Cambridge Bancorp (CATC) 2023 Q2 法說會逐字稿

Welcome to the Cambridge Bancorp second quarter 2023 earnings conference call. We'll be making forward-looking statements during this call and actual results may differ materially. We encourage you to review the disclaimer in our earnings release dealing with forward-looking information, which applies to statements made on this call.

歡迎參加劍橋銀行 2023 年第二季度收益電話會議。我們將在本次電話會議期間做出前瞻性陳述，實際結果可能存在重大差異。我們鼓勵您查看我們的收益發布中涉及前瞻性信息的免責聲明，該免責聲明適用於本次電話會議中所做的聲明。

In addition, some of our discussion may include references to non-GAAP financial measures. Information about those measures, including reconciliation to GAAP measures may be found in our SEC filings and in our earnings release.

此外，我們的一些討論可能包括參考非公認會計準則財務指標。有關這些措施的信息，包括與 GAAP 措施的調節，可以在我們向 SEC 提交的文件和收益報告中找到。

(Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Denis Sheahan, Chairman, President, and Chief Executive Officer. Please go ahead, sir.

（操作員說明）請注意此事件正在被記錄。我現在將會議交給董事長、總裁兼首席執行官 Denis Sheahan 先生主持。請繼續，先生。

Thank you, Marlise. And good morning, everybody, and thank you for joining our earnings conference call today. I'm joined by our Chief Credit Officer, Pete Halberstadt; our Interim Chief Financial Officer, Joe Sapienza; our Vice President of Finance, Joe Lombardi; and our Chief Marketing Officer, Danielle Remis Hackel.

謝謝你，馬利斯。大家早上好，感謝您參加我們今天的財報電話會議。我們的首席信貸官 Pete Halberstadt 也加入了我的行列。我們的臨時首席財務官 Joe Sapienza；我們的財務副總裁 Joe Lombardi；以及我們的首席營銷官 Danielle Remis Hackel。

In a moment, I will speak to earnings for the second quarter and our current thinking on the outlook. From a macro perspective, we see continued uncertainty regarding interest rates and recession in addition to equity market volatility. At Cambridge Bankcorp, deposit levels have stabilized and pricing pressure, while not as elevated, still exists.

稍後，我將談談第二季度的收益以及我們目前對前景的看法。從宏觀角度來看，除了股市波動之外，我們還看到利率和經濟衰退持續存在不確定性。在劍橋銀行，存款水平已經穩定，定價壓力雖然沒有那麼高，但仍然存在。

Growth in deposits remains a priority and is very challenging due to the pricing pressure in the market. However, we are beginning to see green shoots, and I'm hopeful of deposit growth in the second half of this year. Beyond deposit levels, capital is strong and continues to grow. Liquidity is robust at approximately two times the level of uninsured deposits and asset quality remains excellent.

存款增長仍然是首要任務，而且由於市場定價壓力，存款增長非常具有挑戰性。然而，我們開始看到復甦的跡象，我對今年下半年存款增長充滿希望。除了存款水平之外，資本也很強勁並且持續增長。流動性強勁，約為未保險存款水平的兩倍，資產質量仍然出色。

From a lending perspective, activity during the quarter was modest. As expected, total balances were essentially flat as a result of slowing market activity and the continued disconnect between buyer and seller expectations in commercial real estate, combined with the reduction in consumer mortgage activity due to the level of interest rates and ongoing lack of housing supply.

從貸款角度來看，本季度的活動溫和。正如預期的那樣，由於市場活動放緩、商業房地產買賣雙方預期持續脫節，加上利率水平和住房供應持續不足導致消費者抵押貸款活動減少，總餘額基本持平。

The one bright spot was in commercial and industrial lending, which achieved growth of 7% in the quarter in both the renewable energy and innovation banking sectors. I expect we will continue to see solid growth in the innovation banking segment in the second half of the year as the opportunities are many.

商業和工業貸款是一個亮點，本季度可再生能源和創新銀行領域均實現了 7% 的增長。我預計下半年創新銀行業務將繼續穩健增長，機會很多。

In commercial real estate lending, it is clearly slow. There is activity, but we are not attracted to either the loan structures or pricing offered in the market at this time. We are known for our credit discipline and that will not waver just to achieve growth. In summary, aside from C&I lending, we would not expect significant loan growth in the second half of this year.

在商業房地產貸款方面，顯然進展緩慢。有活動，但我們目前對市場上提供的貸款結構或定價不感興趣。我們以信用紀律著稱，不會僅僅為了實現增長而動搖。綜上所述，除工商業貸款外，我們預計今年下半年貸款不會出現大幅增長。

Following the industry turmoil earlier this year, we are focused on benefiting from the disruption in the markets by acquiring new clients and talent. Specifically, we have hired four skilled relationship bankers to focus on acquiring deposits in Massachusetts and New Hampshire.

