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spk00: Ladies and gentlemen, thank you for standing by. Welcome to the Fulton Financial Third Quarter 2023 results. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Matt Josbeck, Director of Investor Relations. Please go ahead.
spk05: Thank you, Michelle. And good morning and thanks for joining us for Fulton Financial Corporation's conference call and webcast to discuss our earnings for the third quarter, which ended September 30th, 2023. Your host for today's conference call is Kurt Myers, Chairman and Chief Executive Officer Joining her is Mark McCollum, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which was released yesterday afternoon. These documents can be found on our website at fult.com by clicking on investor relations and then on news. The slides can also be found on the presentation page under our investor relations website. On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operations, and business. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, and actual results could differ materially. Please refer to the safe harbor statement on forward-looking statements in our earnings release on slide two of today's presentation for additional information regarding these risks, uncertainties, and other factors. Fulton undertakes no obligation other than as required by law to update or revise any forward-looking statements. In discussing Fulton's performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday, as well as slides 16 through 20 of today's presentation for reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. Now I'd like to call the turnover to your host, Kirk Myers.
spk07: Thanks, Matt, and good morning, everyone. Today I'll provide a summary comments on our company, including comments on our financial results, our growth, and an overview of the credit environment. Then Mark will share more details on the financial results and step through our outlook for the remainder of 2023. After our prepared remarks, we'll be happy to take any questions you may have. We were pleased with our third quarter results. Operating earnings of 43 cents per share were solid. We saw deposit and loan growth. Our net interest margin was stable, and we maintained solid asset quality. Our pre-provision net revenue was down 4% as fee income on an operating basis was down length quarter. We generated strong results in wealth management that helped offset a decline in capital markets income this quarter. Operating expenses were higher during the quarter, largely driven by additional technology expense as well as higher salaries and benefits expense. Our core operating expenses are expected to decline in the fourth quarter from the third quarter levels. We are focused on our current level of core operating expenses and are committed to realizing the full benefit of recent technology investments, continuing to generate smart growth, and obtaining staffing efficiencies to drive core operating expenses to average assets down in future periods. In addition to our solid operating results, we repurchased 2.2 million shares in the third quarter and continue to monitor capital deployment opportunities. As of September 30th, 29 million remains from our $100 million 2023 repurchase authorization. Turning to growth, total loan growth moderated this quarter, growing $133 million, or 2.5% annualized. These results were in line with our expectations as communicated in prior quarters. Commercial loans experienced modest growth and a mixed shift occurred as commercial mortgage loans moved from construction to permanent status. Consumer loan growth was driven by residential mortgages. However, that growth continues to moderate as expected. Overall, we are focused on originating loans at the appropriate risk-adjusted spreads and acknowledge the impacts of a higher for longer interest rate environment and current economic conditions may have on this loan growth. Deposit growth outpaced loan growth and was $215 million for the quarter. This was driven by seasonal inflows of municipal deposits of $270 million. As a result, our loan-to-deposit ratio benefited, declining from 98% declining to 98.9%. This remains well within our long-term target range of 95 to 105%. We continue to invest in long-term organic growth. During the quarter, we opened one new financial center in Philadelphia. In addition, we have financial centers targeted to open in the Philadelphia, Richmond, and the Wilmington MSAs in the fourth quarter. We also recently opened a loan production office in Norfolk, Virginia, in order to further accelerate growth in that market. Turning to credit quality, our credit quality metrics remained stable. Net charge-offs were 5 million, or 10 basis points annualized. Criticized and classified loans declined, non-performing assets declined, and delinquencies remained historically low. We have again provided detail on our loan portfolio and specifically on our office portfolio in slides four and five. I'd like to note that our overall concentration in commercial real estate is approximately 185% of total capital, well below our proxy peer average. Overall, we remain pleased with our credit metrics. However, we acknowledge the broad market trends and their potential impacts on credit quality. Now I'll turn the call over to Mark to discuss the details of our third quarter financial performance and our 2023 outlook in a little more detail.
