the impact of pressures on the NIM will be.

Lower in the upcoming quarters, even more noticeable will start in 2020, Yeah, and you know Michael I mean, just to add to that Sheri.

Sharymar Yepez: This amount includes 82.5 million and loans originated and purchased during the quarter primarily done with private banking customers and other strategic relationships. Consumer loans, as of 3, Q.23, work 439 million, a decrease of 64 million or 13% quarter over quarter. This includes approximately 255 million in higher yielding indirect loans, which were a tactical move for us to increase yields in prior periods.

Obviously, the treasury team and our Alco Committee, Alright, Yes asset liability Committee I Should've said meet and we talk about things you know it shouldnt be lost on anyone.

Speaker 3: R.S. asset liability committee, I should have said, meet and we talk about things. It shouldn't be lost on anyone that the comment I made earlier about a reduction in excess cash being used when there's virtually no spread. We're continuously looking at ways to...

Comment I made earlier about a reduction in excess cash.

Being used when theres virtually no spread.

Continuously looking at ways to in.

Sharymar Yepez: As we mentioned last quarter, we are focusing on organic growth and have not been purchasing any new productions since the end of 2020. II. We estimate that a current prepayment speech this portfolio will run off over the next two years. During 3Q, we also continue to run off our near city theory portfolio. We transferred our single highest exposure in our near city theory portfolio to help for sale and required evaluation allowance of 5.6 million upon transfer.

Speaker 3: Given the rate pressures, the competitive pressures on the deposit side.

Given the rate pressures the competitive pressures on the deposit side look for offsets one of the really encouraging signs, though that that I think hopefully everyone has as a takeaway is the jump up in noninterest bearing and our teams are absolutely in Shannon and are actually.

Speaker 3: look for offsets, you know, one of the really encouraging signs, though, that I think, hopefully everyone has this take away, is the jump up and non-interest bearing, and our teams are absolutely intended and are actually...

Speaker 3: you know, starting to deliver more and more of non-intersparing relationships as part of new relationships, and obviously we're going back in existing relationships.

Okay.

Starting to deliver more and more of noninterest bearing relationships as part of new relationships and obviously, we're going back and existing relationships and trying to see where we can also gain additional share there. So.

Sharymar Yepez: This loan had a 43.3 million balance net of allowance at the end of 3Q and we have scheduled the sale of this facility for later today. The resulting New York city theory portfolio health for investment was 204 million as of 3Q and consists of 23 facilities. We also had 26 million in loan sale for sale in connection with Amerant Mortgage compared to 50 million in the previous quarter. Given recent industry events in connection with shared national credit for folio, it is important to note that our exposure to these loans is limited.

Speaker 3: and trying to see where we can also gain additional share there. So...

Speaker 3: You know, we're very cognizant. I think a Sherry said that it's lone yields at this stage look like they've somewhat peaked.

We're very cognizant I think as Sherry said that loan yields at this stage look like they've they've somewhat peaked.

Speaker 3: or certainly near the peak and so it's really incumbent on us on the

Certainly near the peak and so its really incumbent on us on the deposit cost side.

Speaker 3: the posit cost side. And as you can tell, we've only added brokerage and for duration and liabilities, and frankly those rates are cheaper than even the shorter term stuff that people are paying right now. So that's not as much of a drag as one might think, as you think about the NIM going.

As you can tell we've only added brokered and for duration and liabilities.

Sharymar Yepez: As of 3Q, we had 177 million in shared national credit 2.5% of the total loan for folio. This amount includes the theory loan help for sale at just mentioned. Also, it is important to note that approximately half of these borrowers have relationships with us.

And frankly those rates are cheaper than even the shorter term stuff that people are paying right now so that's not as much of a drag as one might think.

As you think about the NIM going forward.

Speaker 6: Very helpful and it's good to see just finally for me, just it's good to see TC up a little bit, capital up a little bit this quarter. You can utilize the buyback, you're still trading below tangible book, so authorization, just wanted to get your near term thoughts on usage of the buyback from here and just balancing some of the headwinds that are out there from a capital perspective. Thanks.

Sharymar Yepez: Turning to slide 11, let's take a closer look at credit quality. Our credit quality remains sound and reserves coverage is strong. The allowance for credit losses at the end of the third quarter was 99 million, a decrease of 6.8% from 106 million at the close of the previous quarter.

Very helpful.

It's good to see just finally for me just it's good to see.

Tcf, a little bit capital up a little bit this quarter.

Can you utilize the buyback youre still trading below tangible book still have authorization just wanted to get your kind of near term thoughts on on usage of the buyback from here and just balancing.

Sharymar Yepez: We recorded a probation for credit losses of 8 million in the third quarter, which from price of 7.6 million to coverage charge of 1.4 million to loan composition and volume changes and 600,000 added to the provision for credit contingency, which is recorded in other liabilities. These provision requirements were often by 400,000 released due to credit quality and factor updates and 1.2 million released due to recovery.

Some of the headwinds that are out there from a from a capital perspective. Thanks.

Speaker 3: Yeah, you know, we talk about capital levels all the time, of course, like others do. And our view is that, you know, you need to look at all the tools in the toolkit. Certainly, bybacks are one of those. Obviously, we've continued, you know, our board approved, continuing to pay the dividend. And we like where we are capital-wise. We certainly don't like where we are valuation-wise. I'm sure that...

Yes.

I'll talk about capital levels, all the time of course like others do and our view is that you need to look at all the tools in the toolkit certainly buybacks are one of those obviously, we've continued our board approved continuing to pay the dividend and we.

Sharymar Yepez: It is important to mention that consistent with previous quarterly disclosures in 2023, the quarterly 2022 provision for credit losses now reflects the desegregated impact of lethal implementation for those specific periods. During the third quarter of 2023, there were net charges of 14.6 million of which 6.4 million were related to indirect consumer loans and 9.3 million were related to multiple smaller commercial loans of which 5.7 million had already been reserved in a prior period. This was offset by 1.2 million recovery.

We like where we are capital wise, we certainly don't like where we are valuation wise.

Speaker 3: that is agreed upon by everyone. But our view is that we do need some of this capital from a growth standpoint. And so it's gonna be a balancing act. And I think again, that's what's nice about having the full set of tools and not being restricted to just one or the other, that we're gonna use it all to grow through, that our view is it's a combination of these things, right?

Sure.

That is agreed upon by everyone, but our view is that.

We do need some of this capital.

I'm a growth standpoint, and so it is going to be a balancing act and I think again, that's what's nice about having the full set of tools.

Sharymar Yepez: Our non-performing loans to total loans are down to 46 basis points compared to 65 basis points last quarter. This was primarily due to charge of mention 8.4 million due to loan sold 2.6 million due to paydowns and 0.4 million due to upgrades. Non-performing assets total 53.4 million at the end of the third quarter a decrease of 14 million compared to 2.3, primarily due to the decrease in MPL. The ratio of non-performing assets to total assets was 67 basis points down 14 basis points from the second quarter of 2023.

And not being restricted to just one or the other right that we're going to use it all for grow through that our view is it's a combination of these things right.

Speaker 3: So how we pay on dividend, how we utilize the buy back authorization, how we manage in what our expectations are for growth. And by the way, we're not going to grow for growth, say it's profitable growth. It is not going to be that obviously this is a nice quarter to add back to capital at 22 million. Our view is we need to be running in those levels.

So how we pay a dividend how we utilize the buyback authorization, how we manage and what our expectations are for growth and by the way, we're not going to grow for growth's sake, it's profitable growth right. It is not going to be that.

Obviously this is a nice quarter to add back the capital at $22 million. Our view is we need to be running in those levels.

Speaker 3: going forward to support the growth plans that we have. But I mean, I just want you to know, we sort of don't look at one of these things standalone. We look at all of them. Needless to say, we do agree completely that when you're below the low-book value that that provides an opportunity to buy back.

Sharymar Yepez: In the third quarter of 2023, the coverage ratio of loan loss reserves to non-performing loans close at three times up from 2.2 times at the end of last quarter and down from 4.1 times at the close of the third quarter of last year.

Going forward to support the growth plans that we have but.

I just want you to know we sort of don't look at one of these things stand alone we look at all of them.

<unk> to say, we do agree completely that when youre below book value that that provides.

Sharymar Yepez: As we did last quarter, we brought up light 12 from our loan supplement section to discuss our theory portfolio in further detail. We have a conservative-witted average loan survival of 59% and that service coverage of 1.4 as well as strong sponsorship tier profile based on AUM, net worth and years of experience for response. As of the end of 3Q-23, we have 30% of our CRE portfolio in top tier borrowers We have no significant incentive concentration in our CRE retail loan portfolio as a sub-15 sentence represents 22% of the total.

<unk> to buyback.

Helpful. Thanks for all the comments I'll step back.

Okay. Thanks.

Yeah.

Speaker 1: Our next question comes from a line of Brady Daily with KBW.

Our next.

Question comes from the line of Brady Gailey with <unk>.

Hey, Thanks, good morning, guys.

Speaker 7: Mind braiding? So the net interest margin guidance for 4Q as far as being down less than 3Q, and that's a pretty wide range just given 3Q down about 25 basis points. Is there any way to tight-gate that range for 4Q? And then how do you think that 4Q will be the bottom in the them? And you could see some expansion next year. Do you think there could be more downside N24?

Good morning Brady.

The net interest margin guidance for <unk> as far as being down.

Sharymar Yepez: Major tenants include recognized national and regional grocery stores, pharmacy, food, and clothing retailers and banks. Our underwriting methodology for CRE includes sensitivity analysis for a variety of seed risk factors like interest rates and their impact over death service, death service coverage ratio, vacancy, and tender retention. Police note that 49% of our CRE portfolio has been hedge by the borrowers via interest rate capture swap, which in turn protects them against rising rate environments.

Less than three two I mean, thats a pretty.

Wide range, just given <unk> is down about 25 basis points is there any way to tighten.

