Q3 2024 S&T Bancorp Inc Earnings Call

Welcome to the S&T Bang Corps 3rd quarter, 2024 conference call. After management remarks, there will be a question and answer session. Now I would like to turn the call over to Chief Financial Officer, Mark Kochvar. Please go ahead.

Mark Kochvar: Thank you and good afternoon everyone and thank you for participating in today's earnings call.

Mark Kochvar: Before beginning the presentation I want to take time to refer you to our statement about forward-looking statements and risk factors. The statement provides the cautionary language required by the Securities and Exchange Commission. Before forward-looking statements, then may be included in this presentation.

Mark Kochvar: A copy of the third quarter of 2024 earnings release, as well as this earnings supplement slide deck, can be obtained by clicking on the materials button in the lower right section of your screen.

Mark Kochvar: This will open up a panel on the right where you can download these items. You can also obtain a copy of these materials by visiting our investor relations website at STBankCorp.com.

Mark Kochvar: with me today, our Chris McComish, S&T CEO, and David Antolik, S&T's president, and now I'd like to turn the call and program over to Chris. Mark, thank you and good afternoon everyone. I'm going to, uh...

Chris McComish: Begin my comments on page three. I'd like to welcome everybody to the call. I certainly appreciate the analyst being here with us today, and we look forward to your questions

Chris McComish: I also want to thank our employees, shareholders and others listening in on the call to our leadership team and employees, your commitment and engagement is what drives these financial results and as I've said every quarter of these results are yours.

Chris McComish: and you should be very proud. Our performance this quarter reflects our continued progress centered on F&T's people forward purpose and the connection of our purpose to our core drivers of performance.

Chris McComish: Our drivers and performance are centered on the health and growth of our deposit, customer deposit franchise, consistently solid credit quality, strong for accountability, all of which are under品 by the town and engagement level of our teams.

Chris McComish: which leads to the results we're going to speak to today. To sum it up.

Chris McComish: We have made strong progress on all of our performance drivers and in two, three, the continued growth of our deposit franchise and improving asset quality led the way to deliver very solid results for the quarter.

Chris McComish: Additionally, as you're aware, over the past few years, due to the results we've been able to deliver, we have been able to build a significant amount of capital.

Chris McComish: Our performance, combined with our strong capital levels, gives us real optimism as we head into the end of 2024 and into 2025. We're excited about our prospects for growth while delivering for our customer shareholders in the communities that we serve.

Chris McComish: Turning to the quarter, our $33 million in net income equated to 85 cents per share, down slightly from Q3.

Chris McComish: Our return metrics were again excellent with a 13.5% ROTCE.

Chris McComish: 1.35% ROA, and while our PPRNR remains solid at 1.69%, it is important to note, our PPRNR was impacted by a little bit more than $2 million of security losses that we proactively decision.

Chris McComish: to help mitigate impacts the future declining rate environment.

Chris McComish: Our net interest income shall grow in Q2, while our net interest margin at 3.82% decline slightly, but remained very strong.

Chris McComish: Again, this is the direct result of another quarter of very solid customer-to-positive growth. Mark will provide more details on both our net interest income and our net interest margin in a few minutes.

Chris McComish: As that quality continues to improve, as we have another quarter of declining slash improving ACL and Dave is going to die more deeply here in a few minutes. He's also going to touch on the pick-up we are seeing in our lone pipelines and activity.

Chris McComish: Moving to page 4, well those did not grow during the quarter, it's a reflection of lower pipelines from earlier in the year, combined with a higher level of payoffs.

Chris McComish: On the deposit side, customer deposit growth was more than $100 million in the quarter, producing over 5% growth in your lives. While some makeshift continued, overall DBA balances remain very strong at 28% of total balances.

Chris McComish: The customer deposit growth allowed us to reduce wholesale, broker deposits and borrowings by $150 million combined, which will obviously have a positive impact on our future net interest margin.

Speaker Change: I'm going to stop right there and I'm going to turn it over to Dave and he can talk a little bit more about the loan book and credit quality, then Mark will provide more color on the income statement and capital. Following that we'll have some questions I look forward to answering them.

Dave: Thank you. Thank you. Yeah, wonderful. Continuing with the discussion of our balance sheet, particularly as it relates to loan balance activities, we did see a reduction in balances of nearly $25 million for the quarter. This was primarily the result of reduced commercial loan balances of $76 million.

