Welcome to the Community Bank System third quarter 2022 earnings conference call. Please note that this presentation contains forward-looking statements within the provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, and projections about the industry, markets, and economic environment in which the company operates. Such statements involve risk and uncertainties that could cause actual results to differ materially from the results discussed in these statements. These risks are detailed in the company's annual report and Form 10-K filed with the Securities and Exchange Commission. Today's call presenters are Mark Tryniski, President and Chief Executive Officer, and Joseph Sutaris, Executive Vice President and Chief Financial Officer. They will be joined by Dimitar Karaivanov, Executive Vice President of Financial Services and Corporate Development, for the question- and- answer session. Gentlemen, you may begin. Please go ahead. Thank you, Marlise. Good morning, everyone. Hope all is well, and thank you all for joining our third quarter conference call. As you can see from the release, this was one of the best operating quarters we have ever reported. In fact, I believe it is the best quarter we've ever reported, absent last year's post-COVID reserve releases and PPP revenues in Q1. Earnings for the quarter were driven by improvement across the board, including solid loan growth, a growing margin, higher non-interest revenues in our banking and insurance segments, an improved efficiency ratio and solid credit quality. Loan growth was across all of our portfolios and that momentum continues. 5% growth in the quarter follows 4% growth in Q2, continues to be a performance highlight delivered by our credit generation teams. The larger loan loss provision was driven almost entirely by loan growth and deteriorating qualitative factors in the CECL model. Deposit costs remain contained and average balances were flat for the quarter with public fund outflows of about $300 million, offset by growth in consumer and business balances of $300 million. Overall, GAAP EPS is up 8% over last year and PPNR is up 20%. Both numbers would be even greater ex PPP revenues in last year's quarter. We could not be more pleased with this quarter's results and believe we are well positioned heading into Q4 as well in terms of our pipelines and margin expectations. Looking forward, we expect our current operating momentum to continue. Obviously, this is an unpredictable and volatile environment, but given our stable core funding base, a higher rate environment will continue to be additive to our results. Joe? Thank you, Mark, and good morning, everyone. As Mark noted, the third quarter earnings results were solid with fully diluted GAAP and operating earnings per share of $0.90. These results are up $0.07 or 8.4% over the third quarter 2021 results of $0.83 per share. The improvement in operating results was largely driven by a significant improvement in the company's net interest income, an increase in non-interest revenues, and a decrease in weighted average shares outstanding between the periods, offset in part by increases in operating expenses, the provision for credit losses, and income taxes. Adjusted pre-tax, pre-provision net revenue or adjusted PPNR per share, which excludes the provision for credit losses, acquisition related expenses, other non-operating revenues and expenses and income taxes, was $1.25 in the third quarter, up $0.21 or 20.2% over the prior year's third quarter. Adjusted PPNR per share was also up $0.12 or 10.6% over the linked second quarter result of $1.13. The company recorded total revenues of $175.6 million in the third quarter of 2022. This was up $18.7 million or 11.9% over the prior year's third quarter and established a new quarterly record for the company. Net interest income, the primary driver of the company's revenue growth, was up 17.8% or 19.2% over the prior year's third quarter due to market interest rate related tailwinds, strong loan growth and investment securities purchases between the periods. The company's average interest earning assets increased $1.08 billion or 8%, while the tax equivalent net interest margin increased 29 basis points from 2.74% in the third quarter of 2021 to 3.03% in the third quarter of 2022. Net interest income was also up $7.2 million or 7% over linked second quarter results, while the tax equivalent net interest margin expanded 14 basis points. Although interest expense was up $2.4 million over the prior year's third quarter, the company's average cost of funds was up just six basis points from 10 basis points in the third quarter of 2021 to 16 basis points in the third quarter of 2022. The company's average cost of deposits remained low at 11 basis points for the quarter. Non-interest revenues increased $0.9 million over the prior year's third quarter, led by a $1.6 million or 9.7% increase in banking related revenues and a $1.3 million or 7.6% increase in wealth management insurance services revenues. Banking