CVB Financial (CVBF) 24 Oct 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Third Quarter 2024 CVB Financial Corporation and its subsidiary, Citizens Business Bank Earnings Conference Call. My name is Shuri, and I'm your operator for today. Please note, this call is being recorded. I would now like to turn the presentation over to your host for today's call, Allen Nicholson, Executive Vice President and Chief Financial Officer.

You may proceed.

good and Shuri, you, morning, everyone. Thank for results for you joining XXXX. us financial our review to the today Thank third of quarter

Joining Dave Officer. is me and this Executive Chief Brager, President morning

financial contained claim Our will speakers Investors provisions the announcement safe www.cbbank.com the visit yesterday. comments released tab. and the on Securities the Litigation please was obtain harbor copy, website refer the The earnings a today To protection our Private included of information in Act to click in call XXXX. of that this at the on Reform

For December therein. and report to annual a cause XXXX, the particular, XX, Factors please more forth differ complete that results company's ended discussion the on of and Item in Form statements, the actual XA, set forward-looking Risk see uncertainties information risks XX-K materially for in our from year may the

of more call see release company's earnings complete a disclosure, I'll harbor turn For connection call. please version Brager. company's the to this Dave now in the issued safe with over the

Thank everyone. morning, Allen. Good you,

the per third we We earnings return declared or XXXX. quarter a $X.XX $XX million average of consecutive for dividend representing XXXth reported per third XXXX, consecutive previously XXXX, third on share, a quarter quarter of of assets dividend $X.XX our the profitability. return our a net representing quarter shareholders. XXXth For of the of for of of cash share on of produced equity quarter our and XX.XX% a paying X.XX% We to average common tangible

per of income. and grew grew quarter X.X% X%, Quarter-over-quarter, net to pre-provision quarter interest the per $XX $XX of a increase $X.XX by $X.X prior losses, million, gains Total or gains for excluding million the second $X.XX net million second the compares share primarily $X.X year losses. of share $XX.X million or XXXX, due in with Our earnings quarter. pretax million and compared net XXXX, income our or or $X.XX and revenue, to by excluding share for per

noninterest X.X% core to increased by the $X quarter. or expense compared million Our prior

we XXXX. our term On $XXX from completed than declined of second of that funding mature January Total XXth, offset the September the early billion end was redemption approximately BTFP was more assets the of $X.X million by scheduled program in million quarter by in XXXX growth of bank an to customer $XXX deposits repos. borrowing redemption of and as

leases, loss cumulative these $X.X long-term which balance to strategy transactions, borrowings realizing estate In back with of center two investment million. securities million. $XX.X we our leased the pay we at sold our deleverage under executed than gain and of part transactions we banking million on buildings sale-leaseback As totaling sold sheet, $XXX sale BTFP more and in conjunction off available-for-sale of real two a

declined Although of in September million X.X%, to quarter average $XXX by second quarter by which $X.X total $XX.X third billion of net million, or quarter-over-quarter XX, from income. to the assets XXXX, XXXX the interest grew increase earning drove XXXX, assets the

same as the prior net Our the quarter, in the X.XX% margin quarter. was third interest

customer XXXX. The a of end increase from We second for deposit quarter deposits and to third in the deposits bank. was quarter quarter customer repos million the $XXX of is in strong September our generally $XXX quarter-over-quarter repos experienced and XX, growth average an The million.

third XX, million of repurchase September billion, agreements XXXX. XX% the our the that of than sheet were XXXX. quarter added balance for The total December At deposits time XXXX, total during and from first the greater includes repos $XXX and XX, were million increase deposits noninterest-bearing in the totaled brokered in a customer addition XXXX. $XXX to quarter increase of deposits our customer total deposits of average $XX.X deposits average Our

have deposits For million that Trust. to in XXXX. $XXX notes. the first to Citizens of higher-yielding compares liquid was moved $XXX million during treasury such These X This assets months of as were transferred XXXX, invested funds approximately

Our XXXX, the cost for quarter XX customer basis compares of deposits basis year and of which the third repos and for second quarter. points XX of to XXXX the was basis points XXX for points ago quarter

quarter in of time Our from X.XX% non-maturity XX September grown our XX deposits cost deposits increased basis XXXX, points first of XXXX points. basis basis cost December cost from has in XXXX. points of the of grown the through in December XXXX to XXXX while From to of has by XXXX, X.XX% of in September XX of quarter our has of deposits third