Tight.

At <unk>.

Our range for <unk> and then how did.

Do you think that <unk> will be the bottom.

The NIM and you could see some expansion next year do you think there could be more downside and 24.

Speaker 3: Yeah, Brady, look, I think this is the quarter-right where asset yields kind of top out, I think, deposit costs.

Yes, Brady look I think.

Sharymar Yepez: Next, I'll discuss net interest income and net interest margin on flight 13. Net interest income for the third quarter was 79 million down 5 million or 6% compared to the previous quarter. The decrease was primarily driven by higher average rates on total interest varying liabilities for both total deposits and official B advances and higher average balances of customer time deposits. As rates continue to increase during the quarter, we experience higher beta via the combined effect of rate increases in transactional deposits, reprising up time deposits that had no reprised the current market rate, as well as higher balances and time deposits at current market rates.

This is the quarter rate, where asset yields kind of top out I think deposit costs continue just for competitive purposes look everyone.

Speaker 6: and you just for competitive purposes, look everyone.

Speaker 6: I'd like to say we're putting on the right kind of deposits. You know, we've talked a lot about not just putting on.

I'd like to say, we're putting on the rates kind of deposits.

We've talked a lot about not just putting on.

Speaker 3: you know, and we've run down all that institutional stuff that comes from aggregators.

And we've run down all of that institutional stuff that comes from Aggregators. Our view is that yes of course, there is going to continue to be pressure on funding costs.

Speaker 3: Our view is that, yeah, of course, there's going to continue to be pressure on funding costs. That we certainly think between what we need to offer and what consumers are demanding are going to result in pressure. Whether that...

We certainly think between what we need to offer and what consumers are demanding or is going to result in pressure whether that.

Sharymar Yepez: As you can see in the graph, we observed the beta of approximately 43 basis points on a cumulative basis since the beginning of the interest rate of cycle, but around 104 basis points quarter on quarter compared to 196 in the previous quarter. Moving on to the net interest margin, as Jerry mentioned, name for the third quarter was 3.57%, down by 26 basis points quarter over quarter. This was slightly higher than we had originally guided as we saw lower than expected loan floating during the quarter based on our deposit first and relationship focus lending practices. We expect the margins to continue to be pressured given substantial market competition for domestic deposits and demand for higher rates.

Speaker 3: remains to be seen is that somewhere within the range of much lower to midway, I would tell you right now, expectations are that it's really going to depend on us and our ability to generate more non-interest bearing and frankly even more lower cost international to supplement what we're doing to.

Remains to be seen is that somewhere within the range of much lower to mid way I would tell you right now expectations are that its really going to depend on us and our ability to generate more noninterest bearing and frankly, even more lower cost international.

To supplement what we're doing domestically. So I think it's really going to be something that could be a wide range on that and I think thats why sharing I've not given you something very specific I would just say, it's certainly not going to be as dramatic. The flip side is there is definitely going to be.

Speaker 6: So I think it's really going to be something that could be a wide range on that. And I think that's why Sharon, I have not given you something very specific. I would just say it's certainly not going to be a dramatic. The flip side is, is there...

Sharymar Yepez: I'll provide some additional color and name in my final remarks.

Sharymar Yepez: Moving on to interest rate sensitivity on flight for team, you can see the assistance activity of our balance sheet with 53% over loans having floating rate structures and 52% reprising within a year.

Speaker 6: So yes, I know it's a wide range, but I think that everyone in the market plays. This is the period where level in 24, absolutely, that's our exit.

So, yes, I know its a wide range, but.

No.

I think that everyone in the marketplace. This is the period, where will that level in 2000 and for absolutely that's our expectation.

Sharymar Yepez: As we have said in previous calls, we continue to position our portfolio for a change in rate cycle by incorporating rate floors when originating adjustable loan. So currently, we currently have 51% of our adjustable loan portfolio with floor rates. Additionally, you can see here that within the variable rate loan, 37% are indexed to stilfer. Our name sensitivity profile remains stable compared to the previous quarter. We include the sensitivity of our AFS portfolio to showcase our ability to extend additional negative valuation changes.

Speaker 6: I think we have another quarter of where there's going to be some compression and just it's inevitable just given Mark.

I think we have another quarter of where theres going to be some compression just it's inevitable just given market conditions.

Speaker 7: All right, yeah, that's fair. But I want to make sure I heard you read your comment about the Lone Old as peak. I mean, I know the Lone Old was flat length quarter. And I know your Lone Old, I mean,

Alright.

Fair.

I wanted to make sure I heard your comment about the loan yield Cos peaked.

Our loan yield was flat linked quarter and I know youre alone.

Speaker 7: 6.8% I mean that's you know above average and a great loan yield, but I just wanted to make sure I Understand that dynamic well that the loan yield has peaked because I would have thought there would have been maybe some continued You know especially like CRE loan repricing higher and you could see that yield trip higher, but you're saying you think it's flat come here

Six 8% that's above average and a great one.

Sharymar Yepez: I would like to take a moment to discuss the change in organic improvement in AOCI, which is lower than discussed in previous quarters. Does moderate amount result from revised market expectations regarding easing monetary policy not taking place in the short-term as had been expected earlier in the year? We will continue to actively manage our balance sheet to best position our bank for the remainder of 2023 and looking into 2024.

But I just wanted to make sure I.

Understand that dynamic well, but the loan yield has piece because I would've thought there would have been maybe some continued.

Especially like CRE loan re pricing higher and you could see that yield drift higher but youre, saying you think its flat from here.

Speaker 3: Look, I think our view is the biggest driver in increasing loan yields right has been the fact that we've been in that sort of sensitive organization. And so the positive has been that that's been the bigger driver versus higher rate new production.

Look I think our view is.

Sharymar Yepez: Continuing to life 15, non-interest income and death rate quarter was 22 million, down by 4.7 million or 18% from 27 million in the second quarter of 2023. As a reference earlier, 7 million of non-interest income were non-routine items. The decrease was primarily driven by lower gains on the early extinguishment of official b-advances and lower mortgage banking. This decrease in non-interest income was partially offset by higher loan level derivative income due to higher volume of derivative transactions with clients and the absence of the one of the 1.2 million loss in connection with the sale of one corporate debt security available for sale.

The biggest driver in increasing loan yields right has been the fact that we've been asset sensitive organization and so the positive has been that's been the bigger driver versus higher rate new production year.

Speaker 6: You're absolutely asking the right question, which is, yes, we will have higher rate new production in the fourth quarter. I don't know that that'll be as meaningful and often to make it more than to just give you the view of, hey, it's flatish, maybe it's a better way to say it, as opposed to we think we are going to continue to see improvement in the fourth quarter. Do I believe if we can book three, 400 million of production, that new production, that there'll be some pop, there should be, for sure.

You're absolutely asking the right question, which is yes, we will have higher rate new production in the fourth quarter.

Don't know that that will be is meaningful enough to make it more than just give you. The view of hey, it's flattish maybe is a better way to say it as opposed to we think we're going to continue to see improvement in the fourth quarter. Due I believe if we can book three $400 million of production net new production that there'll be some pop there should be.

Speaker 6: But I still think that the way we're looking at things, there's also some other stuff that'll come off that may have been really part of that at that tentative reprised portfolio, right? So it's really a mixed issue that'll come into play there. But my view is I think we're better off telling you flatish and...

For sure.

But I still think that the way we're looking at things.

Also some other stuff that will come off that.

Sharymar Yepez: The increase of 281 million or 15.5%, primarily driven by net new assets, which were 162 million and higher market valuation.

May have been you know really part of that asset sensitive repriced portfolio right. So.

It's really it's really a mix issue that will come into play there, but my view is I think we're better off telling you flattish in.

Sharymar Yepez: Of note, this week the company approved a restructuring of its Bank of Life Insurance program as we surrendered and reinvest in higher yielding policy, well also increasing team member participation. We expect improved earnings of approximately 2 million per year and future periods.

Speaker 3: give you the positive upside, you know, depending on product.

Give you the positive upside.

Depending on production.

Speaker 7: All right, then the surrendered bully and the $2 million benefit. But was any of that in the 3-key run rate or is that all a positive kind of looking forward?

Alright, and then the surrendered bully and the $2 million benefit was any of that in the <unk> run rate or is that all a positive kind of looking forward.

Sharymar Yepez: Turning to slide 16, third quarter non-interest expenses were 64.4 million down 8 million or 11% from the second quarter. As Jerry covered earlier, we consider 6.3 million of our expenses as non-routine expense items, including these items, core non-interest expenses were 58 million in the third quarter of 2023. The quarter over quarter decreased was primarily driven by the absence of many of the items that were included and secured that were no longer in this quarter, as well as lower advertising expenses resulting from campaigns in connection with our partnerships with professional sporting teams.

Speaker 4: It's a positive looking forward. We expect that yield to materialize fully in 2024 going.

It's a positive looking forward, we expect that yield to materially fully in 2020 for going forward.

Speaker 7: And then finally, for me, just a bigger picture question. I know we have the 1% ROA target out there. You guys were pretty much at that level last year, but not near that level here today this year. And I mean, maybe the industry is not even there either. I know profitability is not a pressure everywhere. But any updated thoughts on timing as far as when you can hit that one ROA.

Sharymar Yepez: And lower professional fees and connection with call center services that are no longer needed as a result of the engagement with FIS and the absence of additional consulting expenses into 2023. The decrease in non-interest expense was partially offset primarily by valuation expenses related to the transfer of the New Year of the New Year's based theory loan from loan health reinvestment to loan health or sale.

Okay, Alright, and then finally for me just a bigger picture question I know we have the.

1% ROA target out there you guys were pretty much at that level last year.

But you know.

Not near that level year to date this year.

I mean, maybe the industry is not even there either either profitability is under pressure everywhere, but any updated thoughts on timing.

Timing as far as when you can hit that one Roy.

