Financial Institutions Inc
NASDAQ:FISI
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Financial Institutions Inc
Earnings Call Analysis
Summary
Q3-2023
Amid shifting market dynamics, the company reported subdued income due to lower commercial loan activity while managing a modest uptick in noninterest expenses under 3%. They anticipate normalized TCE ratios and tangible book value over time. A key strategic move involved selling mortgage-backed securities and reinvesting in higher-yielding bonds, expected to benefit after-tax income by $1.4 million annually, with a 2-year earn-back. Full-year 2023 guidance adjustments reflect a net interest margin (NIM) of 295 to 300 basis points, a decrease from previous estimates, and a reduced projection of net charge-offs to 15-20 basis points. An effective tax rate of 15-16% is forecasted, decreasing 200 basis points from prior guidance. Noninterest income expectations have been lowered to a single-digit decline, acknowledging headwinds in investment advisory fees and Banking-as-a-Service (BaaS) implementation. Leadership changes include promoting Jim Gluski to President of Career Capital, succeeding Tom Hamlin who moves to an executive role, and appointing Blake Jones as Chief Marketing Officer, signaling a renewed focus on strategic growth across diverse business lines.
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Hello, and welcome to today's Financial Institutions, Inc. Announces Third Quarter 2023 Results. My name is Elliot, and I will be coordinating your call today. [Operator Instructions]
I'd now like to hand over to Kate Croft, Director of Investor Relations. The floor is yours. Please go ahead.
Thank you for joining us for today's call. Providing prepared comments will be President and CEO, Marty Birmingham; and CFO, Jack Plants. They will be joined by additional members of the company's finance and leadership teams during the question-and-answer session.
Today's prepared comments and Q&A will include forward-looking statements. Actual results may differ materially from forward-looking statements due to a variety of risks, uncertainties and other factors. We refer you to yesterday's earnings release and investor presentation as well as historical SEC filings, which are available on our Investor Relations website for a safe harbor description and a detailed discussion of the risk factors relating to forward-looking statements.
We'll also discuss certain non-GAAP financial measures intended to supplement and not substitute for comparable GAAP measures. Reconciliations of these measures to GAAP financial measures were provided in the earnings release filed as an exhibit to Form 8-K. Please note this call includes information that may only be accurate as of today's date, October 27, 2023.
I'll now turn the call over to President and CEO, Marty Birmingham.
Thank you, Kate. And good morning, everyone, and thank you for joining us today. Third quarter results were highlighted by healthy deposit growth and a continuation of stable credit quality metrics, both of which position us well for the remainder of 2023 and give us confidence in our ability to effectively navigate the operating environment in 2024, including capitalizing on opportunities.
Third quarter net income available to common shareholders was $13.7 million or $0.88 per diluted share, down from $14 million or $0.91 per share in the second quarter of 2023 and in line with the prior year results of $13.5 million or $0.88 per share. Like much of the country, competition for deposits remains fierce in our markets, and I'm incredibly proud of our team's ability to drive 6% deposit growth during the quarter. The fact that this growth was led by core nonpublic deposits is all the more noteworthy with retail, Banking-as-a-Service or BaaS, and commercial, all contributing.
A significant driver of nonpublic deposit growth was the 5% money market account campaign that you'll recall we launched in late July. In addition to helping us deepen relationships with existing customers, we have introduced more than 800 new retail customers to Five Star Bank and our relationship-based approach to community banking through this campaign. These new customers brought in approximately $72 million in balances through October 14. In addition to balances deposited by our long-standing customer base. We plan to continue the campaign through mid-November providing a strong start to the fourth quarter.
BaaS also gained momentum during the third quarter with approximately $77 million of related deposits at quarter end. We consider these to be an attractive alternative to higher cost wholesale funding. While these deposits have come out slower than we originally anticipated, our approach to onboarding new partners includes a thoughtful governance process before transitioning them on to our BaaS platform. We look forward to continued growth in 2024 and beyond as we build out our pipeline of Fintech and nonbank partners.
Our Commercial Banking franchise also supported deposit growth in the quarter. As we implemented changes earlier in the year to incentivize our commercial lenders to focus on deposit gathering initiatives. Public deposit balances at September 30, 2023, were up compared to the end of the second quarter, largely reflecting seasonal inflows that we typically experienced late in the third quarter. Reciprocal deposits also grew during the quarter as this continues to be an attractive option affording our larger customers the benefit of FDIC insurance on accounts greater than $250,000.