Our basis beginning cycle through the Fed's deposit XXXX third XX%. was the of end rate the non-maturity of deposits beta of XXX the from on point increasing quarter

commercial has quarter utilization Commercial loan XXXX XXXX. to real utilization loans. rate rate livestock of second of be a estate loans million be of XX, a declined at dairy September at loan September and at of $XXX tepid. The was loans December demand loans, end $XX decrease grown decline the discuss and million XX, the real Dairy as The $XX in line utilization and loans decrease million the end from million to decline also or $XX million in C&I livestock though $XX by quarter-over-quarter decrease XX, XX% $XXX to Total see we by continues C&I line Commercial let's led have decrease December compared in the from year-end, in were and total weakened. construction utilization and a included million Now loans. a estate is estate fourth from $XXX loans end commercial higher loans, even low, XXXX commercial XXXX, XXXX. X% demand loan our the in loans. estate which a $X.X XX% real real industrial quarter billion, the continues reflected decrease commitments. at decline the million from in XX, a XXXX,

by more period than Our XXXX first months XX%. X in lagged CRE loan production for has the XXXX the of same

less to been declined by same loans by at construction origination utilization Construction We $XX very selectively, loan than million loans over has origination originations, comparing a when C&I balance loan impact high production rate to be loan quality million on in than new XXXX. C&I loans compete declined in X.XX%. new loans third -- XX%. credit yields. new quarter of continues the new $XX of loan the have the loan greater yields minimal. XX, which considering Even our and on line been period December XXXX as can

from loan X%. been near-term recently competition will originations below likely under rates However, and average have pressure

period loans small- are C&I either array resulted of has loans. loan of on originations XXXX owner-occupied best Our our continued XXXX. full in XXXX to providing in focus remained in of for asset flat Nonowner-occupied We them total that loan quarter-over-quarter. our have originations, classified strong compares and medium-sized believe or and relatively in products been remains quality higher our approximately banking percentage new as which XX% owners, million the loans their businesses loans same XX% X-month declined a nonperforming $X the approximately by to

primarily at total Our in declined this third losses estate XX, owned, industrial end, recoveries for as both assets, approximately agribusiness past quarter XXXX. points September as dairy in $XXX June loans one $XX end. days loans more we $XX,XXX million XX, plus quarter by were and as and prior Classified to XX loans due million, of At quarter. with loans that of paydowns, XX million loans were nonperforming classified total to same third $XXX,XXX due assets. $XX.X charge-offs $X.X and second the million million than prior Classified of defined increased were allowance the credit the quarter Classified loans other was The or of September loan. for had net compared industrial XX real estate nonperforming livestock the the and the XXth, the quarter quarter. quarter totaled $XX to of less and while compares million $XX.X by commercial approximately Net year. addition loans were commercial million in real percentage due $XX.X but a nonaccrual of X.XX% classified for than loans, basis at commercial million days. At $X.X

million off our third $X.X comprised no that paid a a three remaining two charge-offs. October, has the of was million which Two party Of We loan foreclosure. of have we at nonaccrual that exceed become we October. by was loans, loans, these nonperforming on well asset, XX% loan foreclosed fully also offers loans asset but past that are on these a went anticipated due believe one secured, In that book value. are there that OREO loans purchased approximately loans in $X.X the an and multiple

the on offers in In result quarter $X of all our believe property, asset and senior recovery Suncrest balance the interest over loan is -- loan million. a sheet. of additional to became the most took the the we discuss third call and in The which OREO previously October, I Allen? of living of charge-off acquired approximately net in further or facility we which of first merger. are in loan There was multiple will foreclosed the will participated turn to our an will believe discussed aspects income now Allen XXXX. we this

over Thanks, quarter. the $X.X by prior income Dave. grew million Interest

income by portfolio we $XXX Federal security decline billion. of generated balance of by Reserve million in as increase of of $XXX to in Interest in $X.X interest selling the during portfolio third million balance an average AFS more declined accelerated investment at by decline the million million. second income than average the contributed million increased growth securities. quarter, funds Our from low-yielding our bond $X.X securities this This to $XXX quarter approximately $X.X which from the our