繼今年早些時候的行業動蕩之後，我們專注於通過獲取新客戶和人才來從市場混亂中受益。具體來說，我們聘請了四名熟練的關係銀行家，專注於獲取馬薩諸塞州和新罕布什爾州的存款。

Additionally, we hired a new Head of Wealth Management, Jeff Smith, who brings decades of experience in growing wealth management business as our new Head of Wealth Management replacing Jennifer Pline, who retired last month. I look forward to Jeff digging in and building a wealth management growth story in the coming months and years.

此外，我們聘請了新的財富管理主管傑夫·史密斯 (Jeff Smith)，他在發展財富管理業務方面擁有數十年的經驗，接替上個月退休的詹妮弗·普林 (Jennifer Pline)，擔任我們的新財富管理主管。我期待傑夫在未來幾個月和幾年裡深入挖掘並構建財富管理增長故事。

A few highlights in the quarter. Deposits, excluding wholesale funds, totaled $4.09 billion as compared to $4.13 billion at March 31, and have been remarkably stable since the middle of March when comparing week over week changes during this period.

本季度的一些亮點。不包括批發資金在內的存款總額為 40.9 億美元，而 3 月 31 日為 41.3 億美元，與 3 月中旬以來每週的變化相比，存款一直非常穩定。

Interest and non-interest-bearing checking balances combined were also stable at $2.23 billion at June 30, as compared to $2.24 billion at March 31. Of note, approximately $50 million moved to interest bearing deposits via our insured cash sweep, which has been a focal point for clients during the backdrop of recent bank stress and failures.

截至 6 月 30 日，利息和無息支票餘額合計也穩定在 22.3 億美元，而 3 月 31 日為 22.4 億美元。值得注意的是，約 5,000 萬美元通過我們的保險現金掃描轉入有息存款，這一直是在最近銀行壓力和倒閉的背景下，客戶的焦點。

The tangible common equity ratio ended June at 8.41% as compared to the March level of 8.32% and tangible book value per share increased to just over $58 at June 30.

6 月份有形普通股比率為 8.41%，而 3 月份為 8.32%，截至 6 月 30 日，每股有形賬面價值增至略高於 58 美元。

Loan asset quality remains superb. Delinquencies are well-managed, and we are not seeing any significant issues to date. Pete Halberstadt will join in a minute to speak to our commercial loan portfolio in detail and provide an update on the office environment.

貸款資產質量依然優良。拖欠問題得到了妥善管理，迄今為止我們尚未發現任何重大問題。 Pete Halberstadt 稍後將加入，詳細介紹我們的商業貸款組合，並提供辦公環境的最新情況。

Wealth management assets increased primarily due to market appreciation during the quarter and client assets under management and administration totaled $4.4 billion as of June 30. The total amount of available liquidity was $2.6 billion, remaining roughly two times the level of uninsured deposits at the end of the quarter.

理財資產的增加主要是由於本季度市場升值，截至 6 月 30 日，管理和管理的客戶資產總額為 44 億美元。可用流動性總額為 26 億美元，大約是截至 2019 年末未保險存款水平的兩倍。該季度。

Moving to earnings. Net income, profitability ratios, and earnings per share are all negatively affected by the weight of higher interest rates and negative deposit flows in the latter part of 2022 and beginning of 2023. GAAP diluted earnings per share were $0.91 and diluted operating earnings per share were $1.23 for the second quarter.

轉向盈利。 2022 年下半年和 2023 年初，淨利潤、盈利率和每股收益均受到利率上升和存款負流的負面影響。GAAP 攤薄後每股收益為 0.91 美元，攤薄後每股營業收益為 0.91 美元。第二季度為 1.23 美元。

The adjusted net interest margin, which excludes the impact of merger-related loan accretion, decreased by 37 basis points to 2.21% from the previous quarter. The cost of deposits, excluding wholesale deposits for the quarter, increased by 51 basis points to 1.52%, bringing the cumulative total non-wholesale deposit beta to 27%. The company had a return on average assets of 0.70% and return on tangible common equity of 8.51%, both on an operating basis for the quarter.

扣除合併相關貸款增加的影響後，調整後淨息差較上季度下降37個基點至2.21%。本季度的存款成本（不包括批發存款）增加了 51 個基點，達到 1.52%，使累計非批發存款貝塔係數達到 27%。該公司本季度運營基礎上的平均資產回報率為 0.70%，有形普通股回報率為 8.51%。

Regarding the outlook, the expectations of the Fed continued to change during the quarter, given uncertainty about inflation and economic conditions. As a result, wholesale funding costs and deposit costs were elevated during the quarter, both as the continuation of client rate requests during the month of April and higher borrowing expenses in June.