non-interest revenues increased from $16.9 million in the third quarter of 2021 to $18.5 million in the third quarter of 2022, driven by an increase in deposit service and other banking fees. The increase in wealth management insurance services revenues was driven primarily by organic and acquired growth in the insurance services business, offset in part by a decrease in wealth management services revenues due to a challenging investment market conditions. Employee benefit services revenues were down $2 million or 6.8% as compared to the prior year's third quarter due to a decrease in asset-based employee benefit trust and custodial fees. Although asset quality remains very strong, the company recorded $5.1 million in the provision for credit losses in the third quarter, reflective of strong loan growth and a weaker economic forecast. This compares to a $0.9 million net benefit recorded in the provision for credit losses in the third quarter of 2021. Comparatively, during the second quarter of 2022, the company reported a provision for credit losses of $6 million, $3.9 million of which was due to the acquisition of Elmira Savings Bank during the quarter. The company recorded $108.2 million in total operating expenses in the third quarter of 2022, compared to $100.4 million of total operating expenses in the prior year's third quarter. The $7.7 million or 7.7% increase in operating expenses was driven by a $3.3 million or 5.3% increase in salaries and employee benefits. A $2.2 million or 19.8% increase in other expenses and a $1.2 million or 9.4% increase in data processing and communication expenses. On a combined basis, all other expenses increased $1 million between the comparable periods. In comparison, the company recorded $110.4 million of total operating expenses in the second quarter of 2022. The $2.2 million or 2% sequential decrease in quarterly operating expenses was largely attributable to a $4 million decrease in acquisition-related expenses, partially offset by increases in salaries and employee benefits, data processing and communication expenses, and other expenses. The effective tax rate for the third quarter of 2022 was 22%. The company's average earning assets increased $1.08 billion or 8% over the prior year, from $13.53 billion in the third quarter of 2021 to $14.61 billion in the third quarter of 2022. This included a $2.07 billion or 49.4% increase in the average book value of investment securities and a $1.06 billion or 14.6% increase in average loans outstanding, partially offset by a $2.05 billion dollar decrease in average cash equivalents. Average deposit balances, which includes $522.3 million dollars of deposits acquired in the Elmira acquisition, increased $830.9 million or 6.6% over the same period. On a linked quarter basis, average earning assets increased $140.5 million or 1%. Ending loans increased $398.9 million or 4.9% during the third quarter, and $1.26 billion or 17.3% over the prior twelve-month period. Exclusive of $437 million of loans acquired in connection with the second quarter acquisition of Elmira, ending loans outstanding have increased $824 million or 11.3% over the prior twelve-month period, despite a $156.2 million decrease in PPP loans. During the third quarter, the company originated over $750 million of new loans at a weighted average rate of just under 5%. Comparatively, the book yield on the company's loan portfolio was 4.22% during the third quarter. Asset quality remained strong in the third quarter. At September 30th, 2022, non-performing loans were $32.5 million or 0.38% of total loans outstanding. This compares to $37.1 million or 0.46% of total loans outstanding at the end of the linked second quarter of 2022, and $67.8 million or 0.93% of total loans outstanding one year earlier. The decrease in non-performing loans as compared to the prior year's third quarter was primarily due to the reclassification of certain pandemic impacted hotel loans from non-accrual status back to accruing status. Loans 30-89 days delinquent were 0.33% of total loans outstanding at September 30th, 2022, up slightly from 0.29% at the end of the second quarter of 2022, but down slightly from 0.35% one year earlier. The company's regulatory capital ratios remained strong in the third quarter. The company's Tier 1 leverage ratio of 8.78% was up 13 basis points in the quarter. This significantly exceeds the well-capitalized regulatory standard of 5%. The company has an abundance of liquidity. The combination of the company's cash and cash equivalents, borrowing capacity at the Federal Reserve Bank, borrowing availability at the Federal Home Loan Bank, and unpledged available for sale investment securities portfolio provide the company with over $5.2 billion of immediately available sources of liquidity at the end of the third quarter. The company's loan to deposit ratio at the end of the third quarter was 63.4%, providing future opportunity to migrate lower yield investment security balances into higher yield loans. Looking