Q3 2024 SB Financial Group Inc Earnings Call
IRA: [music].
Operator: Good morning and welcome to the SB Financial third quarter 2024 conference call and webcast. I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode.
Good morning, and welcome to the FB financial third quarter, 2024 conference call and webcast I would like to inform you that this call conference call is being recorded and that all participants are in a listen only mode people will begin with remarks by management and then open the conference.
Operator: We will begin with remarks by management and then open the conference up to the investment community for questions and answers.
To the investment community for questions and answers.
Carol Robbins: I will now turn the conference over to Carol Robbins with SB Financial. Please go ahead, Carol.
Speaker Change: I will now turn the conference over to Carol Robbins with FB financial. Please go ahead Carol.
Carol Robbins: Thanks, Dave.
Carol Robbins: Thanks, Dave Good morning, everyone I would like to remind you that this conference call is being broadcast live over the Internet and will be archived and available on our website at IR got your state Bank Dot Com joined.
Carol Robbins: Good morning, everyone. I would like to remind you that this conference call is being broadcast live over the Internet and will be archived and available on our website at ir.yourstatebank.gov.
Carol Robbins: Joining me today are Mark Klein, Chairman, President, and CEO. Tony Cosentino, Chief Financial Officer, and Steve Walz, Chief Lending Officer. Today's presentation may contain forward-looking information, cautionary statements about this information, as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials as well as our SEC files. These materials are available on our website, and we encourage participants to refer to them for a complete discussion of risk factors and forward logic.
Carol Robbins: Joining me today are Mark Klein, Chairman, President and CEO.
Carol Robbins: Tony Cosentino Chief Financial Officer.
Carol Robbins: Steve Walsh Chief lending officer.
Carol Robbins: Today's presentation may contain forward looking information cautionary statements about this information as well as reconciliations of non-GAAP financial measures are included in today's earnings earnings release materials as well as our SEC filings. Please.
Carol Robbins: These materials are available on our website and we encourage participants to refer to them for a complete discussion of risk factors and forward looking statements. These statements speak only as of the date made and S. T financial undertakes no obligation to update them.
Carol Robbins: The statements speak only as of the date made, and SB Financial undertakes no obligation to I will now turn the call over.
Speaker Change: I will now turn the call over to Mr. Klein.
Mark Klein: Thank you, Carol, and good morning, everyone. Welcome to our third quarter conference call and webcast. Highlights for the quarter include net income of $2.7 million, and when adjusted for the servicing rights impairment, net income was $2.4 million. Diluted earnings per share as adjusted increased to $0.41, a 3.3% increase from the adjusted $0.40 that we delivered in the prior year quarter. Tangible book value per share ended the quarter at $16.49, up from the $13.09 last year, or a 26% increase. Net interest income total $10.2 million, an increase of 6.8% from the $9.5 million in the third quarter of 2023.
Mr. Klein: Thank you Carolyn.
Good morning, everyone and welcome to our third quarter conference call and webcast highlights for the quarter include.
Mr. Klein: Net income of 2.7 million and when adjusted for the servicing rights impairment net income was $2 4 million.
Mr. Klein: Diluted earnings per share as adjusted increased to 40 183.
Mr. Klein: Three 3% increase from the adjusted 40 that we.
<unk> in the prior year quarter.
Mr. Klein: Tangible book value per share ended the quarter at $16.49 up from the $13 nine since last year or a 26% increase.
Mr. Klein: Net interest income totaled $10 2 million, an increase of 6.8% from the $9 5 million in the third quarter of 2023.
Mark Klein: From the linked quarter, margin revenue was up $527,000, or a 22% increase on an annualized basis. Total loans increased to $1.03 billion, up by nearly $41 million, or 4.1% from the prior year quarter, and higher compared to the linked quarter by nearly $25 million. The linked quarter growth would equate to an approximate 9.8% annualized increase. Our year-to-date return on tangible equity was down slightly from the prior year, but still a solid 10.4%.
Mr. Klein: From the linked quarter margin revenue was up 527000, or 822% increase on an annualized basis.
Mr. Klein: Total loans increased to 1.03 billion up by nearly 41 million or four 1% from the prior year quarter and higher compared to the linked quarter by nearly $25 million.
Mr. Klein: The linked quarter growth would equate to an approximate nine 8% annualized increase.
Mr. Klein: Our year to date return on tangible equity was down slightly from the prior year, but still a solid 10, 4%.
Mark Klein: quarter were $71 million. And year-to-date, we've now originated $188 million. The annual origination level is up 12% from the prior year to date. The servicing portfolio improved to $1.41 billion, which was up from both the prior year by 2.9% and from the linked quarter by approximately 4.7% annually. Operating expenses for the first nine months were up approximately 1% compared to the prior year same period. And finally, asset quality metrics remain stable compared to the linked quarters.
Mr. Klein: Mortgage originations for the quarter were 71 million and year to date, we've now originated $188 million.
Mr. Klein: The annual origination level is up 12% from the prior year to date.
Mr. Klein: The servicing portfolio improved to 1.41 billion, which was up from both the prior year by two 9% and from the linked quarter by approximately 4.7% annualized.
Mr. Klein: Operating expenses for the first nine months were up approximately 1% compared to the prior year same period, and finally asset quality metrics remained stable compared to the linked quarter.
Yeah.
Mark Klein: Our strategic path forward remains hinged on our five key strategic initiatives we've discussed in many quarters. First, revenue diversity. We remain focused on growing both our traditional marginal revenue and fee-based revenue. A larger balance sheet is delivering the former and the real estate mortgage business line continues to contribute to the latter. While the mortgage market remains challenging and persistent high rates constraining our momentum, we have fortunately seen continued growth in other fee-based areas such as wealth management and our title insurance. Our growth remains. Our goal remains to consistently drive our fee-based revenue to the 35% level, all else remaining constant.
Mr. Klein: Our strategic path forward remains hedged on our five key strategic initiatives, we've discussed in many quarters first revenue diversity.
Mr. Klein: We remain focused on growing both our traditional traditional margin revenue and fee based revenue.
A larger balance sheet as delivering the former and deep real estate mortgage business line continues to contribute to the ladder.
Mr. Klein: While the mortgage market remains challenging and persistent high rates constraining our momentum we are Fortunately seeing continued growth in other fee based areas such as wealth management and our title insurance business.
Mr. Klein: Growth remains.
Mr. Klein: Our goal remains to consistently drive our fee based revenue to the 35% level all else remaining constant.