關於前景，鑑於通脹和經濟狀況的不確定性，美聯儲的預期在本季度繼續發生變化。因此，由於 4 月份客戶利率請求的持續以及 6 月份借貸費用的增加，本季度批發融資成本和存款成本有所上升。

As it relates to client rate change requests, the level of activity has certainly diminished from the activity seen in March and April and the spot cost of deposits at the end of the quarter was 1.66%. We believe, based on the current forward yield curve and consistent with our previous guidance, the net interest margin will likely continue to decline into the low twos toward the end of this year and could be further reduced if rates continue to move higher. Recently, we've been adding more derivatives to reduce the impact of higher interest rate increases.

由於與客戶利率變更請求相關，活動水平肯定比 3 月和 4 月的活動有所減少，季度末的即期存款成本為 1.66%。我們認為，根據當前的遠期收益率曲線，並與我們之前的指導一致，淨息差可能會在今年年底繼續降至低兩位水平，如果利率繼續走高，淨息差可能會進一步降低。最近，我們增加了更多衍生品，以減少利率上升的影響。

The remainder of the outlook also remains similar to last quarter. Consistent with prior guidance, we are expecting a reasonably flat year in terms of loan growth. And while we are focused on deposit growth, we expect modest growth for the remainder of the year as we are looking to avoid the race to the top in interest rates and instead focus on relationship-based core deposits. We expect to monitor operating expenses closely for the remainder of the year and a growth rate of 0% to 3% from the prior year remains appropriate.

其餘的前景也與上季度類似。與之前的指導一致，我們預計今年的貸款增長將相當平穩。雖然我們關注存款增長，但我們預計今年剩餘時間將出現溫和增長，因為我們希望避免利率競爭，轉而關注基於關係的核心存款。我們預計今年剩餘時間將密切監控運營支出，較上年 0% 至 3% 的增長率仍然合適。

Within noninterest income, a reduction of between 0% and 5% from the prior year remains appropriate. For the allowance for credit loss ratio, we still expect that to remain between 0.9% and 1% for 2023, barring changes in unemployment or other macro level items. The effective tax rate for the year is expected to be between 24.5% and 25% for the full year.

在非利息收入中，較上年減少 0% 至 5% 仍屬適當。對於信貸損失準備金率，我們仍預計 2023 年將保持在 0.9% 至 1% 之間，除非失業率或其他宏觀層面項目發生變化。全年有效稅率預計在24.5%至25%之間。

I will now ask our Chief Credit Officer, Pete Halberstadt, to make a few comments on his observations regarding loan asset quality and in particular, the commercial real estate loan portfolio. Pete?

我現在請我們的首席信貸官 Pete Halberstadt 就他對貸款資產質量，特別是商業房地產貸款組合的觀察發表一些評論。皮特？

Thanks, Denis. Good morning, everyone. Overall asset quality remains steady. Nonperforming assets ended the quarter at 0.13% of total assets, largely unchanged from March 31, 2023, and year end 2022. We are not seeing significant movement in risk-rating changes and early-stage delinquency levels remain low relative to the size of the portfolio. Through the first six months, performance has remained strong within the consumer lending portfolio, and we continue to see a shortage of housing supply throughout our markets.

謝謝，丹尼斯。大家，早安。總體資產質量保持穩定。本季度末不良資產佔總資產的 0.13%，與 2023 年 3 月 31 日和 2022 年年底相比基本沒有變化。我們沒有看到風險評級發生重大變化，而且相對於不良資產規模而言，早期拖欠水平仍然較低。文件夾。前六個月，消費貸款組合的表現依然強勁，我們仍然看到整個市場的住房供應短缺。

On the commercial side, we've maintained a diversified commercial real estate loan portfolio overall with a focus on multifamily as compared to other property types. Multifamily remains an attractive asset class for us with a seasoned portfolio that is well dispersed throughout our New England market.

在商業方面，與其他房產類型相比，我們總體上保持了多元化的商業房地產貸款組合，重點關注多戶住宅。對我們來說，多戶住宅仍然是一個有吸引力的資產類別，其經驗豐富的投資組合廣泛分佈在我們的新英格蘭市場。

Even with the potential for slowing year-over-year rental growth, we believe multifamily fundamentals remain sound within our markets strengthened by a diverse workforce and continued pressure on housing supply that yields stable demand.

儘管租金增長可能會逐年放緩，但我們相信，由於多元化的勞動力和住房供應的持續壓力，我們的市場中多戶型的基本面仍然良好，從而產生了穩定的需求。

As it relates to investment office properties nationally and within our own footprint, we are keeping a sharp eye on both sales activity and rental rates. While we recognize that we will not be immune to office trends nationally, we feel optimistic that our long history of conservative underwriting will help limit downside exposure.

