First Commonwealth Financial (FCF) 25 Oct 232023 Q3 Earnings call transcript

Company Profile

Participants

Ryan Thomas	executive
Thomas Michael Price	executive
James Reske	executive
Daniel Tamayo	analyst
Michael Perito	analyst
Brian Karrip	executive
Karl Shepard	analyst
Jane Grebenc	executive
Manuel Navas	analyst
Matthew Breese	analyst
Daniel Cardenas	analyst

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I would like to welcome everyone to the First Commonwealth Financial Corporation Third Quarter 2023 Earnings Results Release Conference Call. [Operator Instructions]. It is now my pleasure to turn today's call over to Mr. Ryan Thomas, Vice President of Finance and Investor Relations. ahead. go please Sir,

Ryan Thomas

Mike and and to everyone. Corporation's discuss Participating Karrip, Jane Credit will financial Brent, Reske, Chief CEO; joining Financial our Revenue Chief third you Officer; us results. Officer; be call today's today First Bank on President good you, and Thank Jim President afternoon, Grebenc, for quarter Price, Chief Thank Officer. Commonwealth Brian Financial and

fcbanking.com included by and copy a yesterday's release logging of financial link on referenced will accessed the Investor page. to presentation information the As of a reminder, be supplemental our during at selecting can earnings website Relations a Investor the be call. with today's on that Relations top We've slide also

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

will reconciliation be include appendix prepared and should to today's measures. viewed financial alternative be measures also these GAAP. non-GAAP Non-GAAP the slide addition measures as with A our accordance financial reported in in an for found results in of can not presentation. call of Today's

will I to Mike. call that, turn With over the

Thomas Michael Price

you, Ryan, Thank and good afternoon, everyone.

end earnings NIM core For XXXX, of are an of we share, X.XX%. income XXXX. net stabilize NIM report of believe hold million, and of increases the points XX.XX%. deposit $XX.X slowing, basis going efficiency of and of cost translates X.XX% to ratio The continue year quarter will $X.XX to per in quarter-to-quarter to third pleased and ROA which of the rate to the we an up X compressed into the The that is

Operating with part a processing cards. driven we the had believe Basically, costs loan associated a system onetime $X were in outstrip likely new growth $XXX,XXX environment, yields debit in deposit debit by higher-for-longer from of prior as automated in improvement quarter, identified disputes. would recognition expenses of that cost. card up a In million we losses for

had the somewhat FDIC insurance due and decreases balances. increase we compared This associated Centric to hospitalization addition, benefits to by quarter lower deposit acquisition in the a $X.X million of expenses. due was In part last and offset salaries in in to in $XXX,XXX

some million X.X% $XXX Total annualized. the grew or loans quarter in

business loan deposit Our X and Northern regions key perspective, banking Ohio growth From with led equipment were way categories and growth of of commensurate a each the the metered We've Pittsburgh growth. geographically. finance the last line commercial driving quarters.

We have the or by loan growth quarter, annualized quarter. X.X% last some exited strategically in million in Average deposits third non-relationship End-of-period deposits $XX.X short just of X.X% is from also quarter. which increased the borrowers. the grew

This loans Community Criticized a XXX%. or Strong classified Centric points, which basis percentage Total approximately was $X.X as Net and XX.X% the loans loan-to-deposit XX annualized included were regional ended PA. metrics. the a which point healthy the a charge-offs to and million X as was million coverage average acquisition. -- $X both Reserve points. were basis -- loans XX of at improved. Central related was points of quarter. credit total contributors rising XX.X% to flat and nonperforming loans ratio led of to the in Ohio with slightly, percentage basis loans solid quarter XX delinquency We from

X.XX%, was percentage for The well, an million, relative in of as growth, peers. nonaccrual quarter which quarter our the by driven healthy $X.X a Provision on updated an screens and at $XXX.X additional to loan. reserves, specific losses we allowance loan the expense end allowance commercial and appraisal totaled $X.X for credit totaled third a believe, million reflecting a loans million,

grown has credit wellness tool front, score Credit April. financial advantage online of faster than robust in We this a adoption now we launched digital a is taking XX,XXX Manager, Score have of tool, since users the expectations believe On banking best-in-class manager late and solution.

far same especially XXXX, over an last compared checking of with The expected increase focus for on openings openings yielded digital our XXX% has period in accounts, growth to in account so the year.

now X are via every of X versus channel We accounts opening in the person. approximately digital

Reske, In that, closing, provided Jim? the growth. our appetite strong have I'll revenue to sufficient grow enough turn deposit we've growth risk built it constructively organic With to asset fund and with over engines we Jim CFO.

