Good day, and welcome to the INDB Independent Bank Corp. third quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. Before proceeding, please note that during this call, we will be making forward-looking statements. Actual results may differ materially from these statements due to a number of factors, including those described in our earnings release and other SEC filings. We undertake no obligation to publicly update any such statements. In addition, some of our discussion today may include references to certain non-GAAP financial measures.
Information about these non-GAAP measures, including reconciliation to GAAP measures, may be found in our earnings release and other SEC filings. These SEC filings can be accessed via the investor relations section of our website. I would now like to turn the conference over to Christopher Oddleifson, President and CEO. Please go ahead.
Thank you, Dave, and good morning, everyone. Thanks, everybody for joining us today. I'm once again joined by Mark Ruggiero, our Chief Financial Officer, and Rob Cozzone, our Chief Operating Officer. I'd like to begin by pointing out that the underlying strength of our franchise was on full display in the third quarter. For our long-term investors, you know that for years we have emphasized building core relationships versus having a transactional business orientation. No matter what the rate environment or our liquidity needs, we have incented colleagues to expand existing relationships and build new ones. As a result, we continue to generate record new core deposit accounts. This is occurring at both the absolute level and at the average per branch level.
While our core deposit franchise has always been a source of tremendous economic value, with the rising interest rate environment, we are now seeing the impact in our NIM and net income. Net income for this past quarter rose to $71.9 million or $1.57 per share, well above both prior quarter and prior year results. The returns in the quarter were quite strong as well, with a return on assets of 1.4% and a return on tangible common of 15.3%. Mark will be taking you through the quarterly details shortly, but highlights include revenues with a major driver of performance rising 10% over prior quarter levels.
Our balance sheet management and asset sensitivity has positioned us quite well to capitalize on the rising rate environment, as evidenced by the significant increase in Net Interest Margin, and Mark will be expanding on this topic in his comments. While loan levels were essentially flat this quarter due to pay downs and refinancings, we're still experiencing robust loan activity. Despite the slowing economy, total loan closings exceeded $800 million in the third quarter, while commercial pipelines were actually up this quarter. Core deposits rose to 88% of total deposits, which included healthy growth in non-interest-bearing deposits, while higher priced deposits continued to attrite. The value of our powerful core deposit franchise simply cannot be understated. Fee revenues rose once again this quarter, and it was marked by strong retail transaction activity.
Within investment management, our assets under administration levels held pretty constant as a continuing high volume of new money inflows has helped counter the reduction in market valuations. Expense levels continue to be intelligently managed as our operating efficiency measure dipped below 50% this quarter. Credit quality remains in good shape with negligible net losses, lower delinquencies, and stable non-performing levels experienced in the third quarter. Capital levels remained at comfortable levels, giving our board the confidence to approve a new stock repurchase program, as covered in our earnings release. Beyond the quarter, we continue to advance the franchise on various fronts. For example, we recently appointed Dawn Mugford as our Chief Risk Officer. Dawn comes to us with over two decades of experience in risk management, audit, and quality assurance.
This is an important step in achieving our goal to deepen our enterprise risk management infrastructure. We also continue to recruit experienced senior talent into our company who are attracted by both our business potential and operating culture. This continued in the third quarter with key hires into our commercial lending and investment management ranks. Such hiring will also serve to help us capitalize on the new business opportunities we see in the former East Boston Savings Bank customer base and markets. We've also recently begun deployment of nCino's industry-leading loan operating system, with online origination capabilities for small business owners soon to follow. Lastly, in line with the growing strength and recognition of the Rockland Trust brand, we have embarked on a new advertising campaign that highlights our success in providing credit, banking services, and advice to local business owners.
Turning to the economic picture, I'm sure you all have noticed that inflation continues to climb despite the Fed hiking rates at a blistering pace not seen in 40 years. In fact, a recent inflation report shows price increases are pretty broad-based. It indicates ample momentum for further upward movement. Consumer spending has flattened, but consumers remain resilient, leaning on accumulated savings and tapping sources of credit to bolster spending. I think a cooling in the economic activity does seem inevitable. This combination with surging inflation, a looming potential recession, and the unprecedented speed of Fed hikes does make for uncertain operating environments. As in all such prior periods, we bring a healthy mix of caution and preparedness to potential downside scenarios. As I've said before, we will remain disciplined and not engage in competitive practices not to our liking, especially on the credit side.
