First Commonwealth Financial (FCF) 30 Oct 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to the First Commonwealth Financial Corporation Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Ryan Thomas, Vice President of Finance and Investor Relations.

You may begin.

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

a link yesterday's release at of page. accessed copy the can and select of to logging top on fcbanking.com a the reminder, be As earnings by Investor Relations the

will included also with slide presentation referenced Investor our call. website that a on supplemental Relations information We be today's during have

accordance forward-looking we for call Today's financial call in results as begin, of should description disclaimer slide Please the be differ financial to also our I that and be Before the slide need found to those reported actual a statements will in refer non-GAAP our appendix risks an materially listeners these results GAAP. from measures in caution and forward-looking of presentation. on include not this of statements. the for today's to statements. Page in Reconciliation addition of with uncertainties X contain that viewed measures alternative reflected can forward-looking presentation measures. cause Non-GAAP to will prepared could

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

welcome, Thank you, Ryan, everyone. and

long to million Third in Durbin. point offset we decrease income cut grew X.XX% were per impact in rate as and anticipation $X quarter the XXXX declined the fell share Growth income Deposits Fed basis core rates in Loans essentially as other the margin a flat. of earnings were $X.XX. incurred X net of September. interest interchange fee anticipated in

onetime Expenses items. were several due elevated primarily to

consensus. revenue and pre-provision pre-provision X.XX%, efficiency All an of analyst $X which ratio net of million, of core XX.X% ROA $XX.X of within was led million pretax this pretax of to

expense second $XX.X credit. million over to provision The $X.X up quarter. million Turning was at the

all for X capital quarter to acquisition elevated the charge-offs X expense legacy in reserves related story provided third in the for, but X region. for within provision the charge-offs this $X.X loans tale to the million million was provision legacy but for the of our credits. of or had loans. X the not Embedded expense Centric top and specific credit Most, X of quarter they largely accounted Centric $X.X Our of now on approximately together been previously

X stemmed Over of from have disproportionate Centric, first the our closed the costs last in quarters, of our credit acquisition a of that quarter share XXXX.

we so previously, shared we've understood the going priced marked credit As profile we and accordingly. credit in, the deal the

portfolio our continues performance. acquired impact to credit the However,

was have the of that XX% of total Centric charge-offs of XXXX. size, bank our former XX% in loans commercial a and For accounted charge-offs for XX%

of year-to-date, loans of XX% were criticized total Centric of charge-offs. loans. XXXX At and XX charge-offs total former accounted commercial X.XX% In for have loans XX% September

from would ratio Centric which that that loans, Centric improvement an Excluding [ is be closed. X.XX% on actually the ] figure X.XX%, day the

to However, the continue Centric make each substantive credits we progress capital in quarter. region with

to service blunt the management our gain Also income card on $XXX,XXX to Durbin in together million income having all income, and of in income third BOLI SBA and charge half due debit the in quarter alongside increases important, amendment. stronger wealth worked cut and $X impact sale interchange

down drifted only $XXX,XXX. income noninterest fact, In

million to income range fourth we the ahead, Looking be expect to in quarter. the noninterest $XX in $XX million

million expenses elevated Turning $XX.X over quarter prior had expenses. this $X.X We now to quarter. of the million, up

$X.X loss $X.X a card approximately Third items, reflect million in severance in expense. onetime it's $XXX,XXX of million expenses credit including and quarter operational

million million quarter. -- $XX We $XX to to million $XX expense to in be $XX million the fourth range in noninterest expect the

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

Western SBA #X in XXXX recognition September. lender earned Pennsylvania by the in Commonwealth ending dollars for fiscal First the as year

and billion benchmarks. ] $XX in ], exceeding hit are have Satisfaction XX, both figures industry Net assets. overall [ these with As trend X-year especially XXXX in our Score and Scores XX.X we seen Promoter a respectively. since These XX.X October peaks cross [ metrics increases of important We've steady Customer as us, of at for

and rebuilding Although by the encouraged muted prospects by: ahead. overall businesses of we quarter share shift by selling our growth all year and originations. earnings this decision to third to ways, sectors some reduce miss, in sponsor a exposure stronger disappointed three, to relatively per are two, has, Centric the been Despite our our nearly like of of our originations purposely momentum loan one, I'm healthy mortgage strategic loan our in finance, level certain portfolio; the for growth our

