Q3 2024 First Commonwealth Financial Corp Earnings Call

Third quarter 2024 earnings conference call all lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again Rusty Star one. Thank you I'd now like to turn the call over to Ryan Thomas Vice President of Finance and Investor Relations you may begin.

Thank you for standing by and welcome to the first Commonwealth Financial Corporation 3rd quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.

If you would like to ask a question during this time, but I'm sure you'll be very close to your phone call. If you'd like to withdraw your question, you can't get your phone on your phone. I'd like to turn the call back to Ryan Thomas, but your friends and friends will be best to really answer. Maybe again, if you'd like to ask a question, you can never call back to the phone. If you'd like to withdraw your question, you can't get your phone. We're just kidding on today's call. I'm Alan Michael. I'm Thomas Price. You've read an amazing, fantastic, wonderful. After relations, Jamie begins. Thanks President and Chief of the Drop. Good afternoon everyone. I want to offer you a good evening. Thank you for joining us. Thank you for coming along. Thank you for joining us.

Ryan Thomas: Thanks, Rob and good afternoon, everyone. Thank you for joining us today to discuss first Commonwealth Financial Corporation third quarter financial results participating on today's call will be Mike price, President and CEO, Jim Reske, Chief Financial Officer, Jim Gabel Bank, President and Chief revenue Officer, Brian to Aki Chief Credit Officer.

Ryan Thomas: And Mike Mcewen, our chief lending officer.

Ryan Thomas: As a reminder, a copy of yesterday's earnings release can be accessed by logging on to SD banking dot com and selecting the Investor Relations link at the top of the page we have.

Ryan Thomas: Also included a slide presentation on our Investor Relations website with supplemental information that will be referenced during today's call.

[inaudible]

Ryan Thomas: Before we begin I need to caution listeners that this call will contain forward looking statements. Please refer to our forward looking statements disclaimer on page three of the slide presentation for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward looking statements.

Ryan Thomas: Today's call will also include non-GAAP financial measures non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.

Ryan Thomas: Reconciliation of these measures can be found in the appendix of today's slide presentation with that I will turn the call over to Mike.

Mike: Thank you Ryan and welcome everyone.

and not as everyone is on risk for. And the survey polluted results would probably actually result written for the EU, the Federal Reserve Plan to the end of the 10-second of the eight-day slide. Today's poll will also be with that on a matter of my knowledge.

Mike: Third quarter 2020 for core earnings per share were <unk> 31 loans were essentially flat.

Mike: Deposits grew and the net interest margin fell one basis point to 356%.

And welcome to the next episode. Thank you Ryan and welcome to the next episode. A third quarter, a week thousand, a month, a quarter, a quarter, a quarter. A year ago, we were 31,000. We were essentially flat, flat, pretty.

Mike: As rates declined in anticipation of the fed rate cut in September.

Mike: Growth in other fee income offset a 3 million dollar decrease in interchange income as we incurred the long anticipated impact of Durbin.

The positive room in the net interest margin fell.

1 day Ryan, I had welcomed everyone. We've 0.5 staffer, sir. And quarter, as rates took on, in 24 tables, and the fair and gray chair in September. We're 31, sir. Rose Lone, getting the father for the income offset of $3,000 in value, and the net risk in order to change the income. When we have heard my long anticipated 25 to the dirt, sir.

Mike: Expenses were elevated primarily due to several onetime items all the all of this led the pre tax pre provision ROA of.

Mike: Of 173% and efficiency ratio of 56, 6% and core pretax pre provision net revenue of $59 million, which was within $1 million of analyst consensus turning to credit.

Exitances were elevated, primarily due that several one-time diamer.

All the role of this yet other times, contribution to our lay, $80 million of $1.7 billion for an air change into a ratio of the incurred, the long and six-point impacts of our rent.

Mike: Provision expense at $10 6 million was up $2 8 million over the second quarter, our credit story in the third quarter was largely the tail of four credits embedded within the elevated provision expense our specific reserves for two legacy loans.

and core ventry's validated preventer of revenue several one ten-ton point nine all of this was the three towers with the innovation are a million dollars of a one-point seven three percent of the graduation provision existence at 10.6 for no end

Two charge offs related to the century acquisition now in our capital region.

and the four point agnostic intervention never revealed an uncoordered order. Our credit score in the lower-order was largely the jail of the framework credit. $1 million debt in the elevated provisioning segment of our specific reserveation, and 2,000 legacy loans, and 2,000 will charge off the related to the million electric over that position. Now in the capital region, third quarter, most of the debt not all, and 2 centric embedded drug-driven elevated provisioning, and the divided core of the specific reserve, together, might it be approximately 1.5 million dollars for the late accident. This recorder on the top of the map, now in our capital, we've been $0.5 million, and most of the, like, not all of the two, set the last seven drug holders at the district of the 42-viter, where we're a credit.

Mike: Most but not all of the two centric charge offs had been previously provided for but they together accounted for approximately $1 $5 million of provision expense this quarter on top of the $5 5 million for the two legacy loans.

Over the last seven quarters, a disproportionate share of our credit costs.

Mike: <unk> from our acquisition of centric that closed in the first quarter of 2023 as we've shared previously we understood their credit profile going in so we marked the credit and the price the deal. Accordingly, However, the acquired portfolio continues to impact our credit performance.

[inaudible]

Mike: <unk> was 10% of our size the former centric loans have accounted for.

476% of commercial charge offs and 51% of total charge offs in 2023, and 2024 year to date former centric loans have accounted for 86% of commercial charge offs and 42% of total charge offs.

So we're the last seven writers, the greatest reveal to the chair of our credit. However, the acquired family on acquisition in Patrick, our credit flows for the first quarter. For example, it was 10, when we sent him a size, the four times we've sent him a glove, and we haven't counted the credit profile for the remaining six percent. The Marshall Trident, the Price and the OECD 1% of total, however, the acquired portfolio out of the 23.

Mike: At September 30th criticized loans were two 6% to 8% of total loans, excluding centric loans that ratio would be 169%, which is actually an improvement from the one 7% figure on the David centric close however, we continue to make substantive.

in 2014, and 2014, year-to-date for a bank, and 10-clone of our size, or former 80-accounted commercial for our jobs in 477, and a total of our jobs. Our commercial charge-offs at September 1, 30 have criticized our own for 2.2,000, and 2,000, and 3, total loan. In 2012, we were year-to-date for that ratio, which would be 1,000, and 0.689. It was spent at, which is actually in the first half of our jobs in 2011, until we had a year on the day that sent us to September of 30, which invited you to make 2.2,000, to date for our net, which was so little, and wanted to exclude it in the capital region, each square ratio would be 1,000, and 1,000. It's stronger than 3,000, and there's gain on the scale in coming in the 1,000, and 1,000, 7,000, to a one-year-old on the day that's been preserved, so far, and well-cooked.

Mike: Progress with centric credits in the capital region each quarter.

Mike: So important stronger third quarter gain on sale income and SBA alongside increases in service charge and wealth management income.

Mike: And $926000 and boldly income all work together to blunt the $3 million impact of having our debit card interchange income cut in half.

Mike: Due to the Durbin Amendment in fact noninterest income income drifted down only $683000 looking head ahead, we expect noninterest income to be in the $22 million to $24 million range in the fourth quarter.

Managed it, made come, stand man, progress, $926,000 after the rule I had given all our were willing to gather to blunt. longer, $3 million, we're getting on Act A, having an Emeagwali Air change in one side and an act is in service to the German government management in fact, non-entry and $920,000, $4,000, and $43,000, all the hours together. Looking at, I had a $3 million, not having to have an under-dem策 in our 20-year range in the fourth quarter to the Derby net. Turning now to expenses, that has elevated in terms of the encoder ifs it up down, $4 million, $680,000, $8.80 million over the prior quarter. I had the required expense on the select improvably in the 2021.8.

Mike: Turning now to expenses, we had elevated expenses this quarter of $70 1 million up $4 3 million over the prior quarter third quarter expenses reflect approximately $1 8 million of one time items, including a $1 $1 million operational loss in credit.

Mike: Card and a $750000 and severance expense, we expect noninterest expense to be $67 million to $68 million and the $67 million to $68 million range in the fourth quarter.

and $7.74.53 million dollars by an order of $7.64. And that promoter's score were commonwealth and grind.

Mike: Beyond the financials there are a few other items worth mentioning.

Mike: First Commonwealth earned recognition as the number two SBA lender by dollars and Western Pennsylvania for the 2020 for fiscal year ending in September.

Mike: As of October 15th our overall customer satisfaction score and net promoter scores have hit five year peaks at.

Mike: At 94% and 73, respectively, we've seen a steady trend of increases in these figures since 2020.

Mike: With both exceeding industry benchmarks. These are important metrics for us, especially as we cross $10 billion in assets.

here. So, we have a number two SPM line. We've been to all of our in the 70th claimary, spec with a link, thousand and twenty-one. We're steady to enter the end in the figure since 2000 and that's it.

Mike: Although we are disappointed by our third quarter earnings per share missed I'm encouraged by the momentum in our businesses and prospects for stronger growth ahead. Despite a relatively healthy level of loan originations. This year. Our overall loan growth has in some ways has been purposely muted by one.

