WSFS Q3 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Friday, October 24, 2025 at 1 p.m. ET

CALL PARTICIPANTS

President and Chief Executive Officer — David Burg

Executive Vice President and Chief Wealth Officer — Arthur Bacci

Need a quote from a Motley Fool analyst? Email pr@fool.com.

TAKEAWAYS

Core Earnings Per Share -- Core EPS was $1.40, an increase from the prior quarter.

Core Return on Assets -- 1.4%, up sequentially from Q2 2025.

Core Return on Tangible Common Equity -- 18.7%, higher than the previous quarter.

Core Net Income -- Increased 21% year over year, reflecting improved profitability.

Core PPNR (pre-provision net revenue) -- Grew 6% year over year, indicating stronger pre-provision performance.

Tangible Book Value Per Share -- Rose 12% year over year, showing capital strength.

Net Interest Margin -- Expanded by two basis points to 3.91% quarter over quarter, aided by lower funding costs and a deposit beta of 37%.

Interest Recovery Impact -- Recovery from a previously non-performing loan added four basis points to net interest margin this quarter.

Core Fee Revenue -- Flat quarter over quarter due to strategic exits and earn-out impacts; excluding these, core fee revenue grew 5% sequentially, led by capital markets and Cash Connect.

Wealth and Trust Business Revenue -- Increased 13% year over year, with institutional services up 30% and Bryn Mawr Trust of Delaware up 20%.

Total Client Deposits -- Up 1% sequentially, led by commercial; up 5% year over year across consumer, commercial, wealth, and trust segments.

Noninterest Deposits -- Grew 12% year over year, now representing over 30% of total client deposits.

Total Loans -- Down 1% sequentially due to the Upstart portfolio sale ($85 million) and Spring EQ runoff ($50 million); otherwise, loan balances were generally flat.

Residential Mortgage and WSFS-Originated Consumer Loans -- Both portfolios delivered 53% linked-quarter growth, offsetting consumer runoff.

Commercial Pipeline -- Increased to approximately $300 million, reflecting new business activity and talent acquisition.

Asset Quality Metrics -- Net credit costs were $8.4 million, down $5.9 million from last quarter; net charge-offs at 30 basis points (21 basis points excluding Newlane); delinquencies declined 34%, and non-performing assets dropped over 30% to 35 basis points, now at or below the lowest levels in the past year.

Capital Return -- $56.3 million returned in Q3, including $46.8 million in buybacks (1.5% of shares); 5.8% of shares repurchased year to date.

CET1 Ratio -- 14.39%, well above the medium-term target of 12% despite elevated buybacks.

Rate Cut Sensitivity -- Each 25 basis point rate cut is expected to reduce net interest margin by three basis points in the near term, declining to one to two basis points over time as hedges, deposit management, and securities maturities offset the effect.

Cash Connect Margins -- Profitability benefits from rate decreases, with about $300,000 pretax benefit per 25 basis-point cut; segment margins have expanded from under 6% to over 10% year over year.

Floating Rate Loans and Loan Beta -- Floating rate loans comprise just over 50% of the portfolio; with hedges, loan beta is slightly above 40%.

Indexed Deposits -- Approximately $700 million to $800 million in indexed deposits, with most other deposits non-indexed.

SUMMARY

WSFS Financial Corporation (NASDAQ:WSFS) reported sequential and year-over-year growth in core profitability metrics, with management emphasizing continued capital return and margin management strategies. The company intends to maintain elevated share buybacks, potentially exceeding net income, to move CET1 toward the 12% target. The hedging program, with $1.5 billion in notional value, is structured to offset further rate cut impacts and substantially neutralize asset sensitivity as additional cuts occur. Loan runoff in consumer segments was driven by strategic exits, while commercial new business activity and successful senior talent acquisition support ongoing expansion plans.

President and Chief Executive Officer Burg said, "We have a lot of dry powder to execute the buybacks at or above the level of 1% of our net income for a couple of years for two to three years."

Institutional services revenue within Wealth grew approximately 30% year over year, while Bryn Mawr Trust of Delaware rose about 20% year over year, driven by new accounts and client activity.

Cash Connect profitability benefits from rate reductions flow both through lower expenses and operating leverage, rather than strictly through net interest income, with segment margins expanding as planned.

Management maintained guidance for low single-digit annual commercial loan growth despite problem loan payoffs and runoff activity.

The company highlights ongoing operating leverage potential in institutional and trust businesses, where revenue is less reliant on assets under management.