commercial importantly, regional mindset, years growth drive that come. for will to More bank have banking presidents our new a have the talent forward attracted

will performance Commonwealth metrics credit regions attractive capital new key at with future converge credit growth Eastern the of a overall in and source strong and Our become PA central markets. First

to turn And Reske. over Jim? with it that, Jim I'll

up at improvement wrap Thanks, guidance then or Mike. X about interest on major a give the or levels basis current Last our Mike look quarter, has from seconds metrics, and already about take the take NIM margin so "Stability 'XX, for slight capital. as even of closer talked for usual". financial points XX with net was I'll the remainder

improvement didn't we part. we While the did get get the slight part, stability

September. a contemplate point basis Our NIM rate in guidance didn't XX cut

NIM basis pleased stability by some into quarter. that where X the in tailwinds to we by point So last each various were is facing NIM but see relative third in the us quarter, they only other give exhibit going insight headwinds our is The largely from and going. down offset NIM do that sense,

borrowings while continue locked the the quarter, in the all were reluctant program and commercial early year build we On excess deposit received growth steady loan headwind in we in right slightly we grow, a excess resulting quarter. was excess that, to of at the deposits negative a of top third off. in to BFP end cash. third Plus, above is pay that large One cash. year, holding We've Fed's been low-cost through the cash because

suppressive additive it pumps effect quarter, had this that NIM, in points though a effect of up asset. in cash second X basis it's points. a basis the earnings of of X margin because sides both of very effect suppressive a third quarter, with suppressive balance All the the sheet had NIM That even the but to on the on cash thin

in still call will, Neutralizing excess cash our therefore, expansion. the both X range changed But of the basis of stability. of quarters, X all points effect basis what to of realistically, points that's impression we within

borrowings removed $XX when here Looking million because raises has November. we used October million the it forward, pay X, the will the BFP been in likely we of Fed had, of remaining down excess rates largely headwind and of the to down on $XXX that pay million we $XXX cash

however, Another down the point the headwind X from in our cost increase quarter basis points quarter. increase was a of XX the to NIM in first the That point and XX point X increase, deposits. basis second basis basis was in

pace ones that continue. third to The down what deposit that to to continue expect in trend call We lower-cost downward rotation deposit each migration higher dollars the categories of quarter. is month we the slow cost deposit from of of

fell in up been accounts, didn't savings slowdown to non-time basis new X was quarter. Another in deposits quarter, indicator at incremental second first or again in in more the about was quarter importantly, it third deposit X.XX%. but cost per of to go third up the it in to X the the in moving all by month the have points the X.XX%, cost X.XX%. the which of Perhaps And interest-bearing, quarter, quarter second of fell growth the

X% has quarter deposit September rapidly lower our upon repricing That loan-to-deposit In down to helped pressures basis XX.X% jeopardizing pricing markets, at in remarkable. on been without annualized allowing terms for XX. growth deposit deposit that abating by of trajectory competition, in so third far we our deposit this see basis ratio And an deposit maturity XXX points the growth bring year. growth our trajectory.

all production points a of off. fixed rate our have upper repricing rates. for believe came About should We to this a yields the this than rate even basis ran up replacement As total the still fixed at loans, in largely points actually those Loan loans quarter, basis points cycle. the NIM of that because X/X the X in books for about the came third than on rate quarter while yields fixed ones new went higher loans, off. on ran by XX rate rising through loans tailwind higher for continue been loans third that that books the basis XXX falling the loan was and at face the

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

quarter. points macro looking to received the to our Purchase million we in fixed only that expirations lift macro benefit forecast $XXX fall a swaps about million X XXXX XXXX, mature the points near In expiration our addition few in of other in the X accounting mature prior fourth to These tailwinds about X third quarter. contributed in quarter and point should however, provide all of mature And XXXX. in fixed of basis incorporated there We from to that, down to are that quarter, expect basis X are well. do, basis as into by of the to the NIM $XXX would received a swaps next forward are future, million in $XX XXXX the NIM in XXXX. and to

loan to our is NIM, the cuts. to off portfolio month XX% so of us brings our priced SOFR, are however, rate headwind rate That, X of biggest immediately. felt cuts About