Mark Klein: Current levels at approximately 30% still place us well into the top quartile of our peer group of 65 publicly traded U.S. banks between $500 million and $2.6 billion.
Current levels at approximately 30% still places where all into the top quartile of our peer group of 65 publicly traded U S banks between $500 million and $2 6 billion.
Mark Klein: organic growth for greater scale. We achieved a double digit annualized growth rate in our loan portfolio this quarter. And we continue to have a very strong pipeline and a number of our market In fact, our Fort Wayne and Columbus markets were up 18% and 12% respectively from the prior year, but our fractional market growth is not good enough for a model to not have all of our reasons contributing to our growth. We expect to have more of our regions with a positive year-over-year loan portfolio growth in 2025.
Mr. Klein: Organic growth for greater scale, we achieved a double digit annualized growth rate in our loan portfolio. This quarter and we continue to have a very strong pipeline and a number of our markets in.
Mr. Klein: In fact, our Fort Wayne and Columbus markets.
Mr. Klein: We're up 18, and 12% respectively from the prior year.
Mr. Klein: But our fractional market growth is not good enough for our model to not have all of our regions contributing to our growth.
Mr. Klein: We expect to have more of our regions with a positive year over year loan portfolio growth in 2025.
Mark Klein: deepening existing client relationships or more scope. Our deposit base grew by $74.2 million to $1.16 billion and was up over $44 million from the linked quarters. revisiting the Home Buyer Plus program that we've discussed extensively. We have met our internal goal of $50 million and acquiring low-cost deposits, and we are always pleased to assist prospective homebuyers with a State of Ohio subsidized initiative that for us included over 100 new client relationships.
Mr. Klein: Deepening existing client relationships or more scope.
Mr. Klein: Our deposit base grew by 74.2 million to 1.16 billion and was up over $44 million from the linked quarter.
Mr. Klein: <unk> the homebuyer plus program that we've discussed extensively we have met our internal goal of $50 million in acquiring low cost deposits and we are always pleased to assess prospective homebuyers with a state of Ohio Subsidize initiative that for US included over 100, new client relationships.
Mr. Klein: Ships.
Mark Klein: And, of course, always, operational. We continue to add additional talent throughout the organization as we remain focused on using technology, market consolidations and disruptions to acquire new client relationships, drive greater services per household in existing ones, and leverage customized communication channels to identify more diverse client opportunities in the digital space. And finally, asset quality was certainly stable to the length quarter compared to the prior year. Our level of criticized loans declined 41% and our classified loans were reduced by 11%. Taking a little closer look at revenue diversity, our mortgage business line originated at $71 million in volume, an increase of nearly 16% from the $61 million over the prior year quarter.
And of course always operational excellence.
Mr. Klein: We continue to add additional talent throughout the organization as we remain focused on using technology market consolidations and disruptions to acquire new client relationships drive greater services per household and existing ones and leverage customized communication channels to identify more diverse.
Mr. Klein: Opportunities in the digital space.
Mr. Klein: And finally asset quality.
Mr. Klein: Well certainly stable to the linked quarter compared to the prior year, our level of criticized loans declined 41% and our classified loans were reduced by 11%.
Mr. Klein: Yeah.
Speaker Change: It kind of a little closer look at revenue diversity.
Speaker Change: Mortgage business line originated $71 million volume, an increase of nearly 16% from the $61 million over the prior year quarter.
Mark Klein: Mortgage sales of $61 million represented 87% of our total origination. Our capacity remains nearly double the level of our current trailing 12 months of origination volume, but we remain bullish on the business line and expect that our 2025 volume level will be at least 20 to 30 percent higher than the 2024 forecasted level of approximately $265 million. Non-nurse income was down slightly at $4.1 million as the impact of several non-core items, including the impairment of our mortgage servicing rights, halted the quarter-over-quarter growth that we had experienced during 2024. Our title business and wealth management services have steadily improved all year and we remain positive about their continued contribution to our revenue and bottom line net income.
Speaker Change: Mortgage sales of $61 million represented 87% of our total originations.
Speaker Change: Our capacity remains at nearly double the level of our current trailing 12 months of origination volume, but we remain bullish on the business line and expect that our 2025 volume level will be at least 20% to 30% higher than the 2024 forecasted level of approximately $265 million.
Speaker Change: Noninterest income was down slightly at $4.1 million as the impact of several noncore items, including the impairment of our mortgage servicing rights halted that the quarter over quarter growth that we had experienced during 2024.
Speaker Change: Yeah.
Our title business and wealth management services have steadily improved all year and we remain positive about their continued contribution to our revenue and bottom line net income.
Mark Klein: Regarding the wealth management business line, new sales this year have actually exceeded our expectations. And we've added new sales. that we expect to be fully integrated and delivering new clients and new assets under our care in 2025.
Speaker Change: Regarding the wealth management business line, new sales this year have actually exceeded our expectations.
And we've added new sales talent.
We expect to be fully integrated and delivering new clients or new assets under our care in 2025.
Mark Klein: On the scale front, deposit growth has accelerated. Again, as I indicated earlier, this quarter, we were up by 44.3 million compared to the link quarter and up 6.8% from the prior year quarter. Our deposit cost of funds was 1.94% this quarter. up from 1.86% in the June quarter and 1.53% in the third quarter of 2023. continues to move higher, but certainly at a much slower pace. Given our neutral to slightly liability-sensitive balance sheet, we anticipate that a measured gradual decline in overall market rates will strengthen our net interest margin in the coming quarters. Loan growth continues to gain traction.
On a scale from deposit growth has accelerated again as I indicated earlier this quarter, we were up by $44 3 million compared to the linked quarter and up six 8% from the prior year quarter.
Speaker Change: Our deposit cost of funds was 1.94% this quarter.
Up from 1.86% in the June quarter, and 1.53% in the third quarter of 2023.
Speaker Change: The trend line continues to move higher but certainly at a much slower pace.
Speaker Change: Given our neutral to slightly liability sensitive balance sheet, we anticipate that a measured gradual decline in overall market rates will strengthen our net interest margin in the coming quarters.
Speaker Change: Yeah.
Speaker Change: Loan growth continues to gain traction in fact this quarter, we had our strongest level of linked quarter growth in over two years.
Mark Klein: In fact, this quarter, we had our strongest level of length quarter growth in over two years. The pipelines are much stronger today, and Columbus is on pace to deliver over $50 million in growth for the full year of 2024.