Dave: and in the commercial segment, production in Q3 was just slightly lower than what we saw in Q2, but really impacted the balance reduction where it would pay off.

Dave: that increased by nearly 50% in the quarter. The delegated pay off levels were driven by continued demand for multi-family loans in the permanent market. Slightly lower CNI utilization rates and payoffs in our CNI portfolio as we manage asset quality.

Dave: It's very important to note that we do not anticipate this high level of commercial payoff activity in the coming quarter.

Dave: During the quarter we also experienced growth in all segments of consumer loans with the exception of construction.

Dave: And when looking more closely at Q3 activity, production was slower early in the quarter and much stronger in September. We expect this positive growth momentum to carry forward into Q4.

Dave: Looking forward and in support of a return to long-growth in Q4, our total pipeline has increased by over 50% quarter over quarter, primarily due to improved commercial both in the CR-E and CNI spaces.

Dave: We've also seen an increase in the consumer pipeline as customer activity shifts from purchase to home equity.

Speaker Change: I'm a second now direct your attention to page five of the presentation in order to discuss our asset quality results for the quarter. I'm starting with the allowance for credit losses which declined by approximately $2 million.

Speaker Change: and move from 1.38 to 1.36% of total loans.

Speaker Change: This reduction was a result of several factors including at a client in our non-performing assets of $3 million.

Speaker Change: As you can see, non-performing assets remain low at $31.9 million or $41 basis points of total loans.

Speaker Change: We also saw further declines in our criticize and classified assets.

Speaker Change: of almost 3% during the quarter.

Speaker Change: This represents the fourth consecutive quarter.

Speaker Change: of reductions in criticize and classified loans and they have reduced by 17% year to date and 31% year over year. Just as a reminder, these criticizing classified loans require higher levels of reserves.

Speaker Change: In addition, charge us for the quarter, we're in line with expectations at $2.1 million, up from the previous quarter, $400,000 in that recovery. Finally, we anticipate lung growth in Q4 to be in the Lotus mid-Single Fidget range, and we are targeting mid-Single Digit Lung growth for 2025. I'm now turning the program over tomorrow.

Speaker Change: Great day, thanks. Next slide, we have the third quarter of an industry's margin rate at 3.82% net down 3 basis points from the second quarter, while net interest income improved by 900,000 compared to last quarter, primarily due to an extra day.

Speaker Change: The impact of late September fed rate decrease in the leading sofa rate changes can be seen in the reduction of quarterly loan yield improvement to about one basis points in the third quarter compared to five to six basis points per quarter in the first half of the year.

Speaker Change: We're also still experiencing an increase in cost of funds in a third quarter, that's driven by the positive exchanges and continued upward group-pricing activity throughout most of the quarter. We did implement now maturity to positive repricing in response to the Fedcut in late September with CD-Rate being lowered earlier in the quarter.

Speaker Change: Strong customer deposit growth allowed for the reduction in more expensive broker CDs.

Speaker Change: 126 million wholesale borrowers are down 25 million.

Speaker Change: but this did not happen until very late in the quarter. So the third quarter should represent the peak in our cost of funds as to the expected to decline going forward as our reliability is reprised.

Speaker Change: So looking ahead, we expect an additional 10 to 12 basis points of manages margin compression from here. That assumes another 50 basis points of rate cuts or 100 basis points of cuts in total in 2024.

Speaker Change: After that first 100 basis point cuts of cuts, and as we move into 2025,

Speaker Change: We do expect to find an equilibrium Genesis margin rate in the low 370s and that should happen early in the year. We anticipate that level to hold, even if Ray cuts continue as the market expects throughout 2025.

Speaker Change: Support for that Ninja smart and stability, Spyto's further cuts will come from favorable fixed and armed loan and security repricings, or received fixed swap ladder beginning to mature, a very short duration CD portfolio that will reprise, and an improving ability to implement non-matured rate cuts as rates move lower.

Speaker Change: I'm moving on to non-sting income, non-sting income decline in the third quarter by 1.4 million dollars, the quarter of a quarter of variance is related to two main things, security's repositioning and our visa class B1 shares. In the second quarter, we recognized a $3.2 million fair value adjustment in the visa stock and also repositioned about $49 million of securities taking a loss for approximately the same amount at $3.2 million. So these two actions netted to zero.