XXXX to rate XX forecast forecast Fed than X.XX% used lower funds -- calls X.XX%. latest quarter. at for that points about XXXX we basis end XX rate Our That's at last the than forecast our to and end

said quarter like So for for a these account, the quarter, for term. guidance what fourth sounds quarter our stability, the tailwinds near into taking -- of fourth all least we lot the at last

are variability, to end return year NIM give is take our gradually XX where over growth XXXX, the the the [ XXXX. the stays by mid-single-digit basis the of That a for the mid-XXs, XXXX course as than ] lower quarter through latest about way, basis points always, forecast, in falls first today. too, X loan In in our range normalized we of then year normal points mid-X.XXs to in the or

it sum up might You this way.

All rates, yields, swap macro expirations. tailwinds of replacement have, positive deposit removal following excess loan NIM cash, the we of

rates aren't fall overcome All if together the work fast enough. enough of falling quite but to blunt them them rates, effect to of

So level, rates to funds you for the and falls year-end out. you then XXXX and of the tailwinds XXXX, if the that give on some idea the holds through level projected of at sheet, our X.XX% year-end year-end went bracket level balance would of this rate Fed impact just

rate funds actually I currently ]. would the mid-X.XXs X.XX%, expect the is note course of basis a higher our we the year-end our XXXX [ projecting In increase Fed market points latest into steadily than over would that that rate at scenario, is would NIM that futures which XX about XXXX forecast.

So reality the likely in play somewhere middle. out will

from per prices terms below In of raised this $X.XX to tangible part on in management, $XX.X quarter, million share value a due share capital We reduction quarter for $XX.XX AOCI. buying the previous to share. in threshold book $XX repurchases a the increased

repurchased so an price $XX.XX. And shares of average at we this quarter, XXX,XXX

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

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

start, forward. to think portfolio first the we overall want the going on about where stand on you growth, Maybe curious asset size as just just of you where -- securities

a similar. little kind of loan-to-deposit ratio touched on You the bit

that Just level? levels these comfortable curious want XX% if in down the you or from you're coming still

Joe?

year, little over little a Danny? next expansion, asking, Yes. of Not that $XXX bit. securities expand just is XXXX to it to expect No, where today. bit it over course by from million grow Is but you're what the we huge a the going the maybe a portfolio about

follow-up, then gears a And switching to yes. Yes, just credit.

on I if that but maybe provide earlier, quarter. could you detail apologize the on in this a I the specific little reserves took did if miss Just you the loans, loans

it . over Brian [indiscernible] to turn I'll

yes, side, the the credits period that drove there the was reserve reserve on provision. Daniel, the in for specific X

in million First was a in here funded property loan. a third This to taken participation global mixed-use on came quarter. is Pittsburgh. property for loan, located maturity a $X.X million a construction office it fully $XX was a in million $XX specific the reserve The a

the And while to level move entire in the $XX million resulted current balance vacancy, an uncertain combined negotiated, of with of nonperforming. amendments the being the outlook

distribution in in The $X.X space. was finance on increase $X.X do outlook specific. That of specifically was driver a term payments the reserve That that is challenged. credit million accounted million in primary provision the taken loan the specific portfolio. second was million the for provision loan. current, sponsor $X.X The while the a long-term remain our and And in

combine. X The

combined. X Es The

line the Markets. from Carl Your from next question of comes Shepherd RBC Capital

Just credits? can loss a you from to for expected those up legacy credit content say you about pick X Can anything on second. --

on legacy credit. content Lost

short-term our real specifics that resolution and charge-offs driver of expect outlook next We've appraisals the to period, had through for the come The to we've the X. will Sure. quarter for be to short-term over property, the made. we estate next

Okay.

not those for much in maybe X? the So of [indiscernible] provisioning way incremental

Yes, be the expectation. that would

Okay. And Centric then the up to follow just credit on piece.

portfolio. expect or more the [indiscernible] kind line the any of Kind to book? with mentioned get of before we or what would You kind with time charge-offs you broader larger of convergence back a erosions anything emerge to state over

start higher level, out at just I'll Carl. little a

The the loans to Just decreased decreased looking million loans watch to million million second million ]. at $XXX from Centric, the $XXX in this criticized [ quarter quarter. $XXX $XXX

improving $XXX highs watch down to come those million has consistently from year. been seeing are we from So the start and

a SWAT we've What are really bank, and add, lenders have that want do the stage there you collections of that. nice are results So that's -- out we and to early working group from in seen Brian?

