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spk02: and welcome to the Horizon Bancorp, Inc. conference call to discuss financial results for the third quarter of 2023. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. Before turning the call over to management, please remember that today's call may contain statements that are forward-looking in nature. These statements are subject to risk. uncertainties, and other factors that could cause actual results to differ materially from those discussed, including those factors noted in slide presentation. Additional information about factors that could cause actual results to differ materially is contained in Horizon's most recent form, Tank A, and its later filings with the Securities and Exchange Commission. In addition, management may refer to certain non-GAAP financial measures that are intended to help investors understand Horizon's business. Reconciliations for these measures are contained in the presentation. The company assumes no obligation to update any forward-looking statements made during the call. For anyone who does not already have a copy of the press release, and supplemental presentation issued by Horizon yesterday, they can access at the company's website, horizonbank.com. Representing Horizon today are the Executive Vice President and Chief Commercial Banking Officer, Lynn Kerber, the Executive Vice President and Chief Financial Officer, Mark Secor, and Chief Executive Officer and President, Thomas Brame. At this time, I would like to turn the call over to Mr. Thomas Brame.
spk03: Please, go ahead. Good morning, and thank you for participating.
spk10: We're pleased to share our third quarter results that were highlighted by a strong loan growth led by our commercial banking team, resilient and stable core deposit portfolios, and an increase in our non-interest income performance. Not unlike the first half of 2023, the team continues to manage expenses very well, and you'll see in our presentation, our credit quality performance remains a positive foundation for the franchise. Within our comments today, we'll update you on our fourth quarter and full year outlook as we continue to strategically manage our balance sheet, portfolios, and pricing, and expand revenue sources, conservatively manage risk, and maintain ample capital and liquidity that we believe will position us well as we move into 2024. To offer more detail into our third quarter results, let me introduce Lynn Kerver, our Executive Vice President and Chief Commercial Banking Officer, to provide insight into our lending and credit performance. Lynn?
spk00: Thank you, Thomas. Beginning on slide six, we show that commercial loans increased $83 million for the quarter, or 13.1% on an annualized basis. Net fundings were $96.8 million for the third quarter versus $128 million for the second quarter. Our average commercial loan yield was 5.80% for the portfolio and 7.5% for new production. New loan originations continue to be very diverse across our markets and industries. In the third quarter, one-third of our originations were commercial and industrial, which is a continuation of some expansion in this category. The overall commercial pipeline increased from 118 million at June 30th to 145 million at the September 30th. Activity continues to be well diversified by industry and geography with 61% in Michigan and 49% in Indiana. Commercial credit quality remains strong with low past dues of eight basis points for quarter end. Non-performing commercial loans decreased 16% in the quarter, and year-to-date net charge-offs were one basis point at the annualized basis. Turning to slide eight, you'll see that consumer director loan balances increased 50%. $64 million during the quarter, which consisted primarily of increases in home equity loans. This increase was partially offset by an intentional runoff and indirect auto loans. This change and mix is consistent with our strategic plan of redeploying capital to higher-yielding product sites. The average consumer direct yield was 8.05% for the portfolio and 8.96% for new production. The average yield for consumer indirect was 3.25% for the portfolio and 9.51% for new production. Consumer past dues increased in the third quarter for both consumer direct and consumer indirect, reflective of the broader economic conditions. However, consumer non-performing loans remained stable. Year-to-date net charge-offs for consumer direct are a net recovery of one basis point, and consumer indirect charge-offs were 31 basis points. Slide 9 highlights our mortgage loan performance for the quarter. Our portfolio was stable and consistent with our expectations for 2023, aligning with our industry trends. Thus far for 2023, 67% of our year-to-date production is saleable. The average mortgage loan yield was 4.23% for the portfolio and 7.63% for new production. With zero charge-offs for the quarter, this portfolio continues to reflect high-quality borrowers with significant payment capacity and equity in their homes. Our asset quality metrics continue to be strong, as outlined on slide 10. Net charge-offs for the third quarter were $722,000, representing two basis points of average loans. Non-performing loans improved to 0.45%. Past dues continued to be low at 30 basis points of total loans for the quarter. Finally, our allowance for credit losses was maintained at $49.9 million, representing 1.14% of total gross loans, which we believe is appropriate given the low level of past dues and non-performing and charge-offs and current economic forecasts. Credit quality across all of our lending classes is performing well and reflects our history of consistent and well-balanced approach to lending. Now I'd like to turn things back to Thomas, who will provide an overview of our deposit portfolio and trends.