INDUSTRY GLOSSARY

Deposit Beta: The ratio measuring the change in a bank's cost of deposits relative to changes in benchmark interest rates, indicating deposit repricing speed.

Net Charge-Offs: Loan balances written off as uncollectible, net of recoveries, expressed as a percentage of average loans.

NPA (Non-Performing Assets): Loans or assets not producing interest or principal repayments, typically due to borrower default.

CET1 Ratio: Common equity tier 1 capital as a percentage of risk-weighted assets, a primary regulatory capital metric.

Bailment Business: A cash logistics service, such as vault cash management, where a company holds funds on behalf of its customers, commonly reported outside net interest income.

Loan Beta: A measure of how much a lender's loan yields change in response to shifts in benchmark interest rates.

PPNR: Pre-provision net revenue, calculated as net revenue before deduction of loan loss provisions.

Spring EQ Portfolio: A specialized consumer lending partnership portfolio WSFS is running off as part of strategic exits.

Upstart Portfolio: Consumer loans originated through a third-party platform, divested by WSFS as part of non-core asset reduction.

HELOC: Home Equity Line of Credit, a revolving loan secured by the borrower's equity in their home.

Full Conference Call Transcript

During the third quarter, WSFS continued to demonstrate the strength of our franchise and diverse business model. The company delivered a core EPS of $1.40, core return on assets of 1.4%, and core return on tangible common equity of 18.7%, which are all up versus the second quarter. On a year-over-year basis, core net income increased 21%, core PPNR grew 6%, and core earnings per share increased 30%. In addition, our tangible book value per share increased by 12%. Net interest margin expanded two basis points to 3.91% quarter over quarter. This reflects a reduction in total funding cost of two basis points with a deposit beta of 37%.

Given the September rate cut, our exit beta for September is 43%, which reflects the repricing actions taken after the rate cut. Net interest margin for the quarter benefited from an interest recovery from a previously non-performing loan, which added about four basis points. Core fee revenue was flat quarter over quarter, as our results were impacted by two previously announced strategic exits in Wealth and Trust as well as the Spring EQ earn-out from last quarter. Excluding these items, core fee revenue grew 5% quarter over quarter, primarily driven by capital markets and Cash Connect. Our Wealth and Trust business continues to perform very well and grew 13% year over year.

Total client deposits increased 1% linked quarter driven by commercial business. On a year-over-year basis, client deposits grew 5% driven by growth across consumer, commercial, wealth, and trust. Importantly, noninterest deposits grew 12% year over year and continue to represent over 30% of our total client deposits. Loans were down 1% linked quarter driven by the previously announced sale of the Upstart loan portfolio and continued runoff in our SpringEQ portfolio. Excluding these items, loans were generally flat this quarter, but we saw solid momentum in several areas. Our residential mortgage and WSFS originated consumer loan portfolios both delivered strong growth with linked quarter increases of 53%, respectively.

These results reflect the momentum of our home lending business as well as the learnings attained from our partnership with SpringEQ. In commercial, new fundings this quarter were offset by lower line utilization and the payoff of problem loans, which supported improvements in our asset quality. Importantly, our commercial pipeline remains strong across both C&I and commercial real estate, increasing to approximately $300 million. We saw a meaningful improvement across our asset quality metrics during the quarter. Total net credit costs were $8.4 million this quarter, down $5.9 million compared to the prior quarter. Net charge-offs were 30 basis points for the quarter and 21 basis points when excluding Newlane.

Importantly, we saw a decline in problem assets, delinquencies, and non-performing assets this quarter. NPAs declined by over 30% to 35 basis points driven by two large payoffs with no additional losses, while delinquencies declined by 34%. In each of these areas, we are now at or below the lowest level in the past year. During the third quarter, WSFS returned $56.3 million of capital, including buybacks of $46.8 million or 1.5% of our outstanding shares. Year to date, we have repurchased 5.8% of our outstanding shares. Despite these higher levels of repurchase, our capital position remains very strong with the CET1 of 14.39%, well in excess of our medium-term operating target of 12%.

We intend to maintain an elevated level of buybacks in line with our previously communicated glide path towards our capital target of 12%, while retaining discretion to adjust the pace of these buybacks based on the macro environment, our business performance, and potential investment opportunities. These results position us well to meet our previously announced full-year outlook even with an additional October rate cut, which was not previously included in our assumptions. While the path and timing of future rate cuts remain uncertain, it's important to note that the impact of additional rate cuts on our financial results will not be linear as we continue to manage our margins through deposit repricing, our hedge program, and securities portfolio strategy.