Speaker Change: In the third quarter, however, we executed another security's repositioning, also for about 48,49 million, but this time taking a loss of 2.2 million, but without an offset like we had in the second quarter.

Speaker Change: Our normal, it nuns just income run rate remains approximately 13 to 14 million hours per quarter.

Speaker Change: Related non-esthetic expenses on the next slide, we saw an increase of 1.8 million in the third quarter compared to the second two main things. Throw that, salaries and benefits are higher due to increased incentives pay-out expectations due to our performance.

Speaker Change: and in the data processing line that higher due to some timing related to some technology investment.

Speaker Change: with respect to run rates in expenses to be 54 to 55 million per quarter.

Speaker Change: The last thing on Capitol, TCE ratio increased by 64 basis points to this quarter. A little over half of that 36 basis points was due to the AOCI improvement. Our TCE and regulators' capitals as Chris mentioned, position is very well for the environment and will enable us to take advantage of both organic and inorganic growth opportunities.

Speaker Change: Thanks very much to this time, I'd like to turn the call back over to the operator to provide instructions for asking questions.

Speaker Change: The floor is now open for questions. If you have any questions, please press star one on your phone.

Speaker Change: We ask that while asking your question, please pick up your phone and turn off speaker phone for enhanced audio quality. Please hold while we pull for questions.

Speaker Change: i

Speaker Change: And your first question comes from the line of Daniel Tamale with Raymond James. Please go ahead.

Daniel Tamale: Thank you. Good afternoon, guys. Maybe.

Daniel Tamale: Yeah, maybe first on credit where the story just continually gets better, record or seemingly for you guys. So that's certainly good news. But just curious now with MPA's down to the level they're at and that charge off seeming too slow. If you had updated thoughts on what would be kind of a more normalized or regular type of cadence for net charge off. Or provision however we should think about it going forward.

Speaker Change: Yeah, I think what you saw in the quarter would be closer to what I would call as normalize relative to the Charter off levels.

Speaker Change: And what we're hoping to see relative to provisioning is as we return the loan growth that we would need to keep provisioning in place to support that loan growth.

Speaker Change: We do think there is still room for us to improve, though I mentioned the criticize and classified asset. So I think about red versus classified assets, generally it was still room for improvement there for us. So the ACL level may move as a result of those continued improvements.

Speaker Change: Okay, all right, terrific. And then I guess just a clarification for Mark on the interest margin guidance.

Speaker Change: You talked about a stabilization in the early 2025 and let's see here the 370s, low 370s, even assuming for the red cuts. So I'm just curious.

Speaker Change: Um...

Speaker Change: I guess if we didn't get those rate cuts, does that mean that margin would you expect to stabilize higher or, or I guess then, you know, get down to the low 370s and rise from there, or like, I'm just curious kind of what the embedded impact from rate cuts would be within that forecast that you're doing.

Speaker Change: Yeah, a lot of the finer details is going to depend on the timing and on the competition, but if the Fed moves a lot slower, I would expect it to take potentially longer longer to get to the...

Speaker Change: The stabilization point in, and you kind of alluded to, probably would be slightly higher than the 370s that we're looking at now with a much deeper cut.

Speaker Change: Okay, yeah, that makes sense. Okay.

Speaker Change: and I will I'll step back. Thanks, yes.

Speaker Change: Thank you, Dan.

Speaker Change: Your next question comes from the line of Kelly Mata with KBW, please go ahead.

Kelly Mata: Hey, good afternoon, thanks for the question.

Kelly Mata: A-A-A-A-A-A-A-A-A

Kelly Mata: So, it sounds like that pipeline is really strong and you were impacted by some elevated pay-offs and pay-downs as a quarter. I'm just wondering what could you do?

Kelly Mata: You know, the confidence that that kind of headwind will flow and how should we be thinking about, you know, the potential risk that going forward with.

Kelly Mata: Construct Potentially Looking.

Kelly Mata: to re-ify evrates come down.

Speaker Change: Yeah, as race reduced, of course, customers will be looking at the potential to refinance. We do have a great protection in many of our loan products with prepayment penalties and make holes. We're able to get ahead of those and understand when those maturitys are rate changes.

Speaker Change: and the bankers have proactive conversations relative to those and if we can get ahead of them make sure that we understand what the impact is and really what the customer desires and what's best for them. That's our focus and then in terms of adding additional volume, we've seen some pretty good activity as I mentioned at the end of Q3 that carries into the beginning of Q4 here relative to the new customer calling activities.