spk10: Thank you, Lynn. I appreciate the insight and the detail. Transitioning to our deposit base, which is going to start on slide number 12. As noted, Horizon has a seasoned and very granular portfolio with an average client tenure of about 10 years. A majority of these balances continue to be held in our transactional relationship accounts that know and trust Horizon well. Additionally, in Q3, the portfolio displayed less than 20% of balances being uninsured. As I stated in my opening remarks, we're very pleased with our third quarter deposit performance, maintaining Horizon's core funding stability and limiting additional funding needs from broker and or wholesale balances. On slide 13 provides detail on the resiliency of the portfolio, and the team continues to be very upbeat about its strength. Our core consumer and commercial relationships were stable with minimal changes in total balances. The combined portfolio balances changed approximately 0.64% for the quarter. Public funds balances were also stable and experienced some heightened pricing pressures for excess liquid funds this quarter. However, the portfolio continues to maintain a significantly lower cost of funding when compared to alternative wholesale options. The quarter closed with brokerage CDs and other fixed-rate borrowings left with ample borrowing capacity available if needed. As we saw in Q2, cash flows from our operations and securities portfolios provided a positive Fed Fund sold position of $72 million at the end of Q3. This excess liquidity will continue to provide options in the fourth quarter for higher-yielding asset growth or flexibility in deposit pricing. As mentioned previously, the deposit portfolio continues to deliver strong results in terms of stability, resiliency, and flexibility in our funding. Let me hand the presentation over to our Executive Vice President and Chief Financial Officer, Mark Secor, who will walk through our current highlights and our income statement and key financial metrics for Q3. Mark?
spk06: Thank you, Thomas. Our third quarter results were positive on many fronts. As Lynn stated, we had quality loan growth from the commercial team, improved non-interest income, and continued a disciplined operating model in respect to expenses and credit. And our approach to new loan production spreads and strong loan growth shifted lower-yielding assets into higher-yielding loans. In Q3, we experienced elevated deposit pressure on commercial and public liquid funds, putting pressure on the net interest margin and net interest income in the near term. However, we will continue to actively manage pricing and our balance sheet to begin improving the net interest margin over the longer term. Starting with slide 14, non-interest income improvement over the length quarter was led by increases in gain on sale of mortgages and other income from sale of assets, while most other line items remain consistent. The company is continuing to diversify core C-income categories that align with our relationship banking model. Going forward, we also expect our investments in trade remanagement and private wealth capabilities to contribute additional fee income to Horizon's revenue mix. Slide 15, our efforts to manage our operating expenses continues to be a strength for Horizon. Non-interest expenses were 1.81% of average assets for the quarter compared to 1.86% last quarter. Our longstanding commitment to being agile in this part of our business model and consistently reviewing opportunities to reduce expenses and streamline processes continue to be a priority, and you can expect it to remain our focus throughout 2023. Non-interest expenses improved modestly, even with an elevated FDIC insurance expense that was offset by lower quarter-over-quarter expenses in several other categories, Salary and benefits in the third quarter were slightly lower based on stable headcount and modest reductions in commissions and other variable compensation. Our loan and deposit pricing management maintains a strong spread as displayed on slide 16. While it narrowed in the quarter, we believe a 414 basis point spread in Horizon's loan and deposit pricing remains healthy compared to previous recent median and has the ability to improve over time. The results highlight our disciplined loan pricing for new loan production and a greater focus on originating higher-yielding loan products. We will continue to focus on loan spread