Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| And through the open architecture of our new platform, we've been able to move more quickly to deploy upgrades and enhancements to make our customers' lives easier |
| Those lines of business, as well as the full SNC portfolio continue to perform very well from a credit standpoint |
| So finally, on Slide 6, our team once again paired solid revenues with diligent expense management during the third quarter |
| On the execution front, I'm gaining a lot of confidence in our leadership team |
| We've had some pretty strong, stable performance in the book |
| Employment trends remain very strong in our footprint with most Midwestern states seeing unemployment below the national average, and Wisconsin coming in below 3% |
| In a little more than a year since the platform launched, we've had 99.9% uptime and have already made 11 customer-facing upgrades, leading to a multi-year high in customer satisfaction scores |
| Our third quarter results reflected the steady growth of our balance sheet and continued progress against our initiatives |
| We expect to continue benefiting in a rising rate or higher for longer scenario, but we're also better positioned for an eventual decrease in rates over time |
| Both those lending verticals reflect the successful business model we've had there for many years |
| We benefited from a natural asset sensitivity over the past couple of years as rates have risen, but we've also taken actions on both sides of the balance sheet to decrease that sensitivity and drive more durable interest income in future quarters |
| While CRE has been cited as an area of risk in the media over the past several quarters, we feel well positioned given the conservative approach we've applied across the bank |
| So in a market that is normalizing to some extent, we've put ourselves through the initiatives we've had in a pretty good position on the foundational customer growth |
| First, we've set ourselves up to drive quality, relationship-focused loan growth that decreases our reliance on lower-yielding non-relationship balances and enhances our profitability profile |
| The stabilized environment, combined with our deposit initiatives, drove strong core customer deposit growth in the third quarter |
| And we've been very happy with the deals that have gone into it and how they've performed |
| We think we have a significant opportunity |
| On the funding side, the customer acquisition and attrition trends we shared for Q2 look even stronger in Q3 |
| This marks the six consecutive quarters in which all three of our major loan segments have reported net growth |
| Digital has also been instrumental to our success |
| And we remain confident in our ability to fund our growth at a reasonable cost going forward based on our initiatives |
| What this means for us is that we've been able to focus squarely on execution of our initiatives as we look to track and deepen customer relationships, optimize our balance sheet and improve our profitability profile |
| So we're happy with it |
| We've had pretty strong mortgage fees the last two quarters related to MSR evaluations going up |
| The one encouraging sign, several encouraging signs I would say is we've seen a decrease, I talked about the decrease in attrition that we've experienced, that helps us understand what the volatility is going to be |
| And finally, since launching a new mass affluent strategy to deepen relationships with high potential customers, we've already added over $550 million in net new deposits, nearly doubling our full-year goal by September 30 |
| On the loan side, all three of our major consumer and commercial loan segments once again saw net balance growth during the quarter, led by growth in our auto finance business |
| Despite the downward pressure for market-driven headwinds and adjustments to our fee structure, non-interest income grew modestly for the third straight quarter and landed at $67 million |
| As a result, we're bringing in new dollars and deepening relationships with a customer base that is more satisfied |
| And after a period of industry-wide volatility in the first half of this year, core customer deposits grew by over $500 million here in Q3, as we continue to realize the impacts of our customer acquisition and relationship deepening initiatives |
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| As you know, industry-wide volatility in the spring combined with an ongoing battle for deposits to create significant funding headwinds for the first half of the year |
| Given the funding pressures facing the industry, our PTPP income dipped to $125 million or $8 million lower than the second quarter |
| While these pressures have stabilized meaningfully in Q3, they continue to pose a challenge for profitability in the near term |
| And it's clear that pipelines have also slowed as customers make a more cautious approach in what appears to be a higher for longer rate environment |
| While much of the volatility cleared up by June, short-term funding and liquidity pressures combined with a mixed shift in customer accounts had a lingering impact on Q2 balance flows |
| On the liability side, rising rates, liquidity pressures, and a mix shift in customer deposits, they converged to create significant funding cost pressure for the whole industry |
| With that said, it's clear that lending activity has slowed in most categories as compared to 2022 |
| Derek Meyer I mean, in fact, the non-accruals have been down each of the past five quarters, and net charge also been negative over that five quarter period |
| It'd put a lot of pressure on us |
| Shifting to the income statement, funding costs continue to be a pressure point for the entire industry in this rate environment |
| Moving to Slide 8, the funding cost pressures facing the industry combined to drive a 9 basis point compression in our NIM in Q3 |
| We have not seen a lot of degradation there but we do have an outsized reserve against it just given the uncertainty in that market |
| Here at Associated, however, the pace of downward pressure on margin has slowed |
| And that slowdown that we saw this quarter, we actually expected to slow down again in the fourth quarter |
| Additionally, our non-interest expense bases remained below 2% as a percentage of average assets and is now down 18 basis points from the same period last year |
| While growth has continued throughout the year, the pace of growth has slowed |
| The real estate asset class still gets hit by rising interest rates |
| In Q3, our NIM decreased by 9 basis points to 2.71% |
| In fact, market data shows us that we're under-penetrated in deposits in key markets for commercial |
| I guess just sort of in your view, what would have to happen for NII to have bottomed out at the current level? In other words, there must be some confidence that it may have bottomed out or could even go higher |
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