Flexibility is key here, and we're focused on remaining nimble. In the near term, we will continue to benefit from the rising rates owing to our asset sensitivity, and we'll also look to generate growth from existing operations. What is constant is our intense focus on building relationships combined with our caring, respectful, our relationship-oriented culture that has served us well over these many years. We believe that a great place to work leads to a great place to bank, leads to solid financial performance, and that allows us to invest in our colleagues and customers. The Boston Globe has recognized us as a top place to work for over a decade. J.D. Power ranks us as number one in retail satisfaction in New England, and the results speak for themselves.
Our discipline and careful management of our business prepares us well when a weak economy or underlying crisis emerges. I'll end with the reminder that we emerged from the great financial crisis with stronger capital and a more robust customer base. If we enter more difficult economic waters, we believe we will continue to distinguish ourselves. We are confident with the capital, core deposit franchise, competitively advantaged businesses, attractive markets, and skilled colleagues to manage anything that comes our way. With that, I'll turn it over to Mark.
Thanks, Chris. I'll speak primarily to the earnings presentation deck that was included in our 8-K filing last night and is also available on our website in today's investor portal. Jumping to slide four of that deck, 2022 third quarter GAAP net income rose to $71.9 million, and diluted EPS was $1.57, reflecting 16% and 19% increases respectively from the prior quarter results. As Chris said, this performance serves as a great example of our core franchise value and profitable balance sheet positioning while remaining disciplined in this challenging environment. The third quarter results produced a 1.43% return on assets, a 9.90% return on average common equity, and a 15.26% return on tangible common equity for the quarter, all up significantly from the prior quarter results.
In addition, this slide also summarizes the main drivers of the quarter performance that Chris just covered. Not reflected here, but worth noting, tangible book value per share dropped $0.75 to $39.56 as of September 30, as a result of the repurchase of 443,000 shares during the quarter and additional other comprehensive losses offsetting the strong earnings in the quarter. The repurchase activity completes the program announced earlier this year. As noted in our announcement last night, another $120 million share repurchase program was authorized, providing additional flexibility in optimizing our capital position moving forward. Turning now to the components of the quarter's results. Slide five provides a high-level summary of the loan portfolios for the quarter.
As noted here, reported balances are relatively flat, and when excluding PPP activity, growth for the quarter was 1.3% on an annualized basis. Similar to last quarter, the consumer portfolios experienced strong growth. On the commercial side, despite very competitive pricing in the Northeast market, new commitment activity remained robust, with total balances decreasing as a result of continued elevated payoff activity within the commercial real estate category. Slide six provides some additional details around the loan activity for the quarter. As noted, new commercial commitments for the quarter were strong at $522 million, though down slightly from the prior quarter, while the approved pipeline of $383 million should suggest similar closing activity heading into Q4.
In terms of commercial activity, we continue to see good opportunities across a number of asset types in diversified industries, with a few highlighted on this page. In what should be our last noteworthy impact from PPP, you can see the PPP balances paid down to $11 million as of September 30, generating $400,000 of net fees recognized this quarter compared to $1.8 million in the prior quarter, with immaterial amounts left to be recognized going forward. As noted on the right side of the slide, the consumer portfolios again yielded strong growth and balances as approximately 90% of the quarter's mortgage activity was retained in the portfolio, while solid home equity demand and increased line utilization led to overall growth in that category.
Moving to slide seven, again echoing what Chris just stressed in his comments, deposit activity reflects the strong balance sheet positioning we discussed last quarter, as overall decreases resulted from our ability to allow for the outflow of highly rate-sensitive balances and time deposits while staying focused on core relationships and operating accounts. With core deposits comprising 88% of total deposits as of September thirtieth, the cost of deposits increased from 5-15 basis points in the quarter, representing only a 5% cumulative deposit beta for the current rate cycle so far, or slightly over 7% when isolated to interest-bearing deposits only. As an aside, both numbers are slightly higher when you're looking at Q3 Fed increases only.
With deposit pricing well in check, slide eight shows additional details over the reported margin, as well as a breakdown of volatile or non-recurring items to reconcile back to our core net interest margin. Our overall asset sensitivity is clearly reflected in the results shown with the core net interest margin results, which exclude net PPP fees, purchase accounting and other non-recurring items, increasing 36 basis points as compared to the prior quarter. Also benefiting the margin, our decision to be patient in deploying excess liquidity has allowed for a measured build of higher yielding securities balances into a gradually improving market, while still benefiting from yield increases on meaningful cash balances. This strategy is anchored in our interest rate management approach summarized in the bottom right section of this slide.