management, product shift into higher-yielding loan products, and cash flow reinvestment at higher rates. The perceived results also reflect our efforts to retain quality, durable in-market relationships in a highly competitive market for deposits. Moving to the investment portfolio on slide 17, it totaled $2.8 billion at the end of the quarter, down $26 million from June 30th. The portfolio had a book yield of 2.21% and an effective duration of 6.7 years at the quarter end. As longer-term investments were originally identified as held to maturity, the duration of that portfolio is 2.2 years longer than the available-for-sale portfolio. Expected cash flows for investments are estimated to be $25 million for the remainder of 2023 and a total of $120 million over the next 12 months. But we continue to actively review strategic options for this portfolio. Slide 18. Verizon continues to maintain solid regulatory capital ratios well above the requirements to be considered well capitalized, and we believe we have sufficient capital to be open to options to improve our earnings outlook in the foreseeable future. We anticipate that growth in capital will outpace the growth in total assets during the next 12 months, providing additional strength. As shown on slide 19, we continue to maintain a strong cash position at the Holden Company with adequate cash to cover eight quarters of fixed costs, including shareholder dividends. The cash position helps provide additional stability in uncertain times, and as mentioned previously, keeps the door open for strategies to improve our earnings. Horizon's current focus for the use of capital is organic earnings growth, as current opportunities and market conditions make M&A less likely. However, we remain open and receptive to discussions for profitable new revenue opportunities, both in acquisition and lift-outs. We expect to continue our targeted dividend payout ratio of 30% to 40%, continuing our 30-plus year of uninterrupted quarterly cash dividends, Based on our current stock price, our dividend provides a higher yield relative to the sector. Looking ahead on slide 20, we provide you with an update on our current expectations for the fourth quarter and full year 2023. Our loan growth continues to be solid in both commercial and consumer sectors, which should be valuable contributors to core earnings in subsequent quarters. For the fourth quarter and full year 2023, we expect 4% to 5% and 6% to 7% total loan growth, respectively. Our net interest margin and net interest income trends should continue to benefit from our balance sheet and pricing management. We expect a net interest margin of 2.33% to 2.38% for the fourth quarter and 2.5% to 2.55% for the whole year. We expect net interest income of $40 to $42 million for the fourth quarter and $174 to $176 million for all of 2023. We anticipate the net interest margin to reach its floor in early 2024, assuming the Fed Fund's target reaches its terminal rate in the fourth quarter of 2023. Non-interest income should continue near current levels with the anticipation of consistent fee income from our investments in treasury management and wealth and a seasonal softening in Q4 of mortgage lending. The expected range of $10 to $11 million in non-interest income in the fourth quarter and a total of $43 to $44 million in 2023. Non-interest expenses continue to be proactively managed across the organization, specifically in segments of our business impacted by rising rates, such as mortgage and consumer lending. We also intend to invest in revenue-generating talent in our treasury management and commercial lending teams to contribute to top line in 2024. As a result, we expect non-interest expenses to range from about $35 to $36 million in the fourth quarter. This would result in $142 to $143 million of non-interest expense for the year. We also expect these expenses to range below 1.85% of average assets for the fourth quarter and the full year. Our operating metrics, ROAA and ROAE, are expected to be slightly lower in the next quarter. We anticipate ROAA to range from 75 and 80 basis points for the fourth quarter and between 85 and 90 basis points for the year. We expect ROAE to range from 8.5% to 9% for the fourth quarter and between 9.5% and 10% for the full year 2023. Finally, for the TCE ratio on December 31st, we are expecting 6.6% to 6.8%. Now I'll turn it back over to Thomas for some final comments.