James Reske

Mike. Thanks,

able growth. whatsoever loans deposits We adjustments billion. for $X.XX our acquisition, by solid to the loan produce have while deposit fund have Centric grown growth by grown all same nearly amount, our basis, a to no billion, been On making year year-to-date have $X.XX

relatively result, our masks been base but has stable loan-to-deposit that a fund deposit the year, all our grow ratio our our growth. in ability mid-XXs to to loan As

came by $XXX acquisition, period-end These Centric by we at third quarter, In the cost. loans Centric Excluding cost improved deposits XX while only deposits grown while of year-to-date, million loan saw total XX basis basis however, points. our increased $XXX million. grown have a our by have yields by the deposits, excluding points,

cost from continued, rotation last slower deposit than Deposit quarter. low-yield at a rate categories, categories but the higher

the basis It's Fortunately, funds in quarter. cost only call the the basis but up in to points early peak quarter nicely XX coming on increases yields keep costs, XX too the in overall increased third well. to of the of quarter. but continued loan increased third as Average second deposit deposit pace slow points cost

The the basis at in on the from Mike with level quarter first peers. X.XX%, to still compares believe of as margin X.XX% points rate up quarter, books average New nicely X.XX% loans compression came quarter. was X.XX% a second of we well third relatively in X the result, the an which said, and in

the wider of than Our margin the initial depositor for of show usual is behavior. unpredictability to continues outlook next year stability, potential due outcomes though to range

XXXX slightly until the the this second actually for In Our the XXXX, base of half, by is it calls about about hence, so of In rate that is basis a you a a Fed falls the now, about NIM projection, case higher-for-longer where NIM bit by X% rate half scenario scenario, next funds then NIM stability. and end second X rate ending the marginally dip points. in expands better, year. don't see of right in mid-'XX

highly are assumptions depositor forecasts regarding on dependent These behavior.

fairly have around conservative we deposits rate rotation even higher-yielding example, the loans loans, in higher-costing continued low-cost For into assumptions from environment. categories of XXXX a falling customer -- in

of we our assumptions, looks NIM deposits with rate the in even keeping assume low-cost those experience still about And the environment, into So have higher-cost even rotate XX% categories, falling XXXX with in we'll XXXX. that in stable. that

into yields the cost rate variable higher not more that rate because loan But environment, portfolio the of freight benefit higher in of benefit scenario, in get offset which part would By contrast, in deposit a of the rates. higher-for-longer loan does categories, expect some downwards. we higher we'd rotation reprice

last sale pressure, was premiums under have quarter. division little our from SBA been income changed gain did wealth but better. on Fee

We to be quarter. expect the income little changed next

For grow to to mortgage the next slowing income year, fee offset looking gain Amendment. interchange to and sale SBA are we the impact on help income lost Durbin income due of

debit as to quarter, Mike the in described. elevated was with associated costs due in and items, cards expense second related part Noninterest

to continue XXXX, Our $XX expected lid noninterest will next we're in million but to think expense around committed million a on pressures is $XX quarter. We keeping expense costs.

second We the late approximately a to I with to the quarter increased slowed ratio that, common tangible retained remained $X.XX back weighted share outstripped to ratios capital. $X.XX at $XX.XX. third price And equity We of capital from repurchases growth slightly somewhat per unchanged. repurchased value as in in earnings book conserve average quarter over Mike. it share will shares improved XXX,XXX increased Regulatory AOCI. while the Tangible turn

Thomas Michael Price

Operator, turn it now over we'll questions. for

Operator

Tamayo Your from comes Instructions] line question James. Raymond of first [Operator Daniel the with

Daniel Tamayo

then the then where the beginning is year expand during Is and and you -- did I sure sorry, your I I end -- Jim, year, then expand Or here, of now? the X% just -- make there Fed year to just is I on just funds -- if expand ends want just year? any heard hear Yes, -- the the yes, going the guidance end can margin. that why of I NIM at guess contraction I the start so we rate is correctly -- around it the about I mean that to on okay. tell Maybe

James Reske

But of expansion bit didn't I'm talk got you to from time. little I sorry, you. it over yes, now. right mean a the There's first

So happened have you the some of get this year loan positive [indiscernible] that of a benefit rate the been portfolio, experiencing. increases and we have year-to-date the

year rates little a variable in the now So off and projection year, of that towards rate [indiscernible]. That a right then the rate if funds bit, give bit much by it brings you falls the But the year next there's so the of next pressure down NIM and exactly end that is next end Fed actually it the -- it of to ends portfolio. trails overall that expansion. in helps where

Daniel Tamayo

Okay.