and loan our compared increased than average interest of second of The yields. expense by in and on million on due a the funds million to points. prior reflecting an Interest-bearing repos increase funds. repos and quarter, declined to expense increase cost customer was grew and cost deposits $XXX,XXX increase quarter point Although due loans interest $X.X XX Interest interest over a basis in by million deposits loans the XXXX, more of of expense primarily deposits customer and income X basis grew million. point on by average $X.X in increase cost $XXX $XXX the customer by basis X by our repos increased in of to

by $XXX by borrowings declined decreased $X.X costs average borrowing as quarter million million. Third

approximately by we AFS $XXX by investment XX, value $X.XX during on unrealized June from securities a of XXXX, portfolio total of These $XXX from HTM the Our approximately securities prior end at portfolio the million Investment declined at compared to million quarter million. yield declined or portfolio totaled quarter book XX, end X.XX% XX, third second December billion XXXX, held by of $XX from million by June The declined the with XXXX. XXXX. XXXX. the of million the maturity $XXX $XXX from sold XX, of and million September approximately securities to The in net million by tax XXXX. of The securities XX, million. on second was $XXX resulted $XXX loss to $XXX from loss quarter. AFS quarter entire for declined X.XX% XXXX, the the million security investment sales HTM quarter $XX.X a securities the third equivalent September as on for AFS pretax

basis we million We hedges in spread daily quarter on value $X.X which the continue based have pay fixed to We have We SOFR XXX received XXXX. of June average to the approximately recorded positive related weighted these on interest these in carry a of swaps fixed late of third rate income on swaps, fair points. the of X.X%. executed

cash The November declined The Federal hedges, and from our by earn end $XX reductions reduction fair anticipated December the quarter. million prior spread value point the combined September rate approximately Reserve's in we value reduce the flow in on swaps. the will market of our basis and XX of hedges, with these rate

sale XXXX. sale-leaseback million. sold XX terms $XX previously, a As of close, two simultaneously AFS $X.X lease agreements of gains XXXX. of into transactions of additional million the We with in loss XX anticipate years. these Dave corresponding gain aggregate for during price an we from with respective quarter currently during two entered purchasers executed noted and and we transactions, third two sale-leaseback the initial resulted transactions fourth net sale-leaseback Once We offset properties quarter portfolio. transactions trades for to expect of we the some pretax These our

result million redemption of as term of bank Cash and XXth a September $XXX to the borrowings declined on XXth. program $X.X funding the equivalents cash billion of September

was Our $XX as allowance as for losses XXXX, XX, credit on the was XX, level June September of XXXX. same million, ACL

Our third on X.XX% quarter total to compares which XX. was ACL of loans, X.XX% June

reserve million a Our loans. million, XX, ACL identified was at December nonperforming $X.X $XX.X for which XXXX, specifically included

loans quarter provision X of record in have the a did specific for of quarters been essentially We the first Our X reserves of XXXX. first end since not the XXXX.

of produced continues by a economic Moody's. multiple blend be to forecast Our forecasts

forecast forecasts. We continue the downside scenario on with largest weighted individual weighting to risk Moody's baseline have among multiple

and resulting forecasted X.X% quarter of real increase in than for XXXX. of in slightly less fourth to The stay then forecasted in XXXX. resulted first XXXX for XXXX. in economic increasing is growth be declining growth and the unemployment rate unemployment X.X% Unemployment before the to X.X% than is in X% GDP averaging be is XXXX all to XXXX late to higher to continuing with quarter XXXX. of forecast of The forecasted all X.X% negative until of GDP

common $XXX tangible million X.X% XX, equity at equity and at XX, XXXX, $X.X December XXXX, Now our from X.X% shareholders' compared September end The by XXXX, of XX, the ratio billion. turning X.X% XXXX. position. to At company's XXXX was to XX, June with at increased our capital September

and the highest ratios capital Tier was our capital among continue regulatory Our ratio XX.X%, At XX.X%. to XX, and our industry. total risk-based are common X ratio September capital XXXX, grow was the in equity

during decreased bringing of for I'll credits, of of call back third as third year-to-date our effective in discussions rate this tax tax rate Dave a to quarter the tax XX.XX%. the earnings. our effective result year to investments turn quarter further now Our

Allen. you, Thank

to Moving on income. noninterest

quarter. the million $XX.X XXXX and prior losses excluded. noninterest $XX.X third net million This with compares quarter Our income $XX.X when million the are was of gains for for or

including quarter-over-quarter, Third cash quarter exceeded $XXX,XXX debt values quarter the by third of the receipt in $XXX,XXX in increased that the benefits income of BOLI surrender XXXX.