spk02: Thanks, Kurt. And thank you to everyone for joining us on the call this morning. Unless I knew it otherwise, the quarterly comparisons I will discuss are with the second quarter of 2023. And the loan and deposit growth numbers I'll be referencing are annualized percentages on a link quarter basis. Starting on slide 6, as Kurt noted, operating earnings per diluted share this quarter were 43 cents on operating net income available to common shareholders of $72.2 million. This compares to 47 cents of operating EPS in the second quarter of 2023. Moving to the balance sheet, as we anticipated, loan growth slowed in the third quarter to $133 million, or 2.5% annualized. On the commercial side, Growth moderated to $47 million, or 1.4%, and it was a mix of certain categories offsetting others during the quarter. Consumer loan growth also moderated to $86 million, or 4.7% during the quarter. While mortgage lending remained the majority of our consumer loan increase, the third quarter growth rate slowed considerably from prior quarters due to higher loan pricing and overall demand. We have raised new loan rates across the board with most new loan yields falling between seven and eight and a half percent depending on product and borrower specific criteria. Total deposits grew 215 million during the quarter. Interest-bearing deposits grew 506 million or approximately 13% with seasonal growth in our municipal deposit portfolio contributing 270 million of that total. This growth was offset by a decline in our non-interest bearing DDA accounts. Non-interest bearing balances declined $290 million during the period, which was down from a $538 million decline in the second quarter and a $603 million decline back in the first quarter. This moderation in the mix shift from non-interest bearing to interest bearing deposits was slightly better than our expectations and helped increase our NII guidance I will provide at the end of my comments. As Kurt mentioned, our loan-to-deposit ratio ended the quarter at 98.9%, down from 99.2% at the end of last quarter. We had no net broker deposit purchases during the quarter, and that component of our funding remains low at only 4% of total deposits. Moving to slide seven, last quarter we shared with you this 33-year history of our non-interest-bearing deposit percentage. We believe we should end the year between 23 and 24% non-interest-bearing deposits, down from 27.7% at June 30th and 26% at September 30th. This estimate assumes that we'll have an additional deposit shift of approximately 350 to 400 million into interest-bearing deposits during the fourth quarter of 2023. Our investment portfolio declined approximately $200 million during the quarter, closing at $3.7 billion. Going forward, we expect our investment portfolio to migrate upward as market conditions dictate, ultimately equaling about 15 percent of our balance sheet. Putting together those balance sheet trends on slide eight, net interest income was $214 million, a million-dollar increase linked quarter. Our net interest margin for the third quarter was 3.40 percent, consistent with 3.4% in the second quarter. Our loan yields expanded 20 basis points during the period, increasing to 5.72 versus 5.52 last quarter. Cycle to date, our loan beta has been 46%. Our total cost of deposits increased 24 basis points to 1.56% during the quarter. Cycle to date, our total deposit beta has been 29%. Turning to credit quality on slide nine, our non-performing loans decreased 6.3 million during the quarter, which led to our NPL to loans ratio decreasing to 67 basis points at September 30th versus 70 basis points at June 30th. Loan delinquency remains historically low at 1.12% at September 30 versus 1.05% last quarter. Our allowance for credit loss as a percent of loans increased from 1.37% alone to June 30th to 1.38% at quarter end. Turning to non-interest income on slide 10, our wealth management revenues were $19.4 million, up from $18.7 million for the second quarter. We continue to invest in our wealth business, and it now represents about a third of our fee-based revenues. The market value of assets under management and administration declined $17 million during the quarter to close at $14.2 billion. Commercial banking fees declined to $19.7 million during the quarter. Reduced loan originations tempered capital markets revenue in our customer swaps business, coming off of a very strong second quarter. Other categories within commercial fees were solid, as both merchant and card revenues have exceeded our expectations year to date. During the quarter, we recorded a charge of $3 million in other fee income related to our final transition from LIBOR to SOFR. In order to minimize customer disruption in rewriting certain loan and swaps contracts, this resulted in a valuation difference that must be recorded this quarter. This unrealized accounting loss will be recouped over the expected life of the underlying swap contracts. Consumer banking fees were up modestly for the quarter with pickups in credit card revenues and overdraft fees. Mortgage banking revenues picked up late quarter as an increase in volume offset a slight decrease in gain on sale spreads in the third quarter. Application volumes, however, were down 6% year over year as rate increases and low housing inventories influenced applications, origination, and overall loan sale volume. Moving to slide 11, non-interest expenses were $171 million in the third quarter, a $3 million increase from the second quarter. The following items contributed to this increase. Higher base salary expense due to one additional