Net of our hedging portfolio, which now totals $1.5 billion in notional, we anticipate 20%-25% of our loan portfolio will immediately reprice with any future rate increases. Though deposit rate increases will likely accelerate going forward, we are still very well positioned to benefit from future rate increases while continuing to layer in protection to a down rate scenario. Moving on to asset quality, slide nine provides some key metrics worth highlighting. Non-performing loans stayed consistent at $56 million. The activity for the quarter included the positive resolution of a $24 million commercial real estate loan payoff, which resulted in a $1.3 million recovery of previously deferred interest, which was offset by a new to non-performing $24 million C&I loan.
As a result of the commercial real estate non-performing payoff I just mentioned, total delinquencies dropped significantly to only 17 basis points of the portfolio as the newly non-performing C&I loan is under a forbearance agreement and considered current. Net charge-offs were essentially zero for the quarter. In conjunction with the category shifts in non-performing assets in a relatively stable credit outlook, $3 million of provision for loan loss was recognized, slightly increasing the allowance for credit loss as a percentage of loans to 1.08%. Shifting gears to non-interest items, slide 10 provides details on non-interest income results for the quarter, a few of which I will highlight. Deposit account interchange and ATM fees all increased nicely from the prior quarter.
Regarding investment management income, strong net inflows helped offset market depreciation as assets under administration dropped by only $65 million to $5.1 billion at September 30. The modest reduction, combined with the usual seasonal decrease in tax preparation fees, led to an overall investment management income decrease of approximately $900,000 for the quarter. The $267 million of gross new money noted on this slide is reflective of our sales force team experiencing great momentum in both the legacy and newly acquired markets and geographies. Lastly, mortgage banking and loan level swap income continue to be challenged in this rising rate environment as both of these income streams are impacted by our current position and ability to retain more fixed rate volume on the balance sheet as part of our strategy to protect against future down rate scenarios.
Turning to the next slide, total operating expenses of $92.7 million reflect a 2.4% increase from the prior quarter, driven primarily by increased salaries and incentive compensation, as well as some larger non-recurring items such as elevated office equipment spend. Lastly, the tax rate for the quarter remained relatively consistent at 24.4%. In conclusion, and moving on to slide twelve, I'll finish with a few updates regarding 2022 fourth quarter guidance, as we will provide full year 2023 guidance next quarter. As we think about our year-to-date results and the relative uncertainty over the general economic environment, we anticipate relatively flat loan and core deposit balances over the fourth quarter, with some modest level of continued reductions in time deposits.
As I noted before, we feel very good about our overall balance sheet position and will continue to stay disciplined in our pricing. Always focused on growing core relationships on both the loan and deposit side of the ledger, commensurate with overall economic growth. As a byproduct of this disciplined approach, assuming no changes to overall economic conditions, we anticipate credit loss and provision levels to be well contained. Regarding the Net Interest Margin, without predicting the level of additional Federal Reserve rate hikes in Q4, we do anticipate further margin expansion in Q4, driven by the following assumptions.
100% cash balance betas, 20%-25% loan betas, net of our hedges, and will also be applicable to the late September rate increase not yet reflected in the Q3 results, offset with a slight increase in the total deposit betas I referenced earlier to a 15% range. Regarding non-interest items, total noninterest income could experience modest decreases driven primarily by seasonal declines in deposit and interchange income. Regarding our overdraft program, we continue to work through expected program changes and anticipate an implementation date later in the year. As such, we will provide the dollar impact as part of our full year 2023 guidance next quarter. Non-interest expenses are expected to increase in the low single-digit percentage range. Lastly, the tax rate for the fourth quarter should approximate 25%. That concludes my comments.
With that, we'll now open it up to questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Mark Fitzgibbon with Piper Sandler. Please go ahead.
Hey, good morning, guys. Happy Friday.
Happy Friday to you.
Thank you. Mark, quick question on your deposit beta assumption for the fourth quarter of 10%-15%. You know, it just strikes me as low given the speed with which rates have gone up here. What gives you so much confidence you're, you know, that you're not going to see more pressure than that? Are you not feeling it from your commercial customers today?
