Q3 2023 Premier Financial Corp Earnings Call
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Good morning, and welcome a Premier Financial Corp, third quarter earnings Conference call. My name is Ellen and I'll be the operator of states cool during the presentation, all participants will be in listen only mode.
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Operator: Please[inaudible] at PremierFinCorp.com. Following our prepared comments on the company's strategy and performance, we will be available to take your questions.
Please note that this event is being recorded I would now like to turn the call a well to putting that with Premier Financial Corp.
Please go ahead whenever you're ready.
Thank you good morning, everyone and thank you for joining us for today's third quarter 2023 earnings Conference call.
This call is also being webcast and the audio replay will be available at the Premier Financial Corp website at Premier Fin Corp Dot com.
Following our prepared comments on the Companys strategy and performance, we will be available to take your questions.
Before we begin I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward looking statements related to future financial results and business operations for Premier Financial Corp.
Actual results may differ materially from current management forecast and projections as a result of factors over which the company has no control.
Information on these risk factors and additional information on forward looking statements are included in the news release and in the company's reports on file with the Securities and Exchange Commission.
Ill turn the call over to Gary for his opening comments.
Thank you Paul and good morning, Thank you all for joining us.
On behalf of the Premier team I'm pleased to announce third quarter earnings of $24 $7 million or <unk> 69 per share results were in line with our expectations for the quarter represents a favorable performance versus consensus expectations.
Net income was up by $5 million or 2% on a linked quarter basis.
Posted an ROA of one 4% and our return on average tangible equity came in at 15, 6% for the quarter.
Top two quarter two results with net interest income up 2% on an annualized basis and net interest margin improving slightly versus the prior quarter.
Year to date loan growth stands at 4% and our average loan growth for the quarter was up two 9% on an annualized basis and that was a bit better than we.
We had anticipated.
C&I originations were 40% of the third quarter commercial commitments commercial line utilization rate is at a two year low point.
Our clients are using their excess cash to pay down their loan positions cut.
Customer deposits close that five 6% for the quarter on an annualized basis.
Business deposit growth, leading the way climbing 11% annualized for the quarter.
From a credit perspective loan delinquency declined on a linked quarter basis, and we finished the quarter in a net recovery position of 300 plus thousand dollars.
The non accrual category was up slightly due to a single commercial C&I credit nothing systemic to report.
We did see an increase in the special mentioned category driven by two loans, one C&I loan the other multifamily each loan is performing and the required adjustments expected are to be.
I expect it to be achievable.
We have strong guarantors in each situation.
Non owner occupied office exposure was down seven 5% on a linked quarter basis coming in at just under $208 million Premier benefits from a relatively low concentration in this category and the portfolio has low re lease and re pricing risk.
Operator: Before we begin, I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward looking statements related to future financial results and business operations for Premier Financial Corp. Actual results may differ materially from current management forecasts and projections as a result of factors over which the company has no control. Information on these risk factors and additional information on forward looking statements are included in the news release and in the company's reports on file with the Securities and Exchange Commission.
We had a strong Q3 for fee income, we were up 334000 or two 6% on a linked quarter basis, when adjusting for insurance revenue.
Wealth management and deposit related fee income was up 11, 3% and six 1% respectively versus Q3 of the prior year.
Residents for mortgage fee income totaled $3 3 million and that was up 14% on a linked quarter basis. The gain on sale margin improved and hedges in place to support the construction commitments benefited from the rising rate environment.
Operator: I'll turn the call over to Gary for his opening comments.
Our cost reduction efforts continue to pay off our efficiency ratio improved to 56, 5% for the quarter Premier has always maintained a very low cost basis per earning asset ratio.
Gary Small: Thank you, Paul.
Gary Small: Good morning. Thank you all for joining us.
Gary Small: On behalf of the Premier team, I'm pleased to announce their quarter earnings of $24.7 million or $69 per share. Results were in line with our expectations for the quarter and represents favorable performance versus confidence with expectations. Coordinate income was up a half million dollars or 2 percent on a linked quarter basis. We posted in our array of 1.14 percent and our return on average tangible equity came in at 15.6 percent for the quarter.