Speaker 6: Yeah, look, we absolutely expect to be back on track in 2024. I think with the great additions we've been getting on the team.

Yes look.

We absolutely expect to be back on track in 2024.

I think with the great additions we've been.

Sharymar Yepez: In terms of our team wins the quarter with 700 FT slightly lower from from 710 we had into Q. Out of the 700 members, 602 are employed by the bank and 98 by Amerin Mortgage.

Getting on the team.

Speaker 6: with all the other initiatives we've been talking about.

With all.

All the other initiatives we've been talking about.

Speaker 6: You know, I do want to just comment, you know, as an organization, we've had considerable time, energy, and expense around this core conversion. You know, there's a lot of additional support that is going into this. And, you know, our view is getting this done is going to really clear the runway for us.

I do want to just comment as an organization, we've had considerable time energy and expense around this core conversion.

Gerald Plush: On that note, let's turn to slide 17 which focuses on Amerin Mortgage. On a standalone basis, Amerin Mortgage had a negative PPR of 1.6 million in 3Q23, which was consistent with 2Q results. Our efficiency ratio, excluding the activities from Amerin Mortgage, improved from 64.10% to 62%. During the third quarter, the company originated and purchased approximately 84 million loans through Amerin Mortgage. And as noted on the slide, these are related to the bank's customers and relationships.

There is a lot of additional support that is going into this and our view is getting this done is going to really clear the runway for us.

Speaker 3: as we go into 2024. So I think you have the positive of all these great people that have joined the, in my opinion, an already great team. And you know, you get the production that's going to come from that. You get the conversion passed us.

As we go into 2024, so I think you have the positive of all these great people that have joined in my opinion, an already great team.

And Youll get the production that's going to come from that you get the conversion passed us you.

Gerald Plush: The current pipeline shows 107 million in process or 266 applications as of October 18, 2023 with 84 million in race locks. And to provide some color on our expectations for next quarter regarding rows, we estimate our balance sheet to grow between 250 and 300 million. We foresee deposit growth to continue to be strong. We will use any excess over net loan growth to further reduce higher cost institutional deposits and wholesale funding, including our renewing maturities in 4Q.

Speaker 6: the halo effect of all this great new branding, and it's much more targeted branding, I expect a much stronger 2024. Look, the reality is that also you have to caveat that is that also depends on the economic conditions that go forward in 24. But...

You get the Halo effect of.

All this great new branding and it is <unk>.

Much more targeted branding.

I expect a much stronger 2024 look the reality is that also you have to caveat that is that also it depends on the economic conditions that go forward in 'twenty four but we are doing all the things we can within our control.

Speaker 3: We are doing all the things we can within our control to drive towards making sure that we're back in track in that 1%, 1% plus 12% type of metrics.

To drive towards making sure that we're back on track in that one 1% plus 12%.

Gerald Plush: Given competition for the process, we expect the names to continue to decrease in the fourth quarter, but clearly to a lesser degree than in 3Q. While there are significant maturities of customer time deposits in 4Q, the gap to cover between the average previous rate and the current one is lower. Also, there was a significant emphasis on non interest burden products as noted in this quarter's results, and we intend to continue to pursue additional growth as we onboard new relations, leadership.

Type of metrics that we talked about and as Sherry mentioned in her comments look we're going to have a bumpy fourth quarter first quarter. Just if you looked at a pure efficiency ratio just from.

Speaker 6: And as Sherry mentioned in her comments, look, we're gonna have a bumpy fourth quarter, first quarter, just if you look at a pure efficiency ratio just from, you know, and we're giving you that.

Speaker 6: without trying to exclude those things like they're one time or non-recurring, we're just saying, look, the efficiency's gonna be higher because we have to incur these expenses. So, but the expectation is absolutely to get this place back on track and get back in that 60%, you know, a 60% range of weed. I think we've hit, you know, and then unfortunately it has had the bounce back up.

And we're giving you that without China exclude those things like their one time or nonrecurring. We're just saying look the efficiency is going to be higher because we have to incur these expenses. So.

Gerald Plush: Regarding non-interest income, we expect it to be similar to 3-2 levels. We expect operating expenses to include non-recurring expenses related to the upcoming conversion. Well, we finalize the commissioning services currently utilized after conversion. Note that there are services that must run in parallel with the new FIS systems that will be discontinued throughout 4Q and in 1Q of 2024. Finally, we expect provision for credit losses to be in or around 8-10 million next quarter as we do expect asset growth as I previously mentioned. Oh, no pass-effective areas.

But the expectation is absolutely to get displays back on track and get back in that 60% to 60% range that we I think we've hit and then unfortunately.

Speaker 6: But I also would tell you, Brady, look, we've had a choppy year and I think, you know, because obviously there's been some one-time items. They're in the higher provision. We reported last quarter.

<unk> back up but I also would tell you Brady look we've had a choppy year.

I think because obviously theres been some one time items in the higher provision we reported last quarter.

Speaker 3: We think that we've done a really good job of assessing risk in the portfolio and getting, which is why our reserve coverage is higher. In this quarter, in particular, I do just want to note, we had some elevated charge offs, but we're accelerating our efforts to try and get the NPLs and NPAs offer books.

We think that we've done a really good job of assessing risk in the portfolio and getting which is why our reserve coverage is higher in this quarter in particular I do just want to note. We had some elevated charge offs, but we're accelerating our efforts to try and get the mpls and NPA is off our books.

Gerald Plush: Thanks, Shary. So before I conclude the presentation this morning, I thought first we should give you an update on the upcoming conversion that we mentioned earlier in the call. So here on slide 18, we start with the first thing and the most important. We're still on track for our conversion to FIS, which will take place in early November. Our primary objective is to move to a state-of-the-art core system in modern stack, and this in course will create a simplified and fully integrated ecosystem of applications, and will result in a significant strengthening of cybersecurity and information security infrastructure.

Speaker 3: And so that created some additional noise. I know you comment and on that and you're right up, but our view is it's better to get this stuff done and off the books as fast as possible and get them back into earning status. Get that money back into earning status. That's gonna help too.

And so that created some additional noise.

I know you've commented on that in your write up but our.

Our view is it's better to get this stuff done and off the books as fast as possible and get them back into earning status get that money back into earning status.

That's going to help too.

Okay, great. Thanks sure.

Yep.

Speaker 1: Our next question comes from a line of Stephen Scouton with Piper Sandler.

Gerald Plush: We're very confident in partnering with a well-known and recognized provider and financial services that recently rededicated themselves to focus solely on financial services. And above all things, even though I've listed a couple other items here, we believe that the transition will provide the technological platform that will adequately and exceed the expectations supporting our company's growth.

Our next question comes from the line of Stephen Scouten with Piper Sandler.

Speaker 8: I guess I'd love to kind of touch on credit if we could and kind of

Hey, good morning, everyone.

Hey, Steve.

I guess I'd love to kind of touch on.

Credit, if we could and kind of.

Speaker 8: Maybe if you could give a view for how you think credit costs could kind of stabilize from here and what you would kind of say to investor to get investors to give them some confidence around that. And obviously choppy for the last four quarters and maybe specifically the pace to charge off you might expect from the consumer direct portfolio at this point.

Maybe if you could give a view for how you think credit costs could kind of stabilize from here and what you would kind of stay to investor to get investors to give them some confidence around that and obviously choppy for the last four quarters and maybe specifically the pace of charge offs you might expect from the consumer direct portfolio at this point.

Gerald Plush: We'll turn a physical transformation and give a quick update here on the efforts going on. We've completed the repress of five branches year to date, and I've two more to be completed before your rent. And this will complete our entire network, which is essential for our team members and customers to have the common look and feel of the admiring experience in all locations. We have several new locations in the works in downtown Miami and Los Olis, which is downtown Fort Lauderdale, in Tampa and in San Felipe and River Oaks in the Houston Marketplace.

Speaker 3: Yeah, I think, let me go and backwards. We expect that to improve indirect consumer charge offs on a go-forward basis. I think Sherry made a comment that portfolio, the expectation duration wise, it's getting smaller and smaller every quarter, and maximum two years out before it's completely run off.

Yeah, I think let me go backwards, we expect that to improve indirect consumer charge offs on a go forward basis, I think sheri made a comment that portfolio the expectation duration wise.

Getting smaller and smaller every quarter and maximum two years out before it's completely run off.

Gerald Plush: The consolidation of our Edgewater Florida location will occur here in the fourth quarter, and it will coincide with the opening of our downtown Miami branch. And as we previously announced, we have new regional headquarters currently in process, both in Broward County, so Plantation, Florida, and in Tampa, Florida.

Speaker 3: So that would be the view, yes, that will improve as we move forward. You know, we think we saw an acceleration and now it's it's coming the right.

So that would be the view, yes that will improve as we move forward. We can kris saw an acceleration in knowledge.

Coming to the right direction for us.

Speaker 6: You know, we've had a couple million dollars worth of charges that related, you know, from small business.

We've had a.

A couple of million dollars worth of charges that related.

Gerald Plush: And then we'll turn to give an update on brand awareness. So on this slide, we show the key partnerships we have in place to support and enhance our brand awareness. During the quarter, we announced we entered into a multi-year extension of our partnership with the University of Miami Hurricanes, which comes with significant additional branding opportunities. We also build on our already strong partnership with the Florida Panthers, as we are now the naming rights partner of Amber and Bank Arena in Broward County.

Speaker 3: You know, our view is, you know, that's been a business we've really tightened our credit criteria. It's not actually something we've done as anywhere near the emphasis that have been done in the past.

Small business.

Our view is that's been a business, we've really tightened our credit criteria, it's not actually something we've done is anywhere near the emphasis that had been done in the past and the expectation is there that something we're going to continue to closely monitor but the big thing has been these.

Speaker 3: And you know, the expectation is there that some were going to continue to closely monitor. But the big thing has been these...