Chris McComish: And Kelly, I think that this is Chris, but part of what we're hearing a lot from customers.

Chris McComish: And many of them have been waiting on the sidelines either in the CNI space for capital expenditures waiting to find out what's going to happen with the rate environment or some of our...

Chris McComish: CRE customers and having some better clarity around the direction of race, I think is helping people be more confident to make decisions about future investment, which obviously leads to a bigger pipeline for us. So it may not be a while of it.

Chris McComish: A little unusual to see the level of pay off some of it as Dave talked about was credit related to us continuing to focus on.

Chris McComish: Credit Quality, in return, it's going to help us. The pipeline coming in was lower in the year just simply because of what I would define as some uncertainty as to what people wanted to understand about the future.

Speaker Change: Got it, that's helpful. Maybe a bit of a housekeeping question for the model just looking at the average balance sheet of, like, answering cash was a bit elevated. Just wondering how we should be thinking about managing liquidity levels and the size of the balance sheet was that, you know, did.

Speaker Change: because Sloan Cross was a little slower and you're expecting to deploy that, you know, as we look to.

Speaker Change: Q4, just any color on managing the liquidity is there and how you guys are looking to optimize that.

Speaker Change: What's fun in average basis? We were a little bit high. I mentioned these broker CDs.

Speaker Change: that we paid off, and that happened at the very end of the quarter. So we knew that was coming, and it was our intent to pay those off. So we let some of the cash-levels build, you know, that was coming from our customer deposit growth, and so that we could pay those off.

Speaker Change: and not replaced them again in the quarter. So on average we did have a little bit higher cast, but I think it got some more normal level if you looked at just the quarter end point.

Speaker Change: Got it. Okay, that's really helpful. And then, as we look ahead, you know, you're just under 10 billion in asset. Just wondering if you have any, you know.

Speaker Change: I've updated the thoughts on potentially crossing next year and how you guys are thinking about what potential lovers you have to.

Speaker Change: who offset that initial hit from Durbin.

Speaker Change: Yeah, and some of it obviously is timing associated with the urban and as we've talked about the board Kelly, it's about $67 million of initial impact.

Speaker Change: You know, normal loan growth as we've talked about kind of in that mid-single digit range would put us there sometime.

Speaker Change: in 2025. We have really no concerns from the standpoint of where we'll be able to absorb the kind of the original regulatory oversight we've been building for that over the course of the past couple of years.

Speaker Change: If you look, that's where a lot of some of our expense growth has come in and enhancing all of our risk management audit, compliance, BSAAML, all of those areas that are critical to it.

Speaker Change: to growing the franchise, whether we go over.

Speaker Change: 10 billion or not, so we have...

Speaker Change: We recognize, you know, organically, it's six to seven million dollars. That's a big reason why we're so focused on things like our, our treasury management initiatives and deepening some, some other forms of fee income.

Speaker Change: to offset some of that as well as just expanding our customer base. So, it's not a huge hit for us. We made $33 million this quarter, so we're going to have to absorb it, but it's something that we'll be able to grow into. And then, again, we believe that in organic opportunities, we'll present themselves, and we're preparing for that as well.

Speaker Change: Got it, that's helpful. I'll set back. Thank you so much.

Speaker Change: Thank you, thank you, Ellie.

Speaker Change: Your next question comes from the line of Manuel Novas with DA Davidson, please go ahead.

Manuel Novas: Hey, I appreciate the name outlook, but can you just dive a little bit deeper into some of the assumptions there? You talked about some swaps. I'm interested in what you're assuming on loan and deposit data initially and maybe through the cycle. I'm just adding extra color you could add there as you build that 10 to 12-based point decline into next year. That's not immediate, but just adding extra color there will be really helpful.

Manuel Novas: Okay, so the overall, I mean, when I talk about the full 24 and 25, we're looking at, you know, an aggregate 200 basis point drop is kind of overwhelming that seems to be

Speaker Change: Some of the consensus from the market that they had, so if it went from, you know, the 550 to the 3.5, so that's kind of a baseline fed, fed P, so the, did.

Speaker Change: Good clients that we have in the core and the core rates. A lot of those are coming from how we're addressing the exception pricing book that we have. And so our goal there is to, as we go deeper into the trenches to make deeper and deeper cuts on those lower levels of deposits.