As we have done in the past, we will provide a full-year 2026 outlook in January with the release of our fourth quarter 2025 financial results. We remain excited about the future and committed to continue to deliver high performance. Thank you. And we'll now open the line for questions. Thank you.

Operator: We will now begin the question and answer session. Thank you. Your first question comes from the line of Russell Gunther from Stephens Inc. Your line is open.

Russell Gunther: Hey, good afternoon, guys.

David Burg: Hey, Russell. Good afternoon. Wanted to start kind of with the bigger picture question. David, and you kind of touched on it towards the end of your prepared remarks. But that medium-term target on CET1, challenging to hit given just how much money you guys make. So would be helpful to get a sense just kind of big picture in your mind, what's your base case scenario to achieving that target and sort of what does that assume for organic growth rates over the next couple of years? Acquisitive growth, be it depositories or fee verticals, and then you mentioned potentially flexing the buyback at a more accelerated clip.

Just your base case to get there would be helpful to start.

David Burg: Yes, absolutely Russell. So yes, look as you've seen this year, we are buying back at a clip that's significantly ahead of both the last couple of years. We're buying back approximately 100% of our net income. Given some of the balance sheet dynamics, the sale of the Upstart portfolio, for example, the runoff in some of the partnership portfolios, RWA has not increased. And therefore our capital levels despite these buybacks, our capital levels are still very high and actually increased since the beginning of the year. So that's the dynamic and as well as the profitability levels that you mentioned we do generate a lot of capital.

So I think that if you look forward, even with a robust growth rate on our balance sheet, we still have a lot of dry powder to execute the buybacks at or above the level of 1% of our net income for a couple of years for two to three years. And so that's really the strategic intention that we have. And depending on what happens with the balance sheet, we may accelerate that path. So I can completely see us leaning in more and doing even in excess of our net income on the buyback side. And obviously, as you said, we look at continuously evaluate different investment opportunities.

The first priority, the preference is always to invest the capital in the business where those accretive opportunities exist. But after that, we would look to return.

Russell Gunther: Okay. Got it. Thank you. And then, just second question for me. So asset quality resolution and trends were really constructive this quarter. You guys have a healthy reserve and we just talked about the healthy CET1 for that matter. So I guess how are you thinking about reserve levels here amid what is still a somewhat volatile macro? And then could you share particular sectors of your loan portfolio where you continue to keep closer to incremental high?

David Burg: Yes. I think on asset quality, generally, as you've seen in our numbers, we have good momentum and good progress. I think, I would say a couple of things. I think first and foremost, with respect to asset quality, one of the things that we try to do obviously is disciplined origination. Starts there and try to have recourse for most of our lending, vast majority of it, and those type of actions to make sure we have good underwriting. And then we also try to be proactive around engagement with clients should things should there be unexpected bumps and bruises, we try we have a very kind of long forward-looking pipeline.

We stress our portfolio for higher rates and whether issues when we think there are issues at maturity, we try to engage very, very early and proactively with our clients. And that's been the key to working through our pipeline and some of the migration that you've seen and the favorable trends that you've seen. And so commercial is always going to be lumpy and there may be one or two uneven situations. But generally, we feel good about our portfolio and we feel good about continuing to make progress on resolving and working through the remaining NPAs. The consumer asset quality has been very strong both within our home lending business and within the Spring portfolio.

So we feel good about the trends and we feel good about continuing to make progress. In terms of our reserve, I would say that when you look at the pure macro data that goes into the model, it would suggest that we have the capacity to release some reserves. But we have conservatively made some qualitative offsets where we see still potential volatility in the macro economy to keep that reserve where it is. So I think that's purely a function of the volatility that we see with rates, potential inflation, some of the labor weakness, and us being and erring more on the conservative side.

So hopefully that covers the question, but please let me know if I missed something.

Russell Gunther: No, that's perfect, David. Thank you very much. And I'll step back. Thank you, guys.

Operator: Your next question comes from the line of Kelly Motta from KBW. Your line is open.

Kelly Motta: Hi, Kelly. Your next question comes from the line of Christopher Marinac from Janney Montgomery Scott.

Christopher Marinac: Hey, good afternoon. Thank you for hosting us today. Wanted to dig in further to the wealth and trust business lines and just understand a little bit more about the future growth in terms of new accounts being opened versus just doing more business with existing accounts. I know you called a little bit of that out on the Bryn Mawr Trust, but I wanted to do more on the other pieces.