Setting aside our third quarter deposit growth, the latest data from the FDIC summary of deposits underscores the strength of our position in our markets. Based on June 30, 2023 deposit balances, our company ranked top 3 and 10 of the 14 upstate New York counties where we reported deposits. In addition, we are among the top 10 financial institutions serving Area Monroe Counties, Home to Buffalo and Rochester, respectively. Growth in these cities is an important element of our Community Bank franchise growth strategy and accordingly, our recent money market campaign was heavily focused on these markets.
Total loans were relatively stable on a linked quarter basis at $4.4 billion, as modest growth in residential and commercial lending was partially offset by a decline in our indirect portfolio. Other consumer loans were also up slightly, reflecting a relatively small amount of solar panel financing related to a BaaS client focused on climate positive banking.
With respect to commercial lending, as anticipated, CRE growth slowed significantly in the third quarter due to a combination of softer demand, a bit a challenging economic environment, higher pricing hurdles in our effort to moderate production. Competition remains strong for C&I loans in our markets, but we are seeing opportunities from prospects looking for a true local community bank.
Our residential loan portfolio grew during both the 3 and 12 months ended September 30, 2023, despite the higher interest rate environment and tight housing inventory that has impacted home sales in our market. We continue to see success through our partnerships with select new homebuilders in the Western New York region.
Consumer indirect loan balances declined again in the third quarter as expected, primarily as a result of our internal efforts to moderate production. While we did see an uptick in charge-offs associated with this portfolio in the third quarter, I would remind you that our second quarter indirect charge-offs were exceptionally low as a result of strength in recoveries. We remain comfortable with this asset class and the quality of our portfolio, given the deep experience of our management team and long track record of this line of business. Third quarter consumer and direct charge-offs were partially offset by a commercial recovery as outlined in our earnings press release, resulting in annualized NCOs to average loans of 14 basis points.
Our commercial portfolio asset quality remains sound, and we are confident in the strength of the underlying credits. Our relationship managers have been and continue to be in close contact with their customers than what has been a volatile operating environment. And we recently completed additional internal stress testing on loans larger than $1 million within our multifamily and office portfolios set to mature in the next 24 months. As part of this analysis, we ran a variety of scenarios stressing loans larger than $1 million in these segments with NOI downside and higher interest rates, even above where current rates have transitioned in the last 12 to 18 months. Under these scenarios, the large majority continue to have debt service coverage ratios at or greater than 1:1 coverage. After individually analyzing any debt that would fall below that threshold, we found that Guarantor strength, access to capital, project progress or completion and the overall strong quality of sponsors all reinforce our confidence. We anticipate incorporating this focused exercise into our management routines for the foreseeable future.
We remain comfortable with our allowance coverage ratio with an allowance for credit losses to total loans of 112 basis points and 521% of nonperforming loans as of September 30.
This concludes my introductory comments, and it's now my pleasure to turn the call over to Jack for additional details on results and updates on our guidance for 2023.
Thank you, Marty. Good morning, everyone. As Marty noted, net income was down modestly from the linked quarter due in part to higher funding costs as we work to successfully defend and grow our deposit base in the current interest rate environment. Results were also impacted by lower noninterest income and a modest increase in noninterest expenses that were partially offset by a lower level of provision in the most recent quarter.
Net interest income of $41.6 million was down $660,000 from the second quarter of 2023, as our overall cost of funds increased 27 basis points during the quarter to 230 basis points. We continue to experience margin compression in the third quarter, though at a more moderate pace. Net interest margin on a fully taxable equivalent basis was 291 basis points for the quarter compared to 299 basis points in the linked quarter.
Relative to the magnitude of FOMC rate increases that occurred in 2022 and so far in 2023, our total deposit portfolio has experienced a cycle-to-date beta of 38% and including the cost of time deposits. Excluding the cost of time deposits, the nonmaturity deposit portfolio had a beta of 18%. Noninterest income totaled $10.5 million in the third quarter, down $980,000 on a linked quarter basis. While our earnings release provides additional detail on our diverse fee-based revenue sources, I would like to touch on a few key areas this morning.
Our investment advisory and insurance businesses are the largest contributors of noninterest income, making up about 40% in the third quarter. Insurance income increased as a result of the timing of commercial renewals as well as business development. Declines in our investment advisory income were attributable to the third quarter market downturn and the impact on AUMs coupled with our strategic decision to focus on wealth management services for high net worth individuals as opposed to our retail branch network. While this has negatively impacted transaction-related fees in the near term, we believe this move will support enhanced profitability in this line of business moving forward.