So you've margin next quarter into going Fed essentially move dependent of we got kind as then the XXXX? and up

James Reske

Yes.

to wrong. deposit With behavior, the that's right? the So little But behavior a we reasons is trying been assumptions are disclosure are some right. give has all which projections. be forecast more caveat They to big the projections hard always one the that could forecasts, was and the these I thing of underlying on of depositor

this the margin that point that right. In for we that projection, You've think got the actually low is quarter.

Daniel Tamayo

in you the September? do during note, just what the have -- quarter. of Or that curious how was third progressed kind margin On it the

James Reske

I of the call. you the it don't, end get but I'll before for

Daniel Tamayo

XXXX. And That comment on in continuing wondering, sounds then expense heard your great. pressure just Okay. I the --

you're curious historically kind of relative what expense to Just terms little on point of thinking could how you've a growth. if you in about put done finer maybe that

Thomas Michael Price

and Daniel, great there, start question. I'll

and really [ about ago, turnover try their to every will get but making process include next out XX% business expect you XX lines process. that, -- of we're line a leverage to better about combination optionalities you for have things a just grow but of bank, plans best point every get driving we year, will happen different to have budget. we announce some to respective and process to to in in that can what's coupled deposits, for budgets. rates, in And and a through costs regions, enough more year's through improvements, create and we in unit, operating business with and interest loans every region ] in going like units, a Just just rifts good that to assumptions every not grow some of went week -- support of the with don't And operating resolve, leverage own operating business, we business

And that. And record track we're over look our we So the it's the we'll And much. goal. close next at or XX good pretty here the at you XX but -- that's days. last the if years, in plane XX land or miss, by not if

Operator

the Your with of question Perito comes next line from Michael KBW.

Michael Perito

your circle that to today, just incremental guidance, margin wanted blended any now. conversation deposit like And if margin give curious seem I was incremental new feel on that that dollar a helpful. detail it is I'm more But would terms your so us And little guys in bit loan is of deposits loan correctly. like, forward be where there on books your interpreting your grow back that a against bit. what about moving kind on incremental to little spread of maintain a today. originations the like you color can being able yield or guys of I would spread meaning and confident commercial if the based maybe and spread on you curious

Thomas Michael Price

Jim. ahead, Go

James Reske

talking I corporate holding new you're loans, like are spreads loan on about think, well, very up think -- nicely. I

Thomas Michael Price

our our spreads and of advances biggest fact, well excess They variable and X%. are there in in and growth is category of really are, on all-in commercial

Michael Perito

where guys Okay. that And funding roughly at side, incremental today are excess X% on kind of figure? the against you

James Reske

kind right to market we X% Current money be are the of right deposit about X.X%. going specials CD Yes. Incremental between have and special out between and deposit is is going X% specials X% now, funding by and which to are X%. specials be time driven

Michael Perito

All Okay. right.

-- incremental of your in guess, build Jim, of that of supportive. could the kind then seem backing this mean be about I to very that up you mean facts of is very is it bottom the be into mean I So how kind think would the for I NIM, your terms like the prior margin, which the supportive spread sounds the question to commentary, projections? I those

James Reske

of continued the right. ] marginal funds the X% that's everything is And [indiscernible] overall quarter clear, NIM. think the micro-sorting in support be the X% corporate of your cost and categories, Yes, the kind in of that on the I just [ yield of some stability coming if to X.XX% to the does still yield figure is range, the and in

Thomas Michael Price

supporting growth our best attractive producers spread, assets of there's we've most quite and where that We that really in frankly, some lower putting want but believers pivoted. the generally. all of pinched categories, our this and Yes, time. the We're at have in we've in have those forward, but businesses we're looking we're times businesses, on to keep yields categories