Yes.

our was is I annualized in year-to-date Centric charge-off of start somewhat quarter, on that's the XX normalized quarter, just basis headwind an point at levels I I points portfolio. offset that add charge-off core basis Mike. to global it the to portfolio. you the will perspective, the Mike, anticipate in annualized It was would XX by From it through dissipating XX XXXX. be think one we'd look helpful, third net a basis from as -- [ came in apologize, ratio, ] the Centric points

the So in the teens, performance. and low core about that charge-off level we're is franchise excited

helpful, up, That's Okay. then Brian. about to I To ask growth. follow wanted loan

into measured of gives and You a for guys visibility to confidence and what is have you here the pace. it's near-term that deliberate to What do of have pretty XXXX? kind quarter kind reaccelerate managing been going me

been On $XX we've production our regional in they're been for another banking payoffs probably other running. thing side, to a year, teams the and the sponsor lot the talent to is have commercial the Centric. in really hit particular, really of the and in million about good. added in probably has and $XX starting The headwinds million corporate And just ground

just we can mid-single and perhaps that little So a we digit shall year achievable next very and is feel We see. higher.

that's down that economic with to growth fund we've and -- And And tailwinds the grow also at the of but proud to some loans. retired kind that. get we'll -- sub debt -- able supported we're ratios and time, of we've reason. we with same liquidity -- increasing the Hopefully, We've and is borrowings, been paid had it, have ample margin. capital

do the think I team So can it.

of comes from next Motta line Kelly question from Your the KBW.

or [indiscernible] not of basis. in the was that like whether into to on any also the accounts? I manage as meaningfully, there here? this seen line, up looks was we've noninterest-bearing kind should about pressure that It thinking dig deposit vulnerability And you so hoping -- growth comments although managing to we we're a an were NIBs average wondering, as not saw on quarter. I'm

had a in the last of at deposits $XXX We end of regional the Yes. of win we person company, the one quarter who had a significant markets and our big the in in month. with pretty a week inflow sold of million about nice business

was of some that in parked noninterest-bearing. And

add? do you to Jim, want what

Yes.

numbers. quarter the helped really that So

at thing just what in I that's is deposit you'll behind in the point quarter. month-to-month that's So I the you're third the trend would this look scenes all, to the kind looking NIB rotation my out, see. what But at want comments. of other in just

] inflows. inflows. in [ And $XX of [ $X.X [ ] In In million of there million outflows. of August, July, was September, ] were million $XX there

period. So not those of are averages, end

the overall. for So to slowed the the large moving But of have seems rotation get bank, rest down we it's really deposit seems it a really like direction. We're like in happy anytime. that all right the that

all you've for the And commentary helpful. of I outlook -- given then and your margin. around Okay. super that's That's appreciate sort absolutely color

like you color at bit during you part on on was Just the beta tightening it provide the betas how XX%. just some you're [indiscernible] during thinking looks way about rate should down that how about least you're on cycle, a be deposit deposit cuts, Wondering if could the thinking wondering, initially? if we of expand about could

No, to that. address Yes. happy

were slight is it you XX%. you're assumption depends a a long-term calculation just there's always like deposit what beta about beta team the had it thinking my end The of generally cycle historical the kind when at on But at the I because variation on showed day, deposit it. Our or other cumulative and for has beta internally what up "cycle" looking in just I and the through the that That's been. we doing that by backed back about through-the-cycle looked the when number cumulative way -- we is internally, studies start that doing about, you people was calculate of look side look the XX%. average

starting rate also the XX%. cut hike the was about thing the that we was from when rate about and about it that cycle September, same period. loan first tried look right in started And the XX% -- beta And accumulative. Just over the before at fed this to last to odd

see is what bank, in you different. any the is Just like timing

to deposit it pricing in So reprice then the caught stages, able time. and early out over the very but loans up, quickly, evens we were upward the

of with deposit of to loan portfolio. XX% up make sorry, about hit this beta able kind expect it. then in pretty variability So the us kind -- those to And the of quickly at rates the downward deposit beta the downward cycle, loan we'd to for reprice fallen

because if of to I being down the some you And helpful. talked level the BTST. apologize you very but guys of just you manage as are as already look answered you used doing about pay size That's -- of cash normalized we elevated and it. XQ a this, sheet? cash then what during Got to more balance that