Swap income was down as expected, given our lower level of commercial loan activity during the quarter. Noninterest expenses were up less than 3% on a linked-quarter basis as higher salaries and benefits, occupancy and equipment, computer and data processing and FDIC insurance expenses were partially offset by lower professional services expense.
Income tax expense was $2.4 million in the quarter, representing an effective tax rate of 14.8% and relatively consistent with the linked quarter. Our accumulated other comprehensive loss stood at $161.4 million at September 30, 2023. We reported a TCE ratio at September 30 of 5.25% in tangible common book value per share of $20.69. Excluding the AOCI impact, since December 31, 2021, the TCE ratio and tangible common book value per share would have been 7.69% and $30.31, respectively. We continue to expect these metrics to return to more normalized levels over time given the high credit quality and cash flow nature of our investment portfolio.
Earlier this month, we sold approximately $54 million of agency mortgage-backed securities at an after-tax loss of $2.8 million, reinvesting the proceeds into higher-yielding Ginnie Mae and Freddie Mac bonds. The after-tax income benefit of $1.4 million annually translates to an earn-back of 2 years. I would now like to provide an update on our outlook for 2023 in key areas.
We now expect full year NIM of 295 to 300 basis points, 5 basis points lower than previous guidance, given the impact of higher interest rates on our funding base. Our forecast assumes Fed activity remaining muted for the remainder of the year. Given the continued strength of our credit quality metrics, we expect full year net charge-offs of between 15 and 20 basis points, 10 basis points lower than previous guidance. We now expect the 2023 effective tax rate to fall within a range of 15% to 16%, down 200 basis points from previous guidance. Reflecting the impact of the amortization of tax credit investments placed in service in the current quarter and recent years, coupled with the impact of revised margin guidance on pretax income for the remainder of 2023.
We are lowering our guidance for flat noninterest income to a single-digit decrease given the pressures we have seen on investment advisory fees and slower onboarding of FaaS initiatives than anticipated. This guidance excludes the impact of securities gains or losses, limited partnership income and nonrecurring items such as enhancement on company-owned life insurance and gains on the sale of indirect loans. Our expectations for mid-single-digit full year expense growth, mid-single-digit growth in nonpublic deposits, low double-digit growth in loans, and an ROA between 85 to 95 basis points remain unchanged.
That concludes my prepared remarks and updated guidance. I'll now turn the call back to Marty.
Thank you, Jack. We were off to a solid start in the fourth quarter and remain focused on balance sheet management as well as opportunities to enhance margin and manage noninterest expenses. We have an incredibly strong team in place and several promotions and appointments we announced recently underscore that. Within key internal functions like information security and accounting, we have identified experienced and well-prepared internal candidates ready to step into leadership roles.
In addition, just this week, we announced a leadership succession at our wealth management subsidiary, Career Capital. [ Jim Gluski ], who joined our firm in mid-2022 after more than 2 decades in private banking with several large U.S. banks has been promoted to President. He succeeds longtime leader, Tom Hamlin, who transitions to the role of Executive Vice President of Wealth Management and Co-Chief Investment Officer. We believe that this new leadership structure allows [indiscernible] Capital to continue serving its wealth management, retirement plan and institutional services clients at the highest level, while positioning us for continued growth moving forward, following the merger of our 2 RIA subsidiaries earlier this year.
And finally, in addition to these internal appointments, we recently hired Blake Jones as Chief Marketing Officer. She brings more than 20 years of branding and communications experience and will lead both marketing and analytics. On an enterprise-wide basis, focusing on strategy, branded performance marketing, along with customer and prospect insights. With diversified and complementary lines of business, including consumer and commercial banking, wealth management, insurance and BaaS, our company has excellent opportunity to deepen relationships with existing clients and attract new customers across our footprint and beyond.
Operator, that concludes our prepared remarks. Please open the call for questions.
[Operator Instructions] First question comes from Nick Cucharale with Hovde Group.
Just a question on the Banking-as-a-Service strategy. Just referencing Slide 5, there was a large step-up in total clients from June to September. Do you anticipate a period where you slow client relationships and focus more on monitoring and cultivating the existing relationships? Or do you have capacity to continue adding partnerships at a strong pace?