Speaker Change: So, for example, in this initial cut with 50 basis points, we came close to the 50 basis points in the highest trenches.

Speaker Change: But there were some trenches, lower that we didn't touch, so the deeper that we go.

Speaker Change: into the rate stack over time, as rate gets slower, the more we'll be able to balance, as we'll be able to impact, and then eventually we should be able to also change some of the rates that we have on our non-exception book.

Speaker Change: So, as that sort of improving over the course of the year, the other piece that Swapbooked that you mentioned, we have about a $500 million received, fixed swap ladder that we built as race began to rise.

Speaker Change: That starts in mature at the pace of about $50 million per quarter starting in the first quarter. So we're underwater on those anywhere from 200 to 300 basis points. So as those mature...

Speaker Change: If we let those fully go, that will also provide some margins support that will show up really in the loan in the loan line versus in the deposit in the deposit space.

Speaker Change: and then we also have the CD, a book that we've intentionally over the course of this past year have tried very short like many others.

Speaker Change: and so we do expect we've already repriced that lower starting early September late August.

Speaker Change: Most of those are going into the six-month area, so over the course of the year we expect to get a couple of price.

Speaker Change: Decline at a campsite of Earth.

Speaker Change: and then on the Securities.

Speaker Change: is supposed to carry through the fixed lungs, you know, based on where those are repricing, and there's still better.

Speaker Change: Great.

Speaker Change: with those being put on at newer rate, or at the current rate level versus what they're maturing at. So, I can't tell you the exact bait is because the bait is going to change over the course of that year. They're going to be a little bit higher or a little bit...

Speaker Change: Gifford going into the cycle and then improve as we as we are able to implement more of those deposit rate changes later in 25.

Speaker Change: How should I think about like, end up period the posit cause this quarter and you're kind of already, you're saying this is the peak, so you're already expecting with the exception pricing moves you've made the posit cause of the client next quarter.

Speaker Change: Right, yeah, I mean, you know, with the Fed moving so late in September , we moved within a few days after that, but really didn't see much of an impact. The bulk of the momentum going for the quarter happened in July , August , the first part of September , we still continue to see the mixed changes and continued exception pricing.

Speaker Change: and we look at spot rates, you know, spot rates as of September 30 if we're down already from that month and average. So we know we're going to have a better cost of funds, a cost of deposits in the fourth quarter for sure.

Speaker Change: is your deposit strength, potentially a wildcard here that could even help the men more. If you just kind of talk about your success in the project flows and where that could go going forward.

Speaker Change: Yeah, we think some, I mean, there's, you know, where there's a lot of emphasis being placed on that, both on the business side, commercial side, and also on the consumer side, we still have.

Speaker Change: 375 million dollars of wholesale borrowing that are also very short and relatively high price that we can pick up some advantage if we're able to replace those with a decent mix of the customer deposit.

Speaker Change: and then all it's crescent, you know, this is more anecdotal than anything but, you know, the good news is with, you know, race are in the, you know, above the pole from a standpoint of...

Speaker Change: You know what's being talked about in the marketplace as a whole and so that that leads to more customer conversations both with

Speaker Change: It's interesting customers as well as perspective customers, so we feel very good about, you know, the obviously the progress that we made in kind of the infrastructure that we built.

Speaker Change: in order to continue this. And I think changing rates lead to customer conversations and that's a good thing.

Speaker Change: That's good color. Can I switch over to fees for a moment? If you have 200 basis points and cuts, what could that do on the seaside for you?

Speaker Change: The Glamour is a great day!

Speaker Change: This year, I think we're re-looking and repositioning our mortgage.

Speaker Change: Business, we've really been portfolioing, most of that activity, but we're getting ready to make a concerted effort to sell more of that production going in the next year. That's probably our biggest interest rate related.

Speaker Change: Ability or a potential on the feast side is right now, you know, they only mortgage.

Speaker Change: Activity we're seeing right now is just, you know, the feed from the servicing side, but there's an opportunity as we ship some of that production to the sales that we would pick up, possibly a couple million dollars next year of feed income.

Speaker Change: Do you feel like you have the right capacity, or is that part of the adjustments you're going to make, you might have to make the higher, how do you compare your capacity versus where you were three years ago for example?

Speaker Change: But thanks for my capacity standpoint, it's...

Speaker Change: It's similar in terms of a origination, we haven't been selling a lot, so some of the back office functions need to be reset to make that process smoother.