Michael Perito

your if you're spreads taking it your risk-adjusted within growth year we between your seems on level, much like not basis, and growth least And digits about you anything. too pretty -- to appetite of then full is it's and realize as And the as opportunities helpful. at think we XXXX credit, right? like -- balance think on yet, the for but guys well mean year, If have That's next grow I loans appetite seems a it so really net and putting start, on a me to next kind we providing positioned. without for stress are balance sheet I the very comfort the returns one customers' room mid-single guide hand, really

appetite XXXX And what on of growth flip I you as customer just of would there's you're today? kind the think sides we those think of to based two guys. hearing question of seeing some corporate and color with, side about for you equation do loan north production the I that type love X% is, for that But drive for yields guess on of example, enough

Thomas Michael Price

now. the taker. to us and And either desire we're we do. not for the of small a mean -- markets a or that a in sufficient We're competitors, most to large, we're is have We have maker, we're volume and grow market there of both out I number don't in, right compete. there flexibility opportunities

we're to So a in. good It's at. that's position where be

And by way, the that geography. varies by

region out there Pittsburgh, Central year loan does done pretty because comfortably markets, it that capital years. we We Eastern Cincinnati. in Ohio what lower of PA, than a we PA, Community but enough we've we're figures for in any solutions have and are pretty prior geography, and And range by this X and there's Northern X clients. full is balanced, Part next Ohio, vary to believe the have hit year of more

Michael Perito

remains auto of here. me. so about just there's stable think quality question third But then as Obviously, not last points earnings Obviously, bearish credit on And Great. many for quarter, the card call. we the really your sheet some Discover was delinquencies, from balance pretty delinquencies. pretty their been savory data credit

do approach of here? how kind the you credit guys So piece

was to that looking to have if mean starting correlate become implications guys your economy the and are just points right? book, of it, of for yes, I obvious you're I data would somewhat last approaching doesn't directly So in week that but some at credit two. of the current around of gotten stressing continued, culling it kind how or thoughts could and there curious but kind some are deterioration. Obviously, obviously, And your I environment. given updated just signs just we've right, loan the the love portfolio broader you

Thomas Michael Price

do we we'll but through retrospect work well the -- And to we through we the up have so been that has things each. the cycles to great strain, so. over Brian but did there'll myself, color to it Grebenc, crisis or there's -- will relatively We've demand XX board, in on that enough tightened cycles done And want that? think on there probably should do in do through appropriately the that we're across we But at and in Well, be and certain several tough we're Jane tends Brian, credit we -- geography pretty any Karrip hold have out add this knew feel others time. and have in through do really categories. there and through are some credit and you years financial well.

Brian Karrip

that basis in delinquencies of the up points. side Just pick couple have seen consumer we a

it at roughly underwritten. But that portfolio portfolio points apart, As it a basis basis indirect we for is our know quarter-over-quarter. our well up points, we XX take few and look is

strong score in average, think about delinquencies. the size, what you you the that portfolio think that XXX in the go-to-market any the FICO in the weighted business, about strategy, pretty see comfortable in we increase address If around deal can portfolio, granularity we have feel and we our

James Reske

your down but up mentioned, think, are categories shoulder your kind Brian, of Overall, somewhere delinquency bit just they're still delinquencies the a consumer I this over if as you looking I as is add, little right? at mixed. reports, well, could

Brian Karrip

HELOC think shape portfolio our into this is we category and in the improved, entering cycle. Yes, good credit

Michael Perito

very No, there some I helpful. color. it. appreciate guys in It's think I Got fair. providing pitching you and all that's

Operator

Markets. from next line Karl the Shepard Your question comes Capital of with RBC

Karl Shepard

I of wanted Jim, confidence a think, guys to deposit you this kind conversation. I deposit it Fed you do can pick pressures. from help But in when the comment is peak, sensitivities done? are had you field And But you I the to the costs best if assuming little all your forecast? deposit hearing that on the was, know up think what the shot, I here forecasting. appreciate in the and of bit the slowing give gives

James Reske

overall slowly with, maybe it's don't I'll cuts just rates the The because Fed peak. rotation good to like even right been have, shut upward. think environment, forward. of a we've analogy a boat, costs The it's I your about. next question rate we if That's why this go came a up falling it year, on engine the drift been we've track you that but of it's and in trying it. Yes, one I you're talking off drifting is -- upward projections to -- continue deposit phenomenon it, understand -- deposit to heart will the the deposit Even motor they drift keeps analogy,