由於它與全國范圍內以及我們自己的業務範圍內的投資辦公物業相關，因此我們密切關註銷售活動和租金率。雖然我們認識到我們無法免受全國寫字樓趨勢的影響，但我們樂觀地認為，我們悠久的保守承保歷史將有助於限制下行風險。

As a reminder, the weighted average loan to value on the total investment office portfolio remains strong at 56%, typically based on originated values and excluding any appreciation since loan inception. The office market is something that will need constant monitoring, and as such, we continue to dissect our portfolio at the loan level.

需要提醒的是，寫字樓投資組合的加權平均貸款價值仍保持在 56% 的強勁水平，通常基於原始價值，不包括自貸款開始以來的任何升值。寫字樓市場需要持續監控，因此，我們繼續在貸款層面剖析我們的投資組合。

Our lending teams have maintained close contact with our borrowers surrounding leasing activity. And as expected, more pressure is being seen within Boston as compared to the suburban office market. As noted in the past, our exposure to urban office is nominal at less than 3% of total loans.

我們的貸款團隊就租賃活動與借款人保持密切聯繫。正如預期的那樣，與郊區寫字樓市場相比，波士頓內部面臨著更大的壓力。正如過去所指出的，我們對城市寫字樓的敞口名義上不到貸款總額的 3%。

Moving to the provision for credit loss. In the second quarter, the provision consisted of two primary items. The first being the calculated reduction of the reserve due to slightly lower unemployment expectations. This reduction was offset by a slight increase in loan balances as well as prudent increases in qualitative factors given the environment, resulting in a small net provision overall.

轉向信用損失準備金。第二季度的撥備包括兩個主要項目。首先是由於失業率預期略有下降而計算出的準備金減少。這一減少被貸款餘額的小幅增加以及考慮到環境的定性因素的審慎增加所抵消，導致總體淨撥備規模較小。

These items kept the ACL ratio at 0.95%. We continue to expect the strong asset quality that you have seen from Cambridge Bancorp historically and the ending unemployment rate forecast within the CECL model for the fourth quarter of 2023 is estimated to be 4.08%.

這些項目使 ACL 比率保持在 0.95%。我們繼續預計劍橋銀行歷史上的強勁資產質量，並且 CECL 模型中 2023 年第四季度的最終失業率預測預計為 4.08%。

I will now turn the call back to Denis for conclusion.

我現在將把電話轉回給丹尼斯以得出結論。

Thanks, Pete. As I end my comments, I'd like to emphasize that while this has been a challenging period, we are optimistic about the opportunity ahead. We are investing in new talent acquisition and will benefit from the opportunity posed by the takeovers of SVB, Boston Private and First Republic.

謝謝，皮特。在我結束評論時，我想強調，雖然這是一個充滿挑戰的時期，但我們對未來的機會感到樂觀。我們正在投資於新的人才引進，並將受益於收購 SVB、Boston Private 和 First Republic 帶來的機會。

Finally, an observation of Cambridge Trust brand in New England. Recently, we brought on a commercial client whose offices are not located in our immediate footprint. What compelled them to make the change to Cambridge Trust from their previous bank was the safety and soundness of our institution, the expertise of our team, the exceptional personal attention they received, and the personalized solutions they needed, and we deliver. This is our value proposition to our clients.

最後是對新英格蘭劍橋信託品牌的觀察。最近，我們引進了一位商業客戶，其辦公室不在我們的直接範圍內。促使他們從之前的銀行轉向劍橋信託的原因是我們機構的安全性和穩健性、我們團隊的專業知識、他們受到的特殊個人關注以及他們所需的個性化解決方案，而我們提供了這些解決方案。這是我們對客戶的價值主張。

And we will now open the line for questions.

現在我們將開通提問熱線。

(Operator Instructions) Mark Fitzgibbon, Piper Sandler.

（操作員說明）Mark Fitzgibbon、Piper Sandler。

Thank you and good morning, guys. Denis, I wonder if you could share with us where did those four relationship bankers you brought onboard this quarter come from and how big was their book of business at their prior institutions?

謝謝你們，早上好，伙計們。丹尼斯，我想知道您能否與我們分享一下您本季度引入的四位關係銀行家來自哪裡？他們在之前機構的業務規模有多大？

It came from a variety of different institutions, First Republic, Silicon Valley, and then two smaller organizations. And I don't know the size of their book, but they certainly -- we were attracted to their capability and the contacts that they had in our marketplace and already seeing some of the benefit roll in from them.

它來自各種不同的機構，第一共和國、矽谷，還有兩個較小的組織。我不知道他們的書有多大，但他們當然 - 我們被他們的能力和他們在我們市場上的聯繫所吸引，並且已經看到他們帶來了一些好處。

And we think, in the coming months, it'll have a really nice benefit. And we're not done yet in terms of picking up talent. I've actually been disappointed in our inability to pick up talent on the innovation banking side, but we have been able to do more on the traditional relationship banking team.