management the trust $XXX,XXX and fees wealth compared second approximately our addition, In by increased of to quarter XXXX.

expense due for The quarter $XX.X of of increase the salary the million primarily million Noninterest $X.X million compared expenses. effective in to increase increases XXXX. $XX.X July. was quarter-over-quarter $X.X a annual with at third as for staff-related second expense was Now beginning became million the quarter

involved the than regulatory the quarter, in nature We centers approximately for also due special compared growth impact utility two with occupancy banking when $XXX,XXX in for an had quarter XXXX. accrual the costs to in the of grew second including expense costs. More of $XXX,XXX X% the of increase seasonal sale-leaseback the in due reduction prior the in higher the assessment expense by assessment expense our Occupancy or half the higher was of occupancy transactions. to FDIC

compared included XXXX provision quarter in third of of for the the unfunded $XXX,XXX the quarter in quarter. Noninterest to of for third commitments in compared second average recapture The of assets recapture X.XX% with loan XXXX. $XXX,XXX X.X% quarter for XXXX expense prior totaled

ratio XX.X% the the This third quarter. of This today's quarter compares concludes presentation. XXXX. efficiency XX.XX% for was for second with Our

to Now questions any Allen and might I take that will happy you have. be

from with Our Matthew the Clark Instructions] come question [Operator first line will Piper of Sandler.

to me, for up lift from some the cash that us -- can parts BTFP. from pay yield -- to one repayment deleveraging? used of looks the like the in calculate on Can in First you get that the just the we get give of moving securities around And I give it so just then the sold. yield also wanted your terms the smaller and NIM the you'll you the off.

was Yes. book the yield sold yield book yield the on different, we I securities be mean, X%. the than -- the less but will market

just it cash other Or pieces and there? to the is Okay. securities? Any puzzle those

we and additional grew we cash mean, deposits, as but... obviously, securities, I of deployed, Dave that generated Cash course, mentioned, which

Okay.

your curve? costs looks assuming costs here, in What thoughts and we general have in get on based the Slides September And XX. like Okay. forward then it stabilized deposit on XX deposit are from

Yes.

couple a things. of So

a rates on of up first did be the there. movement, more -- of in us, way the cuts And last rate downside We cut, costs any closer were market future be we little right On in a had maybe deposit going cut. noninterest-bearing, XX%-XX% the our on will market yet. cuts, obviously, During lower lagged a but money we about obviously probably just with to obviously we on beta some those for our below really we beta. But -- down XXX% more the haven't on still the which the shown beta XX% first the will a on XX% up downside.

So situations requests seeing We're but definitely stabilized. all those the I higher environment. it's a majority are rate rising still being the bit some think little rates, all, in of for vast handled in than differently

are those. and So on probably X.X% look the next bit cut, little we'll higher rates into take that at deeper dive or a

So, round we first that or higher. the on were rates did X.X%

as I Allen, So anything moves. add? you have ratcheting we'll makes of know; Fed kind just to don't down that do keep the

that think I covers it. No,

Okay. me, not on buybacks. think M&A to Any Great. you And or you or likely? And not, and deal on a is if announce before update whether able not one buyback whether be a for then year-end? last just might

Yes.

on capital. So sitting of obviously, we're an enormous amount

of maybe to hard it was couple not of That's banks Working ratio. a sold, problem our of prior of obviously bought. than factors less at TCE One was quarters a deals, the, I'll say, today couple the quarters together much restricting last are putting ago.

have So to we deals. stick our knitting the way to as pricing structure as we far and our

that management something. are I stops that we sometimes evaluating capital have anything, from still definitely, that Notwithstanding the option relatively coming and respect shortly. And that's to something conversation, working that X-A. but something opportunity is have believe we'll on are to announcing hard I And the to And M&A And do say, would discussing. with M&A we imagine we do more buybacks. we us out

And moment will next from David Raymond of with line question. our for Feaster one come you, the Thank that James.

the to touch growth wanted outlook. I on

It's about And opportunities? Where and grow to extent? are in. type environment, great you real where environment I'm to a talked about to an do you you seeing to you mispricing curious, not demand how that headwinds. tepid growth? do trying how be exactly competition in win think right, seems about of You talked be credit being competition

please moment Ladies the line, your by. We our conference be will One remain speakers do have Thank stand and on you. resumed gentlemen, shortly. please. Please back.