calendar day in the quarter, and higher outside services costs associated with certain technology initiatives. On slides 12 and 13, we are continuing to provide you with expanded metrics on capital and liquidity. First, on slide 12, as of September 30th, we maintained solid cushions over the regulatory minimums for all of our regulatory capital ratios. We've also provided you with an alternative view of our regulatory ratios, including the impact of accumulated other comprehensive income. Our tangible common equity ratio was 6.8% at quarter end, down from the prior quarter, due to higher long-term interest rates and the related impact on OCI. Included in tangible common equity is the accumulated other comprehensive loss on the available for sale portion of our investment portfolio and derivatives. This totaled $374 million after tax on a total AFS portfolio of $2.9 billion. On slide 13, including the loss on our held to maturity investments, which is $203 million after tax on an HDM portfolio of $1.3 billion, Our tangible common equity ratio would be 6.2% at September 30th, still representing over $1.6 billion in tangible capital. On slide 14, we provided you with a comprehensive look at our liquidity profile. When combining cash, committed and available FHLB capacity, the Fed discount window, and unencumbered securities available to pledge under the Fed's bank term funding program, Our committed liquidity is $8.7 billion at September 30th. In addition, we maintain over $2.5 billion in Fed funds lines with other institutions. On slide 15, we are providing our updated guidance for the remainder of 2023. Our guidance now assumes a final 25 basis point Fed funds increase at their November meeting. Based on this rate outlook, our 2023 guidance is as follows. We expect our net interest income on a non-FTE basis to be in the range of 845 to 855 million. We expect our provision for credit losses to be in the range of 55 to 65 million. We expect our core non-interest income, excluding securities gains, to be in the range of 220 to 230 million, but we are trending to the higher end of this range. And we expect our core non-interest expenses to be $665 million plus or minus for the year. And lastly, we expect our effective tax rate to be in the range of 17.5% plus or minus for the year. With that, we'll now turn the call over to the operator for your questions. Michelle?
spk00: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. And please stand by while we compile the Q&A roster. The first question comes from Daniel Tamayo with Raymond. Your line is now open.
spk01: Daniel, your line is now open. Daniel, can you hear us? Your line is open.
spk00: Please stand by for the next question. The next question will come from Chris McGrathy with KBW. Your line is open.
spk06: Oh, good morning. Maybe Kurt... Hey, good morning. Kurt, maybe starting with you on capital, you talked about the slowing of the balance sheet, which is reflective in H8 trends, but you chipped at the buyback. How do we think about, I guess, finishing it, additional buybacks, other uses of capital, given the, I would say, still uncertain economic environment?
spk07: Yeah, so our capital strategy remains the same. We're going to support organic growth. as we look in the fourth quarter here first, and then we would look at all other alternatives like buybacks. We do have $29 million remaining in that authorization, and we're active in the third quarter. We make those determinations based on pricing and capital use.
spk06: Okay, great. And then maybe two follow-ups. Mark, I think you said you have a November hike in the guide. I think the market's kind of 50-50 if we get it. Can you just remind us what each 25 is? I think you've provided it on a monthly basis in the past.
spk02: Yeah, I would say that if we don't get that, you know, you have just under $9 billion of variable rate loans, you know, that would reprice Um, you know, so if you don't get that benefit, you know, that number, you know, ends up being a little bit, you know, north of 20 million annually. So, you know, a little bit under 2 million a month. Um, you know, but then, then obviously, you know, you know, the, the wild card question is yet, you know, what, if we don't get that, you know, does that change, you know, that your glide upward in a deposit costs, you know, um, you know, so there'll be some offset.
spk06: Okay, great. And then maybe my last, there was a report overnight about interchange making its ways through regulation again. Can you just remind us, obviously you're above 10 billion, but just what the potential, remind us what the impact was previously and how much might be at risk if we get more regulation?
spk07: Yeah, Chris, we really didn't look at the numbers yet because we don't know what will happen. I mean, we have the sensitivity on it. We are So we benefit and have cost offsets with that as well. So we have to model both sides of that, depending on what plays out from a legislative standpoint or from a market standpoint pricing with customers. So we do benefit in some regards, and then we would have an offset. It was a net reduction for us previously when Durban was put in place originally, but not a material reduction for us. at that time.
spk01: Okay, thanks. Thanks a lot.
spk00: Our next question comes from Seti Strickland with Janie Montgomery. Your line is open.
spk07: Hey, good morning. Just wondering if you can talk about upcoming maturities in the loan portfolio over the next couple quarters and ballpark, what's the rate on those on average as they come off as they mature versus renewal?