我們認為，在接下來的幾個月裡，它將帶來非常好的好處。在人才招募方面我們還沒有完成。事實上，我對我們無法在創新銀行方面招募人才感到失望，但我們已經能夠在傳統關係銀行團隊上做更多的事情。

And then do you have a sense for the timing, when you will have a new CFO on board?

那麼您是否知道何時會有新的首席財務官上任？

Yeah. The recruiting process is underway. I would expect over the next -- certainly, the next three to six months, we will have a new CFO. Interview process starts in the next week.

是的。招聘過程正在進行中。我預計在接下來的三到六個月內，我們將有一位新的首席財務官。面試過程將於下週開始。

Okay. And then since we've got Pete on the call, Pete, I wonder if you could share with us what caused that 30-to-89-day delinquency bucket to pick up a bit this quarter? Was there any particular category or kind of spread across things?

好的。然後，既然我們接到了皮特的電話，皮特，我想知道您是否可以與我們分享一下，是什麼原因導致本季度 30 至 89 天的拖欠率有所上升？事物之間是否存在某種特定的類別或類型？

No, it's fairly isolated to one loan. Actually, not office, it's another -- an assisted living facility. The borrower has been struggling a little bit with cash flow. It's early stages now, but it just crossover. So one loan fairly isolated.

不，它與一筆貸款相當隔離。事實上，這不是辦公室，而是另一個——輔助生活設施。借款人的現金流一直有些困難。現在還處於早期階段，但它只是交叉。因此一筆貸款相當孤立。

Okay. And then maybe just if we could spend a minute on the office book, I know you guys have talked in the past about downtown Boston struggling a little bit with vacancy rates and I know you don't have a big book there. But are you seeing any signs of distress in your portfolio in that market? And also, I wondered if you could share with us where do you think values have gone on those office loans in the Greater Boston market?

好的。然後也許我們可以花一點時間在辦公簿上，我知道你們過去曾談論過波士頓市中心在空置率方面遇到了一些困難，我知道你們那裡沒有一本大書。但您在該市場的投資組合中是否看到任何陷入困境的跡象？另外，我想知道您是否可以與我們分享一下，您認為大波士頓市場的寫字樓貸款價值去了哪裡？

So Boston, in particular, we probably updated a few of the ones in downtown Boston. Again, it's a very limited pool. We're seeing in that 20% to 25% decline since loan inception that seems to align with what the market's seeing. I wouldn't say there's material changes within the portfolio. Not a lot of movement within risk ratings. We have a pretty low overall [criticized] ratio in office. It's really just one loan.

因此，特別是波士頓，我們可能更新了波士頓市中心的一些內容。同樣，這是一個非常有限的池。我們看到自貸款開始以來貸款額下降了 20% 至 25%，這似乎與市場的情況相符。我不會說投資組合中有重大變化。風險評級變動不大。我們辦公室的總體[批評]比例相當低。這實際上只是一筆貸款。

Okay. And then last question, Denis, is assuming the Fed follow the forward curve -- I know you think the margin's going to get into the low twos by the fourth quarter, do you think that's the low? Does the margin start to stabilize do you think in early 2024?

好的。最後一個問題，丹尼斯，假設美聯儲遵循遠期曲線——我知道你認為利潤率將在第四季度降至低兩位數，你認為這是低點嗎？您認為 2024 年初利潤率會開始穩定嗎？

So the rate of reduction will decline for the rest of this year. So you know we've had two tough quarters in terms of margin reduction running roughly 40 basis points a quarter. So we're guiding the margins at what, 2.26% GAAP. We're pointing towards the lower two. So the rate of decline will slow.

因此，今年剩餘時間的削減率將會下降。所以你知道，我們已經經歷了兩個艱難的季度，利潤率每季度下降約 40 個基點。因此，我們將 GAAP 利潤率指導為 2.26%。我們指向下面的兩個。所以下降的速度會減慢。

Looking into next year, I think we would continue to see margin compression unless we're successful in growing deposits obviously at a rate that is less than wholesale funding or that a lending picks up and we can achieve higher yield on loans. That's a challenge at the moment, particularly on the commercial real estate side.

展望明年，我認為我們將繼續看到利潤率壓縮，除非我們成功地以低於批發融資的速度明顯增加存款，或者貸款增加並且我們可以實現更高的貸款收益率。目前這是一個挑戰，特別是在商業房地產方面。

But yeah, Mark, it's conceivable. It could tip below the 2% range, but we're working hard to try and avoid that.

但是，馬克，這是可以想像的。它可能會低於 2% 的範圍，但我們正在努力避免這種情況。

Thank you.

謝謝。

Steve Moss, Raymond James.