spk10: Thank you, Mark. So why investment horizon? Our investment thesis is simple. We're located in attractive Midwest growth markets. These markets have desirable economic environments, significant infrastructure investment, and flourishing ecosystems for business and communities. Horizon continues to execute well on its strategy of shifting growth to higher-yielding assets while maintaining its conservative credit risk profile. Horizon's demonstrated a track record of consistent underwriting and active portfolio management to ensure the success of our clients and our shareholders. The franchise has a stable and loyal deposit base with significant excess liquidity of $2.8 billion, providing flexibility and nimbleness to our funding strategies. And our disciplined operating culture consistently achieves a low annual ratio of operating expense to average assets, which we expect to be less than 1.85% for 2023. This is coupled with our annualized net charge-offs of only 2.5 basis points and historically low non-performing loans. We are a very compelling value stock. support of our commitment to our dividend with a 5.9 times PE ratio and a 6% dividend yield. Horizon has a track record of 30 plus years of uninterrupted quarterly cash dividends to our shareholders. We thank you in advance for joining our presentation this morning. This concludes our prepared remarks.
spk03: So now I'll ask the operator, please open up the line for questions.
spk01: And we will now begin the question and answer sessions.
spk02: To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
spk03: In our first question,
spk02: comes from Terry McEvoy from Stevens. Terry, please go ahead.
spk09: Hi, thanks. Good morning, everyone. Maybe, Mark, start with a question for you. Thanks for your thoughts on the fourth quarter net interest margin. Any thoughts on assuming the forward curve is correct, where you would expect the margin or when you'd expect the margin or possibly net interest income to bottom in the future?
spk06: Yeah, good morning, Terry. We think it's close. As we said, we think in the first quarter, based on what the current expectations are in rates, that it will trot by our modeling. We're seeing that. And then start to pick up as we get into the second half of next year, barring any major rate change. If we start to see the rates coming down in the second half of 2024, we'll see more benefit. What we saw coming out of this quarter were the last two months that the margin statewide. So, we have a pretty good idea of what we're coming into going into the fourth quarter.
spk09: Great. And then, just listening to your comments about investing in treasury management and open to hiring commercial teams, any initial thoughts on how you manage expense growth in 2024?
spk00: Good morning, Terry. It's Lynn Kerber. Thanks for the question. Yeah, we are looking at adding some additional staff in our Treasury Department. While there's some additional expenses related with that staffing, the goal is to diversify our corporate deposit base better. And by virtue of a lower cost of funding and that contribution, it would help offset that staffing increase. On the commercial side, there's going to be some team members that will be adding some assets that would assist in paying for their salary, and I think there would be a fairly short payback on that.
spk03: Great. Thanks for taking my questions. Appreciate it. Thanks, Sarah.
spk01: And our next question comes from Nathan Race from Piper Sandler.
spk02: Nathan, please go ahead.
spk04: Great. Good morning, everyone. Thanks for taking the questions. Good morning. Just in kind of thinking about getting to the margin guidance of 250 to 255 for the full year, I'm curious kind of what that contemplates in terms of the size of the earning asset base for the fourth quarter. Are you guys seeing an opportunity just based on your deposit pipeline to wind down some wholesale funding? Can we bring down the printing asset base? Or I guess I'm just trying to think about how to get to that $250 to $255 expectation, just given the lower margin expectations for 4Q.
spk10: Sure. Thanks, Nathan. This is Thomas. Appreciate the question. When we look at our asset size going into the fourth quarter, we're going to imagine it will be relatively consistent as we left the third quarter. We did have the excess cash position that we'll use to pay down any type of alcohol, higher cost borrowing. When you look at our structured borrowing, it's actually at a relatively lower cost compared to overnight borrowing. So we would say our Our borrowing position will be relatively consistent going into the fourth quarter. Access funds will be used to pay down any type of higher-priced borrowings, which would be most likely on the public fund side that we saw some elevation in the third quarter. Relatively consistent balance sheet going third and fourth quarter.