spk02: Yeah, I would say on ones that are maturing, I mean, again, it's going to be a pretty wide swath, Betty, depending on the category. You know, but I mean, it could be, you know, as I mentioned, our new loans are going to be anywhere from seven to eight and a half that we're putting on right now. You know, maturities are coming off anywhere from sort of that five and a half to seven range, depending on one loan category.
spk07: Got it. And then can you remind us the timing of when those public funds flow back out and what the rate was on those? Because I'm assuming when they flow back out, at some point in 2024, the margin benefits a little bit. Those are generally higher rate, right?
spk02: They are lower than our marginal cost of borrowings. You know, obviously, like right now, because, I mean, in our municipal business, I mean, we do have a lot of the core operating accounts for those municipalities. You know, over the last year, with the increase in rates, the overall yield in that portfolio is, you know, has crept up to where it's a little bit under 2% today, about 1.9. And our normal cyclicality there, what we've seen the last two years, you know, has been a consistent around like that 300-ish, you know, like we saw this past quarter, increase in the third quarter. And then in the fourth quarter, you know, you tend to see, you know, a similar amount, you know, in the last two years. Three years ago, it used to be a little more, but right now it's more about, you know, 200 to 300 million of outflows.
spk07: Gotcha. Just one last one for me. We've seen steady growth in wealth fees for, I think, three quarters now. Do you feel like that trajectory could continue or do we see a bit of a pullback in future quarters? You know, we consistently grow that business. You know, it is market sensitive in some of the products, but it's a recurring fee business and we grow the underlying business. assets under management. So, while it will ebb and flow with the market, those changes should be muted. And if you look at the long-term trends in growth and wealth, we expect those to continue. Understood. Thanks for taking my question.
spk00: Please stand by for our next question. The next question comes from David Bishop with Hugde Group. Your line is open.
spk07: Hey, good morning.
spk00: Morning, David.
spk04: Morning, David.
spk07: Hey, appreciate the commentary with regard to the percent of capital allocated to commercial real estate. I think you said 185%. Clearly, in the Northeast, a lot of your peers are bumping up against that 300% threshold. Some are well above that. Does that give you any opportunity here in the near to intermediate term to maybe take market share? Are you seeing some of the competitors migrate out? Good credit that you guys could all stop up here with some excess capacity. Yeah, we're being very strategic about that. It does create opportunities for us. We've kept our commercial real estate team intact, and we are getting opportunities that may not have been available to us. We are being disciplined around credit and pricing, and it's an opportunity for us from a high-quality customer standpoint, but also to get the pricing credit parameters that we need in this environment. So it is an opportunity for us, and that's how we're looking at it. Got it.
spk03: And then within the, I appreciate the disclosures regarding office CRE and central business district exposure, any sort of entry-quarter weakness there or any update in terms of what you're seeing in terms of credit trends within that portfolio?
spk07: Yeah, the portfolio's been pretty stable. You know, we're closely monitoring that portfolio, and you can see from the disclosures that the metrics are pretty consistent. You know, office continues to have stress. We're working with making sure we understand borrowers, understand the outlook as we move forward, but really not any material changes quarter to quarter, but we continue to monitor the macroeconomic environment for office. It is a challenge overall environment.
spk03: Got it. Just one more last question here. In terms of the impact from the SOFR to LIBOR transition, I think you said you're going to accrete that back into other income over time. Just curious, maybe what sort of a mark, maybe a good run rate for that other income line on a go-forward basis? Thanks.
spk02: Yeah, so that's going to accrete back in, actually, in NII over time, and that'll be approximately five years.
spk01: Got it, thanks.
spk00: Please stand by for our next question. The next question comes from Manuel Navas with DA Davidson. Your line is open.
spk04: Hey, good morning. Any thoughts on that? I just wanted to have some updated thoughts in the NIN direction from here. Thoughts on the brokered deposits, like when do you have to kind of seek to replace them? It looks like the CD engine is working quite well. So just kind of some updates on those areas.