forward, we are encouraged by the momentum in our business. The company generates strong organic loan growth over the prior five quarters. The net interest margin expanded meaningfully in the quarter. Asset quality remains strong and the loan pipeline is robust. In addition, the pipeline of new business opportunities in the financial services businesses remain strong. In Q4 in 2023, we will remain focused on new loan generation, managing the company's funding strategies in a rapidly changing interest rate environment while continuing to pursue accretive low risk and strategically valuable merger and acquisition opportunities. Thank you. I will now turn it back to Marlise to open the line for questions. We will now begin the question- and- answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is coming from Alexander Twerdahl from Piper Sandler. Alex, please go ahead. Hey, good morning, guys. Morning, Alex. Good morning. Hey, first off, I appreciate your comments on a robust loan pipeline going into the fourth quarter. Obviously you've strung together a couple quarters of very nice loan growth. I'm just curious if you can spend a little bit more time just elaborating on what we should expect to see in terms of the funding of that loan growth or potential loan growth in the fourth quarter, just given sort of the ebbs and flows of the municipal deposits, as well as any other cash flows that we should expect to see from the securities portfolio over the next couple of quarters. Hey, Alex, this is Joe. I'll take that question. Yeah, it is quite possible that we wind up in a borrowing position at the end of the year on an overnight borrowing position, given the robust loan growth in the pipeline. With that said, we do have about $600 million of securities maturities and payments next year in 2023, which, if you kind of do the math on that can support about a 7% growth rate on our existing loan portfolio. Although we'll have, you know, moments throughout the year, we'll be in a borrowing position. We also think that those securities cash flows will support a lot of that growth next year. You know, with regard to, you know, loan demand, it is still robust. I think the market is expecting that, you know, the higher rate environment will squeeze out some of that demand next year, which, you know, given our securities portfolio cash flows, we think we could support a lot of that growth just by transferring effectively from an investment security earning asset into a loan earning asset. Got it. In the fourth quarter and early next year, we don't expect much in the way of securities cash flows. If I remember correctly, the next big bullet matures in May of next year. In the meantime, can you just remind us of the ebbs and flows of the municipal deposits? I know that you see some inflows, I think, into the end of October and then outflows after that. Am I correct in that thinking? Maybe just help us quantify, you know, how to think about that. Yeah. Alex, we do have at least with New York State, which is the primary driver of our municipal flows, there is a tax collection season that occurs effectively at the end of the third quarter. You know, we tend to be, you know, somewhat level, if you will, in terms of, you know, municipal deposits in the fourth quarter, although that, you know, that can vary a bit from year to year. Then there's another, a large tax collection cycle on property taxes in New York State in the month of January. Typically we'll see a little bit of an increase in, you know, tax collection and municipal deposit flows in the first quarter. Okay. Can you give us some color on what you're seeing in terms of deposit pricing pressures in your market? I know historically you've done an extremely good job keeping those betas about as low as possible. I'm just wondering if you're thinking, you know, through this cycle any differently about the complexion of the deposit mix. Morning, Alex. It's Dimitar. We're not seeing much in the way of deposit pressures in our markets at this point in time. With that in mind, I would say that it's more likely that those will accelerate from where they are today as everybody's experiencing pretty robust loan demand. Right now, no one's really moved in a meaningful way in our markets. Got it. Thanks for taking my questions. You're welcome, Alex. Thanks, Alex. Our next question comes from Erik Zwick from Hovde Group. Please, Erik, go ahead. Thank you. Good morning, everyone. Morn ing, Erik. Good morning. Wondering if I could just start on the net interest margin and what your thoughts are. You've talked a little bit about, you know, deposits, beta and deposit pricing pressure maybe starting to creep in or some expectations that you might start to see that towards the end of the year into next. Just given, you know, the fact that we likely have some more Fed funds rate increases coming here at the end of the year and maybe into next year as well. Just curious about your thoughts for the direction and if you could, you know, quantify