Speaker 6: you know of you just saying in the last several quarters there been a bunch of legacy credits yes there was one that was a south Florida credit in the first quarter no question but there been a bunch of these legacy credits and it's one of the reasons why

Are you just saying in the last several quarters there've been a bunch of legacy credits. Yes. There was one that was a south Florida credit in the first quarter no question, but there've been a bunch of these legacy credits and it's one of the reasons why we stepped up and accelerated made the decision to take a haircut on selling this new York creep.

Gerald Plush: We traded back the helmet sponsor rights, which gave us national exposure for much improved regional focus with naming rights. We also view the naming rights of the Broward County-owned arena as a strategic step as part of our recently announced expansion plans there. And please note that we do not expect to increase marketing expense as a result of any of these partnership agreement. You know, the new deal. We believe that these and our other partnerships position, Amerant for unmatched, brand recognition, and business growth in the markets we serve.

Speaker 6: stepped up and accelerated, you know, made the decision to take the haircut on selling this New York Cree property.

Speaker 6: It was the single largest exposure left in the portfolio. Frankly, it's one of the largest single exposures we had in the entire portfolio. And our view was better to...

Property. It was the single largest exposure left in the portfolio frankly, it's one of the largest single exposures. We had in the entire portfolio and our view was better to take that haircut now and get that off the books and as you can see we produced our exposure down to $240 million as a result of that sale and the.

Speaker 6: take that haircut now and get that off the books. And as you can see, we produced our explosion down to 240 million as a result of that sale.

Gerald Plush: So I'll give a couple of closing remarks on where we are today. So if you turn to the last slide, here you can see we're near the end of our transformation phase. We're excited to have the executive leadership team set, and we remain focused on attracting the right people to complement our existing team to achieve our strategic objectives. And I'll note we've continued to add more experienced commercial business development team members here in the fourth quarter.

Speaker 6: And the viewers, we've got a good line of sight into performance on the rest of that portfolio.

Our view is we've got a good line of sight into performance on the rest of that portfolio. So.

Speaker 6: All that being said, you know, look, the crystal ball, you have with this, we think our teams are doing a really good job of staying on top of relationships, you know, following through with no-your-customer, you know, could there be an unexpected, of course, but the view right now is we think we've done a really good job of looking, certainly, at the largest ones, which have created the most noise.

All that being said.

Look the Crystal ball do you you have with this we think our teams are doing a really good job of staying on top of relationships. Following through with know your customer could there be an unexpected of course, but the view right. Now is we think we've done a really good job of looking certainly at the largest ones, which has created the most noise.

Gerald Plush: And as I just mentioned, we're going to be completing the transition to FIS, which will provide the technological platform to support our growth initiatives. And as I also just mentioned, our plan new locations are nearing completion. So banking centers in downtown Miami, Fort Lauderdale, River Oaks, Tampa, our new regional headquarters, much of which will happen either in the fourth quarter of 23 or early in the first quarter of next year. But at the same time, please know that we will be reducing square footage in other corporate locations by sub-leasing or exiting space as an offset.

Speaker 3: But again, there's been a lot. Unfortunately, we have had some significant events around that New York pre-portfolio. And that's no surprise. I think we've played even...

But again.

There's been a lot. Unfortunately, we have had.

Some significant events around that in your <unk> portfolio and that's no surprise I think we've.

Played even more and more attention.

Speaker 8: Yeah, that makes sense. And so I guess, I mean, it sounds like you feel like maybe your pass.

On that one.

Yes that makes sense, so I guess I mean.

It sounds like you feel like maybe your past.

Speaker 8: the lion share the immediate risks. I mean, obviously like you said, we don't have a crystal ball. We don't know what's coming next year, but I mean, 60 some basis points and then it charged us so far this year, 32 last year. If you had to peg a number for 24, kind of somewhere in the middle, or I mean, I guess how do we think about the ability for that to normalize?

The lion's share of the immediate risks I mean, obviously like you said, we don't have a crystal ball, we don't know what's coming next year, but I mean 67 basis points in net charge offs. So far this year 32 last year. If you had to peg a number for 'twenty four kind of somewhere in the middle or I mean, I guess, how do we think about the ability for that to normalize for one yes.

Gerald Plush: And lastly, we're very proud to say that for the second consecutive year, Emory Bank was recognized as one of Newsweek's top 100 most love workplaces. So before we move to Q&A, I just want to take a moment and say thank you again to all of my Emory team members for their dedication, energy, and effort once again in this quarter.

Speaker 3: Yeah, look, our expectation again, these have been the lumpy credits. The ones that we had the most, you know, we'll say place the most time in energy to watch and had concern with. You've now seen come through, right? And if you look at what's in NPLs and NPAs.

Yes look our expectation again these have been the lumpy credits.

Gerald Plush: So with that, I'll stop and Sharon, I will look to answer any questions you have.

The ones that we had the most.

Operator: Operator, please open the line. As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by when we compile the Q&A roster.

We'll say it placed the most time and energy to watch and had concerned with.

You've now seen come through right and if you look at what's in Npls in NPA.

Speaker 6: in the real state-owned portfolio. The two largest pieces of that are based off the New York. And so, you know, the view, yeah, I mean, to the extent we can continue to see paydowns in New York.

And the real estate owned portfolio.

The two largest pieces of that are based off in New York and so the view, yes, I mean to the extent we can continue to see Paydowns in New York, We continue to see and closely monitor that portfolio I think the Lumpiness that's created those charges.

Speaker 3: you to see, you know, in closing manner that portfolio. I think the lumpiness that's created those charges will come down pretty.

Michael Rose: Our first question comes from a line of Michael Rose with Raymond James.

Michael Rose: Hey, good morning, everyone. Hope you're, uh, hope you're doing well. Um, hey, uh, so, good morning. So, so, you know, the, the step down in core expenses was, you know, better than we were kind of looking for. If I annualize that, it obviously set a pretty good tone as we think about next year, just as we think about expenses and understanding the FIS conversion will happen in the fourth quarter. So maybe a little bit of elevation there, but just, just to help us think about expenses near a term and as we think about next year, just given that the transformation efforts are kind of winding down and you're going to begin to reap, I think, you know, more of the rewards from the work that's been done over the past couple of years.

Will will come down pretty significantly probably to the levels that you talked about 33%.

Speaker 4: Probably to the level that you talked about, it's 30.3% range. And Jerry, to add a little bit more color, I'll say, if we look at the charge of conversations with the quarter.

<unk> Rage, and Gary talk a little bit more color also if we look at the charges compensation for the quarter the reduction of eight basis points in the conversion of the reserve it's related to charge offs of previously reserved so that takes the new charge offs closer to 30.

Speaker 4: The reduction of a basis points in the coverage of the reserve, it's related to charge of previously reserved. So that takes the new charge of closer to 30. And when we look into that composition itself, and we specifically will look into the indirect portfolio, we are seeing the behavior of a reduction of charge of starting to take place this quarter. A little bit later within the quarter than what we were expecting, but definitely behavior showing improved.

And when we look into that competition itself and we specifically were looking to the indirect portfolio. We are seeing the behavior of a reduction of charges starting to take place this quarter a little bit later within the quarter than what we were expecting but definitely behavior showing improvement.

Speaker 8: Got it helpful. And maybe moving to the deposit side, Jerry, you noted an international deposit growth for the focus, because you have for a bit now, but that book's been relatively flat. What kind of changes course there, what would allow you to grow it, and any CD maturity coming on that will help on the deposit side at all.

Got it helpful.

And maybe moving to the deposit side.

Michael Rose: Thanks. Yeah, Michael, I, it's Jerry. I'll take that one and Sherry, please add your color commentary. You know, the, the thing that's really important to note is that our expense base will be elevated again. The bulk of that is related to the fact that we're going to be running parallel, right? So I mean, both sets of applications, both the new and existing will be for the quarter. And so, in a lot of respects, that is, you know, from our perspective, something that for the fourth quarter and certainly in part of the first quarter will dissipate, you know, starting no later than the second quarter of next year.

Jerry you noted international deposit growth Okay.

You have for a bit now, but that book has been relatively flat what kind of changes course, there what would allow you to grow it in any.

CD maturity coming on that will help on the deposit side at all.

Speaker 6: Yeah, look, I think the team, you know, it's taken us a couple quarters to get the synergy of the group to sort of get our footing of refocusing on this. Remember.

Yeah look I think the team.

It's taken US a couple of quarters to get the synergy it grew to sort of get our footing of refocusing on this remember.

Speaker 3: We had prior to this year, it really been in maintenance mode there, a combination of stabilizing it back two years ago to coming through the other side of COVID.

We had prior to this year has really been in maintenance mode. There.

Combination of stabilizing it back two years ago to coming through the other side of Covid.

Michael Rose: So, you know, I think Sherry's comments were around, you're going to see an elevation and, you know, in our mind, you know, they're not really going to be part of the core expense base going forward as you'll see the bump up and the decline. Look, I think expenses are something, you know, I'm going to give an overall remark is something that we are going to be continuously working on. And certainly, I hope you could tell with some of the comments that I made that things that we're doing that are new.

Speaker 6: So travel is just resumed. We want to be very cautious and make sure that what we are growing, we have very good KYC, BSA AML in place.

So travel is just resumed we wanted to be very cautious and make sure that what we are growing we have very good ky see BSA AML and place and so I think we've been gaining more and more confidence there.

Speaker 3: And so I think we've been gaining more and more confidence there. I have to remember that the bulk of that portfolio is, customers are using those accounts. So, you know, really the net growth we need to get for this to grow is exactly your question, which is we have to book more new business.

We have to remember that the bulk of that portfolio is customers who are using those accounts. So.

Michael Rose: We are looking to offset them. So, when you think about the marketing expense, you know, doing some of those initiatives and there's other things that we're swapping out are not going to do going forward, not expecting increases. You know, the same thing to be said about the facilities expense, you know, Carlos is working tirelessly with his team on looking at opportunities to pair back. You know, we've talked about things like hoteling, which, you know, frankly, fits really well with, you know, the mostly hybrid work model that we've been using here at AMRA.