Yes. million. fund of any cash just will The we on below $XX much need day, to be given level the just It depends normal the in how bank.

to I think it day, at million cash not the you be So what $XX around can lying on balance day. of But September sure But any million $XX have, was the be excess make million, given sure is not not XX. I'm end right might my you going of today. It's $XXX of top now if just the it to -- head bank like it it's

at not press sheet the issued, at increase minimal you that look like out It's of be If a in to amount there's cash, a in it's the just bank. going to stay balance long number balance we going and that financials level release huge that sore the sticks thumb, term. a

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

There's materialized X, been very has and or interested nothing a conversation we're in M&A.

we know ranged privilege we've -- had that if you do X [ deals do and to million have the smaller larger from to think done will $XX the as as I billion well and ]. $X.X

we you transaction. we do scale So control that larger there and risk. the been shared deals that with have have a could also I've a like team we that appropriately feel And could

the been on do over on so it have And -- think out share would disciplined. actually, pretty XX there asked just X process. there, things likes But and looked It just or we're X X we've there at Jim passed well X be X, to we always both, to -- or into deals we've have I right. to are

kinds to and bank So things and contiguous heard all of hopefully, our us and nice before. opportunities there'll rural markets say depositories things you've strategic grow in do some the be

stood go $XX cash just was of it's million. level just back at to what for this Kelly, worth, It's kind us. normal a to morning for

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

you piece swap. Jim, SOFR. you whittled said and the affected reprices, XX% start XX% of quarter, to you that of a X-month is number I past, might your of had last think In loan that that even was even -- been a that hoping I to the down, by portfolio like mentioned

of the bit, into on I clarify a little total XX% think for going sorry or Could you floating if repeat cycle. the I'm downward book, floating XX% if rate was put matters So it's just portion in of lot a rate book, to the and to true true XX% you it's head just the loans. it us as because portion closer -- we

I Yes. was that gave and me asked a glad you clarify. so chance to

didn't a third portfolio was I to of vary sure little half kind make misspeak half end bit variable, was It to time. just quarter, of of okay? variable general kind is wanted That's a thumb. of from very I XX.XX% [indiscernible]. rule very, the does it About before. So At XX%. close the of the So

linked is to SOFR XX% But portfolio, the total part that XX%. not only of is the

section, the that's all along XX% the The other of to tied curve. kinds yield other things

only even you be time's mortgage to X -- rate or that stuff. So that's still because going it's variable it's going all that. up it's reprice for clarify it's that's prime. short a with we're might the that's XX%. SOFR over X left letting is But away. Thank directly those XX% me ] phasing or [ [indiscernible] like not There's going to time, arm a SOFR, arm variable, And XX [indiscernible] but

as like -- truly XX%, sound like will tax it assume well the XX% swaps more well. these as And won't range, I would actually expire be as year low it the XX be

adjust the fixed that number I say some was was Well, of the you of giving portion swaps. into numbers irrespective was rates. didn't I just I to you giving that swap

we've and [indiscernible] just got float the receive will be floating those stuff what . Don't floating higher the giving that and upward. will and again, portfolio raw let rate, rate. the you're will was I these numbers It low it away you. the books [indiscernible] the received are And have So take the cash talking about. on I underlying start swaps,

kind is or What's either us portion bit Okay. how fixed a maturity Setting it much book? of to -- the help like profile the the year? true rate you what you duration floating up could little expect maturity the the aside, next of to rate for come understand stuff

I it overall loan broken part is Yes, years. that linked portfolio I of don't portfolio reflects that is loan the like variable that X.XX XX% and don't well. ] of that [ the -- have curve, loan. then other stuff But type The end -- of down the fixed only portion to a as duration by the short rate

helps return, call this about not concept curve we if but diversity is we something really we Conceptually, you, think it's need the what and of yield talk about.