any expectations for where you think the margin goes in 4Q and maybe the early part of next year. Sure, Erik. This is, Joe. I'll take that question. You know, we've had two consecutive quarters of pretty robust margin expansion. I think it was 16 basis points in Q2, and it was 14 in Q3. We don't anticipate that margin will continue to expand at that rate. In part, really ties back to Alex's question regarding, you know, just borrowings. We'll likely be borrowing a little bit in the fourth quarter. And obviously that's at a little higher rate, significantly higher rate than our deposit base. We're not expecting a continued expansion, you know, certainly at the last couple of quarters in terms of margin expansion. But the loan pipeline and the momentum we have, you know, should help a bit to support the, you know, the current margin. You know, we could see it tick up a couple of basis points in the quarter. With that said, you know, we do expect some expansion of NII, net interest income, because of that, because of the deposit growth and the momentum we have. Probably and likely not at quite the rate that we've been growing at least in the last quarter. We do expect continued expansion of NII. On a longer -term basis, you know, we still think that our expectations around mid-single digit kind of growth in loans as more of a standard for us as opposed to 1% or 2% in prior years will support margin expansion over time. You know, on a short-term basis, we don't expect the continued levels of expansion. That's helpful. Maybe one quick follow-up question on this line of questioning. If loans can grow kind of mid-single-digit, but you've got opportunities to take some of the cash flows from the investment securities portfolio in 2023 to fund that, you know, how should we think about average earning asset growth over the next few quarters? Yeah, I think that's a fair question. You know, I wouldn't expect it to certainly increase at the levels that we saw, you know, during the pandemic. We just don't have those types of flows to, you know, from the deposit side to continue to support, you know, growth in the overall base. You know, the loan side of the equation is we got a higher run rate. I would expect that, you know, overall earning assets could probably grow in the low to mid-single digits, just based on, you know, the loan pipeline and expectations, around growth, as we move ahead. Certainly not, you know, the double-digit levels we saw during the pandemic. Thanks for the extra clarity there. Just moving on to credit, obviously, the metrics that you have in your portfolio continue to get better in terms of, you know, non-performing loans, OREO, or early delinquencies. The provision this quarter reflected, as you mentioned, both organic loan growth and then just a deterioration in the, you know, I think national outlook is what it said in the press release. Curious what you're seeing, you know, with your own eyes and hear with your own ears there in your own markets in terms of, you know, communities and businesses. Or, are you seeing any signs of pressure or weakness there or more just kind of caution and businesses and consumers preparing for what might be a recession coming in the next few quarters? Hey, Erik, it's Dimitar. We're not seeing really anything that gives us concern on the credit side. We're watching it a little bit more, obviously, with rates going up. I think that's also cured some of the demand and maybe some of the more marginal borrowers as well. Right now, if you look at our metrics across every single portfolio, they're below or at historical averages. You know, delinquencies are very, very low. You know, we would expect them to creep up a little bit, and you saw some of that in the provisioning this quarter, kind of looking ahead. Certainly it does not feel like any sort of a credit event in our markets. I appreciate the color. That's all my questions for right now. Thank you. Thank you, Erik. Our next question is coming from Chris O'Connell from KBW. Chris, please go ahead. Morning. Just wanted to start off on the fee businesses, you know, which held up well this quarter, especially, you know, wealth and insurance. You mentioned you had a good pipeline there. Maybe if you could, you know, walk us through kind of what you're thinking for organic growth rates going forward, assuming you know, the broader financial markets remain, you know, more or less flat. Morning, Chris. It's Dimitar. If you just kind of step back and look at our fee businesses, the resilience that they continue to exhibit this year is just tremendous. I mean, we're up on a year-to-date basis, across our fee income platforms, and we are, you know, quarter-over-quarter, we were also up. You know, if you look at our benefits, wealth, and insurance businesses together, you know, about 50% of that is market dependent and related. With the market kind of being down 20%, fixed income and equities, you know, it just kind of gives you a sense of those organic opportunities that