Really the net growth we need to get for this to grow is exactly your question, which is we have to book more new business.

Speaker 3: and our expectation is that is in the process of rent.

And our expectation is that is in the process of ramping up.

Speaker 3: And Steve and I apologize. I think your second question was around CD maturities in the quarter.

And Steven I apologize I think your second question was around CD maturities in the quarter.

Speaker 6: Yeah, just curious if there's anything coming that would allow, you know, some of the funding costs pressure to abate at all. Not that other CD costs are going down yet, but just kind of wondering if there's a lot of it would help. I was going to say, you know, I think what Sherry's remarks were is that we look at the delta of what is maturing as to be much closer, right? So these were fairly higher cost maturities this fourth quarter.

Yes, just curious if there's any anything coming that would allow some of the funding cost pressure to abate at all.

I'll, let CD costs are going down yet, but just kind of wondering if there is a yes.

I was going to say.

Michael Rose: So, I would tell you there's a lot of moving parts in and around expenses that, you know, we're going to continue as we know there's an increase and there will be an increase in technology expense. There's no absence or but there are other things we're looking to do to reduce that. And we expect to gain additional efficiencies throughout 2024 as we start to see the benefits of having, you know, what I think is a much better integrated technology stack.

I think with Sherry's remarks, where is that we look at the delta of what is maturing as to be much closer right. So these were fairly higher cost maturities. This fourth quarter. So even if we did a retention we didn't expect significant incremental expense as a result of that.

Speaker 3: So even if we did a retention, we didn't expect significant incremental expanses as a result of that.

Speaker 8: Okay, that's very helpful. And then maybe just last thing for me, sounds like growth is picking back up already this quarter. You said the pipelines are strong. I know, you know, for most of the banks we look at, growth is kind of getting pulled back and people seem a bit more cautious. What kind of gives you confidence in the growth you guys are putting on? Is it new market expansion primarily? That gives you that confidence, or how can you speak to that old?

Okay. That's very helpful. And then maybe just last thing for me it sounds like growth is picking back up already this quarter.

The pipelines are strong I know for most of the banks, we look at growth as kind of getting pulled back when people seem a bit more cautious what kind of gives you confidence.

Gerald Plush: Okay, that's helpful. And then I guess just putting it all together, obviously some headwinds still here on on-rates. But you know, I think as we move through the years, it move through next year, is it fair to assume that we'll hit a point where we start to kind of achieve positive operating leverages that kind of a realistic goals or think about the back half of the year? Thanks. It is, Michael. So when we think about the environment right now, I think there's consensus that we're either at the peak or close to it.

And the growth you guys are putting on is it new market expansion primarily.

Gives you that confidence or how can you speak to that a little bit.

Speaker 6: I have to tell you, I think it shouldn't be lost. We made a big transition in...

I have to tell you I think.

It shouldn't be lost we made a big transition.

Speaker 3: in the team, in some of the composition as a team, particularly on the commercial side this year. And I think that that team is really gaining even more and more footing at this point. We're also expanding that team. I can tell you that we've got five new, strong business development officers that have either started or will be starting, frankly, next week.

And the team and some of the composition of the team, particularly on the commercial side. This year and I think that that team is really gaining even more and more footing. At this point. We're also expanding that team I can tell you that we've got five new.

Gerald Plush: So although there can be different views as to the timing of an inflection point or the speed of a downward trend, irrespective of that, when we think about the maturity that we have, and the gap of pricing that we would cover on those that are subject to repricing, I think it's fair to say that the impact of pressures on the name will be lower in the upcoming quarters, even more noticeable starting in 2024. Yeah.

Strong business development officers that have either started or will be starting frankly next week.

Speaker 3: Here at the organization, we expect we've added in Broward, we've added in Miami-Dade. I think we've had another additional person in the...

Here at the organization, we expect we've added in Broward we've added in Miami Dade I think we've had another additional person.

Gerald Plush: And you know, Michael, I mean, just to add to that, you know, Sherry and I, and obviously the Treasury team and our Alco committee, our asset liability committee, I should have said, meet, and we talk about things, you know, it shouldn't be lost on anyone that the comment I made earlier about a reduction in excess cash, you know, being used when there's virtually no spread. We're continuously looking at ways to, you know, given the rate pressures, the competitive pressures on the deposit side, look for offsets, you know, one of the really encouraging signs though that I think hopefully everyone has this a takeaway, is the jump up in non-interest bearing and our teams are absolutely intended and are actually, you know, starting to deliver more and more of non-interest bearing relationships as part of new relationships and obviously we're going back in existing relationships and trying to see where we can also gain additional share there.

Speaker 6: on the other side in Houston, you know. And so we feel good about what these new team numbers are gonna be able to bring.

The.

On the other side in Houston.

So we feel good about what these new team members are going to be able to bring in addition, right and so every time I talk about another person coming on board you have to kind of think about that as a scorecard.

Speaker 3: And so every time I talk about another person coming on board, you have to kind of think about that as a scorecard of their set of goals, both on the loan and deposit side, that are added to the core base to people that we have. And so, look, I'm of the belief that, you know, this is a time, it's a wonderful opportunity. People like our story, they want to come here, they believe in what we're doing. The execs have done a great job.

<unk> set of goals both on the loan and deposit side that are additive to the core base of people that we have and so look I'm of the belief that this is a this is a time, it's a wonderful opportunity people like our story they want to come here.

They believe in what we're doing.

The exact <unk> has done a great job.

Speaker 3: of, you know, attracting some of these folks as well. And so that to me is what gives confidence around our ability, you know, and of course, I have to say,

Attracting some of these folks as well and so that to me is what gives confidence around our ability and of course.

Speaker 3: You know, we talked about awareness, the awareness levels for this organization just continue to escalate.

I have to say.

We talked about awareness the awareness levels for this organization just continue to escalate.

Speaker 3: Get lots of compliments about it. You know what I'm out in the marketplace and talking with people and I think that halo effect that comes from that

We get lots of compliments about it you know what I'm out in the marketplace and talking with people.

Gerald Plush: So, you know, we're very cognizant, I think it's Sherry said, that at low yields at this stage look like they've somewhat peaked or certainly near the peak, and so it's really incumbent on us on the deposit cost side. And as you could tell, you know, we've only added brokerage and, you know, for duration and liabilities and frankly, those rates are cheaper than even the shorter term stuff that people are paying right now, so that's not as much of a drag as one might think, you know, as you think about the NIM going forward.

Think that Halo effect that comes from that is also extremely helpful. In the consideration set and look we take every single interaction.

Speaker 3: is also extremely helpful in the consideration set. And look, we take every single interaction. You know, I don't wanna beat the drum on this one, very personally. I think that, you know, one of the advantages of banking with a company like ours is the personal interaction. You can get with all levels of management, the attention, the quick return around time.

I don't want to beat the drum on this one very personally I think that one of the advantages of banking with a company like ours is the personal interaction you can get with all levels of management the attention the quicker turnaround times and so your reputation builds as a result of that and that's what gives me confidence that youre going to see growth.

Speaker 8: So your reputation built as a result of that and that's what gives me confidence that you're going to see growth out of our organization in the fourth quarter. That's a really good color. Appreciate the time.

Out of our organization in the fourth quarter.

Great.

Gerald Plush: Very helpful. And, you know, it's good to see just finally for me, just it's good to see, you know, TCE up a little bit, you know, capital up a little bit this quarter. You can, you utilize the buyback, you're still trading below tangible book, so about authorization, just wanted to get your kind of near term thoughts on usage of the buyback from here and just balancing, you know, some of the headwinds that are out there from a capital perspective.

That's really good color I appreciate the time this morning.

Absolutely happy to take care.

Speaker 1: Our next question comes from a line of Fettys Strickland with Janie Montgomery Scott. Okay, now.

Our next question comes from the line of.

Very strict lynde with Janney Montgomery Scott.

Hey, good morning.

Speaker 3: Just wanted to start by clarifying on expenses. Is the court's expense rate you're getting to in the fourth quarter? Is that going to be similar to the 58 million core that we saw this quarter? And then are the FIS charges being the one time item on top of that?

Hey, Patrick.

Just wanted to start by clarifying on expenses is that core expense rate you're guiding to in the fourth quarter is that going to be similar to the $58 million core.

Gerald Plush: Thanks. Yeah, you know, we talk about capital levels all the time, of course, like others do, and our view is that, you know, you need to look at all the tools in the toolkit, certainly buybacks are one of those. Obviously, we've continued, you know, our board approved continuing to pay the dividend, and we like where we are capital-wise, we certainly don't like where we are valuation-wise. I'm sure that, that is agreed upon by everyone, but our view is that we do need some of this capital from a growth standpoint, and so it's going to be a balancing act, and I think, again, that's what's nice about having the full set of tools and not being restricted to just one or the other, right, that we're going to use it all to grow through that we, you know, our view is it's a combination of these things, right?

What we saw this quarter and then are these.

The Fas charges being a onetime item on top of that.

Speaker 6: Yeah, no, we expect what we had said, I think, Sherry and I had talked in part of Quarter Sveday that.

Yes, no. We expect book, we had said I think sheri and I have talked in prior quarters fed a debt.

Speaker 3: You know, the targeting was anywhere between sort of all, call it a 59 and a half to 61ish range.

The targeting was was anywhere between sort of I'll call. It a 59 and a half to 61 ish range.

Speaker 3: And then you're going to see the elevated expense that takes place. Now, fast before we do anything of some of these other additional expense initiatives that I was mentioning earlier, I'd love to give you more color, but I would prefer to just say that what you're going to see in 4Q, right of,

And then youre going to see the elevated expense that takes place now passed before we do anything of some of these other additional expense initiatives that I was mentioning earlier.

I'd love to give you more color, but I would prefer to just say that what youre going to see in <unk> right.