spk02: Yeah. We think that we're going to continue to see our margin drift down. We were pleased that we held constant from 2Q to 3Q. I think last quarter we had told folks at the time that our our margin, you know, was $340 for the quarter and ended the quarter at that same number. You know, in the month of September, our margin was $338. You know, so to give you an idea that, you know, we will expect to see, you know, and again, with some of those public funds outflows and replacing some of that, you know, with some higher cost borrowings in the fourth quarter, you know, I'd see that number drift down a little bit. We expect at this point to see the margin bottom out sometime in the middle of 2024. And then I think back to your question around CDs, yeah, we do feel our CD engine is pretty strong. And the other reason to comment on when margin will bottom out is that in the middle of 2024 is really where we see our CDs that are rolling off and replacing that that differential in rate becomes much narrower to today's market rate. You know, as like in the fourth quarter, we still have about 300 million of CDs maturing at about a 2% rate, whereas by the middle of next year, you know, you have 600 million of CDs, but they're maturing at a 420 rate. You know, so your replacement rate becomes much narrower, you know, which will then help to, you know, slow down that margin compression as well.
spk04: I appreciate that. Is the expectation that we kind of drift up on the loan deposit ratio to the higher end of your range over the next couple of quarters?
spk07: We're working hard at balanced growth. Quarter to quarter, it's going to ebb and flow within that range. But we don't see a steady increase to the top end of that range. But You know, quarter to quarter, it may move up and down as we have different strategies within each quarter.
spk04: Okay. You brought up that in the past you've seen a lot of new account openings. Is a lot of the deposit flows ex the public funds coming from your new accounts, or are you getting from your current account base, you're getting CDs? Can you kind of just talk through that a bit?
spk07: Yeah, so we're working both. So we are adding customers and are focused on deposit customers, but customers overall. And we are working hard at Cross-Sell on existing customers to bringing in money that may be at other institutions. And we're their primary relationship, but we don't have all of the relationship. We're hyper-focused on that share of wallet for current customers to to bring in deposits that way and loans.
spk04: And my last question is on expenses. You're bringing them down a little bit in the fourth quarter. Can you just talk about some of the corporate initiatives you called out in the release and what kind of drove that line to be a little bit higher? And is that going to be a little bit elevated into next year? Just some thoughts on that end of the spectrum.
spk07: Yeah, we're really focused on core operating expenses. We said that expenses will come down in the fourth quarter. We're confident in that. We are also looking broadly in this environment how we strategically manage expenses effectively. So we'll be messaging kind of each quarter, not only results, but what we're looking at as we move forward. Getting that technology benefit realization and staffing efficiency with smart growth is really how we're looking at all of those things, but we are very focused on bringing down core operating expenses.
spk04: Thank you very much.
spk07: You're welcome.
spk00: Please stand by for our next question. The next question comes from Matthew Breeze with Stevens. Your line is now open.
spk07: Hey, good morning. Just following that line of question, you had mentioned a lower overall NIE to asset ratio. Could you just give us some idea of where you'd like to see that ratio trend next year or over time? Yeah, we're really focused on it. We don't have a target that we're public with at this point, but we're really focused on bringing that down over time. Just with the outlook that we have around maybe a little slower growth, margins more challenged from where we were the last couple of quarters, really focused on bringing that true expense level down. And we're going to be able to incrementally move that over time. Okay. So maybe to put a broader point on it, the goal is to bring the absolute level of expenses down from where they are currently versus a lot of expense initiatives where are really utilized to temper growth from a current level. Is that how we should be thinking about it? Well, we're focused on both. So we do want to look at just core expense levels but it is a combination of smart growth as well. So it depends on our growth opportunities and opportunities in the marketplace on how we'll be looking at the balance of those two things as we move forward. So we have items like our corporate real estate expense. We will bring that expense down. Other areas, we need to look at revenue opportunity relative to expense opportunity. So we're doing both things. Okay. And maybe going back to the NII guide, which suggests in the fourth quarter there's a pretty decent step down in terms of quarterly NII outcomes. Obviously, that's short term. As we think about 2024, do you expect that trend of NII being down on a quarterly basis to kind of sync up with your NIM outlook, which stabilizes and call it mid-2024? Is that a decent way to think about this?
spk02: Yeah, I think that's fair, Matt.
spk07: Okay. And do you have any idea where you think the NIM or NII might stabilize at that point without any additional rate movement?
spk02: You know, we haven't given guidance yet for 2023. I mean, I'm comfortable giving that broad guidance, or ESR, for 2024. But, you know, when we come out next quarter, you know, for 2024, we'll obviously be giving guidance for the full year at that time.