we've been referencing on our calls. We're up double digits in terms of units if you want to think about it that way in those businesses, more activity, more clients, you know, excellent kind of organic performance. Some of that has been taken down by the market essentially. Again, we're still, you know, on a year-over-year basis, we have a pretty good shot this year at being, you know, close to flat, those businesses. We kind of look at that as a very constructive outcome, especially given that most of our peers will be down fee income, right? Not every fee income is created equal. We're pretty pleased with that. The momentum in each one of those businesses, again, it's double-digit organic growth. We're very pleased with it. What you're going to see that in actual numbers, again, half of that is tied to the market. You know, we got the units, we got the organic side, and the market will do what the market does. Got it. That's helpful. Thank you. Circling back to some of the margin discussions, a little bit surprised, I guess, you know, not more bullish on the near-term margin outlook. Maybe if you could provide, you know, what the spot rates are, you know, on the deposits today, that would be helpful. Is all of the near-term 4Q less expansion due to the borrowings coming on the books in the fourth quarter o r do you expect deposit betas to accelerate from here? Yeah. Hi, Chris. This is Joe. I'll just take that. You know, we're cycle-to-date our cost of funding, cost of deposits is not up very much at all. In fact, I think our cost of funding beta is about two, which, you know, probably will not continue at that level as we head deeper into the cycle. You know, we will likely have to catch up in terms of some funding costs as we get further into the cycle, which is pretty typical. You know, we also have a pretty strong loan demand. We need to fund it. So, you know, we're going to continue to evaluate our deposit base and look for opportunities in our markets to grow that, and that will be at a rate that's higher than certainly our current cost of deposits of 11 basis points. So we're going to continue to you know expect to see higher funding betas as we head into the fourth quarter. To your question about the fourth quarter specifically, yes. You know, some of the you know shorter-term borrowing costs will dampen our ability to increase the net interest margin into the fourth quarter. You know, then as we head into next year, you know, we'll continue to see some of those securities cash flows start to effectively transfer over to the loan portfolio. Yeah, I think in the short- term, it's really the funding side of that equation that will be a challenge. You know, we did book new loan volume this past quarter at a rate very close on a blended basis of 5%. Now, keep in mind, some of that, some of those originations, you know, the actual rate was set with the borrower, you know, prior to a lot of the increase in rates. We expect the, you know, the new volume rate to be up a little bit in Q4 on new loans. The challenge on the short-term basis will just be higher, you know, higher costs around borrowings, at least, you know, for the fourth quarter, maybe into the first quarter. Great. That's helpful. Go ahead. Yeah. I'm sorry, Chris. NII will continue, we expect, to expand in the Q4. Yep. You were mentioning, you know, the uptick in origination yields, you know, post the end of the quarter. Maybe you could just provide an update on, you know, where the origination yields for the various buckets are coming on at. They're varied, but actually they're, you know, they're fairly tight relative to last quarter. I'm just pulling it up here. Actually, I take that back. I don't have those right in front of me, Chris, on each of the individual portfolios. Unless I missed it there. Yeah. Total portfolio. Yeah, he's looking for individual portfolios. Yeah, that's it. On the mortgages. The originated yield in the third quarter was about 38 basis points higher than the portfolio yield. Business lending was about over 100 basis points. The mostly auto lending business, right? The indirect business was about 80 basis points higher. Actually, home equity was a blowout. That was a couple hundred basis points, I think. The direct consumer lending, which we don't do a lot of, but was up about 65 basis points. It's up across the board quite a bit, actually. We, you know, expect that to continue into the fourth quarter, that divergence between the portfolio yield and the yield on new assets coming in. Great. Lastly, just with the AOCI impact on TCE, I know you guys primarily focus on the regulatory capital ratios, but maybe just an update on how you guys are thinking about that and any updated conversations in general with how the regulators feel about that. You know, you mentioned still pursuing accretive M&A transactions. Maybe just kind of outlining what you guys are seeing in the market there and what type of transactions you'd be interested in pursuing now. With respect to the question