Speaker 3: we'll call it, you know, $56 million, expansive running everything at the same time, is more of an anomaly for the period than it is, you know.

We'll call it $5 6 million dollar expense running everything at the same time.

Gerald Plush: You know, so how we pay on dividend, how we utilize the buyback authorization, how we manage in what our expectations are for growth, and by the way, we're not going to grow for growth, say it's profitable growth, right, it is not going to be that, you know, obviously this is a nice quarter to add back to capital at 22 million, you know, our view is we need to be running in those levels going forward to support, you know, the growth plans that we have, but I mean, I just want you to know, we sort of don't look at one of these things standalone, we look at all of them.

Is it more of an anomaly for the period than it is.

Speaker 6: So that's why when we started to talk about this, we're, yeah, if you peeled it back, we still think our run rate isn't in around that range, but let's be clear. We are going to have in 2024 elevated technology related expense as part of this process that will then was we decommissioned things over time. That's gonna be a continuous improvement exercise for us as an organization. So it will probably, as we said, certainly stay elevated in Q1 at a minimum. Share your animal with you when adding.

So that's why when we started to talk about this where yes, you peeled. It back we still think our run rate is in and around that range, but let's let's be clear we are going to have in 2020 for elevated technology related expense as part of this process that will then was we decommission things over time.

It's going to be a continuous improvement exercise for us as an organization. So it will probably as we said certainly stay elevated in Q1 at a minimum Sherri I don't know if you want to add any color.

Michael Rose: Needless to say, we do agree completely that when you're below book value, that that provides an opportunity to buy back, helpful thanks for all the comments, I'll step back. Okay, thanks.

Speaker 4: It's kind of the effects of running these applications and technology efforts in parallel.

Completely right, it's kind of the effect of running these applications and technology efforts in parallel.

Got it. So then it sounds like over time.

Speaker 3: You can kind of hold that a little more flat as you redeploy some of those cost days as you quit running things and parallel into other technology initiatives and get into other areas of that.

Thank you can kind of hold that a little more flat as you redeploy some of those cost saves to get quick.

Brady Daily: Our next question comes from a line of Brady Daily with KBW. Hey, thanks. Two more to guys. So the net interest margin guidance for 4Q as far as being down less than 3Q, and that's a pretty you know, wide range just given 3Q down about 25 basis points. Is there any way to, you know, type that range for 4Q, and then how do you think that 4Q will be the bottom in the them, and you could see some expansion next year.

Quit running things.

Parallel into.

Into two other technology initiatives, you had ask others the back.

Speaker 6: Yeah, and Fetty and Ferenus, you know, just based off the comment so as making, you know, from the last set of questions.

Yes, and setting in fairness.

Just based on the comments I was making from the last set of questions you have to take into account with us our expectation counter to a lot of other people.

Speaker 6: You have to take into account with us, our expectation counter to a lot of other people is that we're expected.

Speaker 6: grow and it's a combination of we just see good opportunities in the marketplace. So you're going to have a higher, you know, all-coloured earnings base as well that comes into play. So some of that is a direct result of some of these other investments that we're making in people. But I will tell you we're continuously evaluating how as this technology gets deployed that we can better assess our ratio of business development.

We're expecting to continue to grow and it's a combination of we just see good opportunities in the marketplace and so youre going to have.

A higher I'll call it earnings base as well as it comes into play. So some of that is a direct result of some of these other investments that we're making in people, but I will tell you we're continuously evaluating how as this technology gets deployed that we can better assess our ratio of business to be.

Brady Daily: Do you think there could be more downside N24? Yes, Brady. Look, I think this is the quarter right where asset yields kind of top out. I think deposit costs continue just for competitive purposes. Look everyone. I'd like to say we're putting on the right kind of deposits. You know, we've talked a lot about not just putting on, you know, and we've run down all that institutional stuff that comes from aggregators. Our view is that yeah, of course there's going to continue to be pressure on funding costs.

<unk> support.

Speaker 6: Under certain expectations, you're going to see us go into a true continuous improvement mode in 2024.

Understood expectation is youre going to see us go into a true continuous improvement mode in 2024.

Speaker 3: You know, frankly in 2023, it's been all about bringing in some new team members to add additional growth with the vast majority of efforts, you know, again, under the, I'll refer to it as unnoticed and under the surface. There's just been an incredible amount of energy and effort by this team

Frankly in 2023, it's been all about bringing in some new team members to add additional growth, but the vast majority of efforts again under the I'll refer to it as unnoticed and under the surface. There's just been an incredible amount of energy and effort by this team focused on this conversion and.

Brady Daily: You know, that we certainly think between what we need to offer and what consumers are demanding are, you know, is going to result in pressure. You know, whether that remains to be seen is that, you know, somewhere within the range of, you know, much lower to midway. You know, I would tell you right now, expectations are that it's really going to depend on us and our ability to generate more non-interest bearing and frankly even more lower cost international to supplement, you know, what we're doing domestically.

It's a massive undertaking.

Speaker 3: may not quite remember, but we're converting everything. I mean, when I mean everything, everything. And so this is a...

Sometimes people.

May not quite remember, but we're converting everything I mean, when I mean, everything everything and so this is a major major undertaking for our company and we could not be more excited.

Speaker 6: A major, major undertaking for our company and we could not be even more excited.

Speaker 6: for that date in early November to come.

For that date in early November to come and finally get to the point, where yes. We will we will start to see that the pressure will be on making sure. Our customers are okay. We're onboarding, new new business, Okay, and we can get back to really focusing more and more on.

Brady Daily: So I think it's really going to be something that, you know, could be a wide range on that. And I think that's why Sherry and I have not given you something very specific. I would just say that certainly not going to be as dramatic. The flip side is, is there definitely going to be a wide range on that? to be some. So yes, I know it's a wide range, but you know, I think that everyone in the market place, this is the period where will it level in 24?

Speaker 6: finally get to the point where yes we'll start to see that the pressure will be on making sure our customers are okay. We're onboarding new business okay and we can get back to really focusing more and more on, as I said, continuous improvement.

I said continuous improvement efforts.

Speaker 3: Understood. That's helpful. Thanks for the color on that Jerry. And just for such a year's for a moment here, I appreciate the detail and rate sensitivity on the slide 15 of the deck.

Understood. That's helpful. Thanks for the color on that Gerry.

Switching gears for a moment here I appreciate the detail on rate sensitivity on slide 15 of the deck.

Brady Daily: Absolutely, that's our expectation. I think we have another quarter of where there's going to be some compression and just it's inevitable, just given market conditions. All right, yeah, that's fair. I want to make sure I heard you're coming in about the loan yield as peak. I mean, I know the loan yield was flat length quarter. And I know your loan yield, I mean, it's 6.8%. I mean, that's above average and a great loan yield.

Speaker 9: I'm trying to understand that second circle chart. Is that thing 52% of all loans repriced within a year, or is that 52% of fixed rate loans? And the reason I ask is I'm just trying to understand both the dollar amount of the loans repricing and the average picked up you could potentially see in spread as those loans are renewed, kind of going into 2024.

Try to understand that second circle chart is that saying that 52% of all loans re price within a year or is that 52% of fixed rate loans and the reason I ask is I'm just trying to understand.

Brady Daily: But I just wanted to make sure I understand that dynamic well that the loan yield has peaked because I would have thought there would have been maybe some continued. You know, especially like CRE loan repricing higher and you could see that yield drift higher, but you're saying you think it's flat. Come here. Look, I think our view is the biggest driver in increasing loan yields, right, has been the fact that we've been in that sensitive organization.

Both the dollar amount of the loans repricing and the average picked up you could potentially see in spread as those loans are renewed kind of going into 2024.

Speaker 4: Sorry, I'm going back to the slide. So 50 to 47% of our fixed rate loans. differentiate from the real hiring rate loans.

Alright good.

And going back to the slide 50.

52%.

7% over six.

Fixed rate loan.

One quick second.

Sure I'm talking about that second circle chart by repricing term.

Speaker 4: So that's 100% of the portfolio. 100% of the portfolio will be reprising within less than one year. At 42%, 52% of the portfolio will be reprising within less.

Yeah.

Yes, so thats, a 100% of the portfolio, 100% of the portfolio will be repricing within less than one year at 42, 52% of the portfolio will be replacing with the left one.

Brady Daily: And so the positive has been that that's been the bigger driver versus higher rate new production. You're absolutely asking the right question, which is yes, we will have higher rate new production in the fourth quarter. I don't know that that'll be as meaningful enough to make it more than to just give you the view of, hey, it's flatish. Maybe it's a better way to say it, as opposed to we think we are going to continue to see improvement in the fourth quarter.

Speaker 9: Do you have the amount of the six portfolio that's repricing over the next year if you don't that's fine I can follow later? We will be able to provide this.

Do you have the amount of the fixed portfolio. That's repricing over the next year. If you don't that's fine I can follow up later.

We will be able to provide lending.

Great. Thanks for taking my questions guys.

Yep.

Speaker 1: Our next question comes from a line of Matt only with Stephen.

Our next question comes from the line of Matt Olney with Stephens.

Brady Daily: Do I believe if we can book three, four hundred million in production, that new production, that there'll be some pop, there should be for sure. But I still think that the way we're looking at things, there's also some other stuff that'll come off that may have been really part of that at that tentative repriced portfolio. It's really a mix issue that'll come into play there. But my view is I think we're better off telling you flatish and give you the positive upside, you know, depending on production.

Speaker 10: Hey, good morning. This is Jordan on from Matt. I just wanted to get a clarifying question on that NYC loan sale that's going to be taking place today. That I just wanted to get a question or about the additional loss if there is going to be any, given it that fair value. You could just give any color around that. That would be great.

Yeah.

Hey, Good morning, this is Jordan on for Matt.

Scott wanted to get it Claire.

Clarifying question.

On that.

I see loan sale, that's going to be taking place today.

That.