I dollars my deposit getting think in like and loan book, in continue that's we've also year. the going been own very our new -- it next leadoff my to I mentioned growing in comments, our base, the door successful and to but leadoff reprices

higher -- off a doesn't a don't levels then of rates next So it end even if in stay projections, change environment, in drift falling see just upward. environment, loan an a here, even rates we in the drift for in continue It's deposit if the that peak. longer, year. to kind rates It faster the don't that at from rate rate. -- -- towards And upward rates of our even

perspective so margin why it's us. And that's a from for better

Thomas Michael Price

$XX under Yes. done the we with want in. because is job a once bringing I Jane, late added to as focused, any to preempt color to have a from simply a billion and of add, grown pivoting would and pretty you deposits I And lot deposits. we've the new deposits Durbin. got but And had start Jane recall, phone, deposits, to team you just on her think add? terrific off we nicely -- and got quarter-to-quarter we

Jane Grebenc

that Only a And have which bringing a market in money us tells that were slowing the on very for seen specials, we CDs bit. down in, rate request our retention the are competitors deposit bit, rates exceptions good. retention decline have our been the we that

good. feel we So

good. we too have never but can transaction accounts, feel You many

James Reske

rate back again. really it, the because jump Jim remarkable. that We Jane about just in, mature. has retention It's retain our XX% CD been of could I CDs If mentioned

special really the has XX% Now rate, go seen rack retention take about in but of lower, that priced really That's been about retain, of current XX% those they're strong. But been rate favor. that, the would so our rate. the to will the we've we ones

projections take also you to a year. little more deposit me about, it give that, Let informs for we've on minute color our a been the because concept next talking whole just just rotation really

Centric about and And that's because the savings, closed in acquisition look billion of quarter. starting categories the I point if those quarter. deposit the at first together we So first for the a $X.X were at really the of noninterest-bearing end good low-cost us

was to a third But That quarter. billion. decline those was in $X.X fell about in quarter, billion those $X.X two X.X% Those categories categories. to in the decline That together second X.X% a it in the categories. fell

me macro the the So down. level, But with just level, macro on the is of and at seen a street numbers you it exceptions confidence. color deal mean a Jane giving from of watching I I'm slow interactions. customers and that and those lot a gives day-to-day I've the we That

was still get it's next that, have instability. with still that, July I the up is August NIM even and think, Oh, aggressive quarter, even month-to-month with was answer continue And was from do more that we a asking. we July X.XX%. X.XX%, X.XX%. NIM you and Danny, previous thing. with pretty year. to the one assumption going were fairly September from, caller which And to was have X.XX%. X.XX% I consistent the second

So there you go.

Karl Shepard

Not going a loan Okay. to wasn't color, changing about and I'm focus on pressures a that the pricing deposits strategic is deposits. fund lot growing location. to follow-up lot talked a growth, but ask just We've But that that, right? the of

when But just going bit, about great. expand if little be like driving to growth it core doesn't seems a on you more those Just seem think be game. that it's relationship growth. could be to in going would It special like a it's XXXX, comment CD balanced you

Thomas Michael Price

want [indiscernible] Jane, to there? and do lead us you off

Jane Grebenc

have before, Well, the is I of specials the I to But going very account don't years. said at X these still or specials, base strong I for And we have book. couple, we're transaction least got continue. CD pace as nice always a a and think we've to next the savings think going height

positioning. very our So about I feel good deposit

Thomas Michael Price

XX. is Slide on slide Mike. good This a have We

interrupt. is Sorry account retail average our $XX,XXX. Thanks But that, Jane. for to

Our is $XX,XXX. size average deposit

the -- in PA, you're or communities. deep clients, additional great it our loyal just mean perhaps $X.X X billion not basket of bread inclined customers an relationships. but small Community over are move might our or company, XXX and probably basis our X over deposits, points, is XXX we or and You still of basis I XX, call but points, not these

we depository we us, but Just -- positioned. a feel do we they feel well just confident like we that Jim good and suggested, as have surprise we're could

Operator

next comes line Navas the DA Davidson. from question with Your Manuel of

Manuel Navas

that change Fed of yield What no of rate. kind hikes, you the with increase? on assuming kind yield no kind to loan of are like a loan funds a quarter you in Do normal have repricing with standard