Our pipelines are much stronger today, and Columbus is on pace to deliver over $50 million of growth for the full year of 2024.
Mark Klein: We've not touched on the quality of our ag portfolio much in the last several years, but our $65 million portfolio. continues to perform very well with virtually zero loan losses, representing the prudent approach we take to providing equity to our ag producers. Farmers in our region continue to experience high yields, with over 80% of our clients now carrying some form of crop insurance. to supplement our net interest margin, we have aggressively pursued the State of Ohio Ag Link Program. which has bolstered our deposit base by $14 million and improved margins on these funds by well over 200 basis points.
Speaker Change: We have not touched on the quality of our AG portfolio much in the last several years about our $65 million portfolio.
Speaker Change: Continues to perform very well with virtually zero loan losses, representing the prudent approach, we take to providing liquidity to our AG producers.
Farmers in our region continue to experience high yields with over 80% of our clients now carrying some form of crop insurance.
Speaker Change: To supplement our net interest margin, we have aggressively pursued the state of Ohio eggs length program.
Speaker Change: Which has bolstered our deposit base by $14 million and improved margins on these funds by well over 200 basis points.
Speaker Change: Yeah.
Mark Klein: A strong equity foundation remains a prerequisite to our growth, and this quarter it continued to improve. We are very comfortable with our capital strategy and feel we have a significant level of capital to continue to take advantage of multiple strategic options.
Speaker Change: Our strong equity foundation remains a prerequisite to our growth and this quarter it continued to improve.
Speaker Change: We are very comfortable with our.
Speaker Change: Capital strategy and feel we have a significant level of capital to continue to take advantage of multiple strategic options.
Mark Klein: In terms of deepening existing relationships, in other words, more scope. We continue to embrace technology to enhance client engagement. This quarter we expanded the services of our contact center to 7 a.m. to 7 p.m. This move has made a positive contribution to our level of client care and bolsters our quest for greater brand loyalty. Although slightly more costly, we feel this will be a strong differentiator for a company as we capitalize on market disruption.
Speaker Change: In terms of deepening existing relationships in other words more scope.
Speaker Change: We continue to embrace technology to enhance client engagement. This quarter, we expanded the services of our contact center two seven a M to seven P M.
Speaker Change: This move has made a positive contribution to our level of client care and bolsters, our quest for greater brand loyalty.
Speaker Change: Although slightly more costly we feel this will.
Speaker Change: It will be a strong differentiator for our company as we capitalize on market disruptions.
Mark Klein: Organic expansion continues to be a focus. We have selectively added to our talent pool this year with expansions in Columbus and Cincinnati. New Seals Emphasis and Capacity and Wealth Management and recommitting to the Northern Indiana Market. We believe that these selective growth strategies will deliver positive results through the fourth quarter this year and well on into 2025.
Speaker Change: Organic expansion continues to be a focus.
Speaker Change: We have selectively added to our talent pool this year with expansions in Columbus and Cincinnati.
Speaker Change: New sales emphasis and capacity in wealth management, and Recommitting to the northern Indiana market.
Speaker Change: We believe that the selective growth strategies will deliver positive results through the fourth quarter this year and well on into 2025.
Mark Klein: speaking to operation, The mortgage business line remains a key driver. Our levels of client care and the residential real estate business plan are evident as we have maintained a stable portfolio. of nearly 9,000 households that we service and one that now generates over $3.5 million in fees annually. The headwinds that we have experienced this year continue to reflect both the lack of available inventory and the continued pressure of higher mortgage rates. That said, our pipeline has improved of late, exceeding $30 million, up 30% from the run rate, as slight movement down in rates has moved some clients from the sideline.
Speaker Change: Speaking to operational excellence.
Speaker Change: The mortgage business line remains a key driver.
Speaker Change: Our levels of client care and the residential real estate business line are evident as we have maintained a stable portfolio.
Speaker Change: Of nearly 9000 households that we service and one that now generates over $3 5 million of fees annually.
Speaker Change: The headwinds that we have experienced this year continue to reflect both the lack of available inventory and the continued pressure of higher mortgage rates.
Speaker Change: That said our pipeline has improved of late exceeding $30 million up 30% from the run rate as slight movement down in rates has moved some clients from the sidelines.
Mark Klein: Although refinance volume is still well below our historical levels, it now represents 10% of our current pipeline.
Speaker Change: Although refinance volume is still well below our historic levels. It now represents 10% of our current pipeline.
Mark Klein: As we discussed in prior quarters, we've expanded our presence in a new market. Specifically, we are focusing on the Cincinnati market as one that is similar characteristics to the Columbus and Indianapolis. We're now up and running with two MLOs in that market, and we closed our first deal in September with a solid pipeline scheduled for the fourth quarter. We think once fully integrated that Cincinnati Initiative will match and potentially exceed the production of our other urban markets.
Speaker Change: As we discussed in prior quarters, we've expanded our presence in a new market specifically, we are focusing on the Cincinnati market is one that has similar characteristics to the Columbus and Indianapolis markets.
We're now up and running with two M. <unk> in that market and we closed our first deal in September with a solid pipeline scheduled for the fourth quarter.
Speaker Change: We think once fully integrated that Cincinnati initiative will match and potentially exceed the production of our other urban markets.
Mark Klein: Finally, asset quality, always a hallmark of our company from origination to our expansive review process. We had minimal charge-offs in the quarter, with delinquencies slightly higher at just 65, basically. Clearly our commitment to growing our balance sheet and loan portfolio in Columbus and other markets will require us to remain steadfast in our credit underwriting and ensure that our loan review early warning signs are in tune with the ever-changing economic cycle.
Speaker Change: Finally asset quality always a hallmark of our company from origination to our expansive review process.
Speaker Change: We had minimal charge offs in the quarter with delinquencies slightly higher at <unk>.
Speaker Change: 65 basis points.
Speaker Change: Clearly our commitment to growing our balance sheet and loan portfolio in Columbus and in other markets.
Speaker Change: It will require us to remain steadfast in our credit underwriting and assure that our loan review early warning signs are in tune with the ever changing economic cycles.
Tony Cosentino: And I'll turn it over to Tony Cosentino, our CFO, for additional comments on the quarter. Tony?
Speaker Change: And now I'll turn it over to Tony Cosentino, our CFO for additional comments on the quarter Tony.