We certainly feel pressure, Mark. We feel it mostly in pockets, and I think that's the reason why we continue to stress just the value of our deposit franchise. You know, a hundred-year focus on core operating accounts, primarily on the consumer side, result in the majority of our deposit base being less rate sensitive. We certainly have pockets where we're feeling pressure. When you look at third quarter results, you look at drops in municipal deposits, some larger commercial customers as well. That's where we have been and will continue to stay aggressive in deposit pricing. We think we really have a nice balance of not having to go too outside the norm, across the majority of the deposit base and continue to stay focused on those deposits that are more rate sensitive.
That combination, we believe, will continue to land us in a spot that performs better than most of the industry.
Great. Secondly, can you, I know you didn't give specific guidance on the fourth quarter for the margin, but I guess if you just assume, you know, rates move with the forward curve.
Right.
You know, can you help us think about the magnitude of the margin change in 4Q?
Yeah. For the forward curve, certainly pricing in now another 75 in November and 50 expected in December. If that comes to fruition, I think you'd see our margin increase to the tune of about 20-25 basis points.
Okay, great. On the buyback, I guess I was curious how you think about Tangible Book Value, dilution from that, you know, given your appetite to repurchase stock at, you know, north of 2x tangible. Are you concerned about that? Do you not worry about that? Any thoughts there would be great.
We certainly do worry about that. I think we've talked about this mentality last quarter as well, and that is this program is in place to really be opportunistic if we do and see any pressure on our stock price. I think the levels you just noted, Mark, at 2x tangible, that typically leads to an earn back area that we most likely would not be comfortable with. You know, I don't want to suggest any sort of dollar threshold or earn back threshold publicly, but we take that certainly into account. I think recognizing which price level we believe is appropriate for an earn back is going to drive any decisions on executing on that program going forward.
This is to have in place as just another lever for us to capitalize, given our excess capital position and just gives us flexibility to deploy that capital.
Okay. Shifting gears on the credit front. You guys had a little uptick in C&I non-accruals this quarter and some other banks in your market have kind of seen the same thing on the C&I side. I guess I was curious, are you seeing and I know your levels of delinquencies and nonperformers are really low, but are you seeing any particular pockets of, you know, areas that are challenged or sectors that you're, you know, a little concerned about?
No, not necessarily, Mark. I think we've had a pretty similar message over the last couple of years, and that is with our commercial portfolio, we often see very unique situations lead to individual credits, you know, degrading into non-performing. So that's exactly what happened here in the third quarter. This is a one-off unique situation. We don't see it as being pervasive across the portfolio or an indication of any specific industries that we're concerned about, where we obviously are staying very cautious where I think that reflects in our loan growth. We stick to very disciplined underwriting and pricing guidelines, but we're still feeling, you know, knock on wood, good about our credit and this one movement into NPA is not reflective of anything to a greater scale.
What industry was it, Mark?
This is a manufacturer sort of slash distribution industry.
Okay. Lastly, it was impressive that you had positive flows in the wealth management business in each of the last four quarters, you know, sort of bucking the market trend. Where's that coming from? Is that high net worth? Is that institutional or any other color around that would be great. Thank you.
Yeah, it's been. It's really. I mentioned being able to capitalize on the new markets. We have seen some success. You know, it's still early innings, but we've been able to see some opportunity as a result of the East Boston acquisition. We had some key hires in this space that have really just hit the ground running and have had really good success out of the gate in coming over to us. It's widespread, Mark. It's well diversified across our kind of overall wealth management customer base. They have a lot of great momentum and it's something we're very excited to see, the level of positive inflow that they've been able to generate.
Yeah, I'd like to add something there. This is Chris. I mean, really years ago, we cracked a code in developing confidence among our branch colleagues and especially our commercial banking colleagues, to make referrals of their prized customers into our wealth management business. This is difficult to do, and we have a culture here of doing that, and that's what's really generating a lot of this volume. As we buy new franchises, that just adds more markets to bring our services to. Especially in a market like East Boston Savings Bank, they didn't have any of these capabilities. This is a brand new capability and we're showing success.
Thank you.
Our next question comes from Laurie Hunsicker, with Compass Point. Please go ahead.
Yeah. Hi. Thanks, Chris, and Mark. Good morning.
Morning, Laurie.
Wondered if we could go back to the CRE loan that cured in the quarter. I think you mentioned it was $1.3 million in recovery to net interest income. Did I hear that correctly?