want the it to question, answer [laughter] David, that we wasn't didn't promise. I

It the was good got a off such guys you question phone. kicked that

No, what happened. got know disconnected. We I don't

for So that. I apologize

Sorry that. about

the demand day, I've the to lost speaking very The I below They're couple been Competition a companies. growing commercial loan of we've C&I deals relationships. seen end me. estate has the But to to rates fierce. growth, is is side just more mean, still primarily operating which at unbelievable investor of X%, So slow. we real are is tepid.

do, I stabilize think Because sort more, that curve a pickup of the around side that's number to to on estate investor the think real all to end debt. commercial make the maybe utilization where getting an we're funded and as commercial doing lot And it hit same we to things. loan. start that as sure front stuff of in bit of just stays down the XX% C&I we rates have maybe to tenure do I a in even it is, estate of goes remember, real investor see XX% we'll little that on, a you the need more

includes and focused are income are good pipelines deposit deposits the little okay. fee we're but which and loans very loan a The pipelines But on are lighter, opportunities. The relationship, pipelines still.

of there's 'XX to the little have a And for to in we BTFP. beyond the setting in the we'll with I how bank we'll have we're of -- fourth And So sort seasonality said liquidity. quarter, we're past, on continue in really a as payoff up then, focus the the little and I've perform going that. think, but

the more. We ability do to have

focused ahead. it's little relationships. So think a kind still tough going be those I going on to sledding we're really growing But of

touch on Okay. credit. And to just wanted I

a loan migration were on talking to the to remarks, credit of credit discipline. ability -- October, specific? seeing? ag the kind I'm what hearing speaks are in touched -- trends you there that was curious, underwriting book. extent or pressures could about you're You the some from just pressures of seeing the on does your on I in to your But look, credit But prepared in sell that other We declining touch of your these about Is past. just maybe I help touched value additional what the and commentary rates anything seeing the at CRE trends. -- Where your migration ORE folks lot commentary pressures? talks And or the alleviate you in this are above clients? on guess, are the the hoping they

Yes.

had and relationships. to we've remarks Those two there's environment. mentioned I really the rate the our So are that are basically items -- the unrelated totally prepared interest issues in

went again. and $X.X he first multifamily and and loans XX% all that worked literally mentioned value, borrower three bring XX% us. between to then The months And to extremely values, we properties, loan our just everything brought where were to he with I low loan in million on X.X like current disappeared him dark before,

And putting up at outbid foreclosure. we two We the ended at got so one up for sale.

we OREO. should second one We took into quarter. be that The closing this

goes according You see REO assuming everything that even is under contract an now. right won't what theoretically, to as

think the agent the a The this unfortunately, of did. than And have experienced we've lot one-off. I, participant. the have a on bank candidly, agent. not I sort faster living So would moved We're been senior really we're facility, situations

just the there them little now finally of bit a to dog been And finally -- we're sort get we move. that tail property. wagging the trying we've so have But to and

offers in charged plus I the -- is We would in recover we getting amount operator to first that off an better. theoretically we again, The The us there. have hasn't that performing wants pay should quarter. happened property fully We're off, property. operator mean, yet, the buy the

I well. about feel So as good that

livestock has very unique happening of significantly. lot situations. sort than these there's and not quality other very Ag, So really, improved there the that's credit just stable. been a has And dairy one-off

problem. you if -- that, anything and it's customers our to have been a to very been Allen, stable know, don't but add I the haven't rates So really

repricing have borrowers or had to large really on There a few loans been maturity. haven't a rightsize have to extent. We

And process underwrote cushion on loans those right, through that So gives we us it's that unfortunate we're of even all-in-all, foreclosure. not to you're stable. that have the we at it's to sure money if origination how losing very based make go been

good color. then me. last one That's Okay. And for

You curious the this much quarter, increase success balances pipeline versus your in mean, when kind NIB where today? clients increase quarter. wallet how was where great of to what deposit and pipeline. healthy you that this see drove at touched on It the I'm look having share of growth And existing clients winning is I versus more core you're coming driving deposit over? new the you're

Yes.