October, 14, so many broads to spend more. That's the matter in the circle. We're now in the last broader school, especially at your peak $10 billion. And I mean, $0.4 and 70, although we are just a back-ended, by our third quarter, steady, 30-ended, senior, and senior, and senior, and senior, and senior, and senior, and senior, by the Monentimate, our businesses and both, back-seed, and community, along those driven tax, these are in poor supply, and relatively healthy, and globally, and low-end, or combination, and a junior, or rather, as well. Our overall loan growth has a wide ways of employment, and it's clear to you that, that by turning one, we are re-building of the centric, by the momentum of businesses and prosperity, for the development of the growth that we have, exposure to slightly, slightly, like, sparking the level of loan, or within eight minutes of year. We're telling you all, all loan growth, or hedge, or engine outlaves, and perpone, importantly, our lives.

Mike: Our rebuilding of the century portfolio to our strategic decision to reduce exposure to certain sectors like sponsor finance.

Mike: And three the shift to selling nearly all of our mortgage originations more importantly, our regional presidents have a growth mindset have attracted new commercial banking talent that will drive the bank forward for years to come our new capital regions credit performance will converge with the strong credit metrics.

Mike: Orix at first Commonwealth overall, and become a key source of future growth and attractive central and eastern markets and with that I'll turn it over to Jim <unk>, Jim Thanks, Mike.

and the president of the Grovey Modell, the director of the work quality, the new commercial banking or talent, the division to reduce the right burden for over 30 years to my answer for. A new capital region, specific normative, we'll all convert over more to gone from electric, the first government work, we'll all be into a place and soar, both mindsets, you to direct and attract a new commercial demand in our land and pay markets.

Jim: Thanks, I already talked about the major financial metrics. So I'll take a closer look at the net interest margin and then wrap up with about 30 seconds on capital.

Jim: Last quarter, our NIM guidance was for quote stability or even slight improvement from current levels for the remainder of 'twenty four give or take five basis points as usual unquote.

Speaker Change: and then, John Rowski, a new capital region's credit performance will. Thank you for talking about your major financial and academic research. I'll take a look at all of the net interest margin source. And then wrap up with a Bouther Road like the attractive.

Jim: While we didn't get the slight improvement part we did get the stability part our NIM guidance didn't contemplate a 50 basis point rate cut in September so in that sense. We were pleased to see our NIM exhibit relative stability by ongoing down by one basis point from last quarter.

Central and Eastern P.R. For our new guiding with the effort of the Jim Wright The ability or even sliding movement from current levels for the remainder of 20 minutes I already talked about a major financial interest. You also get fun to look at the net interest margin while we didn't get the draft sign about the current part. We did get this stability part.

Jim: The name is facing various headwinds and tailwind that largely offset each other in the third quarter.

Our name, Guy Matt and Parker, our name, Guy Matt and the school TV floor and Ray Cutters, the very, the nightlight improvement we are creating of the earlier release of the award with the Bygaren Game Farm by one basis at U-Shame Last Unclone.

Jim: But they do give us some insight into where the NIM is going.

Jim: One headwind its excess cash.

Jim: We've been holding excess cash all year, because we locked in low cost borrowings through the fed's VP FP program early in the year and we were reluctant to pay that off.

The name of the Indian-Berryite Ed Ruman file is getting largely off petty shudders. Our Indian guidance didn't contemplate. But I do give us 50 things by break-outs in the head, so in that sense.

Jim: Loan growth was slightly negative in the third quarter, while deposits continue to grow resulting in a steady buildup of excess cash on top of that we received a large commercial deposit right at the end of the third quarter.

[inaudible]

Jim: All of this cash had a suppressive effect on the NIM, even though its additive to earnings because it pumps that both sides of the balance sheet with a very thin margin asset.

But they do give us what I mean, what I mean, negative in the third quarter, all the way, we had to get into the group. Resulting in the state, we've been holding this cash all year because you're locked in, we need to keep a large or we're concerned with the size of the right-of-the-end of the third program.

Jim: That cash had a suppressive effect of six basis points of an eminent second quarter.

Jim: Third quarter, that's depressive effect was nine basis points.

Speaker Change: Early in all of his tasks and we were looking to present this fact on the name, 11 there won't be any further. In the negative because there are quarter pumps out of the outside of the building. The fact that the press is affecting the top of that is the farthest. We're checking positive right at the end of the third quarter. The next episode of the press is the nine.

Jim: Neutralizing the effect of excess cash in both quarters would therefore, it changed our one basis points of compression to two basis points of expansion, but realistically that's all still within the range of what we would call stability.

Looking forward the headwind of excess cash has been largely removed because on October three we used it to pay down $436 million of the $516 million of VP P. Borrowings that we had and we will likely pay down of the remaining $80 million when the fed raises rates here in November.

Speaker Change: and the United States. You know, we've had orders of earnings. We've had orders change our one of those questions. That's a huge, very important margin. But really, actually, we had a support as a fact still within the rainy week once on the enemy's second quarter.

Speaker Change: Looking forward to having the next session. As the last nine days in largely removed.

Jim: Another headwind to the NIM with the eight basis point increase in our cost of deposits that eight basis point increase however was down 10 basis points in the second quarter and a 25 basis point increase in the first quarter, we expect that downward trend to continue the pace of what we'd call deposit rotation that is the migration of deposit.

and the first one is the $510 million. But we look at the $1,000 we have. That's all still. And we're right to pay $0.80 million.

Speaker Change: When looking forward to head your devices fast.

Speaker Change: has been largely removed.

Jim: Dollars from lower cost categories to higher cost ones.

Jim: The slowdown in each month of the third quarter.

Jim: Another indicator of a slowdown as the cost of interest bearing non time deposits or savings and now accounts.

Jim: Which had been moving up by three to four basis points per month in the second quarter, but didn't go up at all in the third quarter.

Jim: Perhaps more importantly, the incremental cost of deposit growth in the first quarter. It was about four 1%.

Jim: In the second quarter fell to $3 six 1% in the third quarter it fell again to 322%.

Jim: In terms of competition, we see deposit pricing pressure pressures abating rapidly in our markets, allowing for lower deposit repricing upon maturity without jeopardizing, our deposit growth trajectory and that trajectory is the remarkable 8% deposit growth on an annualized basis. So far this year.

Jim: That deposit growth helped bring our loan to deposit ratio down by 360 basis points in the third quarter at 92, 5% at September 30.

Jim: As for loans replacement yields have been a tailwind to the NIM all through this rising rate cycle loan yields went up by three basis points in the third quarter, largely because new loans still came on the books at about 50 basis points higher than the ones that ran off.

In terms of competition, we see deposit pricing pressure pressures abating rapidly in our markets, allowing for lower deposit repricing upon maturity without jeopardizing, our deposit growth trajectory and that trajectory is the remarkable 8% deposit growth on an annualized basis. So far this year.

Jim: About a third of our total loan production in the third quarter was fixed rate loans and those fixed rate loans actually came on the books at a 172 basis points higher than the fixed rate loans that ran off.

That deposit growth, helping our loan to deposit ratio down by 360 basis points in the third quarter at 92, 5% at September 30.

Jim: We believe that this upper repricing should continue for a while even in the face of falling rates.

As for loans replacement yields have been a tailwind for the NIM all through this rising rate cycle loan yields went up by three basis points for the third quarter, largely because new loans still came on the books at about 50 basis points higher than the ones that ran off.

Jim: This environment is one in which we're glad to have built a diversified bank with a broad mix of fixed and variable loans and loan types, both in our portfolio and in our origination mix.

In addition to all of that there are a few other tailwind to the NIM that are incorporated into our forecast as well purchase accounting contributed about seven basis points in the third quarter down by about one basis point from the prior quarter. We do however expect that benefit to fall to only four to five basis points next quarter.

About a third of our total loan production in the third quarter was fixed rate loans and those fixed rate loans actually came on the books at 172 basis points higher than the fixed rate loans that ran off.

We believe that this upper repricing should continue for a while even in the face of falling rates.

This environment is one in which we're glad to have built a diversified bank with a broad mix of fixed and variable loans and loan types, both in our portfolio and in our origination mix.

Jim: And we're looking forward to the exploration of received fixed macro swaps in the near future.

Jim: <unk> million dollars of receive fixed macro swaps mature in the fourth quarter of 2020 for 250 million mature in 2025, and 175 million mature in 2026. These.

In addition to all of that there are a few other tailwind to the NIM that are incorporated into our forecast as well purchase accounting contributed about seven basis points in the third quarter down by about one basis point from the prior quarter. We do however expect that benefit to falls only four to five basis points next quarter.

Jim: These explorations should provide a lift to our NIM in 2025 and in 2026.

Jim: That brings us to the biggest headwind to our NIM rate cuts.

And we are looking forward to the exploration of received fixed macro swaps in the near future.

Jim: About 50% of our loan portfolio is priced off of one month sulfur so rate cuts ourselves immediately.

$50 million of receive fixed macro swaps mature in the fourth quarter of 2020 for $250 million mature in 2025, and 175 million mature in 2026.

Jim: Our latest forecast calls for fed funds to end 2024, 429%.

Jim: And to end 2025 at 295%.

Jim: That's about 40 to 50 basis points lower than our rate forecast for the rate forecast that we used last quarter.

These explorations should provide a lift to our NIM in 2025 and in 2020.

So taking all of these headwinds and tailwind into account our guidance for the fourth quarter for the fourth quarter sounds a lot like what we said last quarter stability.

That brings us to the biggest headwind to our NIM rate cuts.

About 50% of our loan portfolio is priced off of one month sulfur so rate cuts ourselves immediately.