So we middle have here like things the books. in mortgages upon the where very that of auto. are and you curve, of you end things curve. have short things priced the of at But the indirect curve When the also long at have fixed rate like things the end

we're X.X of the $X the $X part So that at year over billion billion portfolio, reprices curve. a

equipment and perfect And And the are are of that leasing Those loans. all. sometimes those that don't they XX% the then all it We falling a X-year building. when almost really finance almost prepay. X-year loans we're loans leases, to but at duration call have prepay doesn't

assets. characteristics securities that on over [ total of assets of -- would smooth the X.XX ]. duration So overall But years repricing X.XX that kind that total Total that on those in out X.XX duration kind years years of on it's loans, repricing case the time. the builds it's be portfolio

positive a I basis just XXX-ish and And more also repricing fixed book points. point, gap belaboring this topic by on apologies on if think, a mentioned the there's helpful. rate it's still but Very one that you'd

what -- what for what and providing and the mind those to numbers from? before it repricing after is us You are, those

take might have second find but here... it it, I I Yes.ae- a to

looking you're While that -- sure ahead. for go

ahead question. second. you another It if ask will take a me and have Go

Yes.

a expect just a Mike, it in it own little surprised of be your for some as through view? mean, how on color looking you're is like you are are It in expecting top pickup from to Centric. behave for we the here Or near We've some some would to bit you well. Where of you than MPA's NPAs. sounds a While seen little one normalization? bit And to client maybe more papers. you. of see your charge-offs I your

do. I

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

have that as sight have about We're we feel X/X of anymore, much of on We Brian they're well being line those stack credits. Centric. and outlined. good is and like marked, not surprised NPL as We NPA

hopefully, So I think, peak. that's a

I Brian that past shared that's charge-offs, longer figure would term. think And in to terms normalized as right hope low would our charge-off versus that I be well quarter helpful. this us it what feels In be the And of teens.

It's gave find . [indiscernible] me the time answer helpful the to to it to because me some

at I $XXX of are $XXX X.XX%. underlying at you're So the fixed rate rate basis going back the but about loans, talked think And originated when to are, off for what you're million we XXX ran what here numbers. million loans -- asking, yields is better asking we replacement or on what I fixed And points, the X.XX%. In worse. quarter, third

XX nice get a and basis points in still falling think that fall those it. thing rates points. basis even basis the another are and Hopefully, environment. XXX is a how about So replacing XXX on you basis XX you cut, still That's replacing the points, point yields about rate lift on we then

I dampening that. gap, Wouldn't a steep appreciate the have effect book. bit data? like that a the half more feels a and that's it's of on than It loan just

wouldn't -- that that's my that the over would last XX% curious, just expected time? dampen I'm And beta So question. loan

Yes.

just think our September, I in what math it next loan a I beta like year the it's cycle, to mean, -- thinking -- just extent. XX%. that. depends with XX% and in we far not think for about One about I about started you a was when little that less beta it We deposit get dampens little think falling It it is it's like year, there. whether to bit was beta. you a next the year. baked on off for actually loan next XX% when the start beta than our just deposit on

through way, So, time, by the you cycle. just whole over was go point, my the other

tend they to So even whenever from this cycle ends out X now, time. over years

Schiraldi question next the Piper line Sandler. Frank comes of from Your from

volatility or question quarter. the end create that deposit on the in in or the flow the at came near given of of of end the large of perhaps tend October back or already, at end that we're fourth of here. would Just that to some week to seeing -- you quarter? Just expect Should that that if curious the some the some last quarter, even out

best year. out have now that, it. hold can we is sight do we flow of to line everything on can we'll We'll in that portion our good we'll while think might I And of it. get the of that it take next quarter right a to first

And first then deposit then Jim, of on see a we'd thought And just level. already this said? terms third a it another just increased in the given that XX of here an you the deposit I lower I at thought maybe and possible maybe you seen inflection secondly, basis here? cuts in is deposits all, is quarter that wrong, mentioned perhaps we'd that for is in we've points point what September of had cost, but quarter see costs. I'm Sure. But trends you follow-up thought in

reflected message September. kind competition It are was it. could markets. like feels point market rates cut it movements like the And the Well, the point, just Felt got felt We felt like it in on and the in that the falling. everyone's the last basis see XX change. it deposit dissipate of like

falling rates deposit grow easier at time. and still the it's pass to along deposits So same much

of did like shift be it the to your -- felt September a question. in to seem So last part that