Tony Cosentino: Thanks Mark and good morning everyone. Net income for the year, $7.8 million, delivering a full year EPS of $1.17. And when we adjust for the non-core servicing rights impairment, the year-to-date EPS is slightly higher than the prior year, first nine. Total operating revenue was higher this quarter, improving by 4.4% year-over-year and by 1.8% from the linked quarter. Loan growth and the improvement in our asset mix, with securities now a less material portion of our earning asset base, were the major factors in the improvement. As Mark touched on, we had an impairment of our mortgage servicing rights revenue this quarter, as the significant volatility in rates, and especially prepayment speeds, reduced the valuation of our servicing portfolio.
Tony Cosentino: Thanks, Mark and good morning, everyone.
Tony Cosentino: Net income for the year $7 8 million delivering our full year EPS of $1 17.
Tony Cosentino: And when we adjust for the non core servicing rights impairment the year to date EPS is slightly higher than the prior year first nine months.
Total operating revenue was higher this quarter, improving by four 4% year over year and by 818% from the linked quarter.
Tony Cosentino: Loan growth and the improvement in our asset mix with securities now a less material portion of our earning asset base with the major factors in the improvement.
Speaker Change: As Mark touched on we had an impairment of our mortgage servicing rights revenue this quarter as the significant volatility in rates and especially prepayment speeds reduced the valuation of our servicing portfolio.
Tony Cosentino: At quarter end, the servicing portfolio was valued at $1.41 billion, up from both prior year and the link quarter. In addition, we completed the sale of a vacant lot in the quarter that resulted in a gain of $205,000.
Speaker Change: At quarter end, the servicing portfolio was valued at $1 four 1 billion up from both prior year and the linked quarter.
Speaker Change: In addition, we completed the sale of a vacant lot in the quarter that resulted in a gain of 205000.
Tony Cosentino: on Net Interest Margin. The Net Interest Rate Margin improved end of the quarter at 3.19% on a tax-equivalent basis, reflecting a 10-basis point increase from the prior year quarter and higher by 8 basis points from the length of the quarter. And from that link quarter, the yield on earning assets. was up 14 bases poised. And the rate on interest-bearing liabilities was up six.
Our net interest margin.
Speaker Change: The net interest margin improved.
Speaker Change: Ended the quarter at $3, one 9% on a tax equivalent basis, reflecting a 10 basis point increase from the prior year quarter and higher by eight basis points from the linked quarter.
Speaker Change: And from that linked quarter, the yield on earning assets.
Speaker Change: Was that 14 basis points.
Speaker Change: And the rate on interest bearing liabilities was up six basis points.
Tony Cosentino: As we indicated last quarter, we felt that the second quarter was the low point of our margin compression. And we feel that the remainder of 24 and 2025 will show gradual improvement in the NIM as rates decline and our asset mix adjusts. The efficiency of our balance sheet has always been a focus, with an emphasis on maintaining a healthy loan-to-deposit ratio. which was stable at 89% and it has improved our asset mix while driving margin revenue highs. Loans as a percentage of assets now stands at 73.9% stable to the prior year. Our investment portfolio is calibrated to support projected loan growth and provide a base level of liquidity.
Speaker Change: As we indicated last quarter, we felt that the second quarter was the low point of our margin compression.
Speaker Change: And we feel that the remainder of 24 in 2025 will show gradual improvement in the NIM as rates decline and our asset mix adjust.
Speaker Change: The efficiency of our balance sheet has always been a focus with an emphasis on maintaining a healthy loan to deposit ratio.
Speaker Change: Which was stable at 89% and it has improved our asset mix, while driving margin revenue higher.
Speaker Change: Loans as a percentage of assets now stands at 73, 9% stable to the prior year.
Speaker Change: Our investment portfolio is calibrated to support projected loan growth and provide a base level of liquidity.
Tony Cosentino: We continue to utilize the contractual runoff of the portfolio. approximately $25 million annually. to reinvest either at the Federal Reserve daily or longer term in our growing loan budget. Every incremental dollar of maturity adds at least 300 basis points in margin.
We continue to utilize the contractual run off of the portfolio.
Speaker Change: Approximately $25 million annually.
Speaker Change: To reinvest either at the federal reserve daily or longer term in our growing loan book.
Speaker Change: Every incremental dollar of maturity as at least 300 basis points in margin currently.
Tony Cosentino: on expense management. Given the commission-driven nature of several of our business lines, was in line with or just slightly below revenue growth. and played a key role in stabilizing our profitability. This quarter, when we adjust for non-core revenue and expense items, revenue grew 3.3 times faster than expenses when we compared to the link quarter.
Speaker Change: On expense management.
Given the commission driven nature of several of our business lines.
Speaker Change: Expense growth was in line with or just slightly below revenue growth.
Speaker Change: And played a key role in stabilizing our profitability.
Speaker Change: This quarter when we adjust for non core revenue and expense items revenue grew three three times faster than expenses, when we compare to the linked quarter.
Tony Cosentino: Now, if we turn to the balance sheet. Wholesale Funding Manager. Due to our deposit growth, we have no overnight wholesale. We do have a small level of fixed term wholesale funding that gives us a bit of stable funding. We have held back on any new bond commitments and are comfortable with excess funding invested at the Fed until we see a few more quarters of our loan pipeline.
Speaker Change: Now as we turn to the balance sheet.
Speaker Change: Wholesale funding management.
Speaker Change: Due to our deposit growth, we have no overnight wholesale funding.
Speaker Change: We do have a small level of fixed term wholesale funding that gives us a bit of stable funding.
Speaker Change: Yeah.
We had held back on any new bond commitments and are comfortable with excess funding invested at the fed until we see a few more quarters over our loan pipeline.
Tony Cosentino: We also know that Marblehead will provide another boost to liquidity in the first quarter of 2020. with approximately $35 million in lower cost liquidity. On our investment portfolio strategy, again, we've not added any bonds since early 2022 and have seen the portfolio decline by $57 million since that peak. And the portfolio has now declined to under 16% of total assets. Our AOCI improved by 9 million in the quarter. and Eve has responded favorably to the yield.
Speaker Change: We also know that Marblehead will provide another boost to liquidity in the first quarter of 2025 with approximately $35 million and lower cost liquidity.
Speaker Change: On our investment portfolio strategy again, we've not added any bonds since early 2022 and have seen the portfolio declined by $57 million since that peak.
Speaker Change: And the portfolio has now declined to under 16% of total assets.
Speaker Change: Our <unk> improved by $9 million in the quarter.
Speaker Change: And he has responded fare favorably to the yield curve.