Jim: At least for the near term.

Jim: And our latest forecast our NIM stays in the mid 300 <unk> range through the first quarter of 2025, as always give or take five basis points for normal variability.

Our latest forecast calls for fed funds to end 2024, 429%.

And 2025 at 295%.

Jim: And gradually falls over the course of the year to end the year 2025 in the mid 300, <unk> about 10 basis points lower than where we are today.

That's about 40% to 50 basis points lower than our rate forecast for the rate forecast that we used last quarter.

So taking all of these headwind and tailwind into account our guidance for the fourth quarter for the fourth quarter. It sounds a lot like what we said last quarter stability.

Jim: That is T was by the way a return to normalized mid single digit loan growth in 2025, you might sum it up this way all of the NIM tailwind, we have a removal of excess cash following deposit rates positive loan replacement yields macro swap expirations all of them work together to blunt the effect of falling rates.

At least for the near term.

And our latest forecast our NIM stays in the mid 300 <unk> range through the first quarter of 2025, as always give or take five basis points for normal variability.

Gradually falls over the course of the year to end the year 2025 in the mid 300, <unk> about 10 basis points lower than where we are today.

Jim: But arent quite enough to overcome them if rates fall fast enough.

So bracken is for you and give you some idea of the impact of rates on our balance sheet. If the fed funds rate falls to the projected year end 2012 level year end 2024 level of four 9%.

That is T was by the way a return to normalized mid single digit loan growth in 2025, you might sum it up this way all of the NIM tailwind, we have a removal of excess cash following deposit rates positive loan replacement yields macro swap explorations all of them work together to blunt the effect of falling rates.

Jim: And then just holds at that level through year end 2025.

Jim: <unk> went out.

Jim: In that scenario, we would expect that our NIM would actually increased steadily over the course of 2025.

Jim: Into the mid 360.

But arent quite enough to overcome them if rates fall fast enough.

Jim: I would note that the futures market is currently projecting a year end 2025 fed funds rate at three 4%, which is about 45 basis points higher than our latest rate forecast. So reality will likely play out somewhere in the middle.

So bracket is for you and give you some idea of the impact of rates on our balance sheet. If the fed funds rate falls to the projected year end 2012 level year end 2024 level of four 9%.

And then just holds at that level through year end 2025, <unk> with went out.

Jim: In terms of capital management tangible book value per share increased 47 from the previous quarter to $10 three.

In that scenario, we would expect that our NIM would actually increased steadily over the course of 2025 and into the mid 360.

Jim: Due in part to a $28 $7 million reduction in OCI.

Jim: We raised the threshold for share repurchases this quarter buying on prices below $17 a share.

I would note that the futures market is currently projecting a year end 2025 fed funds rate at three 4%, which is about 45 basis points higher than our latest rate forecast. So reality will likely play out somewhere in the middle.

Jim: And so this quarter, we repurchased 146850 shares at an average price of $16 83.

Jim: And with that we'll take any questions you may have.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue if you'd like to withdraw your question simply press Star one again.

In terms of capital management tangible book value per share increased 47 from the previous quarter to $10 three.

Due in part to a $28 $7 million reduction in OCI.

We raised the threshold for share repurchases this quarter buying on prices below $17 a share.

Speaker Change: First question comes from the line of Daniel Tamayo from Raymond James Your line is open.

And so this quarter, we repurchased 146850 shares at an average price of $16 83.

Daniel Tamayo: Sorry about that afternoon, guys hopefully you can hear me okay.

And with that we'll take any questions you may have.

Daniel Tamayo: Maybe first just start.

Daniel Tamayo: Just as we think about overall asset growth.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue if you'd like to withdraw your question simply press Star one again.

Daniel Tamayo: I'm, just curious where you stand on where you want the size of the securities portfolio going forward, you touched a little bit on the the loan to deposit ratio kind of similar.

Daniel Tamayo: Curious if you still want that coming down from these levels or you're comfortable in that 92% level.

First question comes from the line of Daniel Tamayo from Raymond James Your line is open.

Daniel Tamayo: Yeah.

Speaker Change: We expect the securities portfolio to expand a little bit over the next year, maybe by about $100 million over the course of 2025 from where it is today not huge expansion, but Doug you want to go in a little bit.

Sorry about that good afternoon, guys. Hopefully you can hear me okay.

Speaker Change: Maybe first to start.

Daniel Tamayo: Just as we think about overall asset growth.

Daniel Tamayo: Yeah.

I'm, just curious where you stand on where you want the size of the securities portfolio going forward, you touched a little bit on the loan to deposit ratio kind of similar.

Speaker Change: Is that what youre asking Danny.

Speaker Change: It is yes, yes, thank you and then.

Speaker Change: Just a follow up.

Speaker Change: Switching gears to credit just maybe if you could provide a little detail on the loans I apologize if I missed this earlier, but the loans that you took specific reserves on the quarter. Thanks.

Speaker Change: Curious if you still want that coming down from these levels or you're comfortable on the magnitude percent level. Thanks.

Yes.

We expect the securities portfolio expand a little bit over the next year, maybe by about $100 million over the course of 2025 from where it is today not huge expansion but.

Speaker Change: I'll turn it over to Brian <unk>.

Speaker Change: Yeah on the reserve side, there was two credits.

Speaker Change: Drove the specific reserve.

Speaker Change: To go to a little bit.

Speaker Change: For the period in the provision.

Speaker Change: Yeah.

Speaker Change: First was a $2 $7 million specific reserve taken on $10 million fully funded construction loan that was for a mixed use office property located here in Pittsburgh.

Speaker Change: Is that what youre asking Danny.

Danny: It is yes, yes, thank you and then.

Just a follow up switching.

Speaker Change: Switching gears to credit just maybe if you could provide a little detail on the loans I apologize if I missed this earlier, but the loans that you took specific reserves on the quarter. Thanks.

Speaker Change: This is a participation and a global $58 million alone.

I'll turn it over to Brian <unk>.

Speaker Change: The property came through a maturity in the third quarter.

Speaker Change: Daniel.

Daniel: Yeah on the reserve side, there was two credits.

Speaker Change: And while in amendments being negotiated the current level of vacancy combined with the uncertain.

Brian: Drove the specific reserve for the period in the provision.

Outlook resulted in the move of the entire $10 million balance.

Daniel: First was the $2 7 million specific reserve taken on $10 million fully funded construction loan that was for a mixed use office property located here in Pittsburgh.

Speaker Change: Nonperforming.

Speaker Change: The second driver and that provision was a $2.8 million specific reserve taken on a $4 $8 million term loan.

Speaker Change: As a participation and a global $58 million alone.

That loan was in our sponsor finance portfolio.

Speaker Change: The property came through a maturity in the third quarter and while in amendments being negotiated the current level of vacancy combined with the uncertain.

Speaker Change: The credit specifically was in the distribution space.

Speaker Change: And while payments do remain current the longer long term outlook is challenged that accounted for $5 5 million of the provision.

Speaker Change: Outlook resulted in a move of the entire $10 million balance to now.

Daniel: Nonperforming.

Speaker Change: The primary increase in the specific the two combined the two combined.

Daniel: The second driver and that provision was a $2.8 million specific reserve taken on a $4 $8 million term loan.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Carl Shepard from RBC capital markets. Your line is open.

Daniel: That loan was in our sponsored finance portfolio.

Credit specifically was in the distribution space and while payments do remain current the longest long term outlook is challenged.

Speaker Change: Hey, good afternoon guys.

Carl Shepard: Just to pick up on credit for a second.

Carl Shepard: Can you anything you can say about the expected block content from trip those two legacy credits.

Daniel: That accounted for $5 5 million of the provision.

Carl Shepard: Loss content on legacy credit.

Daniel: Primarily the increase in the specific the two combined the two combined.

Carl Shepard: Sure.

Carl Shepard: Driver of short term outlook for our charge offs will be you know.

Speaker Change: Thank you.

Your next question comes from the line of Carl Shepard from RBC capital markets. Your line is open.

Carl Shepard: Through the specifics that we've made.

We've had our appraisals for the real estate property.

Carl Shepard: Hey, good afternoon guys.

And we expect to come to resolution over the next short term period next quarter or two okay.

Daniel: Okay.

Just to pick up on credit for a second.

Carl Shepard: Okay.

Anything you can say about expected loss content from trip those two legacy credits.

Carl Shepard: So.

Carl Shepard: Not much in the way of incremental provisioning for those two.

Loss content on legacy credit.

Carl Shepard: Okay.

Okay, Yeah that would be in there.

Sure the driver of the short term outlook for our charge offs will be.

Okay.

Carl Shepard: Okay, and then just to follow up on the centric credit place.

Carl Shepard: You mentioned convergence with the broader portfolio.

Daniel: Through the specifics that we've made.

Carl Shepard: Kind of over what timeline would you expect to memorialize unions or charge offs or anything to emerge before we before we get there kind of a steady state back with it.

Had appraisals for the real estate property.

Daniel: And we expect to come to resolution over the next short term period next quarter to two okay.

Carl Shepard: Okay.

Daniel: Okay.

Daniel: So.

Speaker Change: Just start out at a little higher level, Karl just looking at centric.

Daniel: Not much in the way of incremental provisioning for those two.

Speaker Change: The criticized loans decreased from $124 million in the second quarter to one or two this quarter.

Daniel: Okay.

Daniel: Okay.

Speaker Change: Did you expect.