And as a result.
We are about 30% 30.
<unk> 30 basis points, I should say lower than our peers on that factor and thats really helping to offset our current margin challenges.
Our low cost structure will serve as the springboard for performance when combined with a more typically yield curve in the future.
We've recently launched a new digital banking platform, improving our mobile and online banking capabilities has great. New features and services provides a better omnichannel experience for our clients to consumer platform is in place and a new small business banking digital platform is coming onboard in early 'twenty for each app.
Gary Small: EPS topped quarter two results with net interest income of 2 percent on an annualized basis and net interest margin improving slightly versus the prior quarter. Here-to-date loan growth stands at 4 percent and our average loan growth for the quarter was up 2.9 percent on an annualized basis and that was a bit better than our we had anticipated. CNI originations were 40 percent of the third quarter commercial commitments. Commercial line utilization rate is at a two-year low point.
It's a great deal of use and flexibility relative to future digital enhancements additional middleware et cetera, our consumer clients have been clamoring for digital improvements and the new product has been well received 88% of our active users converted in just the first week the.
Gary Small: Our clients are using their excess cash to pay down their loan positions. Customer deposits closed at 5.6 percent for the quarter on an annualized basis with a business deposit growth leading the way climbing 11 percent annualized for the quarter. From a credit perspective, loaned a link on fee declines on a length quarter basis and we finished the quarter in a net recovery position of $300 plus $1000. The non-accrual category was up slightly due to a single commercial CNI credit, nothing systemic to report.
Our system really delivers.
In combination with our recent enhancements to our Treasury management integrated payment product set we're really well positioned to drive additional deposit growth going forward.
Consumer clients as a whole are working deposits down although balances are still above 2019 levels.
And we see no issues at this time on the consumer credit front.
Clients are maintaining a conservative position some slowing on expansion thoughts as rate and economic conditions vacillate.
We have little to no exposure and the challenge to the challenges facing the big three auto group or significant suppliers. There are plants within our markets that have been affected but each market tends to be well diversified industry wise and we all look forward to an amicable contract resolution.
Gary Small: We did see an increase in the special mention category driven by two loans, one at CNI along the other multi-family. Each loan is performing and the required adjustments expected are expected to be achievable. We have strong guarantors in each situation. None of our occupied office exposure was down 7.5 percent on a length quarter basis coming in at just under $208 million. Premier benefits from relatively low concentration in this category and the portfolio has low release and repricing risk.
We have good commercial opportunities throughout our markets and a number of regional and community banks are on the sidelines, we are expecting to capitalize on these opportunities selectively.
And now I'll turn it over to Paul for more details. Thank.
Thank you Gary I'll begin with the balance sheet, where total deposits increased by four 1% point to point annualized primarily due to customer deposits that increased five 6% annualized with.
Gary Small: We had a strong Q3 for fee income. We were up 304,000 or 2.6 percent on a length quarter basis when adjusting for insurance revenue. Wealth management and deposit related fee income was up 11.3 and 6.1 percent respectively versus Q3 of the prior year, residents from mortgage fee income total $3.3 million dollars and that was up 14% on a link for the basis. The gain on sale margin improved and hedges in places to support the construction commitments benefited from the rising rate environment.
We did continue to experience an impactful mixed migration during the quarter, including decreases in savings demand in noninterest bearing deposits.
Which were more than offset by increases in time and public fund deposits as customers keep seeking higher yields.
On the other side total, earning assets to count declined primarily as we allowed securities and other earning assets to rollout.
Our loan to deposit ratio improved by 110 basis points, and we were able to reduce higher cost wholesale funding by $137 million due to the combination of strong customer deposit growth and modest earning asset contraction.
Gary Small: Across reduction efforts continue to pay off our efficiency ratio improved to 56.5% for the quarter. Premier has always maintained a very low cost basis per earning asset ratio. And as a result, we are about 30% 30 basis per month. I should say lower than our peers on that factor. And that's really helping to offset our current margin challenges.
Gary Small: Our low cost threshold will serve as a springboard for performance when combined with a more typically yield curve in the future.