I clarify On that think your hope part I that, the -- the do bit. little point of did, over I I not sure of said If prepared first but you remarks. didn't. me I'm question, was in said the That's let course a make of the rate was cost the deposits to the moving rate of increase year. downward in I I trying the

up points. than was quarter, it by was quarter it quarter, less basis first it in the second only So, up the the third was up than less X

come it projection. the We just a actually fourth It's think in should bit a little quarter. down

think We the will a we the need it So the fan trend -- say might movements deposit rate been turn of I I talking whole huge predicting that It's of coming cost quarter quarter. deposit of thing increases cycle. hardest the with to touch , didn't on fourth increase, down. I is that about [indiscernible] this have and will think

-- cost stock but not plateau. should too any continue So on forecast we it predict we in much internal I that the will don't next that, quarter increase wouldn't one do to deposits put of

Okay.

way, fourth So that another is thinking trough is quarter said the in it here? the maybe

Yes. Yes.

based think the couple lastly, around then That's you It of just gave margin next end I year a right. by of I that And past. just basis like the kind mean, said to points seems And of even on scenarios. that the translates numbers you're think you've cut. a I margin in X still in XX about compression maybe given given point basis for

check still double to for wanted kind a if basis just I So of XX that's a given points? reasonable guidepost

we're forecast, rates. we Yes. our is in thinking That's think of kind And to that, of about we XX have way forecast thought the a at now was, the I in at new these stable I of that last over last points -- on XX days And thumb. lower. basis a it's particular, the carrying couple rule

XX And rate so than the forecast. points lower last it's basis what

XX per get of XX XX points down basis cut. for points points, So that's cuts to basis another your and basis

plays wouldn't about have basis Of you're down a with the X% X you was to the was don't numbers way is XXX that course, and or cuts, out cut and point because and into that just I a of to lot I you model trying that I headwinds from talking that. -- points a the that's things if point take it [ in and ] go of all the XX That's The those why basis a pure in itself XXX basis like ] NIM. X rates tailwinds model. forecasted number give offset [ -- lot lot our tailwinds

comes from from line Your next the Manuel of Davidson. Navis question D.A.

million, fees it's should it if the it And about on end? as to Starting on $XX into SBA you talk about well Just if down, kind going to talk mortgage thoughts side? come the next then that think can fee you like benefit rates -- of right. pick $XX got quarter. Is a sales? higher year up? gets That fees for little Can what on the is fourth I range just you million -- lighter, forward

down, think we'll help -- invest volume the built . rates you lending board give offering do come really well and I'll the there. continue pretty some the and broad jump side and But commercial will revenue as SBA formidable we and we've then across that [indiscernible] to with all a continue as stroke side on consumer fee our businesses,

back snap could banking nicely. mortgage pretty Our

our have could deposits markets share, that into other and in We things. refis good turn good core

would feel do guidance a we provide? some you that So be tailwind. other could

the of nicely. adding a fee along done lot kind see we of but income. some and Yes, fee bank along keeps insurance, baked of One talk hum we that about that on don't coming engines into them really

a wealth we this year. have well division, spend really We

able a that about more that -- growth and you environment, changing The think business on -- think short-term that year, a I you're more just rates, in to You bit next SBA as on refi refi mortgage though. for dependent it the little hope do mortgage hitting you're grow keep is rate it then well. just

hopeful We a see went again business really up in part middle refi that the of are bit. we curve that little see

rate comes doesn't want just the a Fed get down, down because come so mortgage lot business. excited to rates too of get just refi mean And you funds

to got that we So into account. take

piece $X to of business Yes, with mature. provided wealth Durbin. the ] offset continues headwind the That to management [ quarter-over-quarter million $XXX,XXX

back just have of offering a also the nice on We the corporate management, treasury really we've built bank.

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

future We're $XX commercially better as move into and through mature businesses. the get to and We're a model. cross-selling sure billion built of we to job doing bank higher, the the oriented. we're regional make more just We've trying

business emphasis also but C&I the our real pretty of cross-selling small capabilities there's banking, we've based, at, on always relationship company. been relationship already So getting deposits good the

wide million that were That's side. thinking just on And brackets $X of that this we the modeling either your Manuel, range why number for kind of purposes, way it is.