on AOCI and tangible capital, you know, that's not a metric that we spend a lot of time focusing on here in our place. I mean, if you think about the AOCI changes in the last couple of quarters, it's largely on treasury securities, almost all on treasury securities. We don't really feel the need to have incremental capital to support basically an adjustment in the market value on treasury securities. We know when those cash flows are coming in, and they're certain. We don't think there's additional capital that's needed. We do focus on regulatory capital, and we also, you know, and that's what our regulators focus on as well, is regulatory capital, for that reason. You know, that's really our primary focus. You know, Chris, we also have a very long duration, stable core deposit funding base that obviously, you know, we don't have the ability to write that, you know, to its true value. You know, certainly that supports our overall valuation is that portfolio as well, and is actually, quite frankly, the reason we've been able to go longer on some of our asset durations because we have a very long portfolio of liabilities. You know, it's 75% of our total deposits in checking and savings accounts that are not particularly rate sensitive. I think on the Mark, on the M&A question, as we said last quarter, we are still interested in, you know, pursuing high-value acquisition opportunities. I think the market and the environment seems to be okay for having those conversations and those opportunities, so we're pretty pleased that those continue. I do think the one thing that's maybe changed a little bit for us is our ability now to grow organically on the bank side has maybe changed our M&A strategy a little bit. I mean, if you think about our growth opportunities, it's a three-legged stool. We have the bank organic, the non-bank organic, and then M&A. I think the M&A leg and the non-bank organic leg have always been really good. You know, below par growth that we've delivered generally over the years on the bank organic side, we've made up with, let's call them tactical M&A opportunities. I think with the ability to now have that third leg more solid and the ability to grow organically on the bank side appropriately, it allows us now to focus principally on more strategic M&A opportunities. That's kind of the discussion we've been, you know, having internally. Maybe a slight change to the strategy, but nothing changing near term in terms of, you know, our interest or ability or even, I would say, the level of dialogue, which is reasonably productive. Great. Appreciate the color, and thanks for taking my questions. Thank you. At this time, I would like to remind you if you would like to pose a question, please press star then one. Our next question comes from Matthew Breese from Stephens Inc. Please, Matthew, go ahead. Good morning, everybody. Good morning. Hey, I first just wanted to confirm on the loan growth outlook. It feels like mid-single digits is a pretty good bogey, low single-digit earning asset growth with, you know, the difference there being expected securities runoff. Is that an accurate statement? Yes. We think that's accurate, Matt. Okay. Within the loan pipeline, you know, where are the greatest strengths and where do you expect to grow or should we expect loan growth to be pretty diverse like we saw this quarter? Morning, Matt. The pipeline is strong across all of our businesses. We expect to grow in commercial. That's been obviously a meaningful area of growth for us. The pipeline there remains very strong. Same in mortgage. You know, notwithstanding what you're hearing about kind of the national situation, our markets remain resilient with obviously refi volume is down, but as you know, we put those on our balance sheet, so refi is a net zero for us. Purchase applications are actually trending up this year for us. We've also been hard at work at reorganizing our go-to-market model there a little bit. Expect that mortgage will continue to grow for us on the balance sheet side. Indirect has been very strong this year. It is a more cyclical business, and it's hard to predict, but right now, certainly the application volume remains robust, notwithstanding rate increases. You know, on the direct side, we've actually grown this year and continue to grow, you know, into the fourth quarter. We feel pretty good about that as well. It's the first year in a while that we've actually grown home equities, in addition to everything else. We feel good across the board. Is it going to be as strong as the third quarter? Maybe not. Still, that mid-single digit growth rate is achievable for us for next year. From an underwriting perspective, can you talk a little bit about the health of the underlying borrowers, just given the more tenuous backdrop? I s what we're seeing a reflection of, you know, the no-boom-bust markets that you're typically in, combined with a bit more horsepower on the lending front and exposure to some of the metropolitan areas? You know, and