As a result of these balance sheet changes plus having a full quarter benefit from the swaps. We executed in June net interest margin stabilized and actually eked out a one basis point increase for <unk>.
Total interest bearing deposit costs increased 47 basis points to 254% for <unk>, which was primarily due to the mixed migration I mentioned earlier.
Gary Small: We've recently launched a new digital banking platform improving our mobile and online banking capabilities. It has great new features and services, provides a better omni channel experience for our clients. The consumer platform is in place and a new small business-making digital platform is coming on board in early 24. Each has a great deal of ease and flexibility relative to future digital enhancements, additional metalware, etc. Our consumer clients have been clamoring for digital improvements and the new product has been well received.
Total average customer deposit costs in September, including noninterest, but excluding broker deposits and mark accretion or 185%.
This represents a cumulative beta of 32% up from 28% in June.
Compared to the change in the monthly average effective federal funds rate, which increased 525 basis points from December 2021% to 533%.
Gary Small: 88% of our active users converted in just the first week system really delivers. In combination with our recent enhancements to our treasury management integrated payment product set, we're really well positioned to drive additional deposit growth going forward. Consumer clients as a whole are working deposits down, although balances are still above 2019 levels. And we see no issues at this time on the consumer credit front. Commercial clients are maintaining a conservative position.
Net interest margin was positively impacted by the combination of previous loan growth and higher loan yields which were five 2% up 26 basis points from the prior quarter.
Excluding the impact of PPP and marks loan yields were five 7% in September 2023 for an increase of 126 basis points since December 2021.
This represents a cumulative beta of 24% compared to the change in the monthly average effective federal funds rate for the same period.
Gary Small: Some slowing on expansion thoughts as rate and economic conditions facilitate. We have little to no exposure to the challenges facing the big three auto group or significant suppliers. There are plans within our markets that have been affected, but each market tends to be well diversified, industry-wise, and we all look forward to an amicable contract resolution. We have good commercial opportunities throughout our markets and a number of regional and community banks are on the sidelines.
Next excluding insurance commissions and the insurance agency gain on sale last quarter noninterest income increased two 6% to $13 $3 million in <unk>.
This increase was primarily due to mortgage banking income were gains increased 342000 from last quarter, primarily due to better margins.
Excluding transaction costs for the <unk> agency sale last quarter expenses of $38 1 million were down $2 8 million or 7% on a linked quarter basis.
Paul Nungester: We are expecting to capitalize on these opportunities selectively, and I'll turn it over to Paul for more details.
The combination of successful cost saving initiatives implemented to date and the insurance agency sale, we have already reduced our expense run rate by 11% to $152 million annualized from our beginning of the year estimate of $170 million.
Paul Nungester: Thank you, Gary. I'll begin with the balance sheet. We're total deposits increased by 4.1% point to point annualized. Primarily due to customer deposits that increased 5.6% annualized.
Provision for the third quarter was a net benefit of $773000, which was comprised of a $1 million benefit on our $75 million linked quarter decrease in unfunded commitments and a 245000 expense for loans.
Paul Nungester: We did continue to experience an impactful mixed migration during the quarter, including decreases in savings demand and non-interest bearing deposits, which were more than offset by increases in time and public fund deposits as customers keep seeking higher yields. On the other side, total earning assets declined primarily as we allow securities and other earning assets to roll off. Our loan to deposit ratio improved by 110 basis points, and we were able to reduce higher cost wholesale fundings by 137 million due to the combination of strong customer deposit growth and modest earning asset contraction.
Provision expense for loans was the net result of a $12 million decrease in balances.
Net recoveries of 347000, and a one basis point increase in the allowance coverage ratio to one 4% or one 7%, including an accretive acquisition marks.
We are pleased with our performance in the third quarter, including core deposit growth and a stabilized interest margin.
Paul Nungester: As a result of these balance sheet changes, plus having a full quarter benefit from the swaps we executed in June, net interest margins stabilized and actually eaked out a one basis point increase for 3Q. Total Interest Baring Deposit Cost Increased 47 Basis Points to 2.54% for 3Q, which was primarily due to the mixed migration I mentioned earlier. Total Average Customer Deposit Cost In September, including non-interest, but excluding broker deposits and marks accretion, or 1.85%.