So thanks for pointing that out because we've got some assumptions built into our balance sheet and related deposits. for the year, and that's being impacted by the timing of onboarding clients. And we have spent a lot of time upfront ensuring that our management and our governance routines as well as our controls are right for this line of business as it's new activity. So that has impacted our timing overall of onboarding clients to our platform. We're very comfortable with the clients that we've added to this point. But Sean Willett is here, who leads that line of business for us. I'd ask you to comment, please.
Thank you for the question. I would just say that we have capacity to continue to bring on clients. But that being said, as Marty has indicated, we will continue to be hyper selective and ensure that those opportunities fit with our risk appetite and the thesis-driven approach that we've taken to client selection.
And just a follow-up there. When do you anticipate a material impact on the noninterest income side from these partnerships? Or is that already occurring?
I can take that one. So this is Jack. I can cover that first, Sean. Our first strategy was to have an impact on the balance sheet outstandings, which we've seen through deposits which were up about $78 million in the quarter in this line of business. And that is something that I think is critical to franchise success, particularly in this environment, given that they have lower cost relative to funding that we're raising in our current market footprint.
And on the noninterest income side, that's been slower to translate as the fee sharing is coming in a little bit later from the deposits. I would expect to see some marginal contribution in the fourth quarter and beyond. But I'll ask Sean to discuss the partnerships that we're onboarding and how they can contribute to future periods.
Yes. So I think you're spot on, Jack, in terms of the opportunities that we're going after our focus is Deposit acquisition. And then with that, as we start to see activity from those partners, then we start to see contribution not only on the platform side, but also on interchange income.
That's very helpful. Maybe just a follow-up on the NIM after the revised guidance. I understand it's too early for 2024 commentary. But can you help us think about the direction of the margin as we turn the page into new year?
Yes, Nick, this is Jack again. So we've had some success with repositioning the liability side of the balance sheet during the quarter. We were successful with the retail money market campaign coming on board, success in the BaaS deposits. growth in commercial deposits, which allowed us to pay off a little over $300 million of higher cost wholesale borrowings. We'll see the full quarter benefit of that in the fourth quarter as well as the benefit of the securities repositioning, which should help to limit the margin compression that we've observed throughout this year and quarter-to-date. Now it appears to be slowing, and it certainly feels like we're approaching a bottom. Our guidance that we provided for full year, which was revised to 295 to 300 basis points, I would assume that if we reach a low point of 280 basis points in the fourth quarter, that would put us at the lower end of our full year guidance of 295 basis points. So it certainly feels like we're approaching the bottom there.
That's helpful. And then lastly, do you have the AUM for Courier at September 30? I'm just trying to gauge the impact of the weaker equity markets in the quarter.
Yes, it was $2.7 billion.
Our next question comes from Damon DelMonte with KBW.
Just wanted to ask a couple of questions here. Starting off with probably for Jack. On the securities portfolio, we saw a pretty decent decline this quarter. I think in the past, you've given projected cash flow expectations. Could you just remind us of what your quarterly cash flows are and kind of your thoughts on where the security settle in as a percentage of average earning assets?
Yes. The cash flow that we're projecting is $140 million annually on the securities portfolio. And relative to the percentage of assets, I look at the securities portfolio as a collateral source for our public deposit base. But we also have alternative sources available through Federal Home Loan Bank. Municipal lines of credit, which we've been able to bolster our position there through additional collateral that's been posted. So I think that we can drift a little bit lower on the securities portfolio outstanding as we take cash flow off and let it reinvest into loan outstandings and then we'll use alternative sources to support our public deposit base.
Got it. That's helpful. And then I guess, Marty, can you just give a little bit more perspective on your outlook for loan growth here kind of going into the fourth quarter? Do you think things kind of stay moderate through year-end and kind of given the forward look on pipelines, do you think things kind of pick up as we move into -- move in and through 2024?
Definitely, as we're continuing our conversation this morning, Damon, we've seen loan growth moderate in the second half of the year. That will continue through the fourth quarter. And we are in our midst of our planning season for 2024, and we're looking at a lot of different scenarios. As we've had a hard flood year as an industry this year, we want to make sure as we drive loan growth that we are driving acceptable spreads, risk-adjusted returns, saving space on our balance sheet for those where we've got the deepest relationship. So my comment at this point will be that loan growth will be moderate in 2024, moderated.