I just wanted to get a.

Question about the additional loss if there is going to be any given that the fair value.

Give any color on that that'd be great.

Speaker 6: Yeah, look, our view was we took a mark on that. It was as obviously pouring what we saw, but I'll let Sherry go ahead. I know it was in her comments.

Yeah look our view was we took a mark.

On that as well as have obviously quarter and what we saw but I'll, let Sherry go head I know it was in her comments.

Brady Daily: All right, then the surrendered bully and the two million dollar benefit. What was any of that in the three key run rate or is that all a positive kind of looking forward? It's a positive looking forward. We expect that yield to materialize fully in 2024 going forward. Okay, and then finally, for me, just a bigger picture question. I know we have the 1% ROA target out there. You guys were pretty much at that level last year, but you know, not near that level here today this year.

Speaker 4: Yeah, so we did take evaluation, evaluation, adjustment at the point of transfer. This was prior to Valenscheet of $5.6 million. In the actual sale that will take place later today, we do expect some loss on sale between $1.82 million to be recorded.

Yeah. So we.

We did take a valuation a valuation adjustment at the point of transfer. This was prior to the balance sheet of $5 6 million in the actual sale that will take place later today, we do expect some loss on sale between $1 million to $2 million to be recorded.

Sorry, what was the number one eight.

Speaker 6: Yeah, it's an on recurring charge and we expect we have an offset, you know, in mind as well. So, you know, our view was look, this was a great move to reduce a, the highest single point exposure we had left. I think it's in a highly volatile segment, you know, of commercial real estate in New York. And our view was we need to move on this because just given.

Yes, it's a nonrecurring charge and we expect.

We have an offset in <unk>.

<unk> as well so.

Our view was look this was a great move to reduce a.

Brady Daily: And I mean, maybe the industry is not even there either. I know profitability is not a pressure everywhere. But any updated thoughts on timing as far as when you can hit that one ROA? Yeah, look, we absolutely expect to be back on track in 2024. I think with the great additions we've been getting on the team with all the other initiatives we've been talking about, you know, I do want to just comment, you know, as an organization, we've had considerable time, energy, and expense around this core conversion.

The highest single point exposure, we had left I think it's in a highly volatile segment.

<unk> real estate in New York, and our view was.

We need to move on this because just given.

Speaker 3: Barkey conditions there, it's better to move on and not take the risk. Particularly, I think there's refinance risk that we come with.

Market conditions there.

Better to move on and not take the risk, particularly I think there's a refinance risk that would come with with some of these deals not just necessarily this one all deals and so our view is this was.

Speaker 6: Some of these deals, not just necessarily this one, all deals. So our view is this was a very proactive move by us to get this done.

A very proactive move by us to get this done and over with.

Brady Daily: You know, there's a lot of additional support that is going into this. And you know, our view is getting this done is going to really clear the runway for us, as we go into 2024. So I think you have the positive of all these great people that have joined in my opinion, an already great team. And you know, you get the production that's going to come from that. You get the conversion past us, you get the halo effect of, you know, all this great new branding, you know, and it's much more targeted branding.

Speaker 10: Understood. Thank you. And then maybe one more question. We talked about that Bully restructure and having a $2 million benefit. But then you also talked about the income kind of staying flat at the $50 million level. Is there anything that's going to be offsetting that $2 million benefit any light item that we should be aware of?

Understood. Thank you and then just.

Maybe one more question you talked about that bully restructure and having a $2 million benefit.

But then you also talked about fee income kind of thing.

Flat.

The $50 million level is there anything thats going to be offsetting that $2 million benefit any line items that we should be aware of.

Speaker 4: Now, the benefit of 2 million dollars that we're expecting out of the structure is moving forward, fully 2024. We're not capturing 100% of that benefited fourth quarter because there's some steps still from an admin perspective that have to take place on the restructure. That's why we're providing guidance closer to the results of the 50 million we had in 3Q. But no, no additional assets that were.

Yeah.

Now the benefit of $2 million that we're expecting out of their structure is moving forward for the 2024, we're not capturing 100% of that benefited fourth quarter. Because there are some that's still from an admin perspective that have to take place under restructure that's why we're providing guidance closer to the results of the $50 million we had in <unk>.

Brady Daily: I expect a much stronger 2024. Look, the reality is that also you have to caveat that is that also depends on the economic conditions that go forward in 24. But we are doing all the things we can within our control to drive towards making sure that we're back in track in that one one percent plus 12 percent, you know, type of metrics that we talked about. And as Shary mentioned in her comments, look, we're going to have a bumpy fourth quarter, first quarter, just if you look at a pure efficiency ratio just from, you know, and we're giving you that without trying to exclude those things like their one time or non-recurring, we're just saying, look, efficiency is going to be higher because we have to incur these expenses.

But no no additional offsets that we're seeing over that.

Speaker 9: So, 2024, if the income's gonna be a bit higher than from that current $15 million level. That's the F for Chisholm, yes. Okay, perfect.

So 2020 for fee income is going to be.

Higher than from the current $15 million level.

That's the expectation yes.

Okay perfect. Thank you for taking my questions I appreciate it.

Absolutely. Thank you.

Speaker 1: That concludes today's question and answer session. I'd like to turn the call back to Jerry Plush for closing remarks.

That concludes today's question and answer session I would like to turn the call back to Jerry flush for closing remarks.

Speaker 3: Thank you everyone for listening in on today's call. We greatly appreciate your interest in Emory. Again, thank you very much and have a great day.

Thank you everyone for listening in on today's call. We greatly appreciate your interest in Ameren again, Thank you very much and have a great day.

Brady Daily: But the expectation is absolutely to get this place back on track and get back in that 60 percent, you know, two 60 percent range. I think we've hit, you know, and then unfortunately, it had the bounce back up. But I also would tell you, Brady, look, we've had a choppy year, and I think, you know, because obviously there's been some one-time items. They're in the higher provision. We've reported last quarter, you know, we think that we've done a really good job of assessing risk in the portfolio and getting, you know, which is why our reserve coverage is higher, you know, and in this quarter in particular, you know, I do just want to note we had some elevated charge offs, but we're accelerating our efforts to try and get the MPLs and MPAs offer books.

Speaker 1: But this concludes today's conference call. Thank you for participating. You may now disconnect.

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

Speaker 11: Bye

Okay.

Yeah.

Yes.

[music].

Brady Daily: And so that created some additional noise. I know you commented on that and you're right up, but, you know, our view is it's better to get this stuff done and off the books as fast as possible and get them back into earning status. Get that money back into earning status. That's going to help too. Okay, great. Thanks, Jerry. Yep.

Brady Daily: Our next question comes from a line of Steven Scouton with Piper Sandler. Hey, good morning, everyone. Hey, Steven.

Steven Scouten: I guess I'd love to kind of touch on credit if we could and kind of maybe if you can give a view for how you think credit costs can kind of stabilize from here and what you would kind of stay to investor to get investors to give them some confidence around that. And obviously, choppy for the last four quarters and maybe specifically the pace of charge offs you might expect from the consumer direct portfolio at this point.

Steven Scouten: Yeah, I think let me go and backwards. We expect that to improve indirect consumer charge offs on a go forward basis. I think Jerry made a comment that portfolio the expectation duration wise, you know, it's getting smaller and smaller every quarter and you know, maximum two years out before it's completely run off. So that would be the view. Yes, that will improve as we move forward. We think we saw an acceleration and now it's...

Steven Scouten: It's coming the right direction for us. You know, we've had a couple million dollars worth of charges that related, you know, from small business. You know, our view is, you know, that's been a business we've really tightened our credit criteria. It's not actually something we've done is anywhere near the emphasis that have been done in the past. And you know, the expectation is there that some we're going to continue to closely monitor.

Steven Scouten: But the big thing has been these, you know, of you just saying in the last several quarters, there've been a bunch of legacy credits. Yes, there was one that was a South Florida credit in the first quarter. No question, but there've been a bunch of these legacy credits. And it's one of the reasons why we stepped up and accelerated, you know, made the decision to take the haircut on selling this New York Creek property.

Steven Scouten: It was the single largest exposure left in the portfolio. Frankly, it's one of the largest single exposures we had in the entire portfolio. And our view was better to take that haircut now and get that off the books. And as you can see, we produced our exposure down to 240 million as a result of that sale. And the view is we've got a good line of sight into performance on the rest of that portfolio.

Steven Scouten: So all that being said, you know, look, the crystal ball you have with this, we think our teams are doing a really good job of staying on top of relationships, you know, following through with no your customer. You know, could there be an unexpected, of course, but the view right now is we think we've done a really good job of looking certainly at the largest ones, which you've created the most noise.

Steven Scouten: But again, you know, that's there's been a lot. Unfortunately, we have had some significant events around that New York Creek portfolio. And, you know, that's no surprise. I think we've, you know, played even more and more attention on that one. Yeah, that makes sense.

Steven Scouten: And so I guess, I mean, it sounds like you feel like maybe you're past the lion share the immediate risks. I mean, obviously, like you said, we don't have a crystal ball. We don't know what's coming next year, but I mean 60 some basis points in charge of so far this year, 32 last year. If you had to pay a number for 24 kind of somewhere in the middle, or I mean, I guess, how do we think about the ability for that to normalize them with.

Steven Scouten: Yeah, look, our expectation again, these have been the lumpy credits, the ones that we had the most, you know, we'll say it placed the most time and energy to watch and had concern with. You've now seen come through, right? And if you look at what's in NPLs and NPAs in the real state on portfolio, the two largest pieces of that are based off the New York. And so, you know, the view, yeah, I mean, to the extent we continue to see pay downs in New York, we continue to see, you know, in closing monitor that portfolio.

Steven Scouten: I think the lumpiness that's created those charges will, will come down pretty significantly, probably to the levels that you talked about in 30.3% range. Yeah, and Jerry, to add a little bit more color, if we look at the charge of compositions for the quarter, the reduction of eight basis points in the coverage of the reserve. It's related to charge of previously reserves. So that takes the new charge of closer to 30.