Excluding the impact of the fixed sale into Q net income increased $5 million or 2% on a linked quarter basis for a one 4% return on average assets and core EPS increased a penny to 69.
That completes my financial review and I'll turn the call back over to Gary for some closing remarks.
Thank you, Paul and I'll share some guidance thoughts for the remainder of the year.
Earning assets will see loan growth offset by securities Roll Downs, and I would expect about 1%, but with an improved yield on the average earning assets.
Paul Nungester: This represents a cumulative beta of 32% up from 28% in June. Compared to the change in the monthly average effective federal funds rate, which increased 525 basis points from December 2021 to 5.33%. Net Interest Margin was positively impacted by the combination of previous loan growth and higher loan yields, which were 5.12% up 26 basis points from the prior quarter. Excluding the impact of PPPM marks, loan yields were 5.07% in September 2023 for an increase of 126 basis points since December 2021. This represents a cumulative beta of 24%, compared to the change in the monthly average effective federal funds rate for the same period.
Expect moderate deposit growth throughout year end and the one to one 5% category.
Margin perspective expect continued stability, we've been very good for six months in a row at keeping a small.
Bandwidth on that.
Loan repricing and new business originations offsetting deposit mix movement, there was a small Q3 tailwind.
And we could see Q4 down 2% to four basis points.
No absolute certainty around that.
Expect to continuation of fee income trajectory strong wealth and deposit fees consistent with the third quarter results fourth quarter mortgage income is likely to be more in keeping with the forecast we provided on our last call somewhere in the $1 $5 range.
Paul Nungester: Next, excluding insurance commissions and the insurance agency gained on sale last quarter, non-interest income increased 2.6% to 13.3 million in 3Q. This increase was primarily due to mortgage banking income, or gains increased 342,000 from last quarter, primarily due to beta margins. Excluding transaction costs for the insurance agency sale last quarter, expenses of 38.1 million were down 2.8 million or 7% on a link quarter basis. Through the combination of successful cost saving initiatives implemented today and the insurance agency sale, we have already reduced our expense run rate by 11% to 152 million annualized from our beginning of the year estimate of 170 million.
The expense run rate will be similar to Q3 at $38 million.
From a credit perspective, no projected change, although we see the potential for a moderate favorable movement in mpls.
Fourth quarter provision will benefit and will continue to benefit from the lower level of unfunded construction commitments. We are nearing the more normalized run rate for the unfunded position.
Still see full year net charge offs contained to a five to eight basis point range and we consider this.
Keeping a conservative.
I would like to add a comment on the performance of the organization over the past seven quarters Premier has delivered an average quarterly EPS over the past seven quarters of <unk> 68, a share and thats, excluding the favorable impact of the person assurance group sales in the second quarter.
Paul Nungester: Provisioned for the third quarter was a net benefit of $773,000, which was comprised of a $1 million benefit on a $75 million link quarter decrease in unfunded commitment and a 245,000 expense for loans. Provisioned expense for loans was the net result of a $12 million decrease in balances, net recoveries of $347,000, and a one basis point increase in the allowance coverage ratio to 1.14%, or 1.17% including unacreated acquisition marks.
This consistent delivery of earnings and capital over a tumultuous period for the banking industry performance is a direct reflection of premier's team's determination and commitment to making adjustments as needed making difficult decisions and balancing near term performance and long term value creation objectives for our.
Holders that performance commitment runs through this organization as part of our DNA and we are driven to positioning premier to return to being a top quartile performing.
Paul Nungester: We are pleased with our performance in the third quarter, including quarter-posit growth and a stabilized interest margin. Excluding the impact of the fixed sale in 2Q, then income increased a half million dollars, or 2% on a link quarter basis for a 1.14% return on average assets, and QORIPS increased the penny to 69 cents.
Organization and you can count on it.
And with that said I'll be happy to take all questions.