That's right, Laurie. Yes.
Okay. About three basis points or so. The guide that you just gave Mark on 20-25 basis points, was that a headline guide or was that core excluding that or how are you thinking about that?
That would be a core number. Just back to that 1.3, Laurie, we do show that in the table where we reconcile to the core margin. That's embedded in, I think it's what we call the non-accrual impact. There's a line item there. You can see that was about $560,000, I think, of an impact in the third quarter. That's reflective of $1.3 million being backed out, offset by about $500,000-$600,000 of reversal of interest on the new to nonperforming. We always treat that as non-core, and the guidance I gave is on a core basis.
Okay. That's perfect. That's helpful. Can you update us on where you are with new branches, in terms of the new branches, what you've got under development and just new branch build, how you're thinking about that for the next year?
I'm gonna let Rob speak to that.
Good morning, Laurie.
Good morning.
Mark. Good to hear from you. Our de novo plan in the Greater Worcester market now includes five branches, three in the City of Worcester, which we believe to be a sufficient complement to certainly serve the city in the near term. We also have two branches in the suburbs of Worcester, one in Shrewsbury, one in Westborough. Westborough being our most recent opening. Total deposits in those five branches are about $65 million as of September thirtieth, which is down a little bit, not surprising given the rate environment, but our customer momentum continues to be quite strong. We're pleased with the customer expansion that's happening there. In addition, on the lending side, we're doing quite well in commercial, with a full team there, some treasury management folks, as well as an IMG professional.
All in all, our expansion into Worcester is going well. We don't have any new plans for branches on the docket at the moment. I suspect that we'll budget for maybe one additional branch in 2023, but we haven't finalized those plans. That would not be in the City of Worcester, it would be in one of the surrounding towns.
Okay. That's great. All right. I guess, Chris, last question to you. I know it's not an optimal M&A environment at the moment, but you still have super strong currency. Can you just refresh us what you're thinking here with rising rates, how you're approaching M&A? Are you all still considering it? Just general thoughts would be helpful. Thanks.
You know, Laurie, an earnings conference call would not be the same without you asking this question, so thank you for continuing the tradition. Our posture has not changed, which is, we are here with our strong currency. When a bank board
Has decided, hey, listen, we think we might wanna jump on to INDB acquisition for a variety of reasons, whether it be scale, investments in technology, sort of talent, a whole variety of reasons. We are here and willing to talk. I know this current rate environment would make for some very interesting conversations, but the fundamentals of bringing banks together and building scale are still there. We have to be careful not to sort of get too distracted by some of the sort of how we think about accounting. You know, as usual, I would welcome those conversations. Thank you.
Again, if you have a question, please press star then one. Our next question comes from Christopher O'Connell with KBW. Please go ahead.
Morning. Just wanted to start off on the loan portfolio side. You know, CRE has been, you know, under pressure year to date. Based on the outlook for the fourth quarter, it sounds like, you know, could remain under a little bit of pressure here into the back end of the year. Just hoping to get an update as to, you know, what you're seeing in the CRE market, you know, where you're being cautious and maybe if there is, you know, some lumpier larger loans remaining from the EBSB book that you're not planning to retain as they come due. You know, what those amounts would be.
Yeah. I think your last point there, Chris, is a big driver of the experience we've had year to date. You know, when we closed on East Boston, it was no secret. You know, we were pretty transparent about expectations and seeing runoff in that book for a number of reasons. We're certainly seeing that, and unfortunately, we've seen some level of outflow in addition to what we were anticipating. As you know, they typically had larger on balance sheet holdings than we've historically underwritten. When you have big deals like that, just a handful of payoffs can certainly move the needle. We've continued to stay disciplined in terms of limiting our on balance sheet exposures to individual credits.
When you have payoffs, in some cases at the $50-$60 million level, we're still staying fairly disciplined and holding, in most cases, only $35-$40 million of a new relationship. That's gonna create some pressure on growing the portfolio, but we knew that and we're comfortable with that result. In terms of the outlook, you know, there's like any other bank in this environment, you know, we are cautious about certain asset classes. Certainly, office comes to mind, especially downtown Boston office. There's still levels of vacancy in a number of facilities where I think there's still uncertainty around lease renewals upon termination of existing leases, where a lot of these buildings will end up with absorption. We're cautious in that space.