So say, as a of, that you lines have on. focus of know, we couple really I'd we business heavy, noninterest-bearing

title of there's And property so refinances, group, their deposits our And escrow no escrows our those probably all lows customers. from property are they've government couple no managers, for escrow services generally Because existing at group, group, well. management open just title year sales. there's remember, a done

not the year seeing years had deposit So sure. ago, level we're same just a we ago, X.X for or

different question, and it's So operating relationships, the of across answer companies. your to to there. It's new some think all been start really pickup we'll But it's see types board. I

Our title group is a group, job. escrow best year management group, title in The their great having government has services done originations. escrow property

the And so all industries. board, it's across really across

I Generally, fourth little do quarters But excess worse. been think out. us, have and has we The second a the -- some the But we'll for historically are of quarters think third a I and bit lot remember, do that better. seasonality. first are taken

because group trust outside same our thing to moved the into the, been trust lot don't deposits group. or moved of see outside I'll I exactly investments So excess of say, have a our that we'll know

job. may of a we I right deposit deals, side order that. get the the little in win a fair aggressive And from pricing more side, a great our to doing share need to So to think on and the just side, loan we -- on and relationship have we're there's do

Terrell question. moment come for line from the One will Andrew that of with Stephens. our And next

just that I Matt's have were during Do were the Maybe one during sold? the timing of think, securities the quarter third the questions sold on, follow-up you securities a the specific quarter. around

last sold there. you was and throughout they equate heavier in ways, were back it point-to-point but change the could little on many the balance average a from end, probably But it the in Well, quarter, the versus particularly the probably estimate month.

Yes.

should quarter. make in it yield the current sold a third we of And bit much X.XX% line just pretty with Okay. that the that's in a think securities little assumption or have maybe AFS kind the below? was were that portfolio the I

if you're -- of the book the saying to on a this of was now, yield, is -- X%. X.XX%, market average portfolios the yield Probably these but closer

Got it.

maybe deposit Okay. to of little wanted dive the some And a maybe then commentary. I cost more into

of at But taking non-maturity basis like the rest some rate but better first on XX% just the kind presentation, elevated that yield, you know weren't overly cost so a in moderated deposits commentary I still far? probably requests of necessarily hoping get in September to the basis. has impactful month month quarter. beta split I guys just at should for rate that expect not out Looking the in of gave the non-maturity exit versus of the kind point sense looks versus around going the by the XX that maybe cut. cuts it getting of you Still points a was to September. basis kind of And we XX that number some a full maybe

Yes.

it's of I obviously down when customers we didn't down cut, XXX% slowed do parts the that be spectrum part, quite bit. rate closer we're going think points. But everybody. second a move our we assuming beta There's rates, basis next XX in in of sort rates, reduction for most moving that's to of a lot increases, some further rate reduction to and did rate probably hit accurate. we the really first get in the that's because on the even

moderate decline slightly. of and downs. sort good that all-in-all, a think probably of a puts stabilize, lot mean see takes, not and I is I ups there's if word. should we But So

Yes.

then And one the on portfolio. just more securities Okay. actually

was there given a anything quarter, bonds? you during against the sell if a think I'm did I curious from some standpoint changed hedge hedging place the in bond book.

No, Andrew.

fourth the quarter. continue to We capacity. more on of AFS hedges the portfolio. have The also with was lot a excess put were capacity sell in There to

issues shouldn't there. we any so And foresee

Now are in There's hedges. value fourth we fair quarter. They may evaluate shortening. the three different

change a And so hedge may perspective as the fair bit a value move little forward. implications from we

So but we of of certainly it. all just may not that, evaluate a unwinding but that's some possibility,

One come And Davidson. with line from that D.A. question. moment of Tenner next for will our Gary the

possibly I funding there be another or wanted ask wholesale do expectation reinvest would or sales, or go towards the AFS goal with regarding reducing to broker transaction to maybe plans other to there deposits? sale-leaseback

that things evaluating. table on Gary, couple the there's probably we're of a

I hedges think extent, just likely mentioned, take of as any and off also be it's $XXX million all want to a I be some considering reinvested. think We're whether we don't Which we're wholesale then And balance we'll the have sheet. funding with of reinvesting, that doing the anything evaluating, to maybe it FHLB. really I that. -- with we perspective, from we

hedges. XX-day We million don't brokered in of million anything I $XXX have CDs, are think $XXX there flow which cash million $XXX is those, but that's do resets. we'll with

interest we helps evaluate cost versus And the of through go quarter. that as us from how rate perspective risk so an we'll funding