spk06: Yeah, and make that four-year, as you recall, that's not adjusted. That's not adjusted, so it includes the swap gain that we received in the third quarter.
spk04: Gotcha. Understood. And then just kind of thinking about the trajectory of loan yields going forward in a higher for longer rate environment, you know, any color and just kind of what the new rate on production was in the third quarter and just how you're kind of thinking about kind of the trajectory of loan yields over the next few quarters, assuming the Fed pauses and just kind of the tailwinds that you guys have with some of those repricing going forward.
spk00: Hi, this is Lynn Kerber. Relative to the commercial portfolio, we're really basing our new originations on corrupt funds, and so that's been generally very much in sync. Over the last year, the rate increases have occurred. Generally, there's a few week lag as our pipeline catches up to the new rate, depending on the rate structure and the terms of the funding. But overall, our margin over cost of funds for commercial has been pretty stable. And so if rates start to stabilize, I don't see that really having a lot of variation.
spk04: Yeah, but it sounds like, Linda, kind of new production on a weight average basis is still coming on nicely. I'm sure the portfolio yield is coming out of the third quarter.
spk00: Yes, it is.
spk04: Okay, great. And then just lastly, sorry.
spk06: I can add, in the presentation, Nate, we have the average corruption for the last quarter for commercial was 7.5%. Consumer was just under 9%, and mortgage was 7.6%. Okay, great.
spk04: Thank you for that. And then just lastly, any thoughts on kind of share repurchase activities in the fourth quarter and early next year, just given where the stock's trading today?
spk06: um, You know, we have an ability and we have, I think, 1.8 million shares in a plan that we could repurchase. But we've done quite a bit of evaluation of what piece of capital and with the current cost of funds to give up cost of that cash to buy it. It doesn't appear a stock repurchase right now is the best use, although it's always on the table and we're constantly looking at it.
spk04: Okay, great. I will set that. I appreciate the call. Thank you.
spk03: Thanks for the questions.
spk02: And let me just remind you, if you would like to enter the question queue, just press star 1. Our next question comes from Damon Del Monte from KBW. Damon, please go ahead.
spk07: Morning, Damon. Hey, good morning, everyone. I hope everybody's doing well today, and thanks for taking my questions. I just want to start off on credit. You know, obviously very strong credit trends continue with you guys, but just wondering, you know, are there any areas of your portfolio where you're maybe seeing some early signs of stress and maybe something tied to a particular industry or geography?
spk00: Good morning, Damon. It's Lynn. Thanks for your question. As you see in our deck, we had a slight increase in past dues, although it's still at only 30 basis points, which is a traditionally low past due percentage. Most of that was in our consumer portfolio portfolio. And as we reviewed those numbers, primarily automobile. And while the percent increased, you know, if you look at our overall portfolio mix, we have been having reduction in our indirect loan portfolio. And so while the percent has increased, the dollar amount hasn't increased substantially there. Relative to charge-offs, that did increase this quarter. and that was predominantly indirect auto.
spk08: Got it.
spk10: Okay. Just a real quick follow-up on that. I know we're seeing a lot in the industry around indirect auto and consumer charge-offs. I just ask that you review our results. Please take a peek at page 8. I think you'll see that even though Lynn said that we'll see a little bit of increase in our consumer charge-offs simply because the where the economy is. Our consumer portfolio is high-quality borrowers, and so we're expecting that our trends on consumer charges, even though the industry may go in a different direction, are going to outperform there.
spk07: Got it. Okay. And then with respect to, you know, I guess a broader view on credit, and you look at, like, where the reserve is, you know, that's been steadily marching down since it, you know, obviously peaked during the COVID time, like most others. You know, where do you feel is a comfortable level to settle at? You know, it's down to 1.14% as of this quarter. So, you know, how do we think about settling rate for the reserve and then kind of using the provision line to keep that there?