Tony Cosentino: On credit losses, we took provision this quarter of $200,000 as our CECL model, coupled with funding for a number of commercial loan commitments in the Columbus market, required a small increase in provision. Given the quality of our portfolio, we are comfortable with a slight reduction in our reserve ratio that stood at 1.48% at quarter end. And we still have non-performing loan coverage of nearly 300. As we indicated last quarter, the three credits that were added to non-performing are all well secured and we anticipate resolving these credits relatively quickly and without material rights.
Speaker Change: On credit losses, we took provisions this quarter of 200000 as our seasonal model coupled with funding for a number of commercial loan commitments in the Columbus market required a small increase in provision expense.
Speaker Change: Given the quality of our portfolio, we are comfortable with a slight reduction in our reserve ratio.
At 1.48% at quarter end.
Speaker Change: And we still have nonperforming loan coverage of nearly 300%.
Speaker Change: As we indicated last quarter. The three credits that were added to nonperforming are all well secured and we anticipate resolving these credits relatively quickly and without material write downs.
Tony Cosentino: Our capital strength and shareholder value, the rate reductions obviously had a positive impact on our AOCI in the quarter, with total capital ending the quarter at $132.8 million, or 9.5% of assets. When we exclude all of the remaining AOCI impact, the equity-to-asset ratio improves to 11.1. stock buyback continued in the quarter. at a much higher pace as we repurchased over 66,000 shares at a level that was at or near tangible book value. This is the highest level of shares repurchased in some five quarters. Even with our capital needs for growth and for the Marblehead acquisition, we have modeled share repurchases to continue without a material declination in our capital ratio.
Speaker Change: Our capital strength and shareholder value the rate reductions, obviously had a positive impact on our OCI in the quarter with total capital ending the quarter at $132 8 million or nine 5% of assets.
Speaker Change: When we exclude all of the remaining a OCI impact the equity to asset ratio improved to 11, 3%.
Speaker Change: The stock buyback continued in the quarter.
Speaker Change: At a much higher pace as we repurchased over 66000 shares at a level that was at or near tangible book value.
Speaker Change: This is the highest level of shares repurchased in some five quarters.
Even with our capital needs for growth and for the cap Marblehead acquisition, we had modeled share repurchases to continue without a material declination in our capital ratios.
Mark Klein: I will now turn the call back over to Mark. Thank you, Tony. Certainly at a high level, our progress this quarter has positioned us nicely to finish the year strong as our asset mix changes, yield curve steepens potentially, and margins expand marginally, and profitability improves.
I will now turn the call back over to Mark.
Speaker Change: Yeah.
Mark Klein: Thank you Tony at certainly at a high level our progress this quarter has positioned us nicely to finish the year strong as our asset mix changes the yield curve, steepens potentially and margins expand marginally and profitability improves.
Mark Klein: We announced a dividend increase this week to $0.145 per share, which is nearly 35% payout ratio with a yield of approximately 2.95%. We have been making solid progress on the Marblehead acquisition that we announced previously. We're very excited to add their client base to our portfolio in early 2025, and we continue to believe it will be solidly accreed to our earnings and to our franchise value.
Mark Klein: We announced a dividend increase this week to $14.05 per share, which is nearly 35% payout ratio with a yield of approximately 295%.
Mark Klein: We have been making solid progress on the Marblehead acquisition that we announced previously.
Mark Klein: We're very excited to add their client base to our portfolio in early 2025, and we continue to believe it will be solidly accretive to our earnings and to our franchise value.
Mark Klein: In closing, while the current economic environment presents some challenges, we remain optimistic about our prospects for continued growth. Our diversified business model, strong client relationships, and conservative risk management, we think will allow us to continue delivering solid results for our shareholders on into 2025.
Mark Klein: In closing, while the current economic environment presents some challenges we remain optimistic about our prospects for continued growth.
Our diversified business model strong client relationships and conservative risk management, we think will allow us to continue delivering solid results for our shareholders on into 2025 now.
Carol Robbins: Now I'll turn the call back over to Carol for questions and answers. Dave, we're ready for. Okay, we will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using your speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two.
Speaker Change: Now I'll turn the call back over to Carol for questions and answers.
Carol Robbins: Dave we're ready for questions now.
Dave: Okay. We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're if you're using your speakerphone. Please pick up your handset before pressing the keys. If at any time. Your question has been addressed and you would like to withdraw your question. Please press star and then.
Carol Robbins: Two.
Operator: At this time, we will pause momentarily to assemble our roster.
At this time, we will pause momentarily to assemble our roster.
Okay.
Brian Martin: Our first question comes from Brian Martin with Jannie. Please go ahead.
Speaker Change: Our first question comes from Brian Martin with Janney. Please go ahead.
Brian Martin: Hey, good morning, guys. Mark Klein, Ryan, nice to have you with us. Yeah, thanks for having me.
Hey, good morning, guys.
Good morning, Ryan Nice day February yes, thanks for having me.
Mark Klein: So the, just maybe just, Mark, you mentioned some new hires on some kind of new talent, and I guess I'm not sure if that was more referring to the mortgage side or on the lending side or both, or maybe you just can give a quick update on, you know, kind of changes recently. Yes, we've added, again, two MLOs in the Cincinnati market, and they're up and running and producing. We've added some additional talent in the back room in the Quality Control Department.
Brian Martin: I guess, maybe Marc you've mentioned some new hires on some kind of new talent and I guess I'm not sure if that was more referring to the on the mortgage side or on the lending side or both or maybe you can give a quick update on kind of changes recently.
Speaker Change: Yes, we've added again to MLR was in the Cincinnati market, and they're up and running and producing a we've added some additional talent in the back room and the quality control Department.
Mark Klein: We've added a new leader, so to speak, for the Wealth Management Division to take a little bigger bite and presence out of the 401k market. That individual's on board.
Speaker Change: We've added a.
Speaker Change: New leader so to speak for the wealth management division to take.
Speaker Change: Take a little bigger bite and presence out of the 401K market.
Speaker Change: That individual's onboard.
Mark Klein: We've actually brought in some additional talent in the commercial arena, of course, with Adam Russell that we talked about some time ago, I think probably last quarter. Again, he's doing very well and bringing on roughly $50 million this year, and also an additional administrative assistant for him who's now leading the charge and leading our commercial loan processors in our market. That pretty much comprises the additional talent, but some back room to make sure that we have the compliance piece covered nicely, as well as the impending volume. Gotcha.
Speaker Change: We've actually brought in some additional talent in the commercial arena.