Okay, and then just to follow up on the centric credit piece.

Speaker Change: <unk> loans decreased to 71% to $2 61 $261 million. So we are seeing those come down from high <unk>.

You mentioned convergence with the broader portfolio.

Speaker Change: Kind of over what timeline would you expect anymore erosion as our charge offs or anything to emerge before we before we get there kind of a steady state back with the larger bucket.

Speaker Change: <unk> has been consistently improving from $376 million to start the year. So.

Speaker Change: We have a.

Speaker Change: Start out at a little higher level, Karl just looking at centric.

Speaker Change: A group of.

Speaker Change: Scott.

Speaker Change: Lenders that are out there on early stage collections and are really working.

Speaker Change: Criticized loans decreased from $124 million in the second quarter to one or two this quarter. The watch loans decreased to 71% to $2 61 $261 million. So we are seeing those come down from high isn't watch has been consistently improving from 370.

Speaker Change: Bank and that's we've seen nice results from that what do you want to add Brian.

Brian Aki: I think thats helpful. Mike.

Brian Aki: From a from a global perspective, and we'd anticipate the centrica headwind to start dissipating in 2025.

Brian Aki: It will be somewhat offset by normalized net charge off levels in the in the core portfolio.

Daniel: $6 million to start the year so we.

Daniel: We have a.

Daniel: A group of.

Daniel: Slot.

Brian Aki: Yeah, I would add one point to.

Lenders that are out there in early stage collections are really working.

Brian Aki: Mike says if you as you look at our charge off ratio.

Speaker Change: Bank and that's we've seen nice results from that what do you want to add Brian.

Speaker Change: Year to date through the third quarter. It was 39 basis points on an annualized basis actually I apologize. It just in the quarter was 39 basis points annualized 27 of that came from the century portfolio. So the core franchise charge off.

I think thats helpful. Mike.

From a from a global perspective, and we'd anticipate the centrica headwind those start dissipating in 2025.

Daniel: It'll be somewhat offset by normalized net charge off levels in the in the core portfolio.

Speaker Change: Level is in the low teens and we're excited about that performance.

Speaker Change: Yeah, I would add one point to two.

Speaker Change: Okay. That's helpful. Brian.

To follow up then I wanted to ask about long ago, you guys have been pretty deliberate and measured kind of managing pace.

Daniel: Mike.

Daniel: As you look at our charge off ratio.

Daniel: Year to date through the third quarter. It was 39 basis points on an annualized basis actually I apologize just in the quarter was 39 basis points annualized 27 of that came from the century portfolio. So our core franchise charge off.

Speaker Change: What gives you confidence that that's going to reaccelerate here.

Speaker Change: What kind of near term visibility after the quarter ended 2025.

Speaker Change: On the commercial side in particular, the production has been really good the headwinds have been.

Level is in the low teens and we're excited about that performance.

Speaker Change: Probably for the year about $49 million and payoffs and sponsor and probably another $97 million in centric and the other thing is we've just added a lot of talent.

Okay. That's helpful. Brian.

Daniel Tamayo: To follow up then I wanted to ask about long ago, you guys have been pretty deliberate and measured kind of managing to a pace.

Speaker Change: Two our regional teams and corporate banking and they are really starting to hit the ground running so we just feel that we can.

What gives you confidence that that's going to reaccelerate here and there.

Daniel Tamayo: What kind of near term visibility after that quarter and between 25.

Speaker Change: Mid single digit and is very achievable.

Speaker Change: On the commercial side in particular, the production has been really good the headwinds have been.

Speaker Change: Next year, and perhaps a little higher we shall see hopefully get some tail winds with <unk>.

Speaker Change: For the year about $49 million, and payoffs and sponsor and probably another $97 million in centric and the other thing is we've just added a lot of talent.

Speaker Change: Economic growth and.

Speaker Change: But.

Speaker Change: That's the reason and we've also been able to fund it.

Speaker Change: And that is we're proud of that and at the same time.

Two our regional teams and corporate banking.

Speaker Change: We've had we will have ample liquidity to grow loans, we paid down borrowings retired sub debt with increasing capital ratios.

They are really starting to hit the ground running so we just feel that we can we.

We can mid single digit and is very achievable.

Speaker Change: And have supported the margin so I think the team can do it.

Next year, and perhaps a little higher we shall see hopefully get some tailwind with.

Speaker Change: Okay great.

Economic growth and.

I'll, let someone else covered Jim on the margin, but thanks for that.

Daniel: But.

Thank you thanks Carl.

Daniel: Thats the reason and we've also been able to fund it.

Speaker Change: Your next question comes from the line of Kelly Motta from <unk>. Your line is open.

And that is we're proud of that and at the same time.

Daniel: We've had we will have ample liquidity to grow loans, we paid down borrowings retired sub debt with increasing capital ratios.

Kelly Motta: Hey, Yeah. Good afternoon. Thanks for the question.

Kelly Motta: How about you.

Kelly Motta: I can dig into the deposit growth you saw this quarter it looks like it is for us.

Kind of supported the margin so I think the team can do it.

Daniel: Yes.

Kelly Motta: Ooh fully although.

Speaker Change: Okay great.

Speaker Change: I'll, let someone else copper Jim on the margin, but thanks for that.

Kelly Motta: So on an average basis I'm wondering if we're thinking about the top line was there any sort of intra quarter volatility that we shouldn't manage managing here and Oh.

Thank you thanks Carl.

Daniel: Yeah.

Speaker Change: Your next question comes from the line of Kelly Motta from <unk>. Your line is open.

Kelly Motta: Also any any kind of broader comments as to whether or not.

Hey, Yeah, good afternoon, and thanks for the question.

Speaker Change: It is helpful to you.

Kelly Motta: <unk>.

Kelly Motta: Perhaps it troughs in the pressure on non interest bearing accounts.

Speaker Change: I'll kind of dig into the deposit growth you saw this quarter it looks like it is for up meaningfully.

Kelly Motta: Yeah, we had a nice big win at the end of the quarter with.

Speaker Change: Ooh fully Aldo.

Kelly Motta: Business person in one of our regional markets, who sold a company and we had a pretty significant inflow of about $170 million.

Speaker Change: Not so on an average basis I'm wondering as we're thinking about the top line was there any sort of end of quarter of volatility that we shouldn't manage managing here.

Kelly Motta: In deposits in the last week of the month and some of that was parked in noninterest bearing.

Also any any kind of broader comments as to whether or not.

Speaker Change: Erin Jim what do you want to add.

Speaker Change: <unk>.

Speaker Change: Yes, so that really helped the quarter numbers, so if thats, what youre looking at probably that's what you'll see but.

Speaker Change: That's a trough in the pressure on non interest bearing accounts.

The other thing I would just want to point out this is kind of.

Speaker Change: Yeah, we had a nice big win at the end of the quarter with.

Behind the scenes and my deposit rotation comments I just look at the trend in niv month to month in the third quarter.

Speaker Change: Business person in one of our regional markets, who sold the company and we had a pretty significant inflow of about $170 million.

In July there was $20 million of outflows in August there were $2 6 million of inflows into September $35 million of inflows. So and those are averages not ended period.

In deposits in the last week of the month and some of that was parked in.

Noninterest bearing Jim what do you want to add.

Speaker Change: So.

Speaker Change: Yeah.

Those patients seem to have really slowed down overall, we're really happy that we get a large deposit like that anytime.

Speaker Change: So that really helped the quarter numbers. So if that's what you're looking at probably that's where you'll see but.

The other thing I would just want to point out this is kind of.

Speaker Change: But for the rest of the bank it seems like it's all moving in the right direction.

Behind the scenes and my deposit rotation comments I just look at the trend in niv month to month in the third quarter.

Speaker Change: Okay. That's that's yeah, absolutely that's that's super helpful.

Speaker Change: In July there was $20 million of outflows in August there were $2 6 billion of inflows into September $35 million of inflows. So and those are averages not ended period.

Speaker Change: And then I appreciate all the color and commentary you've given around sort of your outlook for margin just wondering.

Speaker Change: So.

Speaker Change: If you could expand a bit on how we should be thinking about deposit.

<unk> seems to have really slowed down overall, we're really happy that we get a large deposit like that anytime.

Speaker Change: Deposit betas during a rate cut it looks like on during the tiny part of the cycle your interest bearing deposit beta was about 50%.

But for the rest of the bank it seems like it's all moving in the right direction.

Speaker Change: Okay. That's that's yeah, absolutely that's that's super helpful.

Wondering if you if you could just.

Speaker Change: Provide some color on how you're thinking about that on the wake out at least initially.

And then I appreciate all the color and commentary you've given around sort of your outlook for margin just wondering if.

Speaker Change: Yeah happy to address that our deposit beta assumption is generally about 25%. That's just backed up by a long term look back studies that kind of look at what the historical average has been the number youre thinking about it and there's always a slight variation right people calculate cumulative through the cycle beta is because it depends on when you start the clinical cycle and where you ended.

Speaker Change: If you could expand a bit on how we should be thinking about.

Speaker Change: Deposit betas during a rate cut it looks like on during the tiny part of the cycle. Your interest bearing deposit beta was about 50% I'm wondering if you if you could just.

Speaker Change: We're just looking at that the other day and it looked like for.

Calculation I was doing internally from my team is doing internally showed that we had accumulated through the cycle beta on the deposit side of about 46%.

Speaker Change: Provide some color on how you're thinking about that on the wake out at least initially.