spk00: Yeah, thank you again. You know, as we shared at previous calls, you know, during the pandemic, we had allocated quite a bit for certain sectors related to the COVID pandemic. And those portfolios, predominantly hotels and retail, those performed extremely well. In fact, really stellar. And so we had been releasing those reserves steadily over the last year. So what I think you'll see is that our reserve is returning to more core reserves analysis based on historic loss rate and economic forecast. And so I think as we move forward, it's going to be predominantly a function of that economic forecast. Our credit quality metrics all remain very low, as you can see. And if you look back over our history over the last business cycle, we performed generally about 75% of our peer group losses
spk06: Yeah, this is Mark. You have to let the model drive the results, and there's management judgment in there. But as you see, the portfolio is like indirect.
spk03: It's shrinking.
spk06: We're putting on assets in categories and mortgages have much lower historical losses. So that also is contributing to this.
spk07: Got it. Okay. Mark, are you able to kind of like ballpark a rough estimate for provision going forward? I mean, is it fair to look at the first three quarters of the year and kind of take that average and think that's doable here in the fourth quarter? Or do you think maybe just given broader macro trends, we need to have a little bit higher provision?
spk06: You know, Lincoln – add to this, but I think if you look at what we might be seeing in the last several quarters for charge-offs, that we need to, you know, replace those. I think that probably is a good guidance of what we're looking at.
spk07: Okay, great. And then just lastly, if I just need one more, what's a good effective tax rate we should be using, I guess, for the fourth quarter and then it goes to 2024? Yeah, thanks for the question.
spk06: You know, the effective tax rate continues to go down as pre-tax earnings have come down from last year. So it's hard to just say peg a number, but I think where we are right now is pretty good going forward at around that 8%. And what's driving that is we continue to invest in solar tax credits, and we have, obviously, other tax free income from unions and such. But the solar credits are what's contributing a lot. And those were to continue to invest in. Those have a 20-year carry forward. So we want to continue to invest in those and use that to help keep the marginal rate down. So I think where we are right now is good guidance.
spk07: Got it. Okay. That's all that I have. Thanks a lot for the call, everyone. Appreciate it. Thank you.
spk02: And our next question comes from David Long from Raymond James. David, please go ahead.
spk05: Good morning, David. Good morning. Thanks for taking my question. Just a couple of things here. The first one on slide 17, and you discussed this in the formal comments, but the $25 million of scheduled securities cash flow this fourth quarter and then $120 million next year. Are there any prepayment assumptions built into that, or are those simply just those that are contractually maturing? It's contractually maturing and runoff. Got it, got it. So if there are prepayments, those numbers could be a little bit higher. They could, and we see that once in a while.
spk06: We'll see a bond get recalled, yeah.
spk05: Sure, sure. Okay, great. Thank you. And then second question, as it relates to non-interest bearing deposits, the contraction there seems to have stabilized a little bit for you guys. Where do you think that plays out over the next few quarters? Do you see more mix shifting still? And do you have like a percentage in mind that you think non-interest bearing will get to X percent of total deposits? How are you thinking about that level here in the near to intermediate term?
spk10: Thank you for the question. Usually what we see in the fourth quarter is we do take in some tax money from our public funds group that would cause perhaps the average to stay relatively stable, if not slightly up there. And then the consumer spending happens in the fourth quarter. The first quarter historically for our business model and our clients usually is an outflow of deposits. as people make their tax payments, dividend out their companies. So I would say we see a slight decline, but nothing of major concern, probably just the seasonality that we saw from the first quarter of last year.
spk05: Got it. Thank you, Thomas.
spk03: Appreciate it. Thanks, guys.
spk02: And we have a question now from Brian Martin from Janie, Janie Montgomery. Brian, please go ahead.