Thank you we will now enter all Q&A session.
Linda if you would like to ask a question. Please press star one telephone keypad direct to your question.
Paul Nungester: That completes my financial review and I'll turn the call back over to Gary for some closing remarks.
Your question. Please ensure that your line is on mute.
Gary Small: Thank you, Paul. I'll share some guidance thoughts for the remainder of the year. Earning assets will be loan growth offset by securities roll down, and I would expect about 1%, but with an improved yield on the average earning assets. Expect moderate deposit growth throughout your end in the one to one and a half percent category. Marge from perspective expect continued stability. We've been very good for six months in a row at keeping a small bandwidth on that.
Our first question today comes from Michael Perito from <unk>, Michael Your line is now law from please proceed.
Hey, Hey, Gerry Hey, Paul how are you guys doing.
Good morning, Mike good to hear from you.
Good Yeah same store couple of margin questions I wanted to spend a minute on it obviously it was good to see the stabilization again.
I guess two questions number one.
Like pure incremental here like incremental blended loan yield incremental blended deposit costs, what's kind of the spread that you are putting new stuff on today is just above the $2 73 level.
Gary Small: Loan reprising and new business originations offsetting deposit mixed movement. There was a small Q3 tailwind, and we could see Q4 down two to four basis points. No absolute certainty around that. I expect a continuation of fee income trajectory, strong wealth and deposit fees consistent with the third quarter results. Fourth quarter mortgage income is likely to be more in keeping with the forecast we provided on our last call, somewhere in the million and a half dollar range.
And do you expect that to change up or down kind of near term here and then second question just as we think about 2024 realize you're not providing guidance yet, but just curious about kind of what the fixed rate asset maturation schedule looks like for next year and if there's maybe some tailwind for some kind of CRE type stuff and maybe some.
Investments to kind of reprice higher that had been lagging the funding costs over the balance of this year. Thank you.
Gary Small: The expense run rate will be similar to Q3 at $38 million. From a credit perspective, no projected change, although we see the potential for a moderate favorable movement in MPLs. Fourth quarter provision will benefit or continue to benefit from the lower level of unfunded construction commitments. We are nearing the more normalized run rate for the unfunded position. Still see full year net charge off contained to a five day basis point range and we consider this keeping it conservative.
Mike I'll take the first part of the question and Paul will have a second.
You mentioned, the $2 75 number new business going on or the business, it's free pricing as it comes around adjustable rate stuff.
It is on at 275% or north of our most expensive incremental.
Funding base, which we would view as the $5 30 sort of figure.
If you were to look at our commercial book generally everything is starting with an eight to look at our retail book, we have things that <unk> intends on them relative to some of the consumer book.
Gary Small: I would like to add a comment on the performance of the organization over the past seven quarters. Premier has delivered an average quarterly EPS over the past seven quarters of 68 cents to share. And that's excluding the favorable impact of the first insurance group sale in the second quarter. This consistent delivery of earnings in capital over a tumultuous period for the banking industry performance. If the direct reflection of Premier's team, determination and commitment to making adjustments has needed making difficult decisions and balancing near-term performance and long-term value creation objectives for our shareholders. That performance commitment runs through this organization as part of our DNA and we're driven to position in Premier to return to being a top four tile performing organization and you can count on it.
Gary Small: With that said, I'll be happy to take all questions. Thank you.
So.
It is repricing higher than new business going on is going higher and theres more floating rate going on which kind of.
They'll get floater, plus 300 gets you north of eight.
That would be that would be the story.
Yes, Mike and I'll take the second one there in terms of the re pricing that we're looking to get in 2024 I believe it was your question there.
We don't have a lot coming up.
Got a kind of modest level.
Between the adjustable booked which.
It comes up on their normal five year kind of cycle and then the two.
Fixed staff with.
Scheduled maturities and bullets coming up we've probably got maybe up to 10% in.
In total that would be rolling next year between those two buckets.
Operator: We'll now enter our P&A session. As a reminder, if you'd like to ask a question, please press star. Will it by one in your telephone keypad? So I'd show question. I'm prepared to ask your question. Please ensure that your line is unmuted locally.