史蒂夫·莫斯，雷蒙德·詹姆斯。

Good morning.

早上好。

Morning, Steve.

早上好，史蒂夫。

Denis, maybe just following up in terms of the competitive and pricing environment on loans. If you could just give a little more color as to what rate you're seeing competitors price different loans at.

丹尼斯，也許只是跟進貸款的競爭和定價環境。如果您能更詳細地說明您看到的競爭對手對不同貸款的定價是多少。

So it's not just pricing specific to commercial real estate. From our perspective, it isn't just pricing, it's also structure. We're seeing amortization lengthen, loan to values go up. There's less equity being put into the opportunities. So that's problematic for us. And then when you add to that pricing, in some case, Pete, in the fives in commercial real estate, that's tough.

因此，這不僅僅是針對商業房地產的定價。從我們的角度來看，這不僅僅是定價，還有結構。我們看到攤銷期限延長，貸款價值上升。投入到這些機會中的資金較少。所以這對我們來說是個問題。然後當你加上這個定價時，皮特，在某些情況下，商業房地產的定價是五美元，這很困難。

You're dealing with that. So we are not attracted to that kind of growth. And one would hope that some more logic prevails in the market, but this happens from time to time. So that's the one that specifically is problematic.

你正在處理這個問題。所以我們不會被這種增長所吸引。人們希望市場上能有更多的邏輯，但這種情況時有發生。這就是具體有問題的一個。

The -- in the C&I space, there's better pricing. Pete, you agree with that?

- 在工商業領域，定價更優惠。皮特，你同意嗎？

Yeah.

是的。

And we're having some nice success in the innovation banking category. I think that will continue here through the rest of the year. We're having a lot of conversations in that area. And for obvious reasons with some of the bank failures that happened, we think that we can pick up some nice client business in that category and that's nicely yielding.

我們在創新銀行領域取得了一些不錯的成功。我認為這種情況將持續到今年剩餘時間。我們在該領域進行了很多對話。由於發生的一些銀行倒閉的明顯原因，我們認為我們可以在該類別中獲得一些不錯的客戶業務，而且收益很好。

Okay. That's helpful. And in terms of just the -- on the innovation banking side, you mentioned growth is likely to continue here. Just kind of curious, the dynamics you're seeing there that's driving the growth and just where the loan pricing is for that portfolio?

好的。這很有幫助。就創新銀行方面而言，您提到這裡的增長可能會持續下去。只是有點好奇，您看到的推動增長的動態以及該投資組合的貸款定價在哪裡？

So some of it, I put it in two categories. And Pete, you jump in here if you -- you have other opinions, please. One is, what's happening -- there's less VC money in the space today than there was a year ago or two years ago. So companies may be inclined to borrow more to help from a cash flow perspective. One would hope that the VC funding comes back in time.

所以其中一些，我把它分為兩類。皮特，如果您有其他意見，請跳到這裡。一個是，正在發生的事情——今天這個領域的風險投資資金比一年前或兩年前要少。因此，從現金流的角度來看，公司可能傾向於借更多的錢來提供幫助。人們希望風險投資資金能及時收回。

And then the second reason is clearly there's been some disruption in the marketplace with the unfortunate demise of Silicon Valley Bank. And that organization has gone, so clients are looking for other options. Some of the talent went to larger institutions. And so we are an option.

第二個原因顯然是，隨著矽谷銀行的不幸倒閉，市場出現了一些混亂。該組織已經消失，因此客戶正在尋找其他選擇。一些人才去了更大的機構。所以我們是一個選擇。

We've been in the space for now seven years and we're building credibility day by day, borrower by borrower, private equity firm by private equity firm. And it's an area that we're definitely interested in and intrigued in for future growth. It's right here in our home territory and we believe we got a lot to offer in the space, not just on the banking side but also on the wealth management side. So we're excited about the potential there and really looking forward to further growth.

我們已經進入這個領域七年了，我們正在日復一日地建立信譽，一個又一個借款人，一個又一個私募股權公司。這是我們絕對感興趣並且對未來增長感興趣的領域。它就在我們的家鄉，我們相信我們可以在這個領域提供很多東西，不僅在銀行方面，而且在財富管理方面。因此，我們對那裡的潛力感到興奮，並真正期待著進一步的增長。

Pete, would you add anything to that?

皮特，你能補充點什麼嗎？

I think that's fair representation. I'd say, the investment itself is paying off now. Seven years in this space have a bigger market presence, so we're seeing a lot more activity even predating the March just in terms of borrowers reaching out and that market presence.

我認為這是公平的代表。我想說，投資本身現在正在得到回報。在這個領域的七年裡，我們已經擁有了更大的市場佔有率，因此，即使在三月份之前，我們也看到了更多的活動，就借款人的接觸和市場佔有率而言。

Okay. That's helpful. And one last question for me. Denis, I believe you mentioned that you're using derivatives to adjust the balance sheet here, but maybe just a little more color as to what -- how you're making your adjustments and the notional value of any adjustments?