some So it. of -- but definitely, we'll reinvest

all And basis if fourth basis yields cut quarter, And regard that points the in here rate that. ballpark we're impact XX loan of Okay. within was expansion, third the the else wondering I all? there the any thinking the just equal? yields, loan point the on of noise at just appreciate X kind to with about quarter, as

just Fed I we've increase of it sort didn't and say been really was what seeing of muted. slow We part it's unusual. a from was the the impact -- somewhat Yes. anything have would

we as have of depending I But reprice that XX% that year. we And look on our to would XX% be would look loans a way bit could the a or than So the at variable borrowings, within the portfolio. reset. little that dairy is, XX% XX% it loans at roughly only immediately more

October. maybe over reset so happen. obviously, reset and months full quarterly But that or the month ones there's And we full that until saw didn't a other month, X or happen

So that bleed the basis out time. XX of impact sort points will over of

Motta question. KBW. for our One moment And from of Instructions] Kelly will the [Operator come next line with that

margin. to back turning guess I

mean, obviously borrowings those think the of as where currently ahead. that I into about we those that any in can know customer -- how of of your there, previously. to disclosed rates repos if BTSP, there, Now we you've you accounts kind look FHLB as so that color the I you paid have down are there's Wondering, $XXX back the million to

Are sweep you repurchase about agreement talking the deposit accounts?

Yes. correct. That's

Yes.

far the have looking some bit we movement rate. was on Fed from did little impacted So They really those tools some down some going rates. last deposits. There excess as rate does borrowings, our depending repurchase as for start use into our they're that, or management in they as to noninterest-bearing show just sort of albeit higher should cuts rates come forward, agreement cash -- quarter. well. what the that for those will as customers were up the But into movement sweeps, that obviously, But of a repos

what And could the the is There a of down low few are bit very majority come bit. start does, Fed a depending on the that rates priced. again are So higher. little to portfolio little those a relationships

I you that? know, you if to So add anything have don't to want Allen,

those customer also beta our a the of to noninterest-bearing fall low well. so cost as some we average Yes, most going the experienced until quicker very recent of where But now X%. really they're the -- out repos than quarter rose had [indiscernible] over Kelly, probably movement

this least actions here, hit you the should off took do of more fair? it. kind additional appreciate from moving you negative paid lowering I level. BTFP of carry. think necessarily and initial guys together that offset rates down of initially a NII some on you don't Putting NII, the pieces guidance, that Net-net, XXX but with from you give rates? the lower Got than pressure Or with at Is

on about our think we NII, million. that was if I prepared positive you a carry had BTFP, remember, Well, -- And so that as $X think, I I over mentioned in, think right? that's remarks,

hedges. on a net that's made income fair value a So million interest headwind carry Also, swaps, we fixed the perspective. pay right, from that $X.X the on

do going the to to the the some depending could go don't in what and it's -- based going So of September. I moves fourth on extent, eventually December, it to quarter. negative, on not negative end that's go in at certainly So diminish they right? November Fed And

forward. an perspective headwinds So from those are NII going both

start Have quantified of And the Okay. I you for think was the a the as to we through balance I future your size Got it. late to call. little apologize, expectation sheet? sales security

since prior will our well. than a I sold, as what be Certainly, we the mentioned, lot earlier the as it lower a up quarter, do rates our we securities. since million anticipate Well, in we third are in less referenced yield probably certainly remarks we security sales $XXX about quarter. I that. will sold The sell than probably of have

which those unrealized from some mitigate we may we losses the it. of cash take So would get of some expand, may would

be So -- my guess. it would to X/X it be the will size X/X could of

this remarks. questions now I'm further the no call the in would at back closing to turn Brager Mr. queue for over to I any like time. showing

to Great. consistently you, operating Thank in environments. continues Business Shuri. perform all Citizens Bank

with thank questions. our by our the for mission performance joining XXX great Allen for years call. a I interest us earnings any forward customers know paying and owners let quarter. look our and quarters on their and Have all like their Please associates or of cycles. in commitment solid financial to XXX We quarters your Our loyalty. you We Thanks would XX our I appreciate small- have if XXXX fourth day. this banking than January remain more speaking of and to or and through best is of quarter for you highlighted consecutive focused businesses dividends. economic to consecutive profitability medium-sized cash

program. Thank all participating. you for today's concludes This

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