Speaker Change: But it's not a dramatic left, I mean the fact that the only thing that could is, and if you're talking specifically about more than you'd just...

Speaker Change: is that, you know, mortgage rates decline rapidly and there becomes a big re-fight boom, that could create capacity issues not only for us, but everybody in the industry because we're in much lower run rate than we were three years ago when, you know, the re-fight activity was really hot.

Speaker Change: and then I appreciate that color.

Speaker Change: that we could be getting going in that direction. Going back to a comment about an inorganic growth, what are some places that you're interested in growing that we're where our opportunities that you would be excited to geographically.

Speaker Change: Yeah, so we've talked about this before, well, I'll continue to reiterate that we look at our core geographic franchise today is kind of the southern half of Pennsylvania east to west.

Speaker Change: and into North East Ohio and Central Ohio, those are all really, really attractive.

Speaker Change: Markets for us. We also have lots of interest throughout the state of Ohio into that area of the Midwest and then...

Speaker Change: You know, further south into Maryland, Northern Virginia, D.C. Those areas geographically, if you think about it, we, you know, from Pittsburgh to...

Speaker Change: Washington, D.C. is not that far as I was far as it is to get to all the way to Philadelphia, for example. So we think about markets.

Speaker Change: The make-up of markets relative to our culture and what we're trying to build, and there's interesting opportunities both east and west as well as here in Western Pennsylvania. So, we continue to build relationships, and the best way that we can build relationships from an interorganic standpoint is to deliver performance and have the courtesy necessary to have these conversations, and that's where we're focused.

Speaker Change: Thank you very much, I'll step back and share the cue.

Speaker Change: Here next question comes from line of Matthew Breeze with Steven's please go ahead.

Matthew Breeze: Good afternoon. Just a couple of questions. Most of them have been answered.

Matthew Breeze: First, any contemplating any additional securities, restructuring, if so.

Matthew Breeze: since for how much and is that included in any way she performed into your 2025 in that look.

Speaker Change: We're still looking at it, we're not anticipating anything significant, so we've done two, both of them, just under 50 million. I mean, it would certainly be less than that. The opportunities with the shape of the curve, changing a little bit, and just what we've sold already, is kind of being the best candidate, kind of the cost benefit of the activity is less than it was. If we were to do anything more, it wouldn't be any larger than the ones we've already done, and there's a fair chance we wouldn't do anymore.

Speaker Change: and reminds again what the yield pickup was on both of those restrictions.

Speaker Change: And so the first one was about 370 basis points, the second one was maybe 270.

Speaker Change: and the other topic I just wanted to touch on, and it's been brought up a handful of times on the coal. It's just pay off activity, commercial estate, multi-family related.

Speaker Change: How much of that was by design, meaning these were not strategic, or non-phold relationship customers.

Speaker Change: How much of it was rate-driven? You know, one thing we've been hearing a lot of this this quarter is that there's been some, you know, stiffer competition on the commercial old state front from insurance companies, some of the agencies, some of the bigger banks even. And so I wanted to get a sense for how much of that was going on and how different the types of rate offerings were between yourselves and some of the other players.

Speaker Change: Yep, sure.

Speaker Change: To your point, there is still a significant amount of competition relative to the permit mortgages for multi-family.

Speaker Change: The two relatively large, you know, $20 million range deals that paid off during Q3 that are both with existing.

Speaker Change: Customers, they're not transactional deals.

Speaker Change: the normal course of business where we do a construction loan.

Speaker Change: that construction loan converts to a permanent loan.

Speaker Change: on a bridge-based, typically, to get to permanent financing. So in both of these cases, it is the normal course that they would take these two.

Speaker Change: of a permanent facility, and normally the reason that that's done is to take advantage of a longer term fixed rate, typically a 10-year rate, and remove recourse.

Speaker Change: The second being the most important, right? So these large builders and developers want to preserve equity in their deal, have it owned in a single asset entity and not have recourse back to the sponsorship.

Speaker Change: Dota, was there any meaningful delta?

Speaker Change: between yourselves and...

Speaker Change: of the sources of their competition or other competitors.

Speaker Change: You know, from a structure perspective, LTVs are generally similar. Rate may be slightly more aggressive, depending on if it's an insurance company or a CNBS.