Got it. Okay. And then just lastly, kind of broadly on credit. Are there any concerns throughout the portfolio I know there's a little bit of an uptick in direct auto. That's not a real meaningful concern at this point. But just kind of like your commercial real estate portfolio, any areas there like office where you might be seeing a little bit of degradation there?
We've not seen any degradation to this point. In my prepared comments, I did talk about a routine that we're going to continue to build on, which is taking a deep dive, deeper dives into our commercial real estate portfolio and across those loan categories. So we've done some pretty strong sensitivity relative to those loans that we have underwritten in a lower interest rate environment and sensitizing them to the current rate environment plus more interest rate, less net operating income and looking at those outcomes. So we feel very good relative to a severe stress downside scenario, where we end up with most of that analysis showed that we are at or around 1 debt service coverage or involved, and we'll monitor it. And as we think about those with tighter debt service going forward and maturities in the next 24 months, we're supported by our fundamental underwriting approach, which includes personal recourse and dealing with sponsors with long track records and access to alternative -- their own capital and alternative forms of capital. We have seen our CRE portfolio continue to cycle off some of our construction loans cycling through to the agency funding. So, so far, so good, but we are going to continue to monitor it. with discipline and consistency.
Our next question comes from Alex Twerdahl with Piper Sandler.
A couple of questions. First, Marty, I think in your prepared remarks, you said something along the lines of being ready to capitalize on opportunities I was just curious, is that just a blanket statement? Or is there some specific opportunities that you're alluding to?
So it's the fundamentals of operating our full-service community bank in terms of consumers who are open to switching and making a change. We've had good success with our money market offering and bringing in average balances of close to $100,000 with those that have chosen to take advantage of our offer and that provides real nice upside to driving relationship and showing them how we do business versus where they come from. And then as well, I think on the commercial and industrial, there is significant opportunity for us relative to long-standing, solid companies and then operating in our footprint that have experienced unsatisfactory interactions with their existing banks. And it seems to me, as I think about it, we're building some momentum there. which is consistent with where I think the industry and certainly we're trying to emphasize our commercial activity given the more higher probability to have full relationships.
Got it. And then the securities transaction that you alluded to, Jack, seems like a good start. I'm just curious, is that sort of the full capacity that you're willing to take on right now? Or are you sort of in the midst of a more deep dive on to the securities portfolio? and looking for more opportunities that could potentially help to really stabilize the NIM heading into 2024.
Yes. Thanks, Alex. We continue to look at more opportunities there. I think this is the start of the first repositioning that we could see.
Okay. And then can you just remind us sort of -- I know you've done a bunch of the wealth business merged the businesses together, made some changes to leadership, Sort of where are we in that sort of restructuring process. And in terms of the revenue, it seems like -- I think you sort of said we're sort of backing up to get a running start, sort of rejiggering the model there. Sort of what the outlook might be? And then also, are there some expense considerations that we should be thinking about as well.
Jack, go ahead.
Yes. So the new leadership change there with [ Jim Gluski ] was meant to provide more of a strategic focus on building out the sales culture at the institution, to cultivate more clients through new wealth managers and more of an aggressive approach to the client base. Typically, our new business was achieved through referrals from existing clients. So I would expect to see some growth there across the institutional base and more of the high net worth individuals over the coming time frame. Those institutional clients do take time to come on board through an RFP process, but we do have expertise on that front.
And on the expense side, we've operated that business in a pretty lean infrastructure historically. So I would expect that we're just going to continue to drive revenue there rather than cut expenses in wealth management.
Okay. And then you talked a bunch about this, the 5% money market campaign. Does that -- I mean is there a point where that 5% clips down to a different rate? Or like how should we be thinking about that kind of money from a modeling standpoint in terms of how it could impact deposit betas?
Alex, that 5% rate was guaranteed for a 12-month time frame, which we thought was reasonable given the Fed's outlook on where they expect to maintain rates over the next year. And afterwards, we have the ability to adjust that to market levels.
[Operator Instructions] We now turn to Matthew Breese with Stephens.
I was hoping, along with your NIM comments, if you could provide the monthly NIM throughout the quarter, specifically the September NIM? And you made a comment that if we come in at [ 280 ] for the fourth quarter, then we'd be at the low end of the full year range. I just wanted to get a sense for whether or not you thought that was a realistic outcome.
Yes, I do think that [ 280 ] is on the downside or realistic outcome. So that was what guided to our [ 295 ] range. September came in at [ 288 ]. So I think that's a good proxy for outlook for the remainder of the quarter.