Thomas Michael Price

where I'll I Jim have high X%. our finance, as is as, it, portfolio just Xs. certain the the might finance in of high mentioned yields, running as in quarter the are start was categories in terms really categories, And equipment and X.XX% new think loan key well two but about from as last here over and commercial that and high equipment really in ranged

so that evaporate. our gotten and almost are for And there, doesn't those key in volume but business has X%, us, And good there's even X.XX%. up categories volume indirect

in curve. just risk the on paid our good and So progression yield they're by the wherever terms for team out of getting

from. nice And anything start a so add? to position you that's Jim, to want

James Reske

giving so what's new yield on confidence add, also margin. gives we we coming were but the replacement loan the expanding. And versus on the you that between in Yes, off has differential and I'd what's Manuel, yields, coming been the the us keep yields, you giving

this X.XX%, was So -- is higher in the basis After coming was XX are points. third what that books. than basis And was quarter new at points in XXX XX book's the basis the differential was second the running off differential that on quarter, loans the but points.

Manuel Navas

Okay.

thought at the growth thinking quarter year, the there's year year. in the pipeline keep into loan fourth Is of of about helpful. of ] into commercial at a usually That's and the of mix on Okay. kind where Is stand? [ the been half that Just happening? that -- the more your back could shift towards year? process And half back next the next does book

Thomas Michael Price

grew were definitely but years low we preceding ago, the year teens. they a or lighter are in Pipelines X than the this, X

it's achievable X% right so or are cherish right a same think understandably, of businesses variety where X% given, isn't the And of ways. do very we're And more now category. kind just from that the the -- is of guidance at anything, pinching mid-single time, volume in to And kind -- pinching of the kind if the the digits bit we're couple yields we we if we've we of right little not because a of in at. a spread

James Reske

we're the the new so And origination fairly volume. runoff to is volume we by close that pinching, mean pricing those

doesn't price the is portfolio and margin. if or So increase loan out on any size yield consumer which funding but the fairly is doesn't does that but playing create grow, upward, the nicely. pressures, story side, capital And

Manuel Navas

That's right? mainly auto,

James Reske

particularly auto. thinking I'm of Yes.

that's growth you that before, -- I'm think to I do we've room want spoken lending. about And gives capitalize but and exactly when fund what want for thinking you new commercial about. the you do creates that to which that to ability in that

Manuel Navas

a of seems gotten been kind have of update equipment That's It like nice kind place high Xs. on an you better, growth. finance? can of -- the give Is yields

latest the It's pretty Just nice. small the but there? a from growth has base, been obviously gone

Thomas Michael Price

at, -- Yes. now it's I the that's mean group...

James Reske

$XX million?

Thomas Michael Price

just or We've at we the and a quarter that. volume like type of $XX equipment little terms we're even granularity bit and like $XX million this million past million X.XX% of and that of in the finance new that of pinched doing. $XX actually,

And we categories. years the ago, on so a -- business and our commercial we that have a out bullish lift did just pretty a some in we're just team and of terrific few

Manuel Navas

-- shift to that. I Just appreciate

from customers deposit bringing and in from my a coming bit Just are much gaining talk more current question, to you households? flows shift new little for how or can about money last

James Reske

Yes.

that is remained So relationship actually fairly something stable. we've this watching It's year. been

our is $XXX money special, about of deposit upward. $XX new for -- we get get from we that when a book So -- own every repricing in about from

special noninterest the other our customer you what a from half market an new. $XX into a bearing, that's little special other the you're is existing is new that that or out put bit from money CD and new, But doing savings a existing about special base. is So account, get special. CD now $XX And

then the And money real last -- is new it us, the money. to great. bringing $XX is So is the more which

Thomas Michael Price

I think CD our And this been ago, at Jim, driven what's year basis a was customers. deposits had funds all us last we off of time cost there points, right? year, is helped X

James Reske

Correct.

