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| Statement |
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| Our merchant team is very close and is continuing to make progress there monthly as we have great additions to new customers on a daily and weekly basis so that trajectory looks good going forward |
| And, in addition to that our branches have made a lot of progress in the referral and sales activity, which we are very proud of |
| Our net interest income for the quarter increased as we continue to diligently navigate the way we price loans and manage our customer relationships on the deposit side |
| We also saw a full impact of some earlier strategies such as the hedging we put in place in Q2, which has positively benefited our interest expense |
| So, I think that should be a positive for us going forward |
| We’re pleased with our results for the third quarter as we continue to navigate a challenging and changing economic environment |
| And we are very committed and happy about that from a long-term perspective |
| We’re really proud of our noninterest expense efforts, our noninterest expenses declined $0.5 million from last quarter |
| Our earnings increased over last quarter as we begin to see the results of many strategic initiatives we’ve been working on over the past several quarters and will continue to work on in the quarters to come |
| We’ve actually reduced the overall team through part of our expense initiatives, but we have been able to add back a couple of strong producers that have come from larger and more regional banks that have strong relationships and are giving us opportunities to get in front of some really good significant customers |
| Our team’s really doing a great job over there |
| We think this is a big step forward in our long-term innovation strategy and it’s going to have positive impacts on how we serve our customers, how we market our products and enhance our operations and profitability |
| In addition, the Alabama team is making great progress on the environment, where the growth has been more limited |
| Asset quality remains strong |
| So, I think the good improvement there from a quarter-over-quarter of what we are seeing coming negatively into the pipeline |
| And we also had a full quarter of the hedging strategy we put into place at the end of Q2, which has helped us both from the initial positive carry on the swaps and the hedge against the increase in borrowing rates that we’ve seen recently |
| I hope is that that should be in place during the fourth quarter and we’ll be able to see some positives in the fourth quarter, but really starting into the first quarter of next year we will see some good revenue generation from that |
| But if the environment [Technical Difficulty] I’d say the team over there has done a good job in bringing on seeing our customers the loan relationships that I would add |
| And so, obviously, expense management is really on our radar, the biggest piece there being the headcount piece of that and we’ve seen good progress there |
| We are having success in winning new business on the treasury side |
| Non-performing loans decreased quarter-over-quarter by about 17% and we still feel good about the overall credit quality in the portfolio |
| Our bankers are also focused on deepening the relationships and this has helped us as you have seen and I’ll talk a little bit more on that on Slide 7, but it’s helped us drive more revenue with merchant service business and also with our insurance businesses |
| We’re pretty much eliminated the portfolio products and the construction firm product at this point with the exception of very strong customer relationships where we need to take care of those long-term Colony customers |
| And then at some point, we’re going to get to a place where mortgage will level off in the environment and you could see that improve, it’ll increase total expenses, but it’ll help us improve that net NIE to assets |
| This is an area where we may see some small charge-offs going forward, but really it was a small number of loans impacted and our team’s doing a good job of managing those |
| We expect to see continued progress to the performance on all of these business loans |
| We also continue to look for opportunities to add to our team through strategic hires, where it will enhance long-term strategy even while we have seen decreases in our overall staffing levels |
| If you look at the height of that investment, we have improved $500,000 on a quarterly improvement or $2 million on an annualized basis from the height of our investment in these start-ups |
| We’re glad to share that our noninterest incomes increased quarter-over-quarter and it represents about 33% of our total revenue |
| The Colony Insurance division saw a revenue increase of $66,000 and noninterest income from Colony Wealth Advisors increased $26,000 and Merchant Services income increased $10,000 during the quarter |
| Statement |
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| There’s still many factors that could cause margin to decline a little more before we see it start to increase |
| We expect overall loan growth to continue to slow over the next few quarters |
| We expect that our loan portfolio growth for this and our overall portfolio to continue to slow for the next few quarters |
| We have seen slowing from the larger loan demand, as you can imagine, with the floating rates that go with the SBSL portfolio, it has slowed demand |
| We really are seeing very little volume at all on the commercial real estate side, really that’s more of a result of the pricing in today’s market to maintain – to make sure that we can maintain the proper margin, as well as there’s just a generally slowing demand with the increase in borrowing costs in the marketplace |
| Heath and Derek mentioned, we are seeing loan growth slowed |
| Total loans increased about $25.1 million, which is less than the previous quarter as we continue to see slowdown and overall growth there |
| Our loan growth slowed from the previous quarter to an annualized rate of about 6%, a lot of the growth came from consumer, particularly Marine/RV during this season, the summer buying season |
| Our total deposits were down a little from last quarter and, historically, we’ve seen a slight dip in the third quarter |
| We mentioned this last quarter that we were seeing some weakness there and, of course, our SBA portfolio is primarily variable rate loans and so they’ve seen the most increases quickly in their payments |
| There’s certainly been some slowdown in our mortgage division driven by the current rate environment and we continue to make changes there to our staffing and product mix, and in order to achieve breakeven there |
| Mortgage division income did decrease by $284,000 as we see slowing in that industry due to the rate environment |
| While we stayed flat, our modeling shows we could see still a potential for another 5 to 10 basis points of margin compression over the next quarter or two |
| So, I guess, my point there would end up being it’s not a credit driven slowdown, it’s really more of an environment and pricing slowdown |
| And as Heath mentioned, we do expect that Marine/RV Lending to slow as we move into the end of the year and out of that traditional buying season |
| And so that’s something as we look at between loan growth slowing and the cash flow off the loan portfolio and off the investment portfolio, opportunities to knock out some higher cost funding |
| Average balances for the quarter were down compared with last quarter |
| As Derek touched on earlier, we did have a small loss for the quarter, but we are actively adjusting staffing levels to be in line with current demand |
| We did see, as we stated earlier, a decrease in classified and criticized loans from the prior quarter in SBSL, and we had a decrease in non-performing loans from the prior quarter as well |
| And then on the SBSL, as D mentioned, we did pull back a little bit this quarter in profitability |
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