好的。這很有幫助。還有最後一個問題要問我。丹尼斯，我相信您提到您正在使用衍生品來調整資產負債表，但也許只是更多地說明一下您如何進行調整以及任何調整的名義價值？

Yeah. I think the notion was -- I don't have that in front of me, Steve. But somewhere around 500 million we have in derivatives here and we continue to add where appropriate. That is, protecting against the up. It's essentially their pay-fixed swaps that are helping to protect against the up. It doesn't eliminate all of the upward rate sensitivity, but it certainly protects to a degree. So we've been adding those overtime and did some more here in the second quarter.

是的。我認為這個想法是——史蒂夫，我面前沒有這個。但我們這裡有大約 5 億的衍生品，並且我們會在適當的情況下繼續增加。也就是防範上行。本質上，他們的固定報酬掉期合約有助於抵禦上漲風險。它並沒有消除所有上行利率的敏感性，但它確實在一定程度上起到了保護作用。因此，我們一直在增加加班時間，並在第二季度做了更多的工作。

Okay. Great. Appreciate all the color. Thank you very much. [Cheers].

好的。偉大的。欣賞所有的顏色。非常感謝。 [乾杯]。

Thanks, Steve. Sure.

謝謝，史蒂夫。當然。

(Operator Instructions) Chris O'Connell, KBW.

（操作員說明）Chris O'Connell，KBW。

Morning. I was hoping to start off on the deposit side. Obviously, a tough environment and it seems like you saw some mix shift out of noninterest-bearing here into the second quarter. How are you thinking about those flows? Did they continue to [outflow] or mix out of noninterest bearing in -- so far in July? And do you think that that mix shift is slowing down to stopping or is it something that's going to persist in the back half of the year?

早晨。我希望從存款方面開始。顯然，這是一個艱難的環境，而且您似乎看到了一些混合變化，從無息到第二季度。您如何看待這些流量？ 7 月份到目前為止，它們是否繼續[流出]或因不計息而混合？您認為這種混合轉變是否正在放緩直至停止，還是會在今年下半年持續存在？

It's definitely slowing, Chris. But look, safety is definitely an element of a conversation with clients today in a way that it wasn't a year ago. So it's one of the sort of elements of the arsenal of things you talk to clients about. And for some clients, they want an insured product. And so we're facilitating that for them acting in their best interest, so.

克里斯，這絕對是在放緩。但你看，安全絕對是當今與客戶對話的一個要素，而一年前則不然。所以這是你與客戶談論的事情的元素之一。對於一些客戶來說，他們想要有保險的產品。因此，我們正在為他們提供便利，以符合他們的最大利益。

But just as the level of discussion around rates has slowed somewhat, the level of discussion around safety and stability in the industry, I would pose, has slowed and certainly for us. So I would expect that mix shift to slow.

但正如有關費率的討論程度有所放緩一樣，我認為，有關行業安全性和穩定性的討論程度也有所放緩，對我們來說當然如此。所以我預計混合轉變會放緩。

Okay. Got it. And as far as your strategy on a go-forward basis regarding the use of wholesale or brokered CDs versus wholesale borrowings, I noticed you shifted more to the borrowing side and let some of those higher cost CDs run off this quarter. How are you thinking about the trade-off in using each of those products for funding going forward?

好的。知道了。就您關於使用批發或經紀 CD 與批發借款的未來戰略而言，我注意到您更多地轉向借款方面，並讓一些成本較高的 CD 在本季度耗盡。您如何考慮使用這些產品進行未來融資的權衡？

It comes down, really, to cost, which is the best -- better economic decision between the two. That's really what comes down to it. And from time to time, and Joe, you correct me if you feel differently. But the brokered market can get out ahead of the Federal Home Loan Bank curve and vice versa. So it's really looking at the best economic solution.

實際上，這取決於成本，這是兩者之間最好的、更好的經濟決策。歸根結底就是這樣。喬，如果你有不同的感覺，你會時不時地糾正我。但經紀市場可以領先於聯邦住房貸款銀行曲線，反之亦然。所以它實際上是在尋找最佳的經濟解決方案。

Do you agree, Joe?

你同意嗎，喬？

Absolutely, Denis.

當然，丹尼斯。

Got it. And then I don't know if you mentioned earlier, but for the innovation banking space, on those new loan originations, where are you seeing that pricing now?

知道了。我不知道你之前是否提到過，對於創新銀行領域，在那些新的貸款發放上，你現在在哪裡看到這個定價？

It's fairly competitive. It's in the sevens.

這是相當有競爭力的。這是七人制。

Yeah. Sevens plus.