Thomas Michael Price

I and so just getting And hot but might that money household have else customers have somewhere us, think the now -- rates, been of we think coming they aggregating we're How Not again, out that loyal sure, with I our different currently way to continues we from at out? hang -- and their most lot is a with have us. it long bank, customers but markets. it that rural the that is are playing of play a

Manuel Navas

buyback. great. wanted want That's catch the quarter? did up to of on rising do a little the the that I did in up of -- a bit fourth just that Kind leave you to the from across could it appetite change and How it in to where little pace And and you that to quarter? Okay. capital have XX-year is think does more go bit terms

James Reske

the Just we said powder, it back let's under slows to back with We price dry That be down trading position bit, it. at because call be actually given cap some in a were the at a it And levels -- $XX able to which little the buy And so any end, so buying we're want $XX.XX. sub stock. at also keep debt probably would we a buying our to we're in $XX, day, share. at but we towards early I quarter on cap just changed back. the below I the

million tranches at of have the each. bank You sub recall we debt $XX level, X

One callable is those of lost of X XX% its treatment. and Tier has tranches already

to to X we to -- XX% to capital when want a of position like call able June really treatment. buy levels to continue in be thinking to call was That that. we'd lose be to we be that another the if so next And build able capital Tier behind

Operator

Your next Inc. is the Breese Matthew question line with from of Stephens

Matthew Breese

some thoughts in release, I impacted of how points. dynamics much because I X press noted normalization liquidity hold this currently of about, on with think, talking by, at excess to the you're the that long NIM liquidity intend excess Jim, your on it was of to if, you also basis quarter, some those curious end? in it? period holding assumptions? the onto margin you some there's you're And How

James Reske

Yes. liquidity after quarter. Silicon in It's started We the Bank that the quarter. million about first right excess $XXX to failed some in been when took deploy we on third Valley of of

of about it excess got but cash. to million, think excess, $XXX I just down

I means we're the when to we cash, it purchases, that that continue securities year parked though FHLB into excess as well. continue do the year experiencing is cash So been what of to, from and money that but deploying into the Fed. we've next going rest for borrowed here and going say we to We're and the to at

Matthew Breese

Okay.

to work a So should fair million to $XX-ish that maybe we about put think it? think quarter. Is a way

James Reske

that. Probably more be than about a Might right. little

of assets portfolio securities a in small profitable purchases no it's in run compared the and that think I if it's gotten a almost -- growth but portion least where a loan let at to total a for year, off good, terms point of so peers. doing little our to last strategy, it were we in to was redeployed

And size so the up get of to bit. we'd like securities the a portfolio

Matthew Breese

down XX% over list X% questions. would ultimately Okay. like We're this and close frame? That But on assets. to be actually securities obviously, quarter, pop-up to to you to what was Where time of a period-to-period. my

James Reske

here, have aggressively bigger so. don't know got a it's We but just hard think, We to target. get I not from

projections, next another by grow last projecting we year. million our it in think to $XXX were I

grow of it's want -- to it guns-a-blazing is not now. do securities go portfolio So $X.X from not going but to we and year, next we're buy where billion the

Matthew Breese

Okay.

I Could think on be most it forecast NIM? to quarter. figure. It's there? you quarter of us NIM accretable give this a the of the the every yields How expect much you recent hard-to-model an impact represented XX always just bps

James Reske

points, about points figures Yes. going year make think each offset to basis kind to a it's point and XX We X -- we're basis it's XX think that We the cash actually basis other. yield be next and accretable about probably trying the of quarter.

Matthew Breese

And X, a XXXX? that is estimation X slowly to good for declining

James Reske

it have number don't for XXXX that quarter, in out. estimation I get I'll And the is. next yet, -- is you XXXX exact It but fading for you

assumption. probably fair So that's a

Matthew Breese

incorporating our On delinquencies, know I subprime go see I you category curious anything to to what one and be delinquencies more been should the wanted experience auto higher. if credit headlines is nature. higher are that into some things front, auto. think that recent models, that been the we of starting there underneath There's charge-offs, your the I'm has it's on hood

Thomas Michael Price

last Well, story? give through you good We the we the Brian, to But of hook had only rest do auto them why experience the in market. credit more and starting probably cycle a few don't cars.

Brian Karrip

Yes.

have a business. prime don't subprime. We We have

leadership your The in you up in are I managing business They're XX this it from it, to quarter is got Matt. XX question. for closely. to points earlier, We're mentioned continue basis business. a well. quarter. going June, basis And experienced very we're delinquencies team watch tight. As Thank that the We've points to underwriting watching

Matthew Breese

also loan I much the And syndicated, is credit, performance just that ask, if of that, portfolio? staying size the How on any, there? the is if have of credit to what is one, topic wanted of your how you of have you market?