spk07: Okay. With some of the better than expected deposit results this quarter, could you provide some updated thoughts around expectations around terminal deposit data? as we get into 2024 and perhaps at the end of this cycle?
spk02: Yeah, you know, we're not really moving off our prior numbers for terminal beta because, again, for our terminal beta, I mean, we view it as, you know, kind of two quarters after the Fed stops raising rates. You know, so we still feel like we're going to be, you know, around that, you know, high 30s, you know, to 40 level that we had communicated in prior quarters. And, yeah, You know, hopefully we do end up a little bit better than that. But, you know, I think our results this quarter, you know, we still want to take a guarded, you know, look on that and understand what, you know, customer behaviors, you know, are going to be like six months from now. You know, we're just not ready to move off that number yet.
spk07: Okay. Last one for me is, you know, broadly speaking, it looked like credit trends were benign, you know, very solid. We've been getting more questions around syndicated loans and portfolios. I'm just curious, what kind of exposure do you have, if any, to syndicated loans, and what is the size of that portfolio, and how has performance been? Yeah, Matt, our shared national credit portfolio's balance is about $325 million right now, so less than 2%. It's customers we know well. and performance has been steady. We don't have any metrics in that portfolio that are different than other portfolios. You know, they are larger accounts, so when you have an item there, it's a little more visible, which I think you see, but it's a pretty limited portfolio and activity for us. Any sub-industries within it that have more of the pie than others? No, not really. It's pretty evenly split, CRE and CNI, and we have five, six different categories, so it's pretty diversified within the CNI categories as well. I will leave it there. I appreciate you taking all my questions. Thank you. Okay, thanks, man.
spk00: Please stand by for the next question. The next question comes from Frank Chiraldi with Piper Sandler. Your line is open.
spk03: Good morning. Just in terms of to ask the expense question another way, any thoughts of more normalized efficiency ratio or broad efficiency ratio targets, you know, as we kind of keep a careful eye on the expense side and see where revenues flush out for next year?
spk07: Yeah, Frank, I appreciate the question, and we're really focused on efficiency ratio and absolute expenses around expenses to assets. We have not been public with a target. We are looking to drive them incrementally, and as we move forward in this environment, we may be in a position to put a target out there in 2024. We're just not positioned to do it right now, but we're very focused on it, and we do want to make incremental change and then potentially even more significant change as we move forward.
spk03: Okay. And then on noninterest-bearing balances, Mark, you talked about where you anticipate those balances ending the year as a percentage of total deposits. If we're in sort of a higher for longer rate scenario, obviously it bottoms out somewhere. Do you see it kind of continuing to be a slow bleed from those levels, or do you think it's close to bottoming out here?
spk02: um you know based on the uh where rates are currently um we're still we're still forecasting uh there to be some rundown in 2024 uh but but frank we anticipate that that you know pace of shift will continue to decline um you know so uh you know you know maybe you're down a couple percentage points uh you know in 2024 but certainly nothing like what we saw in 2023 gotcha okay
spk03: I appreciate it. Thank you.
spk00: Please stand by for our next question. The next question comes from Daniel Tamayo with Raymond James. Your line is open.
spk01: Daniel, your line is now open. Daniel, your line is now open.
spk00: Please stand by for the next question. Okay, the next question comes from Manuel Navas with DA Davidson. Your line is open.
spk04: Hey, I just wanted to hop back on to kind of ask about those new branches. Can you just talk about the regions you're kind of adding branches in? And is that like a similar cadence you might see in other quarters? And is that kind of where you're seeing the most regional opportunity?
spk07: Yeah, so right now we have 205 financial centers. We're consistently managing that network, consolidating or reducing offices that aren't performing or can be consolidated while then investing in new locations that are strategic for us. We've been predominantly focused on the Philadelphia, Baltimore, Richmond corridor. In DC, we opened a loan production office in the second quarter. So that kind of metro corridor is where we've been focused with most of our new financial centers. Three and one quarter is just, it's a timing thing on the development. So that's not a, specific pickup in that activity. It's more just the timing of those branches all coming online at the same time. But you'll see a steady management of that network, so some closures, consolidations, and some new investments.
spk04: Okay, I appreciate that. Thank you. You're welcome.
spk00: I show no further questions at this time. I would now like to turn the call back to Kurt Myers for closing remarks.
spk07: Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss the fourth quarter results in January. Thank you all.
spk00: This concludes today's conference call. Thank you for participating. You may now disconnect.
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