Speaker Change: You know, insurance companies are looking for assets tend to be a little more aggressive, but the big difference in structure is the recourse. We require recourse, even if it's limited after some point of stabilization, you know, these fillings in the permanent market tend to be completely non-recourse.

Speaker Change: And if you're talking about, you know, bank competitive pressures from a rated standpoint, I would say that any of that is more.

Speaker Change: and an anecdotal one-off driven specific transaction and it is anything that we're seeing in the marketplace. We have seen in some areas of our geography, which is, you may just scratch your head. We've seen some thin deals that were maybe, as you described, not necessarily long-term relationships fields that were actually taken out by large credit unions.

Speaker Change: That is an unusual place for a CNI or a commercial real estate customer of ours, but there are some pockets of the geography, particularly the eastern part of the state of Pennsylvania where we're seeing some of that activity.

Speaker Change: Yeah, I think Matt, it's bottom line for us relative to asset quality, I think it speaks well for that segment in our geographies.

Speaker Change: and the multi-family projects continue to perform very well. They can take advantage of the permanent market and we can continue to play a role as the depository institution for those borrowers and look at their ongoing construction needs.

Matthew Breeze: I appreciate all that very much. I'll step back. Thank you. Yeah, thanks, Matt.

Speaker Change: Your next question comes from the line of Daniel Cardenas with Jenny Montgomery Scott. Please go ahead.

Daniel Cardenas: Good afternoon, guys.

Daniel Cardenas: Just a couple of questions here for y'all. In terms of the positive, your deposit growth outlook for 2021-25 on a percentage basis, do you think that can mirror what you're looking for on the lending side or going to be a little bit better?

Speaker Change: I'm just going to give an order to the deposit ratio is right now.

Speaker Change: Yeah, Dan, you know what? We feel good about the momentum that we have and the focus on our deposit franchise and deposit business. We've invested in it in people and product and improving processes. We're going to continue that focus.

Speaker Change: As I said, I think the, you know, the rate environment, it leads to opportunities.

Speaker Change: Both with existing customers, as well as new customers, we talk about the kind of declining rate environment that Mark's speaking to, that's going to put, as I would define it, there's a lot of money in motion, and so our targets are to continue to look for growth in the range that we're seeing in.

Operator: And then, given what capital levels are right now, what are your thoughts in terms of stock repurchase activities going forward?

Speaker Change: because

Speaker Change: and then the given old capital levels are right now what are your thoughts in terms of stock we purchased extra to the East going forward.

Daniel Cardenas: Yeah, I mean, that's going to be our lead favorite event, especially given the run up in price. It just makes it a little more difficult for that to make economic sense.

Speaker Change: Yeah, I mean, that's going to be our least favorite of them, especially given that run up from price, you know, just make it a little more difficult for that to make economic sense. So, our first priorities are going to be on the on the on the growth side and to use the capital that way.

Daniel Cardenas: So our first priorities are going to be on the growth side and to use the capital that way to kind of grow the dividends and then maybe buy back so that it makes sense, mathematically.

Speaker Change: and a growth of dividends, and then maybe buybacks, but make sense, mathematical.

Operator: And then just a housekeeping question: what was your AOCI number for the quarter?

Speaker Change: Right.

Speaker Change: Okay, and then I'll just have to be in question. What was your...

Operator: And the quarter was, and the quarter was 77 million.

Speaker Change: AOCI number for a quarter.

Speaker Change: and the quarter was 77 million.

Operator: Thanks, guys.

Speaker Change: Okay, great. I'm a lot of other questions, and then ask to answer thanks guys. Okay, thank you.

Operator: There are no further questions at this time.

Christopher McComish: I would like to turn the call over to Chief Executive Officer Chris McComish for closing remarks.

Speaker Change: There are no further questions at this time. I would like to turn the call over to Chief Executive Officer, Chris McComish for closing remarks. Okay, well thanks everybody for the great questions and the dialogue we really appreciate your engagement, your interest in our company. We look forward to being with you over the coming weeks and months and let's have a great rest of the earnings season. Thank you.

Christopher McComish: Well, thanks, everybody, for the great questions and the dialogue. We really appreciate your engagement; your interest in our company. We look forward to being with you over the coming weeks and months, and let's have a great rest of the earnings season.

Operator: Thank you.

Operator: Goodbye.

Operator: This does conclude today's call. You may now disconnect.

Speaker Change: This does conclude today's call. You may now disconnect.

Speaker Change: and I'm going to ask you a question.