That's helpful.

is Just XXX by Fed baseline the scenario 'XX. on basis the funds you're getting points swap to benefit, year-end

Yes.

based benefit X [ is X.XX% Fed points. you'll the on XXXX. of at at It the which right, end think I That, might rate funds ] forecast, in previous I see earnings think, -- the had deck basis be. swap of

rates So forecast. to go Hard maybe X.XX ] it's our X if [ revised like to basis say. points

If thoughts into -- impact the could the end year curve next half next NIM of upside a how is What XXXX. yield is be by that year, would that the for that of would of a scenario. kind very little what second -- steeper positive how could your

about all -- talk I'm ahead. the We that time go sorry,

upside could ahead. go a to it. but I what no, you? put for the very No, know a just I scenario, of of want like it's that type scenario be caveat to positive

funds the in on near try the of the stuff we book come deposit to grow new we can slope bankers where an term, as we money. replacement, the In cost yield the is term, make Yes. curve. all to yield and in and changes we loans about think positive environment that think the long It's on the the

] I scenarios gave me passes think Jim, [ X it's just he budget . for for XXXX, about because $X.XX [indiscernible]

banks. Yes. is Long term, a positive great for slope

and So that's we're . it. sticking our to story,

deposit growth question been strong. Okay. is my And really has last then

marginal deposit. of ] what target? loan-to-deposit $X.XX here the talked [ appetite for that growth loan You year? the next Is kind deposit new of on Is growth a appetite from that large the with pre-funding it ratio side? of it cost about deposits? kind What's

tell think phrase think exactly growth again. live growth. is deposit deposit smooth We and we glide A the coming about again up side -- path path smooth, on about appetite keeps this how The on a I'll steady you for internally. glidepath steady and

foot terms we this growth. last deposit taken if example, not growing were have we fast, in our off say, of for loans So could hey, quarter, that the gas

per want the keep do growing want it We don't X.X% that. a at X% would third overage quarter, it average quarter. do to we average You in to

to in that want get we The for ratio that bring loan-to-deposit keep going the fourth forward. We ourselves point is growth to loan liquidity to going down quarter. want and

and term, real fund the long really so on And the want match those the go you're getting dynamic to just we got sure that long do. liability on not the side. it may XX.X%. XXX%. side We In make period, desire grow at, the but to what ratio to that over a bank any in that's it asset you gets driven Loan-to-deposit terms given to of way before it's down

see we we got the liquidity So to grow.

Mike?

to impetus to You're Jane, closets trying Jane the depository. we bank say add? our around great As President, relentless are our the behind want was you nonstop. anything core

the aggressively deposits. that consumer. kinds the really there's the or and of and the money and we the of there's rates. can. whether pricing There's accounts X transaction in always up has And and stuff grow with down then new as transaction goes the that households, -- represent time commercial volatility And and households to business exception as market transaction accounts we're rapidly Only the as

That is your answer.

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

watching, of status? NPL into portfolio. that is question other Just one are given within And credit your on that? quick the that portfolio big participation How there larger you're X a loans size the any migration of

focused $XXX book actually relationships. appetite I'll the as that today really is over portfolio shrunk shared time only that. million we We've risk Yes, and on the over XX credit national take credit just

commercial factor to focus, not one as a XX a share it's the we that not really that obviously nonperforming it, in at it's look much portfolio, move credit relationships. was national but and manageable estate So real very

loan? for that a up Okay. you Was was that? facility little the specific the on the the just related Can give space? lack move-in it in nonperforming of reason color or us management to -- of tenants the that Was filling

COVID has mixed center, It some some rehabilitation as construction a center been a road and your call of that rehabilitation other not tenants, to budget. There's office. increases so that They call but is as or working use. the to experienced met office. not XXX Since storage It's over There's grocery through was the have space. the expectation. well stability. and tenancy has still a longer-term typical period prospective but we're a some their the then, of right started them cost time, COVID. The the latter. higher before More significant delays construction a more completed, end pushed they

central the district? in business located that was And

outside the not still Alleghany district. in but downtown Just in County,

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

we're your talent are Just We're regions today. Thank the with your regional our building of time good and questions moving company. for our acquiring positively. bank X momentum the presidents feel in engagement about appreciate in We us. future forward you the like excited and our

This concludes today's participation. conference your call. Thank you for

You disconnect. may now