So we're not expecting a lot of.
Lift out of that we will get some obviously and that could ask.
Accelerated if.
Customers.
For whatever reason looking for some refis or what have you.
Michael Perito: Our first question, say, comes from Michael Prieto from KBW. Michael, your line is now open. Please proceed. Hey, hey Gary here Paul. How are you guys doing? Good morning Mike. Good to hear from you. Good. Yeah, same.
But we're not anticipating a major lift from that so similar trends to what <unk> been seeing here recently, Mike should continue on that piece of it.
Okay.
So I mean, all else equal if rates kind of stay where they are.
Gary Small: Just a couple of margin questions I wanted to spend a minute on. It obviously was good to see the stabilization again. I guess two questions. Number one, like pure incremental here, like incremental blend and loan yields, incremental blend at deposit cost. What's kind of the spread that you're putting new stuff on today? Is it above the 273 level? And did you expect that to change up or down kind of near term here?
It doesn't sound like there should be much more compression.
Actually quarter to quarter things always bounce around a little bit but over like a multi quarter period. It sounds like you guys think most of the compression is behind you based on where incremental spreads are.
So maybe additional although modest.
Maturities next year that should reprice higher do you think that that's fair or do you think it still pays to be more conservative than that on the outlook.
Gary Small: And then second question, just as we think about 2024, I realize you're not providing guide yet. But just curious about kind of what the fixed rate asset maturation schedule looks like for next year. And if there's maybe some tailwind for some kind of CRE type stuff, then maybe some investments to kind of reprise higher that have been lagging the funding costs over the balance of this year. Thank you. Mike, I'll take the first part of the question and pause for a second.
Well, we cautioned ourselves not to not to.
To say, we're at the trough yet we'd like to see it for a couple of quarters, but I think your characterization is about right. It's certainly if were not there we can see it from here, but that combination of what we will reprice.
And what we also have booked that amortize off and on the commercial side is about $400 million a year, what it's going to be replaced with the new business again as of the date. So between the repricing of the what's staying on the book and the new stuff coming on.
Gary Small: You mentioned the 275 number new business going on, or the business that's repricing as it comes around, or just will rate stuff, is on at 275 or north of our most expensive incremental funding base, which we would use the 530 sort of figure. If you were to look at our commercial book, generally everything is starting with an eight. If you look at our retail book, we have things that have nines and pens on them, but on our relative, of the Consumer Book.
It will have a favorable impact.
Versus this year, where we've had less coming on purposely at the new rate because.
We were at 20% growth over last year, So we did pull in or.
Our sales a little bit we will be letting it out a bit next year back to the comment, but theres market, there and we will be back in the market in a more normal way. So I think if it is going to.
Gary Small: So it is reprising higher and new business going on is going higher and there's more floating rate going on, which kind of gets floater plus 300 gets you north of a, that would be, that would be the story.
That direction.
Yes.
Thats fine it'll are favorable.
Great. Thanks, and that dovetails into my next question and I'll step back just on.
You mentioned kind of north of eight on incremental blended commercial loan yields.
Gary Small: Yeah, Mike and I'll take the second one there in terms of the reprising that we're looking to get in 2024, I believe was your question there. We don't have a lot coming up. We've got a kind of modest level, you know, between the adjustable book, which, you know, comes up on their normal five-year kind of cycle. And then the two fixed stuff with schedule maturities and bullets coming up, you know, we've probably got maybe up to 10% in total that would be rolling next year between those two buckets.
I guess as we look in the pipeline here and maybe.
The early part of next year, because just because who knows with the latter part will look like but.
I guess two part question I guess, how what's your appetite for growth here I mean, we've seen a lot of banks kind of pull back a bit with the liquidity environment being what it is I'm just curious I mean, it sounds like you expect a little earning asset remix based on your guide in the fourth quarter. So it sounds like some positive loan growth, but curious if you could go a layer deeper there and then secondly like within.
Within your customer base I mean, I think in your prepared remarks on the release, Gary you might have mentioned some C&I utilization going down I mean, how much appetite is there for north of 8% commercial credit in the current market today up from the customer perspective.