Brian Karrip

the significantly several Yes, down performing million. past over book $XX so is the our years and -- so SNC fine. It's it's

Matthew Breese

the Okay. to want put reserve factors was were on changed It I reappraisal. real it Was aside? some commercial had on And of this some credit? did where estate based credit? commercial what What And appraisal that primary a money a touch the quarter. the to specific the you was enough or then

Thomas Michael Price

Brian?

Brian Karrip

you for Yes. Thank your question.

XXXX. originated Business in the was on In the So it the property nonaccrual. Central the in part pandemic, vacant. The became of office loan this is we an put property XXXX, District. eastern XXX% state, In

reserve is to value, decrease a showed million. specific recently in procedure the most came appraisal an we so significant Our value a add get that of annual and appraisal in $X.X

take cap in property. a the appraisal decreased. would assumptions appraiser, to I the year-over-year the it why point the value So the basis mentioned a increase from That's rate, as earlier, reflected and long conclusion time the lease lease-up the of XXX period fairly

Thomas Michael Price

is pretty about that feel I have million good nonaccrual that think agreed. They're we additional property. $X.X loan, It's one and a an just office as we paying borrower one.

Brian Karrip

That's correct.

Matthew Breese

The what's the the loan size? are where you now total reserve? put aside a specific much loan And you for reserve quarter, how on covered this

Brian Karrip

The loan specific in the [indiscernible]. is size million $XX.X

Matthew Breese

much, I'm sorry, specifically, it's X.X? how

Brian Karrip

loan. It's $X the specific the reserve, million is

Matthew Breese

Okay.

the much there? are million covering $X just reserve you the in I'm -- for confident how potential loss curious pregnant Sorry pause. content how

Brian Karrip

month as old. most We're as the appraisal, confident is recent X which

tenants continue post watch update the should numbers then and a the or they people on We to find Should they quarterly we'll up monitor building, sell a basis. to desire have this. our asset will and special

Matthew Breese

for just M&A. Last Okay. around me is one

more nearby group, curious I'm you're strong You more your peers the relative pretty bank multiple position, that not and be whole fee there's hearing if a might a still have from such to in or conversations, strong income?

Thomas Michael Price

would past first, the people talk of times more Yes, and the lot a us, been and than, partner, the And to And We're conversation that's there's we more we I well come good say, by quite a last frankly, X couple we do right to and nice. us do years. definitely in whole in bank, tend there's have to they a partner that and and people with do well. everybody.

And organically a time. in tongue $X shows accretive deck ideal kind slide that billion have depository. would be how been we've those grown investor and that's very think less. over small M&A, I cheek, transactions, in us generally a to of rural particularly our And we or with

don't great to just and everybody it to not And be way know. a would we to you so talk we're continue do And but overaggressive, supplement.

to all trust got it right, bank. It's just to and is it We over funding. can. We've can that, flat out with low-cost me. you grow just the And you do do got Jane

is that So helpful?

Matthew Breese

Mike. helpful, I appreciate Very it.

Operator

question next Daniel from Your Montgomery Instructions] with Scott. Cardenas Janney [Operator comes

Daniel Cardenas

Most of my been answered. asked and questions have

for here. a of I XX-ish rate? it's that percent kind should a kind -- mean still think your What modeling a you Just about tax guys. questions run I Is couple go-forward basis? of consistent good on here of how rate been fairly

James Reske

XX.XX%, is -- about but XX%. call yes, It it's it

Daniel Cardenas

And fee of Jim, can't I income. Okay. missed those just kind you guess multitask. I again? your through maybe Can go I on then, comments quickly

James Reske

sure, income income to it's There's help Yes, growing by fee Durbin -- So we I SBA Dan. we the the at is offset can't -- But we to the stable. income, affect that's that. are have impact, next year, right? fee like of looking think way. course, sources going multitask either, relatively but

Operator

call are no There Mike Mr. back over time. I the questions at now to turn CEO, further this will Price. the

Thomas Michael Price

We and mind. our thank hear always what's interest Thank today, and to interact on appreciate for time company the you. opportunity and your your your you in

Operator

and gentlemen, this Ladies concludes today's call. conference

disconnect. now may You

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