Speaker Change: Yeah happy to address that our deposit beta assumption is generally about 25%. That's just backed up by a long term look back studies that kind of look at what the historical average has been the number you are thinking about and there's only a slight variation the way people calculate cumulative through the cycle beta is because it depends on when you start the political cycle and where you ended.

Just starting from the right forward starting interest rate hike cycle to that last the first rate cut in September about 46%.

Cumulative and the other thing about that was we try to look at the loan data over the same period and then it was also about 46% just above.

Speaker Change: But what you see is like in any event the timing is different so in the early stages, we were able to reprice loans upward very quickly and then.

Speaker Change: We're just looking at that the other day and it looked like for like.

Speaker Change: Calculation I was doing internally from my team is doing internally showed that we had accumulated through the cycle beta on the deposit side of about 46%.

The deposit pricing caught up kind of evens out over time. So in this downward cycle, we would expect the hello.

Just starting from now going forward in the sense that this rate hike cycle to that last the first rate cut in September about 46%.

Speaker Change: Deposit there I'm sorry, the loan beta to hit us pretty quickly with the falling rates at a variable rate portfolio and then.

And accumulative and think about that was we try to look at the loan data over the same period and it was also about 46% just above.

Speaker Change: As a deposit beta of about 25% and able to kind of reprice those downward to kind of make up for it.

Speaker Change: Got it that's that's very helpful. And then you talked about cash being elevated during <unk> because.

But what you see is like at any bank. The timing is different so in the early stages, we were able to reprice loans upward very quickly and then.

The deposit pricing caught up kind of evens out over time. So in this downward cycle, we would expect the loan deposit there I'm sorry, the loan beta to hit us pretty quickly with the falling rates at a variable rate portfolio and then.

Speaker Change: Some of that to pay down D. T S P.

Speaker Change: Yeah.

I apologize if you already answered this but what are you guys doing as a more normalized level of cash has been up to.

Speaker Change: Just the initial size of the balance sheet.

Speaker Change: As a deposit beta of about 25% and able to kind of replace less downward to kind of make up for it.

Speaker Change: The normal level of cash will be.

Speaker Change: Just in the below $50 million. So it just depends on any given day.

Speaker Change: Got it that's that's very helpful.

Speaker Change: And then you talked about cash being elevated during CQ because.

Speaker Change: How much we need to fund the bank so I think.

I'm not sure off the top of my head what it is right now, but in any given day it might be $10 million to $20 million of excess cash you have to make sure. He can bounce magazine of the day, but it's not going to be $400 million lying around like it was on September 30th if you look at the balance sheet in the.

Speaker Change: Some of that to pay down Bts P.

Speaker Change: Yeah.

I apologize if you already answered this but what are you guys doing as a more normalized level of cash has been up to.

Just the initial size of the balance sheet.

Press release financials that we issued.

Speaker Change: The normal level of cash will be used.

That number sticks out like a sore thumb this huge increase in cash and it's not going to stay at that level long term, it's just going to be a minimal amounts of bounce back.

Just in the below $50 million. So it just depends on any given day.

How much we need to fund the bank so I think.

Speaker Change: Understood.

Then finally I was hoping you could provide any update or color on the M&A environment and the pace of conversations as it pertains to deal activity.

Speaker Change: I'm not sure off the top of my head what it is right now to stay but at any given day it might be $10 million to $20 million of excess cash you have to make sure you can balance magazine of the day, but it's not going to be $400 million lying around like it was on September 30th if you look at the balance sheet in the.

There's been a conversation or two nothing has.

Speaker Change: Materialized and we're very interested in M&A I think you know we are.

Press release financials that we issued.

Speaker Change: That number sticks out like a sore thumb this huge increase in cash and it's not going to stay at that level long term, it's just going to be a minimal amounts of bounce back.

We will do smaller as well as larger than the.

The six deals that we've done and had the privilege to do that.

Speaker Change: Understood.

Speaker Change: And finally I was hoping you could provide any update or color on the M&A environment and the pace of complications as it pertains to deal activity.

Range from 55 million to 1 billion won so they've been deals that we feel like we could appropriately controlled the risk and.

And I've also shared with you that we have a team that could scale a scale and do a larger transaction. It just.

Speaker Change: There's been a conversation or two nothing is.

Speaker Change: Materialized and.

We're very interested in M&A I think you know we will.

Speaker Change: It would have to be just right and Jim always likes to share we have.

Speaker Change: We will do smaller as well as larger than the.

We looked at well over 60 deals to do six so we're pretty disciplined but there are there.

Six deals that we've done and had the privilege to do.

Speaker Change: There have been one or two things out there.

Range from 55 million to $1 billion, one so they've been deals that we feel like we could appropriately controlled the risk.

We passed on one or two.

Speaker Change: Both actually.

Speaker Change: The process so.

Speaker Change: Hopefully there'll be some nice opportunities to grow our bank.

Speaker Change: And I've also shared with you that.

Speaker Change: We have a team that could still scale and do a larger transaction. It just.

Contiguous markets and do strategic things in rural Depository.

Speaker Change: It would have to be just right and Jim always likes to share.

Speaker Change: All the kinds of things you've heard us say before.

Speaker Change: We looked at well over 60 deals to do six so we're pretty disciplined but there are.

Hey, Kelly just to go back to just for what it's worth cash. This morning was stood at $45 billion is kind of a normal level for us.

Speaker Change: There have been a one or two things out there.

Kelly Motta: Awesome. Thank you so much for the color I will step back.

I think we've passed on one or two.

Speaker Change: Perhaps on both actually.

Speaker Change: Okay. Thank you.

Speaker Change: The process so.

Your next question comes from the line of Matthew Breese from Stephens. Your line is open.

And hopefully there'll be some nice opportunities to grow our bank.

Contiguous markets in these strategic things in rural Depository.

Good afternoon everybody.

Jim I was hoping to start you had mentioned that 50% of your loan portfolio re prices. Thank you set off of one month sulfur.

Speaker Change: All the kinds of things you've heard us say before.

Hey, Kelly just to go back to just for what it's worth cash. This morning was stood at $45 million is kind of a normal level for us.

Speaker Change: In the past, but he's been last quarter.

Whittled that down that number to like 30% and even a piece of that was affected by the swap salute the true floating rate portion of the book I think.

Speaker Change: Awesome. Thank you so much for the color I will step back.

Speaker Change: Okay. Thank you.

Speaker Change: Your next question comes from the line of Matthew Breese from Stephens. Your line is open.

Closer to 27% of total loans could you just clarify for us and I'm sorry, if it's going to put you on mute a little bit.

Good afternoon everybody.

Kelly Motta: Sure.

Speaker Change: The true floating rate portion of the book and that's 50% or 27% just because it matters a lot as we head into it.

Matthew Breese: Jim I was hoping to start you had mentioned that 50% of your loan portfolio re prices. Thank you set up a one month sulfur.

So glad you asked that he gave me a chance to clarify so I wanted to make sure I didn't misspeak before about half the portfolio is variable aspects. That's just kind of a general rule of thumb. It does vary a little bit from.

In the past, but even been last quarter.

Whittled that down that number to like 30% and even a piece of that was affected by the swap salute. The true floating rate portion of the book I think was closer.

Time to time at the end of the third quarter was 56, 7% was variable okay. So very very close to 50%.

Speaker Change: Closer to 27% of total loans could you just clarify for us and I'm sorry, if it's going to put you on repeat a little bit.

Speaker Change: But.

The part that is linked to a woman so for only 33% of the total portfolio not 50% is in the other section the other 17%.

Speaker Change: Sure.

Speaker Change: The true floating rate portion of the book and that's 50% or 27% just because it matters a lot as we head into it.

Speaker Change: It's tied to all kinds of things along the yield curve. So there's variable over time might be like a mortgage rate with us.

I'm. So glad you asked that and gave me a chance to clarify so I wanted to make sure I didn't misspeak before about half the portfolio is variable aspect I was just kind of a general rule of thumb. It does vary a little bit of from.

Five one arm or seven one arm that can replace it we're trying to look at variable, but it's not going to repeat itself, but that's only 33% and even those most of all its so far its prime.

Speaker Change: Time to time at the end of the third quarter was 56, 7% was variable okay. So very very close to 50%.

Speaker Change: One or two bids be loans left that we're phasing out because that's going away, but its a 32%.

Speaker Change: But.

Speaker Change: The part that is linked to a woman so for only 33% for the total portfolio not 50% is in the other section the other 17%.

So the short stuff. Thank you for letting me clarify that.

And I would assume as well as the swaps expire.

That's tied to all kinds of things along the yield curve. So there's variable over time might be like a mortgage rate with AR.

Speaker Change: It won't be 27%, who will actually be truly more like 30 sounds like the low 30% range that factor as well.

Five one arm or seven one arm that can replace that we're trying to look at variable, but its not going directly to self but definitely 33% and even those most of all its so far its prime.

The numbers I was giving you is irrespective of swaps I didnt adjust enterprises, giving you to say that some of that portion of it.

Swapped into fixed rate. So it isn't just the raw relying portfolio numbers I was giving you.

One or two bids be loans left that we're phasing out because thats going away, but its a 32%.

Speaker Change: Okay.

So the short stuff. Thank you for letting me clarify that.

Speaker Change: Setting if youre talking about it'll it'll take away. These these low rate receive fixed swaps that we have.

Speaker Change: And I would assume.