Speaker Change: Of course without them Russell that we've talked about some time ago, I think probably last quarter.
Speaker Change: Again, he is doing very well and bringing on.
Speaker Change: Roughly $50 million this year and also what additional administrative assistant for him who is now leading the charge.
Speaker Change: And leading our commercial loan processors and.
In our market.
Speaker Change: So that pretty much comprises the additional talent, but some back room to make sure that we have the compliance piece covered nicely as well as the impending volume gotcha.
Mark Klein: And was that the commercial producer, was that the Columbus market or just in, you know, for all markets, I guess, kind of somewhat overseeing that? Yeah, predominantly the Columbus market that we know we can really, we've demonstrated, Brian, we can really grow at will. And so we're curbing our enthusiasm a bit because there's a lot of projects there.
Speaker Change: Got you and with that the commercial producer was that was that the Columbus market or just in for all markets I guess kind of somewhat overseeing that.
Speaker Change: Yeah predominantly the Columbus market that we know we can.
Speaker Change: Really we've demonstrated Brian we can really grow at will.
Speaker Change: And so we're curbing our enthusiasm a bit because theres a lot of projects. There. We just want to make sure. We are remaining prudent and diligent to our responsible underwriting process and as I mentioned, a $50 million, we're pretty optimistic for Fort Wayne has been nice for us, but clearly our other markets I have to pick it up because.
Mark Klein: We just want to make sure we're remaining prudent and diligent to our responsible underwriting process. And as I mentioned, $50 million, we're pretty optimistic for. Fort Wayne has been nice for us, but clearly our other markets have to pick it up because it can't just be growth in one market. We've got to have some additional balance in 2025. Got you. Okay. That's super helpful.
It can't just be growth in one market that we got to have some additional balance in 2025 gotcha.
Speaker Change: Got you Okay. That's super helpful. And then just on.
Mark Klein: And then just on the loan growth outlook, I think you seemed pretty optimistic heading into 4Q and then kind of carrying that momentum into 25. Is that pretty accurate where it's, loan growth ought to be in the mid to upper single digits in terms of how you're thinking about how that translates to growth? Well, sure, as you know, we've historically been in that high single digit. And that's where we love to be. We don't want to be the market leader, we don't want to, you know, take everything. But single high digit is where we like to be.
Speaker Change: The loan growth outlook, I think you seem pretty optimistic heading into <unk>, and then kind of carrying that momentum into 'twenty five is that pretty accurate words.
<unk> growth ought to be in the mid to upper single digits in terms of how you're thinking about the how that translates to growth.
Speaker Change: Well sure as you know, we've historically been in that high single digit and that's where we loved to be we don't want to be the market leader, we don't want to take everything.
Speaker Change: But single high digit is where we'd like to be we've exceeded that a little bit you know this past quarter at the the 90 plus percent kind of a thing annualized but we've.
Mark Klein: We've exceeded that a little bit, you know, this past quarter at the nine plus percent kind of thing annualized, but we've had a really good pipeline. We've got certainly loans that are on a construction basis or a little bit of a development that's yet to draw up. But we remain optimistic about all of our markets, but clearly...
Speaker Change: We've had a really good pipeline, we've got certainly loans.
Speaker Change: The loans that are on a construction basis or a little bit of a development that's yet to draw up.
Speaker Change: But we remain optimistic about our all of our markets, but clearly.
Mark Klein: Expanding into the Columbus market with the new leader has certainly put a bit of a charge in our commercial production. Gotcha. Okay, that's perfect.
Expanding into the Columbus market with a new leader has certainly put a bit of a charge in our commercial production.
Speaker Change: Got you, Okay, that's perfect and then on the.
Mark Klein: And then just on the mortgage side, you also sound pretty optimistic in terms of, I thought you said it was maybe 20% growth outlook for 2025. And I guess that seems to account for the new entrance into Cincinnati and then just kind of the current rate environment. Is that kind of what the drivers of that are? And is that kind of consistent with how you're thinking about the 20% is really, in terms of production, pretty achievable? Absolutely.
Speaker Change: Just on the mortgage side, you also sound pretty optimistic in terms of.
Speaker Change: You said it was maybe 20%.
Speaker Change: <unk> outlook for 25, and I guess.
Speaker Change: That seems to account for the new entrants into Cincinnati, and then just kind of the current rate environment is that kind of what the drivers of that arent as that kind of consistent with how youre thinking about the 20% is really in terms of production pretty achievable.
Speaker Change: Absolutely as you know we've communicated extensively that our sweet spot is the $500 million. That's what the backroom is built for and so working hard yet maintaining the margins that we've been used to on a sale basis clearly drives our appetite for our Freddie Fannie deals, but also.
Mark Klein: As you know, we've communicated extensively that our sweet spot is the $500 million. That's what the backroom is built for. And so working hard yet maintaining the margins that we've been used to on a sale basis clearly drives our appetite for Freddie Fannie deals, but also doing some private clients kind of loans, but getting at least back into, Brian, that $350 million to $400 million number next year certainly would be in order for us. Of course, we can't predict payoffs, and we can't predict the rate environment. And of course, November 5th will certainly give us a little bit of an insight as to what that might look like in 2025.
Speaker Change: Some private client has got kind of kind of loans, but getting at least back into a Brian that 350 million to 400 million number next year certainly would be in order for us of course, we can't predict.
Pay offs, and we can't predict the rate environment and of course November 5th well certainly give us a little bit of an insight as to what that might look like in 2025, but our mortgage business line remains a.
Brian Martin: But mortgage business line remains a key element of our company. We like the households that we acquire, but more importantly, we like the opportunity to cross sell into those households. And again, over the last decade, we've gone from a few hundred and a few thousand households to 9,000. So we like our positioning. Gotcha. Okay. Yeah. And then let's see.
Speaker Change: Key element of our company, we liked the households that we acquire but more importantly, we like the opportunity to cross sell into those households.
Speaker Change: And again over the last decade, we've gone from.
Speaker Change: A few hundred a few thousand households.
Speaker Change: And so.
Speaker Change: People like our positioning.
Speaker Change: Got you Okay, Yeah, and then let's see the other one was just on Saturday for for Tony on the margin.
Brian Martin: The other one was just on... Sorry. For Tony on the margin, it sounds as though the... The base was built last quarter, or in the second quarter, and the outlook is pretty favorable here.
Speaker Change: It sounds as though the.