have you had to change underwriting at all or become more selective in this environment? Matt, our underwriting has not changed at all. What's changed is just our ability to be on the street and, you know, getting opportunities in the door across our business lines. If you just kind of also look at our markets, they remain housing constrained, i nventory is low. It's actually down on a year-over-year basis versus other markets in the country where it's up very meaningfully. There's just not a lot of housing to go around. The borrowers, you know, again, we're writing mortgages in the sevens today, just like everybody else, and purchase applications are strong. You know, the commercial borrowers as well, you know, we're looking at their financials, you know, on a constant basis. Where we've gone into the larger markets, we've gone with the best-in-class developers and clients. We like to say around here, you know, your biggest clients need to be your best clients. We're very focused on that. No, our credit metrics, you know, you look at our indirect business, you know, our FICOs are actually up year-over-year. As you know, we write kind of prime and super prime type paper in the used market. Nothing's changed in terms of our underwriting. It's just our ability to actually be more present in the markets. Great. Two other ones. The first quick one is just on tax rate and expected tax rate going forward. I have 23% modeled, but it's been a bit below that year- to- date. Yeah, Matt, I think the you know, the last couple of quarters is indicative of our expectations, which is in and around 22%, you know, plus or minus, call it half a percent, depending on activity in you know, in a particular quarter. Barring, of course, any you know, changes in state tax rates or anything along those lines, I would expect that the last couple of quarters is you know, indicative of the future tax rate of about 22%. Okay. Thank you. Last one is just, Mark, when you discussed, you know, more strategic M&A, could you give us some idea of the key differences in your view, for strategic M&A, you know, versus some of the past deals that you've done? You know, what do you look for in a strategic deal? Sure. We look for new markets, generally, adjacent, contiguous extensions that we think are strategic because we don't have a presence there. We have a lot of opportunity in those markets. They might represent some of those kind of slightly, you know, larger markets that we've gone into in the last handful of years, you know, Albany, Buffalo, markets like that. They're a little bit bigger. They're still not what you would consider metropolitan, but, you know, bigger than our kind of, you know, historical legacy markets. So I think that's number one. Talent is always something that's important to us that we assess as a component of our evaluation of transactional opportunities. Maybe particular businesses that are of great interest to us for some reason. You know, some banks have outsized really high-quality trust businesses, which is very additive, and other wealth management resources. Some have insurance. You know, sometimes it's talent, sometimes it's the market. So it's really can be a variety of things. I would suggest that, you know, the tactical type transactions have, you know, historically been kind of the smaller in-market plug-and-play kinds of transactions where, you know, they're smaller, so the accretion percentage, let's call it the economic value, is greater. There's lower execution risk because they're in market. So those I would consider to be, you know, historically more tactical. With the ability to have that kind of third leg of the growth stool, you know, those will become less, let's call it necessary or important in terms of our M&A strategy. We'll focus more on those, you know, kind of, market extensions, talent acquisition, business line product acquisition, those kinds of things, which, you know, we consider to be more strategic and less tactical. Great. I appreciate all the color. That's all I had. Thank you. Thank you. Thank you, Matt. We have, Alex Twerdahl from Piper Sandler with a follow-up question. Alex, go ahead. Thank you. Just on that last point with respect to the strategic M&A. You know, historically, your range has kind of been $500 m illion - $2 billion in sort of target asset size. Does something strategic, could that include something a little bit bigger than that range? Probably not at this juncture. It would have to be something significant and special for us to think about, you know, something, you know, beyond $2 billion at this point. We think there's a lot of really good strategic opportunities that are, you know, less than $2 billion. I would say at this juncture, Alex, no. I would say $2 billion is probably the top side of where we'd be thinking currently. Got it. Just on expenses. I don't think we touched on it yet, but just in terms of cost saves and sort of expected expense run rate. Is this sort of $107 million, $108 million the right starting