David Burg: Sure. Hi, Chris. Thanks for the question. So as you know, our wealth business is a pretty diverse business. And there are really three business lines within that business. There's the institutional services, there's the Bryn Mawr Trust of Delaware, and then the private wealth management. And also about 60% of the revenue in that business is really not AUM based revenue, not tied to AUM, but really tied to new accounts and tied to transaction activity. And so we've seen the places where we've seen a lot of new activity growth, new clients, new accounts, have been both on the institutional services side and the BMT of Delaware side.

When you look at year over year, institutional services is up about 30% this quarter. And when you and BMT of Delaware is up about 20% this quarter. And so we're seeing growth in new accounts and transactions with existing clients. We're seeing a lot of activity there.

Arthur Bacci: Chris, this is Art. I would tell you on a few things. I mean, the institutional services team just came back from the ABS East Conference in Miami this week and they're jazzed. I mean, reputation, our quality of service is really being recognized in the marketplace. There's been comments about deterioration in service with some other trustees. And so are continuing to see a very robust pipeline with new clients. And actually becoming the preferred provider for many clients. On the BMT of Delaware side, similar thing, we've seen a recent bank acquisition that one of the subsidiaries was a Delaware Trust and we're seeing clients starting to leave that and coming to us.

We're seeing opportunities on the international side of that business. So that team is really continuing to look to grow its business. And then on the private wealth management side, we've kind of got past the Commonwealth divestiture, if you will, in the last two months have been net client cash flow positive and we're starting to see very good referrals from commercial. We're also really honing in on COIs and really trying to focus on getting more business from some of our COIs. So I think all in all, have a really positive outlook going into 2026 with our wealth and trust businesses.

Christopher Marinac: Great. Thank you both for that. And I guess just to extend one more thought. You have operating leverage on all ends of company, but is the operating leverage greater in the wealth space where you could create more earnings from that versus the bank operation?

David Burg: Yes. I think the one of the things that it goes to the diversity of the business model, when you look at our profit margins in the wealth business, I would say they're higher than the traditional profit margins that you may see in other wealth businesses. And it really goes to that model. We do have a lot of operating leverage and a lot of opportunity for scale there for sure, particularly institutional services and BMT of Delaware. So I definitely would echo that comment. And I think you can see it in our deposit base that comes out of the trust business because that's large deposits. They're not using our branch network. They're not using ATMs.

It's a very scalable business for us.

Christopher Marinac: Great. Thanks again for taking our calls today.

David Burg: Yes. Thanks, Chris.

Operator: Your next question comes from the line of Janet Leigh from TD Bank. Your line is open.

Janet Leigh: Hello.

David Burg: Hi, Janet.

Janet Leigh: Hi. On Cash Connect, business, as rates if rates were to come down, would expect the revenue to get compressed, but then I believe that the funding side of it could offset. In terms of the NII benefit, coming from the Cash Connect, how do you guys forecast in terms of the potential financial benefit coming from Cash Connect increasing or is it more compressed?

David Burg: Yes, Janet, happy to answer that. So, say a couple of things on Cash Connect. One, think the way you described it is exactly right. The Cash Connect revenue, the pricing is tied to interest rates. And so as interest rates come down, we would expect a reduction in our fee revenue and cash connect. But that will be more than offset in a reduction in expenses. And so basically from a profitability perspective, we do benefit from rates coming down. And you can think of it as roughly for every 25 basis points about a $300,000 kind of pretax profitability benefit.

So that's as we've seen that play out over the last couple of cuts and as we have the cuts September is really not in the numbers yet, but as we have September potentially the cut next week in December, all of those will flow in into the beginning of next year. I would say that's one dynamic with Cash Connect and we'll drive towards increasing profitability. The other thing, which is if you look at our segment reporting and cash Connect, one of the things we've been talking about is increasing the profit margins in that business in general.

And that's not just because of rates, but also because of pricing leverage that we think we have in the market given our market share, that's also on the expense and efficiency side. So there are a few different levers to that. And that's been playing out nicely so far. If you look at year over year the profit margin in that business was about a little bit under 6%. And this year we're over 10%. Last quarter, it's important to note that there was an insurance recovery last quarter, which the margins look a bit elevated. But if you normalize for that last quarter was about 8%.

So we went from kind of 6% to 8% to 10 and that's trajectory that we were looking for and that's, so we're executing against that strategy.