是的。七人制加。

Seven plus, some in the eights.

七個以上，有些是八個。

Depending on the credit.

取決於信用。

Great. And as far as what you're seeing over the course of the back half of '23 and '24 on the loan side that is maturing, where are those yields in general coming off that?

偉大的。就你在23年和24年下半年看到的正在到期的貸款方面來看，這些收益率總體上在哪裡？

I don't know specifically, Chris. I mean we could follow up with you. But do you have a sense, Pete, from just what you're seeing?

我具體不知道，克里斯。我的意思是我們可以跟進你。但是，皮特，你對你所看到的有感覺嗎？

Similar to what we posted on office, we actually don't have that much of the portfolio maturing in the next two years. So it's a small subset that's maturing in the next two years.

與我們在辦公室發布的內容類似，我們實際上沒有那麼多投資組合在未來兩年內到期。所以它只是一個小子集，將在未來兩年內成熟。

Yeah. But we can follow up with you with a sense of what the amortization portfolio will be (multiple speakers)

是的。但我們可以與您聯繫，了解攤銷組合的情況（多個發言者）

Just trying to get a sense of -- for the CRE, obviously, that you guys have on the books already, that is coming due. Obviously, it sounds like you guys are looking to put on some of the new CRE at the 5% range here. But for the credits that are refinancing and maturing, that you already have within the portfolio, where is the pricing, I guess, that you can get on those credits if you choose to refi those?

只是想了解一下——對於 CRE，顯然，你們已經在書本上有了，這即將到期。顯然，聽起來你們希望在這里以 5% 的價格推出一些新的 CRE。但是，對於您在投資組合中已經擁有的再融資和到期的信貸，我想，如果您選擇再融資，您可以獲得這些信貸的定價在哪裡？

So would be rolling off is probably in the threes, the mid threes. And for smaller opportunities, you could be achieving in the mid sixes. Pete, do you agree with that?

因此，滾動可能是三分制，三分制中間。對於較小的機會，你可能會在六點半左右取得成就。皮特，你同意嗎？

Yeah.

是的。

Got it. And appreciate the guidance and the color on the expense side here. And with the convergent being done this past quarter, is it fair to say that next quarter still have expenses down even with some of these new hires and that puts you into the guidance range as things flatten out into the fourth quarter?

知道了。並欣賞這里費用方面的指導和色彩。隨著上個季度的收斂工作完成，是否可以公平地說，即使有一些新員工，下個季度的費用仍然會下降，並且隨著第四季度情況趨於平緩，這將使您進入指導範圍？

So excluding the non-operating -- excluding the merger charges, that's pretty flat down modestly, I think. Pretty flat for the rest of the year compared to the second quarter. And that should get us into that range.

因此，我認為，排除非經營性費用——排除合併費用，這相當平穩。與第二季度相比，今年剩餘時間相當持平。這應該讓我們進入這個範圍。

And was there any true ups or accruals happening in the FDIC line this quarter or is that a good run rate?

本季度 FDIC 額度是否有任何真正的上漲或應計費用，或者運行率是否良好？

Current quarter should be a good run rate.

當前季度的運行率應該不錯。

Okay. Thanks. And then as you guys are well capitalized here and there's not too much balance sheet growth it seems like in the near future, how do you guys think about the capital management from here and specifically, is there any opportunity to be doing a buyback over the next couple of quarters?

好的。謝謝。然後，由於你們這裡的資本充足，並且在不久的將來似乎沒有太多的資產負債表增長，你們如何看待這裡的資本管理，特別是，是否有機會進行回購接下來的幾個季度？

I think the likelihood is low, certainly over the next quarter maybe we'll get a greater clarity around outlook for recession and that sort of thing as we head through the rest of this year. But I think we want to be prudent here and retain capital until there's greater certainty.

我認為這種可能性很低，當然，在下個季度，當我們度過今年剩餘時間時，我們可能會更加清楚地了解經濟衰退的前景以及此類事情。但我認為我們希望在此保持謹慎並保留資本，直到出現更大的確定性。

And then yeah, I would absolutely welcome perhaps heading into next year buying back stock.

然後，是的，我絕對歡迎明年回購股票。

Great. All right. That's all I have for now. Thanks for taking my questions.

偉大的。好的。這就是我現在所擁有的一切。感謝您回答我的問題。

Thanks, Chris.

謝謝，克里斯。

And this concludes our question-and-answer session. I would like to turn the conference back over to Denis Sheahan for any closing remarks.

我們的問答環節到此結束。我想將會議轉交給丹尼斯·謝漢 (Denis Sheahan) 發表閉幕詞。

Thanks, everybody. We look forward to talking to you again after our next quarterly report.

謝謝大家。我們期待在下一份季度報告後再次與您交談。

And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。