And as you look out into '24, I guess where do you see the point at which deposit costs stabilize? And where do you see a point at which the NIM begins to stabilize.
So we haven't completed the 2024 budget yet, but anecdotally, I feel like we're approaching the bottom from a margin perspective. There continues to be pressure in our deposit space for commercial accounts and public deposits through what's offered by [indiscernible] class and local government investment pools. But when we think about our balance sheet positioning overall, we have $1 billion of cash flow that comes off the portfolio and is repricing at current market rates. And given the Fed outlook that we maintain this current level, to me, that feels like we have stability in our margin over the next 12 months.
Great. Okay. Maybe moving on to the indirect auto book. Could you just remind us of the underlying FICO scores within that book? And maybe what the lower kind of quartile FICO scores are? And then what caused the pick up each charge-offs? 92 bps is higher than historical averages. I also wanted to get a sense for what kind of early stage delinquencies for this book look like today versus prior quarters?
So, Matt, you've watched our company for a while and seen several cycles. So our underwriting of the remains consistent, 65-or-so percent. 60% to 65% is what we call Tier 1, 700 above FICO score. 680 and above gets us to 92% of our originations. We're not a subprime lender. I'll have to ask for some assistance on the lower quartile, but it's not really material. We've been focused on credit fundamentally. We -- in terms of the delinquency in the uptick, some of that deals with the pressure consumers are feeling. Some of it deals with the timing of liquidation of collateral in underlying collateral values in terms of our charge-offs. But Jack, do you have anything further that you could add to the response?
Yes. When we look at the credit metrics of the portfolio, as far as FICO is concerned, about 86% of our portfolio is 670 and above and 65% of our portfolio is over 700. Does that answer your question?
Yes. That's great color. Do you have the early-stage delinquencies to 30 to 89 days past due for auto. And I wanted to get a sense for whether or not given the persistence of some of the challenges you cited, Marty, if we should expect this level of charge-off to continue for the time being.
Matt, this is Jack. I'll take that one. So I would expect that our third quarter charge-off experience to be representative of expectations for the next couple of quarters. The second quarter experience was exceptional because we had a significant amount of recoveries but the third quarter looks like what I would expect to see come through in the -- at least for the fourth and first quarters.
And do you have the early-stage delinquencies, the 30 to 89 days?
Well, Matt, let us get back to you on that.
Okay. Last question for me. I don't know if you have any, but I was just curious what the overall exposure to syndicated loans are, what the performance of that book looks like? And how much of it is out of market?
That's not something we've pursued in terms of shared national credits, Matt. We've done several club deals that we've initiated relative to some of our ongoing commercial exposure, CRE and C&I, but in terms of large syndicated credits, it's been -- it's very limited. I would say it's not material for our commercial book of business. And it would relate to companies that are headquartered in and around our franchise or that we know have professional relationships with the management team.
Got it. Okay. Last one for me. Just the overall tangible common equity to tangible asset ratio thoughts around capital adequacy and if this type of environment persists, what kind of position does this level of capital leaving in, in '24 if we were to see an uptick in loan?
So that's relative to our 2024 planning, that's where -- my earlier comment, Matt, we're looking at several scenarios. And ultimately, our goal is to continue to drive and accrete capital through the performance and how we manage the balance sheet. And so generally, I think thematically, that equates to and translates to slower growth, moderating growth. And I think that's one way we're thinking about. We're well aware of where our TCE ratio stands today. And we know from feedback and conversations like this, that it's low, and that's something that's on the top of our management teams buying right now.
We've seen a couple of your larger peers go ahead and sell insurance companies or other -- why fee income businesses to help on the trapped AOCI and overall capital front? Is that something you're considering?
So we're aware of that. Strategically, it's been a good move for us relative to the diversification of revenues and the increase that it represents in terms of noninterest revenues in terms of what we've done with our wealth and our insurance business. But we're open to any possibility from a capital efficient use of capital and allocation perspective for that line of business or any other line of business we have in terms of what you just said, unlocking value.
Got it. Okay. I know I went over where I said I would stop my last question. So I apologize and thank you for taking a couple of extras. I appreciate it.
This concludes our Q&A. I'll now hand back to Marty Birmingham, President and CEO, for closing remarks.
I want to thank everybody. Thanks to our analysts and those that are participating on the call this morning. We look forward to talking with you again in January.
Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.