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| Statement |
|---|
| Asset quality continues to be strong, and the trends remain stable |
| The deposit pipeline still remains strong, stronger than our loan pipeline in pure dollars, but the sales cycle is a little bit longer |
| So I feel relatively positive about the deposit pipeline |
| Although headwinds exist in the current operating environment, we continued our long history of producing solid quarterly earnings and returns on capital in the third quarter |
| Do you have where your spot deposit rate was at the end of the quarter? And as you look to 4Q, I think the margin expansion you had this quarter was really nice |
| This growth in earnings reflects the positive operating leverage we generated this quarter with total revenue growing by 4.2% compared to expense growth of 1.9% |
| I feel relatively positive about the go-forward |
| Our overall capital position continues to be very strong |
| Interest income grew by nearly $7 million over the prior quarter as our earning asset yield increased 17 basis points quarter-over-quarter based on the combination of 6 basis point increase in loan yields and the impact of $3.8 million a positive carry on pay-fixed swap derivative income in the third quarter |
| Our net interest margin grew by 9 basis points from the second quarter of 2023 to 3.31% for the third quarter, reversing the trend of a declining net interest margin from the prior 2 quarters |
| The fourth quarter is always a good quarter for us |
| And so from a credit perspective, that's good |
| The increase in earning asset yields was the result of higher loan and investment yields in the third quarter of 2023 compared to the third quarter of 2022, as well as an improved asset mix in which average loans grew from approximately 56% of earning assets in the third quarter of 2022 to 59% in the third quarter of 2023 |
| The expansion of our net interest margin was the net result of a 17 basis point increase in our earning asset yield, which offset a 9 basis point increase in our cost of funds |
| Just wondering, the $1 billion in swaps you put on really nicely helped the margin this quarter |
| We're well collateralized |
| So at the end of the fourth -- or the end of the third quarter, excuse me, new loan originations were up over 7% |
| We continue to be among the industry leaders with respect to expense control with a 40% efficiency ratio for the third quarter and full year 2023 |
| So I think all in all, we're in a really good spot, but we have a lot of work to do |
| For the third quarter of 2023, we reported net earnings of $57.9 million or $0.42 per share, representing our 186th consecutive quarter of profitability |
| The pipeline is still strong |
| The increase in yield for the third quarter benefited from a $3.8 million of interest income from the positive carry on fair value hedges we executed in late June of this year |
| Our regulatory capital ratios are well above regulatory requirements to be considered well capitalized and above the majority of our peers |
| We're happy with how it's positioned the balance sheet, but we will continue to evaluate that and other hedging opportunities |
| So prior to the last 10 days, we were very stable on the deposit side, as evidenced by the average deposits being up so high during the quarter |
| And so that will be a catalyst |
| It doesn't mean that things can't change, but so far, so good |
| But just the deal was pretty well received by the market initially the first couple of days after it was announced |
| But I mean, generally speaking, things have held up pretty well |
| But so far, we've been hanging in there pretty well |
| Statement |
|---|
| Our new loan production weakened in the third quarter |
| The $10 million decline in net interest income from the year-ago quarter resulted from a 15 basis point decrease in net interest margin and a $484 million decline in average earning assets |
| As you know, the fourth quarter is always a little bit more challenging for us just due to some seasonality |
| Although loans declined at quarter end from the end of the second quarter, we recorded a provision for credit losses of $2 million for the third quarter of 2023 to reflect a further deterioration in our economic forecast |
| But we do have some historical seasonality in the fourth quarter that will challenge us a little bit there as well |
| The pipelines, I would say, remained challenged |
| Loan growth continues to be impacted by a slowdown in loan demand |
| The borrower died in the third quarter, and we downgraded the loan |
| David Brager It looks like Christina may have some technical difficulties |
| We also experienced an $18 million decrease in C&I loans as the line utilization declined from 31% at the end of the second quarter to 27% at the end of September 2023 |
| The quarter-over-quarter decline was led by a $61 million decline in commercial real estate loans |
| The provision for credit losses in the third quarter was driven by the change in our economic forecast, which resulted in lower projected GDP growth, lower commercial real estate values and higher unemployment when compared to our forecast at both June 30 and the end of 2022 |
| The resulting economic forecast reflects a modest decline in GDP in the first half of 2024, but a more significant decrease in commercial real estate values that persist through all of 2025 and an unemployment rate rising through 2025 |
| Our OCI declined by $82 million due to the impact of higher interest rates that increased the unrealized loss on our AFS portfolio |
| We were down $30 million quarter-over-quarter, point to point |
| The year-over-year net interest margin decline was due to an 87 basis point increase in our cost of funds, offsetting a 67 basis point increase in earning asset yields |
| Our customer-related banking fees, including deposit services, international and merchant bankcard services, increased by $224,000 compared to the second quarter and declined by $171,000 when compared to the third quarter of 2022 |
| We've experienced a $773 million decline in deposits and customer repos from the end of 2022, which includes, as I just noted, the $720 million that was moved to CitizensTrust, where these funds were invested in higher-yielding liquid assets, such as treasury notes |
| I still always get concerned just sort of about the small C&I type borrower, the SBA 7(a) stuff, which we have less and less of |
| Total loans at September 30, 2023, were $8.9 billion, a $30 million decrease from June 30, 2023, and a $202 million or 2.2% decrease from the end of 2022 |
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