Steven Scouten: And when we look into that composition itself, and we specifically will look into the indirect portfolio, we are seeing the behavior of a reduction of charge of starting to take place this quarter. A little bit later within the quarter than what we were expecting, but definitely behavior showing improved. Good evening. Got it helpful.

Steven Scouten: And maybe moving to the deposit side, Jerry, you noted an international deposit growth at the focus because you have for a bit now, but that book's been relatively flat. What kind of changes course there, what would allow you to grow it and any CD maturities coming on that will help on the deposit side at all? Yeah, look, I think the team, you know, it's taken us a couple quarters to get the synergy of the group to sort of get our footing of refocusing on this.

Steven Scouten: Remember, we had prior to this year, it really been in maintenance mode there, you know, a combination of stabilizing it, you know, back, you know, two years ago to, you know, coming through the other side of COVID. So travel is just resumed. We want to be very cautious and make sure that what we are growing, we have very good KYC, BSA AML in place. And so I think we've been gaining more and more confidence there.

Steven Scouten: Have to remember that the bulk of that portfolio is customers are using those accounts. So, you know, really the neck growth we need to get for this to grow is exactly your question, which is we have to book more new business. And our expectation is that is in the process of ramping up. And Steve and I apologize. I think your second question was around CD maturities in the quarter. Yeah, just curious if there was anything coming that would allow, you know, some of the funding cost pressure to abate at all.

Steven Scouten: Not that other CD costs are going down yet, but just kind of wondering if there's a demo. I was going to say, you know, I think what Sherry's remarks were, is that we look at the delta of what is maturing as to be much closer, right? So these were fairly higher cost maturities this fourth quarter. So even if we did a retention, we didn't expect significant incremental expenses a result of that. Okay, that's very helpful.

Gerald Plush: And then maybe just last thing for me sounds like growth is picking back up already this quarter. You said the pipelines are strong. I know, you know, for most of the banks we look at growth is kind of getting pulled back and people seem a bit more cautious. What kind of gives you confidence in the growth you guys are putting on? Is it new market expansion primarily? It gives you that confidence or how can you speak to that a little bit?

Gerald Plush: I have to tell you, I think it shouldn't be lost. We made a big transition in the team in some of the composition of the team, particularly on the commercial side this year. And I think that that team is really gaining even more and more footing at this point. We're also expanding that team. I can tell you that we've got five new strong business development officers that have either started or will be starting frankly next week.

Gerald Plush: Here at the organization, we expect we've added in Broward. We've added in Miami-Dade. I think we've had another additional person, you know, on the other side in Houston. And so we feel good about what these new team members are going to be able to bring an addition, right? And so every time I talk about another person coming on board, you have to kind of think about that as a scorecard of their set of goals both on the loan and deposit side that are added to the core base to people that we have.

Gerald Plush: And so look, I'm of the belief that, you know, this is a time, it's a wonderful opportunity. People like our story, they want to come here, they believe in what we're doing. The execs have done a great job of, you know, attracting some of these folks as well. And so that to me is what gives confidence around our ability. And of course, I have to say, you know, we talked about awareness, the awareness levels for this organization just continue to escalate, get lots of compliments about it, you know, what I'm out in the marketplace and talking with people.

Gerald Plush: And I think that halo effect that comes from that is also extremely helpful in the consideration set. And look, we take every single interaction, you know, I don't want to beat the drum on this one very personally. I think that, you know, one of the advantages of banking with a company like ours is the personal interaction you can get with all levels of management, the attention, the quick return around times. And so your reputation built as a result of that. And that's what gives me confidence that you're going to see growth out of our organization in the fourth quarter.

Gerald Plush: That's a really good color. Appreciate the time this one. Absolutely happy to take care.

Freddie Strickland: Our next question comes from a line of Feddie Strickland with Janie Montgomery Scott. Hey good morning. Hey Feddie.

Freddie Strickland: Just wanted to start by clarifying on expenses. Is the court expense rate you're guiding to the fourth quarter? Is that going to be similar to the 58 million core that we saw this quarter, and then are the FIS charges being the one time item on top of that? Yeah, no, we expect what we had said, I think, Shary, and I had talked in prior quarter-svedda that the targeting was anywhere between sort of all, call it a 59 and a half to 61-ish range, and then you're going to see the elevated expense that takes place.

Freddie Strickland: Now, fast before we do anything of some of these other additional expense initiatives that I was mentioning earlier, I'd love to give you more color, but I would prefer to just say that what you're going to see in 4Q, we'll call it $56 million expense of running everything at the same time, is more of an anomaly for the period than it is. So that's why, when we started to talk about this, we're, yeah, if you peeled it back, we still think our run rate is in and around that range, but let's be clear, we are going to have in 2024 elevated technology related expense as part of this process that will then was we decommissioned things over time.

Freddie Strickland: And that's going to be a continuous improvement exercise for us as an organization, so it will probably, as we said, certainly stay elevated in Q1 at a minimum. Shary, I don't know if you want to add any color. No, that's completely right. It's going to be effect of running these applications and technology efforts in parallel. Got it. So then it sounds like over time, you think you could kind of hold that a little more flat as you redeploy some of those costs as you get as you, as you quit running things and parallel into other technology initiatives and get into other areas of the back.

Freddie Strickland: Yeah, and steady and fairness, you know, just based on the comments, those making, you know, from the last set of questions, you have to take into account with us, you know, our expectation counter to a lot of other people is that we're expecting to continue to grow. And it's a combination of we just see a good opportunities in the marketplace. And so you're going to have, you know, a higher, you know, I'll call it our any base as well that comes into play.

Freddie Strickland: So some of that is a director's although some of these other investments that we're making in people, but I will tell you we're continuously evaluating how as this technology gets deployed that we can better assess our ratio of business development and support.

Gerald Plush: The conversation is you're going to see us go into a true continuous improvement mode in 2024, you know, frankly in 2023, it's been all about bringing in some new team members at additional growth with the vast majority of efforts, you know, again, under the offer for to it is unnoticed and under the surface, there's just been an incredible amount of energy and effort by this team focused on this FIS conversion. And it's been massive undertaking, you know, sometimes people may not quite remember, but we're converting everything.

Gerald Plush: I mean, when I mean everything, everything. And so this is a major, major undertaking for our company and we could not be even more excited for that date in early November to come, and finally get to the point where, yes, we'll start to see that the pressure will be on making sure our customers are okay, we're onboarding new business okay, and we can get back to really focusing more and more on, as I said, continuous improvement efforts. Understood, that's helpful. Thanks for the color on that, Jerry.

Freddie Strickland: Just for such a years for a moment here, I appreciate the detail and rate sensitivity on slide 15 of the deck. I'm trying to understand that second circle chart. Is that thing 52% of all loans repriced within a year, or is that 52% of fixed rate loans? And the reason I ask is I'm just trying to understand both the dollar amount of the loans repricing and the average picked up. You could potentially see in spread as those loans are renewed, kind of going into 2024.

Freddie Strickland: Sorry, I'm going back to the slide. So 52% 47% of our fixed or fixed rate loans. One quick second. Sure, I'm talking about that second circle chart by repricing term. Yes, so that's 100% of the portfolio 100% of the portfolio will be repricing within less than one year at 42% of the portfolio will be repricing within less than one. Do you have the amount of the fixed portfolio that's repricing over the next year if you don't, that's fine, I can follow later.

Sharymar Yepez: We will be able to provide later.

Gerald Plush: Great, thanks for taking my questions, Matt. Our next question comes from a line of Matt only with Stevens. Hey, good morning, this is Jordan on from Matt. I just wanted to get a clarifying question on that NYC loan sale that's going to be taking place today. That I just wanted to get a question or about the additional loss if there is going to be any giving it that fair value. If you could just give any color around that, that'd be great.

Gerald Plush: Yeah, look, our view was we took a mark in the on that it was as obviously pouring what we saw, but I'll let Sherry go ahead. I know it was in her comment. Yeah, so we did take a valuation, evaluation, adjustment at the point of transfer. This was prior to balance sheet of 5.6 million in the actual sale that will take place later today. We do expect some loss on sale between $1.82 million to be recorded.

Gerald Plush: Sorry, what was the number 1.8? Yeah, it's an on recurring charge and we expect we have an offset, you know, in mind as well. So, you know, our view was look, this was a great move to reduce the highest single point exposure we had left. I think it's in a highly volatile segment, you know, commercial real estate in New York. And our view was we need to move on this because just give it, and Barkey conditions there. It's better to move on and not take the risk, particularly I think there's refinance risk that we come with some of these deals, not just necessarily this one, all deals.

Sharymar Yepez: And so our view is this was a very proactive move by us to get this done and over with. I understand. Thank you.

Sharymar Yepez: And then maybe one more question. We talked about that bully restructure and having a $2 million benefit, but then we also talked about the income kind of staying flat at the $15 million level. Is there anything that's going to be offsetting that $2 million benefit, any light item that we should be aware of? No, the benefit of $2 million that we're expecting out of the restructure is moving forward fully 2024. We're not capturing 100% of that benefited fourth quarter because there's some step still from an admin perspective that have to take place on the restructure.

Sharymar Yepez: That's why we're providing guidance closer to the results of the $15 million we had in 3Q. But no, no additional assets that we're seeing over that. So 2024, if the income's going to be a bit higher than from that $15 million level? That's the expectation, yes. Okay, perfect. Thank you for taking my questions. I appreciate it. Absolutely. Thank you.

Gerald Plush: That concludes today's question and answer session.

Gerald Plush: I'd like to turn the call back to Jerry Plush for closing remarks. Thank you everyone for listening in on today's call. We greatly appreciate your interest in Emory.

Operator: Again, thank you very much and have a great day. This concludes today's conference call. Thank you for participating.

Operator: You may now disconnect.