spk08: Good morning, everyone. Just wondering if you can talk a little bit about where the – you talk about being a little bit more targeted on where you're thinking on loan growth and just kind of getting better yields, just kind of where you're focused at today on – it sounds like maybe indirect still has to continue to run off, but maybe just point us a little bit there and just kind of a yield pick if you're expecting on that with the liquidity levels you guys have.
spk10: Thanks for the question. I'll start and I'll pass over to Linda to talk specifically about commercial. I think from a macro level on the balance sheet, our growth will still primarily be in the commercial, and Linda can talk about the segments there. We're seeing a natural runoff this quarter of indirect, which is reflective of our pricing. I would anticipate on a go forward the decline in that portfolio will be relatively near for the next several quarters. Our consumer portfolio outside of that through the branches has been stable, slight uptick. And then mortgage has been, you know, that one there has been a slight up, and that's really because our prepayments are slowing down on that. The originations are relatively consistent with about, as we talked about before, about 25% of the originations going down the balance sheet. But we're seeing slowdowns in payments there, which is giving us this, I'd say, modestly up. And I'll pass it over to Lynn to talk about the commercial growth in the various segments.
spk00: Great. Thanks, Thomas. I can direct you to page six. of our slide deck. We've got a portfolio composition for the commercial portfolio. This has been very consistent. You'll see that our non-owner-occupied is 48%, C&I is 25%, and our owner-occupied is 23%. This has been very consistent over the last several years. And when you break down our quarterly pipeline and new originations It virtually mirrors this mix. As I commented in my comments earlier, we have been seeing some increase in CNI this quarter. It was 33% versus our portfolio composition of 25%. And this is a continuation of a trend that we've been seeing over the last year. as we seek to diversify into that sector a little bit more. And that will be a continued trend as we go into next year by expanding some efforts into C&I.
spk08: Okay. And the yields pickup you're getting on that liquidity then with, you know, this type of loan growth is, you know, the average yield of Mark, you know, I guess I figured we talked about it with the number one, is that kind of what we should expect on as far as the pickup goes?
spk10: Yeah, our pricing and pickup itself and the DEX would be consistent as we go into the fourth quarter.
spk08: Okay. All right. And, Thomas, I don't know if you can give any update on this. I think you talked last quarter about potentially looking at a restructure in the bond book, just kind of where you're at there, what kind of guys are still looking at that.
spk10: Thank you for the question. I think as Mark alluded, you know, we're always looking for the best use of capital from where we can put that, whether that's share buybacks, security repositioning, or leveraging the balance sheet. Right now, we're still evaluating that. For us, it's really our view of where that forward curve is going to be. We saw what happened with the curve here this quarter, expectations where the terminal rate changed and what next year will look like. So if we get some more stability in view of what 2024 will look like, we'll probably sit down with our board and our leadership team around the capital deployment there. Understanding, of course, we still have margin pressures here, but we're still very optimistic about the strength of our deposit portfolio. And as Mark talked about earlier, we believe that our margin is probably at the bottom of the top down as we move into 2024.
spk08: Perfect. That's helpful. And just maybe one last one from Mark, just on the margin, Mark. Do you have a spot margin for the month of September? I know it sounds like it was bottoming.
spk02: yeah on a job since we were at p39 okay perfect uh that's all i had guys thank you for taking the questions all right thank you thank you brian and this concludes our question and answer session i would like to turn the conference back over to management for any closing remarks thank you marlies and appreciate your help today
spk10: I also want to thank everyone for participating in our earnings call today. We believe our in-market revenue opportunities, the valuable deposit franchise, credit culture, expense management discipline have positioned Horizon well for the final month of 2024. We appreciate your interest in Investment Horizon, and we look forward to speaking to you in the next quarterly call that will happen in January. In the meantime, don't hesitate to reach out with any questions, and have a wonderful holiday season.
spk03: Thank you. The conference has now concluded.
spk01: Thank you for attending today's presentation. You may now disconnect. Have a good day.
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