You know, we're continuing to see opportunities on construction, multifamily condo, apartment developments. I think what we're finding is those projects that were already underway or had some level of P&S activity on them, we're still seeing those P&Ss hold up, and those projects are moving forward. It's those projects where maybe it was just very early stages, we're starting to see developers, possibly hitting the pause button and waiting through with the level of uncertainty. There's a lot of moving pieces. It's dynamic as you can guess, but we are very much in the deal flow. We have great connections across a lot of the asset classes. I think it shows we continue to stay disciplined and selective about what fits our credit box.
Got it. That's helpful. On the EBSB kind of legacy book, as far as, you know, what you're seeing for, you know, the remaining, you know, lumpier or larger credits, you know, coming due over the next quarter or two. I mean, how many of those, you know, larger credits do you have left that are earmarked? Does that, you know, put you into a position where even, you know, being, you know, relatively cautious on credit, uh, you know, that you're kind of returning to net growth in that book next year?
I think that'd be the hope, Chris. I mean, I think the positive in all this is the rate environment will help, right? What we've seen in most cases to date is the opportunity for some of these larger deals to refinance out, believe it or not, still at a lower rate. That opportunity should certainly subside given where we are with current rates and continued further rate increases. I take a lot of comfort in that, the level and the pace at which we've been seeing the attrition should definitely run off, you know, slow down. I think there's probably a handful still out there that we think have probably a higher expectation of potentially still seeing attrition, but the pace will slow.
If we can stay, you know, aggressive in finding the right opportunities and continue to generate the new closings that we have in our approved pipeline heading into the fourth quarter is strong. That combination, we hope, gets us back to the positive, as you suggest.
Great. On the liquidity deployment plans going forward, obviously, you know, a good amount of cash deployed and an increase in the securities portfolio this quarter. Is that the continued plan into the fourth quarter given the loan growth outlook? Where's the right, you know, cash level that you guys want to get to longer term?
Yeah, I think it's fair to say, Chris, I'd say the pace at which we've grown the securities will certainly slow. We're being very careful about not taking for granted our liquidity. There's certainly a lot of pressure on the deposit base. We feel very good about our deposits, but I think it's wise to ensure we can continue to have a handle over what will happen with deposit balances going forward. You know, we're currently sitting at an 85% loan-to-deposit ratio. These are very comfortable levels. You know, we've historically operated in here maybe a bit higher than that. I think all those reasons would suggest we probably will not get too much more aggressive in deploying excess cash.
I think it's prudent to continue to repopulate the runoff we're seeing in the securities, and we may grow, you know, very low single-digit percentage there. We're going to be cautious with the deposit challenges.
Got it. For the securities that were invested in this quarter, I may have missed it, but what were the rates that those are coming on at?
Yeah. The average for the quarter, believe it or not, was about 3.8%. As you can imagine, rates moved significantly throughout the quarter. Just to give perspective, the last security we purchased in late September was at a high 4% yield, around 4.90. Rates have moved up significantly. It is a very attractive market. Spot yields now on security purchases are close to 5%.
Great. Earlier you'd mentioned on the deposit beta question, you know, some lower betas within the overall, you know, retail deposit base. I was hoping you'd give a breakdown as to the amount of retail versus commercial deposit composition.
Yeah. Right now we're still almost 2 to 1 consumer to business. Then we have a sizable municipal book, as you know, about $1.2 billion in municipal deposits. I don't have the exact number, but it's a little less than 2 to 1, but primarily consumer overall business base.
That's helpful. On the wealth management side, I mean, good job, you know, keeping AUM, you know, relatively stable, given the market moves with the new client inflow. Based on, you know, the way you guys bill and the market movements so far, late in the third quarter into the fourth quarter, how do you see those fees coming in over the near term in the fourth quarter?
You know, I think certainly the market will drive where overall AUM lands. I think in terms of net flows, we still feel very optimistic heading into the fourth quarter. You know, all things being equal, if we're able to maintain AUM, I think you'll see a slight uptick. I wanna say the overall average AUM was a bit higher for the third quarter compared to where we landed. That may create a little bit of noise. You know, at the end of the day, we should see pretty consistent, hopefully maybe modest uptick in overall wealth management income.
Great. That's all I have. Thank you.
Thank you.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Great. Thank you, Dave. Thank you everybody for joining us today. We look forward to talking with you again in January of 2023 regarding full year 2022 results. Have a good weekend. Bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.