Arthur Bacci: And Janet just as a reminder, the way we account for the bailment business, the benefit that Dave has talking about won't necessarily flow through NII. It's a combination of fee income and non-interest expense.

Janet Leigh: Thank you. And just on so you maintain your low single-digit all guidance including the low single-digit commercial loan growth for the year. So that includes the problem loan payoff that you experienced in the quarter. And also could you help me help us size the or size the pace of the payoffs coming from the consumer partnership going forward? Should it decelerate from the current like $140 million levels? How should I think about the total impact of the payments and the trajectory there?

David Burg: Yes. Yes. So Janet, let me take the consumer first and then I'll circle back around to the commercial question. On the consumer side, we had two things happen this quarter. And it's important to separate them. One was we closed the sale of the Upstart portfolio. And that was about $85 million that came off our balance sheet at the beginning of the quarter. As you know that was a non-strategic portfolio that wasn't run off. It had some elevated net charge-offs. And so we made the strategic decision to exit that portfolio and we're also able to release some reserves based on that transaction. So that's the Upstart portfolio.

Beyond that, the remaining runoff that you see is really in the Spring EQ portfolio. And that runoff for the quarter was about $50 million. And so that's the pace more or less that we would expect come somewhere in the $15 million to $17 million per month is what we would expect in that run off of Spring EQ. We expect that to continue. However, one of the I think one of the areas where we've been leaning into and we think we have we had good momentum and we think we have continued momentum is in our home lending business.

Which is our mortgage business and our WSFS originated consumer loans, which are primarily HELOC larger credit installment loans. And we've had really annualized double-digit growth for a few quarters there. And that's really more than offsetting kind of the Spring EQ runoff that you see. So we think we have we think positively about that growth continuing. We think we have some differentiated origination capabilities in that mortgage business. We've been growing our origination officers. And so we feel good about leaning into that area. That's on the residential side. On the consumer side rather. On the commercial side, this quarter as you said, this quarter was really impacted by a couple of things.

One was the work the payoff of the problem loans which obviously is a good thing. We like to see that and that supports our asset quality improvement. We also saw line utilization being down this quarter. That's kind of a bit of a volatile number that moves up and down. There's some of the economic uncertainty plays into that. But generally that's just a function of business activity. But generally if you kind of separate that, we feel we continue to feel good about our pipeline altogether. Across the board including C&I. I would say we're focused on definitely making accretive and profitable originations. There's a lot of competition in C&I.

We don't want to be the low we're not the low price point in the market. We want to be very thoughtful around profitability. We want to be very thoughtful about underwriting. But having said that, we feel very good about our pipeline. Our pipeline now is at a higher level than it's been in a number of quarters. About $300 million in total. We feel good about our pipeline. And I would also add that we're continuing to win talent in the market. Which gives us a lot of confidence. For example, we recently announced the new Philadelphia market President who was the Market President for one of the major super regional banks in the area for Philadelphia.

And so I think winning talent like that gives us confidence and I think demonstrates the confidence that others have in the franchise as well. So yes, we feel good about it's hard to predict quarter over quarter, but we feel good about being able to grow that business and continuing to lead in to C&I and that's really the relationship engine that we want to anchor to.

Janet Leigh: Thank you.

Operator: Your next question comes from the line of Kelly Motta from KBW. Your line is open.

Kelly Motta: Hey, good afternoon. Sorry about the technical difficulties and thanks for the question.

David Burg: Hey, Kelly, no problem.

Kelly Motta: Maybe just piggybacking, where you left off last you noted recruitment of affiliate market president. Clearly, organic growth is a focus. Where are there other areas where you're looking to add talent where you think you know, there's room to bolster up either in terms of product line, wealth or the core bank or parts of the geography that look like attractive growth opportunities and places where you could add some folks?

David Burg: Yes. The answer is yes. So we're just like I mentioned, the commercial example, we have other relationship managers joining the commercial team that continues to be an area that we're looking to continue to increase. And so that is an area of focus as well as the wealth business. That's been an area of focus all along. We've had some very successful lift outs of teams in the last twelve to eighteen months there. That are really starting to bear fruit and play out the thesis. But that's another area where we're continuously looking at talent. Both from a lift out perspective as well as we look at potential RIA acquisitions that we've done in the past.