I got on the books and let that float again, it'll start floating upwards.

Speaker Change: Well as the swaps expire.

It won't be 27%, you'll actually be truly more like 30 sounds like the low 30% range that factor as well.

The cash received will be at a higher floating rate.

Speaker Change: Okay.

Setting the true floating rate stuff side.

Speaker Change: The numbers I was giving you is irrespective of swap I Didnt adjustment advisors, giving you to say that some of that portion of it.

Could you help us a little bit understand what the maturity profile is like for the fixed rate portion of the book.

Speaker Change: In the fixed rate just the raw underlying portfolio numbers I was giving you.

EBIT duration or how much do you expect it to kind of come up for maturity next year.

Speaker Change: Okay.

Speaker Change: Setting if youre talking about it'll it'll it'll take away. These these low rate receive fixed swaps that we've got on the books and let that float again it'll start floating upwards.

Speaker Change: I don't.

I don't have it broken down by type of loan the overall loan portfolio duration is only 276 years.

Speaker Change: The cash received will be at a higher floating rate.

Speaker Change: That reflects the.

Speaker Change: Okay.

Portion of a loan portfolio of 32% linked to the short end of the curve.

Speaker Change: Setting the true floating rate stuff aside.

Variable and our fixed rate stuff as well.

Speaker Change: Could you help us a little bit understand what the maturity profile is like for the fixed rate portion of the book.

Conceptually if this helps you when we think about the concept of <unk>.

Speaker Change: What the EBIT duration or how much do you expect it to kind of come up for maturity next year.

We call yield curve diversity and not really be this return, but when we talk about but we have things that are priced at the long end of the curve.

Yes.

Speaker Change: Uh huh.

Speaker Change: I don't have it broken down by type of loan the overall loan portfolio duration is only $2 seven six years.

Mortgages and Ive got on the books.

Speaker Change: You also have things that have been very short end of the curve. What do you have in the middle of the curve with things like indirect auto.

That reflects the.

Portion of a loan portfolio of 32% linked to the short end of the curve.

Speaker Change: A $1 billion portfolio over a $1 billion that re prices if it two and a half year part of the curve and equipment finance portfolio. We're building those are almost all five year loans that don't really play at all.

Speaker Change: Part of it is variable and the fixed rate stuff as well.

Speaker Change: Conceptually if this helps you when we think about the concept of no.

Speaker Change: Yes.

We call yield curve diversity is not really an industry turn but when we talk about so we have things that are priced at the long end of the curve things like fixed rate mortgages and I've been on the books.

Sometimes leasing that 85% of those are loans within our loans and leases.

Perfect five year duration that doesn't prepay, so that kind of builds saturation overall cases kind of people.

But you also you also have things we have been very short end of the curve, but do you have in the middle of the curve with things like indirect auto.

Speaker Change: Repricing characteristics that smooth out the repricing of the portfolio over time, but the total duration on loans to 706 years on securities for three five years.

Speaker Change: A $1 billion portfolio over $1 billion debt repricing within two and a half year part of the curve and equipment finance portfolio. We're building those are almost all five year loans that don't really play at all.

Total assets that would be.

Yes, it's $2 79 years on total assets.

Speaker Change: Yeah.

Speaker Change: We call it sometimes leasing that 85% of those are loans and whether the loans and leases.

Speaker Change: Okay, Okay and then.

Very helpful and just one more on this topic apologies belaboring the point, but you'd also mentioned that there's a.

Speaker Change: Perfect five year duration that doesn't prepay does that kind of build saturation overall cases kind of.

Speaker Change: It's still a positive re pricing gap.

Repricing characteristics that smooth out the repricing of the portfolio overtime, but the total duration on loans to 706 years on securities for 35 years.

On our fixed rate book pricing 170 ish basis points, you might providing for us what those what the before and after those numbers or what is the repricing to and from.

Total assets that would be.

Speaker Change: Yes give me I might take a second to find it but I have it here.

Yes, it's two.

$2 79 years on total assets.

Speaker Change:

And then maybe while you're little north of that.

Speaker Change: Okay. Okay.

Speaker Change: Okay very helpful and just one more on this topic.

Sure go ahead, and I don't think it will take me a second go ahead and ask another question.

Speaker Change: Belaboring the point, but you'd also mentioned that there's a.

Speaker Change: Yes.

Speaker Change: It's still a positive repricing gap.

Looking through your papers, Mike just one for you.

Essentially booked pricing 170 ish basis points.

Seeing a little bit of a pickup here in <unk>.

Speaker Change: Tas.

Speaker Change: Providing for us what those what the before and after those numbers or what is it repricing to and from.

It sounds like some of it is your own some of it's from century, where would you be surprised to see MPA client too.

Speaker Change: Yeah give me I might take a second to find it but I have it here.

Speaker Change: We near the top in your view are you expecting a little bit more of a quote unquote mobilization and maybe some color on how you expect charge offs to behave as well.

Speaker Change:

And then maybe while you look for that.

Speaker Change: Sure go ahead, and I don't think it will take me a second go ahead ask you another question.

Speaker Change: Yes, I do I think we're I think we're near the peak it could pick up a little bit, but I think it would come down in the ensuing quarters.

Speaker Change: Yes.

Thank you for your papers, Mike just one for you.

We have about a third of that.

Speaker Change: A little bit of a pickup here in npa's.

NPL and NPA stack is centric we feel like we have good line of sight on those credits were not being surprised.

Speaker Change: It sounds like some of it is your own some of it's from century, where would you be surprised to see MPA clients I mean are we.

As much anymore and they are well marked as Brian outlined.

Near the top in your view are you expecting a little bit more of a quote unquote mobilization and maybe some color on how you expect charge offs to behave as well.

So I think hopefully that's a peak in terms of charge offs I think Brian shared as well our charge off figure this past quarter versus.

Yes, I do I think we're I think we're near the peak it could tick up a little bit, but I think it would come down in the ensuing quarters.

Speaker Change: What would be normalized that would be.

We have about a third of that.

In the low teens and that feels right to us longer term.

Speaker Change: NPL and NPA stack is centric we feel like we have good line of sight on those credits were not being surprised.

I hope that's helpful.

It's helpful to me because it gave me some time to find the answer to the premium [laughter]. So so going back to what you were asking I think what you're asking is the replacement yields on fixed rate loans that I talked about $1 70 to 170 basis points what are the underlying numbers.

As much anymore and they are well marked as Brian outlined.

So I think hopefully that's a peak in terms of charge offs I think Brian shared as well our charge off figure this past quarter versus.

And here they are for for better or worse in the third quarter, we originated $290 million of fixed rate loans at seven 4%.

What would be normalized that would be.

In the low teens and that feels right to us longer term.

Speaker Change: But $265 million ran off at 552%.

Speaker Change: I hope that's helpful.

Speaker Change: It's helpful to me because it gave me some time to find the answer to the previous [laughter]. So so going back to what you were asking I think what you're asking is the replacement yields on fixed rate loans that I talked about 170 270 basis points what are the underlying numbers.

So the nice thing about that is based upon a 25 basis points hopefully your replacement yields on those are 150 basis points and another 25 basis point cut, replacing you'll still 125 basis points and you still get a lift even in a falling rate environment.

I would think about it.

Speaker Change: And here they are for for better or worse in the third quarter, we originated $290 million of fixed rate loans at seven 4%.

Speaker Change: I appreciate that.

Speaker Change: Wouldn't that have a bit of a day.

And but the $265 million ran off at 552%.

Dampening effect on the loan data.

Speaker Change: It just feels like that.

Deep gap and its more than.

So the nice thing about that is based upon a 25 basis points hopefully your replacement yields on those are a 150 basis points and then another 25 basis point cut.

It's more than half the book So I'm just curious.

Speaker Change: With that.

Wouldn't that dampen the 45% expected loan data overtime and Thats. My last question. Thank you.

Placing you'll still 125 basis points and you still get a lift even in a falling rate environment. That's how we think about it.

Yeah, I think it's baked in there I, just think about whether it dampens that or.

Speaker Change: Oh.

Speaker Change: To what extent.

Speaker Change: I appreciate that.

Speaker Change: Yeah.

Speaker Change: When we think about our loan beta for next year, it's not that far off our deposit beta, though I mean, just thinking about it depends it depends a little bit on when you start the following cycle. He started as a tender just don't get the math the loan beta for next year.

Speaker Change: Wouldn't that have a bit of a.

Speaker Change: Dampening effect on the loan data.

Speaker Change: It just feels like that's a steep gap and it's more than it's.

Speaker Change: More than half the book So I'm just curious.

Speaker Change: Would that be.

Actually it's a little less than that it's like 10% to 15%.

Wouldn't that dampen the 45% expected bone data overtime and Thats. My last question. Thank you.

Tennessee next year, if the deposit beta it was like 25%. So my other point by the way was just over time you go through the whole cycle. So whenever this cycle and three years from now.

Speaker Change: Yeah, I think it's baked in there I, just think about whether it dampens that or.

Speaker Change: To what extent.

Speaker Change: Yeah.

When we think about our loan beta for next year, it's not that far off our deposit beta I mean, just thinking about it depends it depends a little bit on when you start the following cycle. He started as a tender just looking at the math the loan beta for next year.

They tend to even out over time.

Your next question.

Speaker Change: Your next question comes Oh, sorry go ahead.

No. Thank you.

Your next question comes from the line of Frank <unk> from Piper Sandler Your line is open.