Speaker Change: The base was built last quarter or in second quarter and the outlook is pretty favorable here can you just talk about Tony the dynamics of you know, we do see a steady easing cycle here you know kind of how you think the margin plays out and then you know just kind of layering in how marblehead.
Tony Cosentino: Can you just talk about, Tony, the dynamics of, you know, if we do see a steady easing cycle here, you know, kind of how you think the margin plays out, and then, you know, just kind of layering in how, you know, Marblehead, you know, contributes to that, you know, kind of baseline, if you will, would be helpful. Yeah. You know, I think, Brian, the, you know, margin expanded, in my sense, a little bit wider this quarter than I had really thought. I mean, I thought we'd be maybe five, six basis points up, kind of, you know, eight basis points over the link quarter was a pleasant surprise.
Speaker Change: Tributes to that.
Speaker Change: You know kind of baseline if you will it would be helpful.
Yeah.
Tony Cosentino: I think Brian the <unk>.
Speaker Change: Margin expanded and my sense, a little bit wider this quarter than I had really thought I mean, I thought we'd be maybe five six basis points up kind of eight basis points over the linked quarter was was a pleasant surprise.
Tony Cosentino: You know, I think the mix is moving a little bit faster in our favor. And, you know, I think we'll add another 25-ish million of loan growth here in Q4, kind of similar to what we had in Q3. And on the funding side, I think we're, you know, as Mark said, you know, it's been gradually. increasing but certainly at a slower pace. And you know, most of our rollovers, most of the market, you know, other than a few kind of outsiders have kind of settled in where we are today, so as the CD book kind of rolls over, there's not as much of a significant increase.
Speaker Change: I think the mix is moving a little bit faster in our favor in you know I think we will add another 25 ish million of loan growth here in Q4 kind of similar to what we had in Q3.
Speaker Change: And on the funding side I think you know as Mark said, it's been gradually.
Speaker Change: Increasing but certainly at a slower pace and you know most of our rollovers most of the market other than a few kind of.
Speaker Change: Outsiders have kind of settled in where we are today so.
Speaker Change: As the CD book kind of rolls over Theres not as much of a significant increase so I think the key in 'twenty five is contractual maturities getting to a high single digit growth rate on the loans, which will improve our mix and really kind of stable.
Tony Cosentino: So I think that the key in 25 is contractual maturities, getting to a high single-digit growth rate on the loans, which will improve our mix, and really kind of stable funding, which I think will get our merge into the 330 range by the time we're sitting here, 335 by the end of, you know, 2025. Okay. And that kind of contemplates Marblehead in there with that as well. Yeah. And, you know, interestingly enough, I mean, their loan book is significantly higher than ours on a, you know, I called it the loan pricing model. Their deposit base is similar to ours.
Speaker Change: Funding, which I think will get our emerging too.
Speaker Change: The 330 range by the time, we're sitting here $3 35 by the end of 'twenty five.
Okay, and that kind of contemplates a marvel head in there with the.
Well, yes, and interestingly enough I mean their loan book is is significantly higher than ours on a you know.
Speaker Change: I called it the the loan pricing model their deposit base is similar to ours.
Tony Cosentino: And actually the funding is a little less than what ours is. So the key is, you know, we're going to reposition that portfolio and take their 35 million of kind of two and a half percent bonds and figure out what we can do. If we can rapidly get that in the loan book, you know, it's going to be significant. If it's just a kind of a fed funds and we kind of stay roughly in this range, you know, you're going to add to 250 to 300 basis points of margin improvement for them out of the gate.
Speaker Change: And actually the funding is a little little less than what ours is.
Speaker Change: So the key is you know, we're going to reposition that portfolio and take their $35 million of kind of two 5% bonds and figure out what we can do if we can rapidly get that.
Speaker Change: And the loan book.
Speaker Change: Be significant if it's just a kind of a.
Speaker Change: A fed funds and we kind of stay roughly in this range you know youre going to add to 250 to 300 basis points of margin improvement for them out of the gate.
Tony Cosentino: on 35 million. Yeah.
Speaker Change: 35 million to it yes.
Brian Martin: Okay, in the in the transaction right now, you know, time wise is first, how you thinking of when that when that closes?
Speaker Change: Okay, and the and the transaction right now.
Speaker Change: [noise] wise as far as how you're thinking of when that when that closes what's the what's the timeline there.
Tony Cosentino: What's the what's the timeline there? You know, late first quarter? Is that how you're thinking? Yeah, I mean, I think, you know, we're, we're deep in the in the application process, they obviously need their shareholder approval, which, you know, all senses, you know, kind of full steam ahead. I, you know, we'll get our approval, hopefully here, prior to the end of the year, you know, we'll close it, call it late January, first part of February. And we'll have it on our books for, you know, 11 months here in, in 2025. You know, I don't think we'll do the actual conversion of the clients still, obviously, later in the year, based upon, you know, the system constraints we have with our provider, but I think out of the gate, we'll be able to get them on board and have that accretive to our earnings base.
Speaker Change: First quarter is that how you're thinking yeah.
Speaker Change: Yeah, I mean, I think we're deep in the in the application process. They obviously need their shareholder approval, which you know all sensors kind of full steam ahead.
Speaker Change: We'll get.
Speaker Change: Our approval hopefully here prior to the end of the year you know we will close it call. It late January 1st part of February.
Speaker Change: And we'll have it on our books for 11 months here in in 2025, you know I don't think we'll do the actual conversion of the clients still obviously later in the year based upon you know the.
Speaker Change: The system constraints, we have with our provider, but I think out of the gate will be able to get them on board and have that are accretive to our earnings base and Brian Theres shareholder meetings, the 30th than they've already received a roughly about 85% of their proxy is positive. So we're steaming ahead nicely. We just have to get the fed on border.
Mark Klein: And Brian, their shareholder meeting is the 30th, and they've already received roughly 85% of their proxies positive. So, you know, we're steaming ahead nicely, we just have to get the Fed on board here. Yeah, okay, that sounds, sounds good.
Speaker Change: Yeah, Okay that sounds it sounds good and.
Brian Martin: And maybe just one or two others, just on the expense side, you guys have done a great job and managing and controlling expenses, just how to think about, you know, the next couple quarters are just into 25, kind of how we're, you know, looking at the run rate, kind of inclusive of, you know, Marblehead, kind of how that, you know, what that adds, and just how you're thinking about you know, the expense capability. Yeah, I think, you know, we have 11 million of expense, you know, this quarter. You know, I think that's a pretty good baseline against 70, we're going to do 70 to call it 90 million a quarter of mortgage.