Gary Small: So we're not expecting a lot of lift out of that. We'll get some, obviously, and that could accelerate if, you know, customers are for whatever reason looking for some refi or what have you, but we're not anticipating a major lift from that. So similar trends to what you've been seeing here. Recently, Mike should continue on that piece of it. Okay. So I mean, all else equal, if rates kind of stay where they are, you know, it doesn't sound like there should be much more compression.
I hesitate to use the word pricing power, but theres enough folks on the sidelines.
Deal works and the pricing is reasonable.
You can get the terms youre looking for.
So I think at this point.
Very achievable.
Okay Alright.
Alright, guys I appreciate it I'll, let someone else jump in thanks.
Gary Small: Yeah, I mean, obviously quarter to quarter of things when we bounce around a little bit, but over like a multi-quarter period, it sound like you guys think most of the compression is behind you based on where incremental spreads are. And, you know, so maybe additional, although modest, you know, maturities next year, that should reprise higher. You think that's fair or do you think it still pays to be more conservative than that on the outlook?
Thanks, Mike.
Thank you as a reminder, <unk>. Your question. Please press star followed by one on your kind of thank you Todd, we'll just pause for a moment.
Remaining question.
Okay.
Gary Small: Well, we caution ourselves not to say we're at the trough yet. We'd like to see it for a couple of quarters, but I think there's characterizations about right. Certainly, if we're not there, we can see it from here. But that combination of what we'll reprise and what, we also have books that amortize us off. And from the commercial side, that's about 400 million a year. What it's going to be replaced with, the new business, again, is with AIDS.
Question is from the line so Gary I'll hand back to you for any closing remarks.
Well again I. Thank you all for your interest and feel.
Feel free to reach out with any additional questions that might develop and look forward to having great conversation next quarter. Thank you all.
That concludes today's conference call. Thank you O'brien joining you may now disconnect your lines have a good day.
Gary Small: So between the repricing of the, what's staying on the book and the new stuff coming on, it will have a favorable impact versus this year where we've had less coming on purposefully at the newer rate because we were at 20% quarter last year. So we did pull in our sales a little bit. We'll be letting it out a bit next year back to the comment, but there's market there. We'll be back in the market in a more normal way. So I think if it's going to, that's fine. It'll ever favorable. Great. Thanks.
Yeah.
Okay.
Okay.
Okay.
Gary Small: And that dog tells me my next question. I'll step back just on, you know, you mentioned kind of north to eight on incremental blended commercial loan yields.
Gary Small: I guess as we look in the pipeline here and maybe just the early part of next year because, because who knows what the latter part will look like, but I guess two part question. I guess how, what's your appetite for growth here? I mean, we've seen a lot of banks kind of pull back a bit with the liquidity environment, being what it is. And so curious to me, it sounds like you expect a little earning asset remixed based on your guide in the fourth quarter or so.
Gary Small: It sounds like some positive one-world book here. So if you go layer deeper there, and then secondly, like within your customer base, I mean, I think if you're prepared remarks on the release, Gary, you might have mentioned some CNI utilization going down. I mean, how much appetite is there for north to eight percent commercial credit in the current market today, all from the customer perspective? I hesitate to use the word pricing power, but there's enough folks on the sidelines, if the deal works and the pricing is reasonable, you can get the terms you're looking for. So I think at this point, that's very achievable. Okay.
Michael Perito: All right, guys. Well, I appreciate it. I'll let someone else jump in. Thanks. Thanks Mark. Thank you.
Operator: As a reminder to register a question, please press star, fill it by one on your telephone. Thank you, Pad.
Operator: We'll just pause for a moment to compile any remaining questions. Okay, there are no further questions in the line.
Gary Small: So Gary, I'll hand back to you for any closing remarks. Again, I thank you all for your interest and feel free to reach out with any additional questions that might develop and look forward to having a great conversation next quarter. Thank you all.
Operator: That can be today's conference call. Thank you all very much for joining me now. This connects your lines.
Operator: Have a great rest of your day.