Speaker Change: Actually I was a little less than that it's like 10% to 15%.

Tennessee next year, if the deposit beta is about 25%. So my the point by the way was just over time you go through the whole cycle. So whenever this cycle and three years from now.

Speaker Change: Hey, guys good afternoon.

Speaker Change: Afternoon.

Speaker Change: Oh sure.

Question Oh.

On the the large deposit that came in at or near the end of the quarter last week of the quarter.

Speaker Change: They tend to even out over time.

Speaker Change: Your next question.

Speaker Change: Should that or would that tend to create some volatility in the fourth quarter. Just curious if you expect some of that to flow back out or perhaps even.

Speaker Change: Your next question comes Oh, sorry go ahead.

Speaker Change: No. Thank you.

Speaker Change: Your next question comes from the line of Frank Schiraldi from Piper Sandler Your line is open.

It seems some of that already.

At the end of October here.

Speaker Change: I think.

Hey, guys good afternoon.

Our best line of sight right now is that we'll have a good portion of that that might flow out in the first quarter of next year.

Afternoon.

Speaker Change: Just.

Speaker Change: Question Oh.

Speaker Change: On the the large deposit that came in at the end or near the end of the quarter last week of the quarter.

Speaker Change: Gotcha.

Everything we tend to hold onto it.

We'll take it while we can get it.

Speaker Change: Should that or would that tend to create some volatility in the fourth quarter. Just curious if you expect some of that to flow back out or perhaps even.

Speaker Change: Sure.

And then just a follow up on the.

Trends in deposit costs, Jim I thought you had mentioned that you thought we'd see.

It seems some of that already.

Remember at the end of October here.

Maybe I'm wrong, but thought we'd see another quarter of Hum.

Speaker Change: I think.

Speaker Change: Our best line of sight right now is that we'll have a good portion of that that might flow out in the first quarter of next year.

Increased deposit cost, perhaps at a lower.

Speaker Change: Gotcha.

Speaker Change: Level, but.

Do everything within the hold onto it.

First of all you know is that what you said and then secondly is it possible just given 50 basis points you are seeing here already and.

Speaker Change: We'll take it while we can get it.

Speaker Change: Sure.

Speaker Change: And then.

Just a follow up on the trends in deposit costs, Jim I thought you had mentioned that you thought we'd see.

September in terms of cuts that you know maybe this is an inflection point for deposits in the third quarter here.

Speaker Change: And maybe I'm wrong, but thought we'd see another quarter of Hum.

Speaker Change: Yes.

Speaker Change:

Speaker Change: M <unk>.

Increased deposit cost, perhaps at a lower.

Speaker Change: Level, but.

First of all you know is that what you said and then secondly is it possible just given 50 basis points you are seeing here already in.

Speaker Change: September in terms of cuts that maybe this is an inflection point for deposits in the third quarter here.

Speaker Change: Yes.

Speaker Change: The last point.

It felt like it felt like the 50 basis point cut in September.

Felt like it was reflected in the market. So you can just see the market competition dissipate.

Speaker Change: And the deposit movements kind of change and it feels like everyone's got the message at rates are falling.

It's easier to pass along falling deposit rate and still grow deposits at the same time so.

<unk> it felt like a shift in September to the last part of your question on the first part of your question I'm not sure I said, but you said.

Speaker Change: Right.

Speaker Change: I hope I didn't if I, if you have any clarify a little bit I do think that that rate of.

The rate of increase in the cost of deposits was moving downward over the course of the year. That's the point I was trying to make some prepared remarks so.

Speaker Change: It was up in the first quarter, but was up less than the second quarter was up less than the third quarter, but only eight basis points.

Stock in that but we don't do not predict or any of the internal forecast that the cost of deposits will continue to increase next quarter. This should plateau.

Speaker Change: Actually I think it should come down a little bit in the fourth quarter.

Speaker Change: It's just a projection so I didn't mean to say that I think it will increase.

Okay. So so cited otherwise is it maybe.

Talking about the trend of increases coming down.

Speaker Change: I'm thinking that the trough is in the fourth quarter here.

We think we may turn the corner in the fourth quarter.

Speaker Change: Yeah.

Speaker Change: Yes, that's right.

I will start with a huge fan of skol predicting deposit cost and deposit rate movements has been the hardest thing to this whole cycle. So I wouldn't.

Speaker Change: And then and then just lastly, I mean, I think you're just given.

Speaker Change: The numbers you gave around.

Put too much stock in that but we don't we do not predict or any of the internal forecast that the cost of deposits will continue to increase next quarter It should plateau.

Speaker Change: Margin by the end of next year based on a couple of scenarios it.

It seems like that's still kind of translates to about five basis points.

Okay. So so cited otherwise is it maybe.

In March of compression for a given 25 basis point cut and I think you maybe even said that in the past so just wanted to double.

Speaker Change: I'm thinking that the trough is in the fourth quarter here.

Speaker Change: Yeah.

Speaker Change: Yes, that's right.

Double check if that's kind of still a reasonable.

And then and then just lastly, I mean I think.

Guideposts for a given 25 basis points.

Speaker Change: Just given the.

Speaker Change: That's kind of a rule of thumb in the way I thought about that in particular.

Speaker Change: The numbers you gave around.

Speaker Change: Margin by the end of next year based on a couple of scenarios.

Over the last couple of days was our last forecast we're thinking.

It seems like that's still kind of translates to about five basis points.

Carrying on with the stable at these rates and now we have a new forecast that.

38, excuse me 40 to 50 basis points lower.

Speaker Change: And and margin compression for a given 25 basis point cut and I think you maybe even said that in the past. So I just wanted to double check if that's kind of still a reasonable guideposts for a given 25 basis points.

And so it's 10 basis points lower than it was last rate forecast. So for another 50 basis points of cuts to get down 10 basis points.

Speaker Change: And that to your 25 basis points per cut.

Of course, the way it played itself out with those headwinds and <unk> as I was talking about it that you don't just have a tier.

Speaker Change: That's kind of a rule of thumb in the way I thought about that in particular.

Over the last couple of days was our last forecast we're thinking.

Speaker Change: Five basis point per 25 basis point cut because if you go from $5, 50% to 3% in your down 250 basis points and rates a lot.

Speaker Change: Carrying on with a stable at these rates and now we have a new forecast.

Speaker Change: 36 can be supported 40 to 50 basis points lower.

A lot of cuts, but I wouldn't take that number by five and things like that into the NIM a tailwind.

Speaker Change: And so it's 10 basis points lower than it was last rate forecast. So for another 50 basis points of cuts to get down 10 basis points.

Speaker Change: Is that a lot of that that's what I was trying to get my.

Speaker Change: Model forecast numbers for our model.

Speaker Change: I appreciate it.

Speaker Change: And that's your 25 basis point per cut of course.

Speaker Change: Okay, great. Thanks for the color.

Speaker Change: The way it played itself out with those headwinds and <unk> I was talking about is that you don't just have a tier.

Speaker Change: You bet.

Your next question comes from the line of Emmanuel <unk> from D. A Davidson your line is open.

Five basis points per 25 basis point cut because if you go from $5, 50% to 3% in your down 250 basis points and rates a lot.

Speaker Change: Starting on the fees for fourth quarter that ranges.

Speaker Change: A lot of cuts, but I wouldn't take that number by five and things like that and showing them. The tailwind offset a lot of that that's what I was trying to give me.

Speaker Change: It's a little wider $24 million to $22 million, if I got it right can you just talk about.

Model forecast numbers from our model.

Speaker Change: No that's it I appreciate it.

Okay, great. Thanks for the color.

Speaker Change: You bet.

Speaker Change: Your next question comes from the line of Emmanuel <unk> from D. A Davidson your line is open.

Speaker Change: Hey, starting on the fees for fourth quarter that range is.

Speaker Change: It's a little wider $24 million to $22 million, if I got it right can you just talk about.

What gets you to the higher end isn't like SBA sales and then can you talk about fees going forward into next year.

Speaker Change: If rates come down mortgage should pick up just kind of thoughts on that.

<unk>.

Benefit as well on the fee side.

I'll give you some broad strokes.

Speaker Change: But we do think rates come down that will help all across the board with.

Speaker Change: Revenue and volume on the commercial lending side, and the consumer side as well as our fee businesses, we really built a pretty formidable.

Speaker Change: SBA offering and continue.

Speaker Change: We'll continue to invest there are mortgage banking could snap back pretty nicely with good share good deposits in our core markets that could turn into refis and other things. So we do feel that could be a tailwind.

Jim other guidance you provided.

Speaker Change: And if he and his baked into the bank that kind of humming along and then some of them done really nicely. When we don't talk about a lot of insurance that keeps coming along adding some fee income. They are our wealth division, which has been really well this year.

About growth for next year, I think you're hitting on it in a changing rate environment.

Speaker Change: That youre able to do more in mortgage refi and then.

More SBA.

I'd keep that can just grow that business as well.

Speaker Change: The mortgage refi a little bit is it dependent on just the short term rates, though we're really hopeful that we can refi business in that middle part of the curve went up again, a little bit in.

Speaker Change: So the.

Speaker Change: We just want to get too excited just because the fed funds rate comes down doesn't mean mortgage rates come down you get a lot of refi business. So we got to.

We're trying to move the bank into the future and make sure as we get the $15 billion and higher.

Take that into account.

Speaker Change: We're more commercially oriented.