Maybe just one or two others just on the on the expense side you guys have done a great job in managing and controlling expenses.
Speaker Change: Think about you know maybe the next couple of quarters or just into 25 kind of how we're looking at the run rate kind of inclusive of you know marvell had kind of how that what that adds and just how you're thinking about you know that.
Speaker Change: The expense capabilities.
Speaker Change: I think you know we had $11 million.
Speaker Change: Other expense.
Speaker Change: This quarter.
Speaker Change: And I think that's a pretty good baseline against 70, we're going to do 70 to call it $90 million a quarter of mortgage so that's going to move up slightly one way or the other relative to that number I don't anticipate significantly more talent acquisitions above where we are.
Tony Cosentino: So that's going to, you know, move up slightly one way or the other relative to that number. I don't anticipate significantly more talent acquisitions above where we are. But we will have some kind of year over year comparative, that'll be moderately higher. I do think we continue to have like all banks our size, we continue to have technology needs and constraints that we have to spend on to get better. And the key is, can we drive revenue growth offset those, but, you know, we're committed to keeping expenses in line with our expense growth slightly less.
Speaker Change: Yeah, but we will have some kind of year over year comparative that'll.
Speaker Change: That'll be moderately higher Ah I do think we continue to have like all banks. Our size. We continue to have technology needs and constraints that we have to spend on to get better and the key is can we drive revenue growth offset those but we're committed to keeping expenses in line with our.
Speaker Change: Expense growth slightly less and that's our expectation and Brian just to comment we are trying to balance that our <unk> expense increased conversation with some tactical organic expansion opportunities in some adjacent markets.
Tony Cosentino: And that's our expectation.
Mark Klein: And Brian, just to comment, we are trying to balance that expense increased conversation with some tactical organic expansion opportunities in some adjacent markets, you know, PNCs pulling out of some of our markets and Huntington has pulled out of some of the markets and there's a lot of disruption going on that we intend to take advantage of, which most likely is going to be a little bit of expense before the revenue comes in, but we try to keep that in perspective. Gotcha. No, that's helpful.
Speaker Change: <unk> are pulling out of some of our markets and Oh Neogen has pulled out of some of the markets and there's a lot of disruption going on that we intend to take advantage of which most likely is going to be a little bit of expense before the revenue comes in but we try to keep that in perspective.
Brian Martin: And Tony, just one back for the margin, just so I kind of think about it. The margin expansion, you know, next quarter, next year, just kind of rolling forward, inclusive of the rate outlook, I mean, I guess is really predicated on, you know, getting the loan growth, because right now it sounds like any pickup you're getting, you know, absent any more competitive loan pricing is kind of in that, you know, 300 basis point range. So really the way to think about the margin is the, you know, the funding costs are flat to down. And, you know, the really it's just, you know, putting the liquidity from Marblehead and, you know, to work at.
Speaker Change: Yeah, No that's helpful and Tony just one went back for the margin just so I kind of think about it the margin expansion next quarter next year, just kind of rolling forward inclusive of the rate outlook. I mean, I guess is really predicated on getting the loan growth because right now it sounds you can keep the penny pick up you're getting you know absent any more competitive loan pricing.
Speaker Change: Missing is kind of in that 300 basis point range. So really the way to think about the margin is the you know the funding costs are flat to down in.
Speaker Change: They're really it's just you know putting the liquidity from Marblehead and to work at.
Tony Cosentino: in higher yielding loans and just kind of remixing, I guess, or just, you know, that's kind of what drives the margin expansion here.
And in higher yielding loans and just kind of Remixing I guess, we're just you know that's kind of what drives the margin expansion here yeah.
Tony Cosentino: Yeah, absolutely. I, you know, I think, you know, my base model is, you know, kind of stable funding costs. And then you look at, you know, kind of 25 million of, of bond amortization at a 275 to 3% range, you know, at a minimum, you get five and a half, which doesn't get you a whole lot of margin improvement. But if we can get, you know, 85 million of loan growth, call it that eight and a half to percent next year, that'll take up not only that liquidity, but the 35 million from, from Marblehead. And then we're not as stressed on the funding side, Brian, to have to, you know, go to higher pricing in order to fund that we should be able to remain, you know, fairly stable with our current base and not have to get in kind of the funding chase to, to fund our growth.
Yeah, absolutely I think you know my base model is you know kind of stable funding costs and then you look at kind of $25 million of bond amortization at $2, 75% to 3% range you know at a minimum you get five and a half which doesn't get you a whole lot of margin improvement but.
Speaker Change: If we can get you know $85 million of loan growth call. It that eight and a half 2% next year that'll.
Speaker Change: That'll take up not only that liquidity, but the 35 million from for Marblehead and they were not as stressed on the funding side, Brian to have to go to higher pricing in order to fund that we should be able to remain you know.
Speaker Change: Fairly stable with our current base and not have to get into kind of the funding chase too to fund our growth and you know I think 25 is an excellent kind of window for us to really improve margin.
Tony Cosentino: And, you know, I think 25 is an excellent kind of window for us to really improve margin with loan growth. And that's the critical, that's the critical factor for us next. Got you. Okay.
Speaker Change: With loan growth and then that's the critical that's the critical factor for US next year.
Speaker Change: Gotcha, Okay, well it sounds it sounds pretty positive on and the momentum on the loan side heading into <unk>, you know the rate environment and the new market and a mortgage certainly you know give you some tailwind there in time in terms of the the outlook heading into 'twenty five so can grasp on a nice quarter and thanks for taking the question.
Brian Martin: Well, it sounds pretty positive on the momentum on the loan side heading into 4Q and you know, the rate environment and the new market and mortgage certainly, you know, give you some tailwind there in terms of the outlook heading into 25. So can grasp on a nice quarter and thanks for taking the questions. Thanks, Brian. Thanks for joining, Brian.
Speaker Change: Thanks, Ryan and thanks for joining Brian.
Speaker Change: Okay.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mark Klein for any closing remarks.
Mark Klein: I would like to turn the conference back over to Mark Klein for any closing remarks.
Mark Klein: Once again, thank you all for joining us this morning.
Mark Klein: Once again, thank you all for joining us. This morning, we certainly look forward to having you with us in January for the update on the final quarter of the year and for the full year of 2024.
Mark Klein: We certainly look forward to having you with us in January for the update on the final quarter of the year and for the full year of 2024.
Operator: Thanks for joining and goodbye.
Mark Klein: Thanks for joining and goodbye.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.