And so we continuously evaluate talent across our footprint. And we think we have a lot of opportunity there. And Art mentioned earlier the referrals but that's something that we really think is there's a significant amount of opportunity in the referral pipelines across our businesses. That's between wealth and commercial, it's between small business. It's between our home lending business and each of those. So there's really a lot of untapped potential there as well.

Kelly Motta: Got it. That's helpful. Then maybe turning back from the margin, I apologize if I missed this, but you guys have done a really great job managing the margin. Keeping an overall relatively level high level margin and neutralizing some asset sensitivity. If you get a couple of cuts here again this quarter, do you think you have enough flex in the deposit base to offset to absorb some of that? Or could there be some near-term pressure that margin ahead? Thank you.

David Burg: Yes, Kelly, happy to go into work through that a little bit. So I think there's I'll give you a short-term answer and a longer-term answer. From a shorter-term answer, we do have sensitivity in our net interest margin as you mentioned. I would characterize that as about three basis points per 25 basis point rate cut. So that's really the near-term impact. So when you think about the net interest margin this quarter, we were 3.91%. We had the one interest recovery. If you kind of normalize for that, we're in the high 3.8s.

And so, with a couple of a few rate cuts that go into fourth quarter, we would tick down to maybe about 3.80 around kind of in that ballpark. But the I would say the longer-term answer is that we have a number of tools that we use to offset that sensitivity. After the initial impact. And the best evidence that I can give you of that is if you look at what's happened over the last year. Where we've had as you know 125 basis points of rate cuts but our margins are up year over year over 10 basis points.

And so that sensitivity that I mentioned of about three basis points per cut will go to one to two basis points as we are able to take the actions that we take. And those actions are one is the deposit repricing that you mentioned. We continue to our exit beta for the quarter the cut obviously happened at the September. But if you look at the exit beta at the end of the month, it was about 43% in the low 40s. We're going to run a similar playbook for the other cuts and we think that we can be kind of in that low 40 beta for each of the upcoming cuts. That's number one.

Two is we have you know the hedging program where we have four options that mitigate and neutralize some of the asset sensitivity. We have about $850 million of those that are in the money right now. And with the next rate cut another $250 million come in the money. And if we have three more cuts, you would have the entire $1.5 billion program actually in the money. So that would neutralize essentially $1.5 billion of variable rate loans and essentially neutralize that to look like fixed. So that's something that we continue to deploy. We're going to continue to utilize that program throughout 2026.

We're thoughtful about maturities there and making sure that full $1.5 billion is going to be deployed. And the third thing, I would say that the third tool actually two more things. The third tool that we've been using is obviously new the extent that we've been growing new deposits and we're able to reinvest it. And you think about a steeper yield curve going forward and you're able to originate those deposits and the low-cost deposits that we've been able to have and then reinvest them at the higher yields. That of course takes some time to play out, but that's a big supporter of the net interest margin.

And the last thing that I will call out is our securities portfolio. As you know, our securities portfolio yields south of 2.5%. And it rolls off we have about $500 million of cash flow every year that comes off that security portfolio that then we reinvest either into loans or potentially other securities. We reinvested and we pick up a lot of yield. There's four to five basis points of annual yield pickup from that from that rollover. So the combination of all of those things, it's what allowed us to really mitigate the impact more than what the kind of the paper math would suggest, and we'll continue to lean in and deploy those tools.

Kelly Motta: Great. I really appreciate all the color on that. That's really helpful and will be helpful to go back to. Just one point of tying up the loose ends of clarification. Just can you remind me how much floating rate loans you have? And maybe index deposits just to help manage our margin with that component? Thank you.

David Burg: Yes. So our floating rate loans are a little bit over 50%. And so our loan beta is about 50%. But when you incorporate the hedges the loan beta drops to a little bit over 40%. So and that's really and so when you think about our deposit beta, in that range as well, that's really that's how we try to neutralize the portfolio. That's how we think about it. So and on the deposit side, we as you know we have the CD book, is the time maturities that most of that CD book is in kind of the six-month with a little bit of eleven-month. And so that kind of matures on its cycle.

The other deposits are mostly non-indexed. We have about $700 to $800 million of kind of index deposits.

Kelly Motta: Thanks again for all that David. That's helpful. I'll step back.

David Burg: Sure.

Operator: Thank you. And with no further questions in queue, I would like to turn the conference back over to David Burg.

David Burg: Okay. Thank you very much everyone for joining the call today. If you have any specific follow-up questions, please feel free to reach out to Investor Relations or me. Have a great day.

Operator: This concludes today's conference call. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.