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| And finally, to deliver more value to our commercial client base |
| And we've had a certain -- certainly a back off in our PCG market, which have been incredibly successful for us in 2021 and into 2022 |
| Our ability to hedge the pipeline coupled with our historically high pull-through rate mortgage clients of nearly 90% has allowed us to command very good loan sale yields despite the tough secondary market |
| So leading indicators, at least on the criticized are continuing to remain strong |
| We expect to expand our fourth quarter successes and provide the imposes to a stronger 2024 in the SBA arena |
| As a result, we have accelerated sales training for each of our staff members with a focus to retain 100% of our current clients and deliver a strong community bank brand for all prospects alike |
| By doubling our calling efforts to our clients, as well as our strong prospects that are tied to our competitors, a number of home has stepped away from lending, we expect that when the economy does turn, we'll be better positioned to achieve pre-pandemic levels of loan growth |
| Consecutive quarter-over-quarter growth dating back seven quarters has been a noticeable achievement in our overall balance sheet growth |
| We continue to have very strong capital levels, as Mark has highlighted |
| And finally, asset quality metrics remained strong, with delinquency levels at 33 basis points and year-to-date net charge-offs of only 1 basis point |
| Also, when coupled with our strong credit culture and the added safety net of the government guarantee asset quality elevates and revenue stabilizes |
| As such, we remain committed to our title insurance business and despite the obvious headwinds from the residential sector, we are pleased with the progress we have made this year in making Peak Title the number one choice for our clients in our markets |
| As rates potentially stabilize into 2024, our consistency in the market should allow us to quickly return to higher origination levels |
| It was encouraging that we sold 88% of our production in the quarter and the yields on those sales were in line with what we achieved in the last four quarters |
| Regardless, this business line continues to deliver a stable $3.7 million to $4 million in annual revenue and continues to provide us a competitive advantage over our community bank peers |
| So we feel pretty good about where the portfolio is right now |
| It's all about net interest income and fee-based revenue, more scale in our current households, more scope and operational excellence and asset quality |
| In addition, our reserve coverage of nonperforming loans at 474% gives us a great comfort moving forward, that our asset quality is strong, stable and prepared to confront any additional weaknesses in the economy |
| We did a deep dive into our CRE portfolio, particularly the investment real estate things that were coming up for in -- and we were very happy with what we saw as far as leases that were in place as well as the ability of those cash flows to withstand the pressure of an increased rate |
| Encouragingly, this quarter the deposit growth enabled us to pay down more high-priced repos and FHLB borrowings by over $26 million or 25% compared to the linked quarter |
| Capital levels remained strong with Tier 1 leverage of 11%, common equity Tier 1 of 13.6% and total capital over total risk-based capital of 14.8% |
| Loan-to-deposit ratio of 91.1%, our second consecutive quarter above 91% and higher by nearly 6 basis points from the prior year |
| Our budgeting process for 2024 is revealing in what markets and products we feel will have strength and how our operation will emerge with greater emphasis on margin expansion and stabilization, balance sheet growth and mix change and noninterest expense containment to preserve and grow EPS |
| It is notable that our pretax pre-provision earnings adjusted for the MSR recapture for the nine-month period are up $550,000 or nearly 6% from the prior year nine-month period |
| It remains a great complement to our private banking and commercial customer bases and helps ensure that we are providing our clients a comprehensive solution to all their financial needs |
| Growing deposits from the linked quarter was a key achievement as we have worked extremely hard this past year to maintain our deposit levels on par with the prior year |
| In addition to the shift in the mix of assets away from securities to loans, increases in asset pricing have driven earning asset yields higher in every quarter this year, and they are higher by 89 basis points when compared to the third quarter of 2022 |
| Operational excellence are our fourth key thing |
| We are in the midst of our Salesforce integration project, and we are confident that both our corporate sales champion and consultant sales approach with each client will bring us closer to a bigger bank process, but with a community bank feel |
| Our common equity Tier 1 ratio stands at 13.6% and even with adjusting for AOCI, the level remains robust at 10% |
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| We understand that growth will become more difficult as we look out to a potentially further slowing in the economy |
| Highlights for the quarter include net income of $2.7 million, down from both the linked and prior quarters as funding costs and lower mortgage volume has impacted profitability |
| Margin ended the quarter down 7 basis points from the June quarter and was down 37% from the prior year |
| The mortgage business line has been under significant pressure this year from not only higher rates, but also the lack of inventory in most of our markets |
| As we look at our year-to-date results, the negative impact from the mortgage business line with $1.2 million of servicing right impairment and an additional $900,000 due to lower gain on sale has clearly overshadowed a year in our other fee-based business lines |
| We do, however, expect the next six months in the mortgage business to be difficult, with total origination levels of roughly $100 million |
| However, revenue growth has been challenged by the downward pressure in the equity markets and our need to identify more wealth advisers |
| We anticipate that the fourth quarter will likely be the low point in our margin with the expectation that in 2024, we will start to see some slow improvement |
| In fact, from the prior year, total FTE is down 17% or 6%, reflecting those impacts |
| Total margin income has declined for the quarter from both the linked and prior years despite very strong growth in interest income, in excess of 25% as a significant accumulation of funding costs impacted total margin |
| So some things we thought we would see come to the floor earlier in this year have been delayed |
| It's certainly less than our capacity and well below the goals we have set for this very profitable sector |
| Charge-offs were again low this quarter, just $5,000 |
| Dealing with 11 rate hikes since early 2022, including 425 basis point hikes this year have impacted our rate-sensitive business lines of mortgage and SBA significantly |
| This would mark our lowest origination level in a number of years, but is reflective of the near 8% rate mortgage market |
| Mortgage origination value are lower than the linked and prior year quarters did show a very high and a more traditional level of sold volume at 88% |
| The total size of our balance sheet experienced a slight decline from the linked quarter due to marginal loan growth with our levels of cash and securities declining |
| December looks to be dropping off a bit from that |
| I mean, certainly, the variability this year between how fast funding costs have risen, relative to the asset side has slowed down |
| This quarter was reflective of not only the new lower level of activity, but also the ongoing side of our pipeline |
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