I'll finish with Pes provided 500000 quarter over quarter of offset to the $3 billion of headwind with Durbin that business continues to mature. We also have treasury management. We've just built a really nice offering on the back of the corporate bank.

Built mature businesses, we're doing a better job of cross selling through the regional model. So there's real emphasis on relationship banking C&I small business space.

Getting the deposits have already always been pretty good at but also cross selling the relationship capabilities of our of our company.

Continue to get service charge income from there and just do a nice job for our commercial clients.

Trying to move the bank into the future and make sure as we get the $15 billion and higher.

And maybe I'll just for your modeling purposes that that wide range kind of bracket. The number that we were thinking of $5 million negative side. That's why it is way too.

Speaker Change: We're more commercially oriented.

We've built mature businesses, we're doing a better job of cross selling through the regional model. So there's real emphasis on relationship banking C&I and small business space.

Speaker Change: Yes.

Speaker Change: That's helpful.

Speaker Change: On the swap benefit is the baseline scenario, you're three getting fed funds to 300 basis points by year end.

Speaker Change: Getting the deposits, which we've already always been pretty good at but also cross selling the relationship capabilities of our of our company.

Speaker Change: 25.

Yeah, I think the swap benefit you'll see in the earning deck.

And maybe just for your modeling purposes that that wide range kind of bracket. The number that we were thinking of $5 million negative side. That's why it is way too.

Right of eight basis points that I think is based on the previously forecast, which had fed funds at $3 29 at the end of 'twenty.

Speaker Change: Okay. That's that's helpful.

Speaker Change: Okay.

Just on the swap benefit is the baseline scenario, you're three getting fed funds to 300 basis points by year end.

Speaker Change: Okay.

It might be so maybe at seven basis points if rates go to exceed 95 like our revised forecast.

Speaker Change: 25.

It's hard to say.

Speaker Change: Despite the end of next year.

Speaker Change: Yes, I think the swap benefit you'll see in the earning deck.

The yield curve is a little steeper could how.

Speaker Change: Right of eight basis points that I think is based on the previously forecast, which had fed funds at $3 29 at the end of 'twenty.

How it impacts kind of your NIM thoughts.

That is a very positive scenario.

Speaker Change: 20, okay.

Speaker Change: What would.

Speaker Change: Okay.

Well it could be that upside for second half of next year into 2026, we talk about that all the time.

Speaker Change: Okay.

Speaker Change: Yeah.

It might be so maybe at seven basis points if rates go to 295 like our revised forecast.

I'm sorry go.

Speaker Change: Go ahead <unk>.

Speaker Change: I just I just want to put a caveat to it I know, it's a very positive scenario, but like what could be the upside of that type of scenario for you.

Speaker Change: Hard to say.

Speaker Change: If by the end of next year.

Speaker Change: The yield curve is a little steeper could.

Speaker Change: Wow.

Speaker Change: How it impacts kind of your NIM thoughts.

That is a very positive scenario.

Speaker Change: <unk>.

Speaker Change: Good.

Speaker Change: Well it could be that upside for second half of next year into 2026, I'm talking about that all the time.

Yes, I am sorry go.

Speaker Change: Go ahead <unk>.

Go ahead, I, just I just want to put a caveat to it I know, it's a very positive scenario, but like what could be the upside of that type of scenario for you.

Yeah in the near term, we think about changes in the cost of funds as we try to grow the deposit book and the yields on new loans come on and replace me. It's all of that stuff, but long term, we think as bankers. It's positive it's positive slope to the yield curve.

It is an environment, we can make some money.

Speaker Change: Just smile, because he just screaming for budget passes.

Speaker Change: Of course scenarios for 2025, but I think it's about Baidu Tencent.

Speaker Change: [laughter] long term a positive slope is great for banks. So that's.

Our story and we're sticking to it.

Speaker Change: Okay and then my last question is deposit growth has been really strong you talked about that large deposit.

What's kind of the.

Appetite from here.

With that marginal cost of $3 20 for new deposits.

Speaker Change: It is it is it is it a loan to deposit ratio target is it pre funding loan growth next year whats kind of the appetite on deposit growth side.

The appetite of the deposit growth side is for I'll.

Speaker Change: I'll tell you exactly how we're thinking about this internally, we think about a smooth steady glide path in the Thrace lightpath keeps coming up again and again.

Smooth steady glide path in deposit growth. So for example, this last quarter. If you say hey loans, we're not growing that fast we could've taken our foot off the gas in terms of deposit growth you don't want to do that we want to keep it growing at 3% per quarter, which we should be at three 2% average on average in the third quarter, we're going to keep that going in the fourth quarter. The point is we want it.

Speaker Change: The net loan to deposit ratio down and get yourself liquidity.

Our loan growth going forward and so.

The real dynamic that you are getting at it is really driven by a desire to grow the bank on the asset side and just make sure that you funded on the liability side in any given period those may not match, but long term. That's what he wanted to wanted to pause ratio down to 92, 5%. We've got a long way to go before it gets over a 100%.

But you know there's really two kinds of deposits so the transaction accounts.

That represent new new households, whether commercial or consumer and then theres the time and the money market stopped it.

Speaker Change: So we feel like we've got.

Speaker Change: I've got the liquidity to grow Mike as our bank President James events.

As the volatility of exception pricing and goes up and down with rates and we're always in the business to grow with the transaction accounts and transaction households.

Speaker Change: Our relentless surround the closet.

Non stop Jean anything you want to add your the.

Speaker Change: Youre the impetus behind.

Speaker Change: Rapidly and as aggressively as we can.

Speaker Change: Our great core depository.

Speaker Change: Only that.

It's really two kinds of deposit so see.

Speaker Change: There's your answer.

Yeah that helps thank you.

Speaker Change: Transaction accounts.

Speaker Change: That represent new new households, whether commercial or consumer and then theres the time and the money market start to.

Speaker Change: Got back in thank you.

Speaker Change: Thanks.

Your next question comes from the line of Daniel Cardenas from Janney Montgomery Scott Your line is open.

Hence the volatility of the exception pricing and it goes up and down with rates and we're always in the business to grow transaction accounts and transaction households.

Speaker Change: Okay.

Daniel Cardenas: Hey, guys good afternoon.

Speaker Change: Good afternoon.

Just a quick question on the.

Rapidly and as aggressively as we can.

The size of your participation portfolio, how big is that and are there any other loans within that portfolio that youre watching given the migration of one larger credit into.

Speaker Change: There's your answer.

Speaker Change: Thank you.

Speaker Change: I'll step back into the queue.

Speaker Change: Thanks.

Speaker Change: Your next question comes from the line of Daniel Cardenas from Janney Montgomery Scott Your line is open.

NPL status.

Yeah I'll take that.

We've actually really shrunk the portfolio over time.

Speaker Change: Okay.

Hey, guys good afternoon.

Speaker Change: Good afternoon.

We focused on the credit risk appetite.

Just a quick question on the <unk>.

That's shared national credit book is just over $115 million today, and only 10 relationships.

Speaker Change: The size of your participation portfolio, how big is that and how you are.

Are there any other loans within that portfolio that youre watching given the migration of one larger credit into.

So it's really not a factor as we look at it.

Speaker Change: The the one commercial real estate credit that moved to nonperforming was obviously in that shared national portfolio, but are very much not a focus and it's a manageable with 10 relationships.

Speaker Change: NPL status.

Speaker Change: Yeah I'll take that.

Speaker Change: Yes.

Speaker Change: Actually really shrunk the portfolio over time.

Speaker Change: As we focused on the credit risk appetite.

Speaker Change: Okay.

Speaker Change: Yes.

That's shared national credit book is just over $115 million today, and only 10 relationships.

Was it what was the reason for the cause of the nonperforming move in that and that specific loan was it related to just that.

Speaker Change: So it's really not a factor as we look at it.

Speaker Change: The the one commercial real estate credit that moved to nonperforming was obviously in that shared national portfolio, but are very much not a focus in it.

Speaker Change: 10 relationships.

Speaker Change: Okay.

Speaker Change: Was the.

Speaker Change: Because it was the reason for the cause of nonperforming move in that and that specific loan was it related to.

Speaker Change: Just add management of the facility.

Lack of tenants filling up.

The space can you give us a little color on that.

More and more so at or the construction was a rehabilitation that started right before COVID-19.

Speaker Change: They experienced COVID-19 delays as well as some significant construction cost increases over the period of time.

Speaker Change: That pushed them to the higher end of their budget. Since then the rehabilitation has been completed.

Speaker Change: But the tendency is not met.

That expectation.

Speaker Change: It is a mixed use it's not your typical office there is a grocery space. There's a cost of 911 call center and some other storage and office.

Speaker Change: Yeah, they have some perspective tenants, but we're still working through.

Speaker Change: Longer term Roes is stability.

Speaker Change: And was that located in the central business District.

Speaker Change: Just outside still in Allegheny County, but.

Speaker Change: Not in the downtown District.

Speaker Change: Okay I appreciate that.

Speaker Change: All my other questions have been asked and answered thanks guys.

Speaker Change: Dan.

Speaker Change: And that concludes our question and answer session I will now turn the call back over to Mike price for some final closing remarks.

Mike Price: Just I appreciate the questions and your engagement with US we're excited about the future of our company, we feel like we're building good momentum in acquiring talent in our.

Speaker Change: Six regions and our regional presidents are moving the bank forward positively.

Speaker Change: Thank you for your time today.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: No.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [noise].