point? As you look into next year, you know, how do you see expense trajectory? Yeah. Hi, Alex. It's Joe again. I'll take that question. Our history was growing at, you know, call it low single digits, maybe, you know, call it 3% as kind of a run rate around OpEx. We've invested a few, you know, additional resources in new loan generation and new business development. That in itself has, you know, the cost structure associated with that. As I think we're all keenly aware, you know, there's inflationary pressures on wages and other pressures on, you know, even vendors and the like from the standpoint of higher costs. You know, our expectations is that, you know, our run rate from this point forward will be kind of mid-single digits, potentially a tad higher if, you know, the inflation persists. Right now, kind of mid-single digits is our expectation. Great. The $108-ish million is the right starting point for that mid-single digits? That seems reasonable. We typically have, you know, some seasonal patterns around expenses. The snow will fly here at some point. There's just higher costs associated with Q4 and then Q1 into next year. You know, we typically have our merit increases in the beginning of the year and then things level out. I think the long-term trajectory of mid-single digits is a fair expectation, of course, barring any additional M&A at this point. Got it. Just to clarify on your NII growth comments. I think you said the fourth quarter you expect NII growth or expansion. I'm just wondering, as we head into 2023, as you kind of outlook and sort of see, obviously you have the exchange of low yielding securities for higher yielding loans. You know, given that weighed against higher funding costs, do you feel confident that NII can expand across 2023 as well? Yeah. We still expect that to continue to expand in 2023. Just the rate of change and rate of increase is unlikely to be replicated in 2023. Okay. Thank you for taking my question. Yeah. We're clearly writing loans well ahead of the wholesale funding costs, right? Every marginal dollar is additive, from a balance sheet growth perspective to NII. Right. Good. Thank you for taking my follow-ups. You're welcome. Now we have a question from Manuel Navas from D.A. Davidson. Manuel, please go ahead. Hey, good morning, fellows. Good morning. The non-interest-bearing deposit growth, is that all tied to public funds, or is that also seeing some nice growth from new commercial customers? Sorry, Manuel, can you repeat that? Yeah, no, I think, Manuel, you know, in the quarter, we actually had public funds outflows. The end of period non-interest bearing deposit growth is driven by, c an you kind of give extra color on that? Yeah. It's consumer and business. Okay, great. It's reaching about 32% right now. Any thoughts on how that can be held in across this type of more rapidly increasing deposit beta environment? I'm not sure what the 32%'s referring to, Manuel. You have roughly 32% non-interest bearing deposits. Actually, yes. I think if you look at our deposit account balances, the checking and savings accounts are about 70%, give or take, of the total. 70% is checking and savings, and about 30% is money market and CDs. You know, I think historically, if you look through different interest rate cycles we've had, the beta performance through the cycle has been really good. You know, the duration of those core deposits that go back and do core deposit studies on our existing core deposit base in connection with an acquisition, it's I think the last one we did was 14 years o r so. There's a lot of duration and stickiness to those deposits. I think we're going to be in a, you know, different environment going forward. I know some other banks have already been challenged in terms of the deposit base and the funding costs. I think that we will not be immune, you know, from that influence over time. I think right now it's pretty good. I think as Dimitar said, we're not seeing a lot of, you know, a lot of risk currently. I think that will come. I like where we're sitting in terms of our deposit mix and our historical ability to hold those in and hold the rates and hold the beta, you know, much lower. We won't have the same kind of pressure, because we're going to have the, you know, our strategy of kind of over the next few years, taking our investment book down by maybe a couple billion dollars. Still have tons of liquidity, but have a much more optimized, you know, balance sheet. We have some kind of forward funding that's going to ebb and flow, you know, quarter to quarter, you know, based on deposit and overnight borrowing needs. I think there's a longer-term strategy here that's pretty sound around repositioning our balance sheet over time to, you know, optimize the, you know, the earnings potential. I think if you look at a couple billion dollars in securities at, you know, 4%, that delta on earnings is $1 a share. I think our opportunity is $1 a share over the next few years without impairing liquidity without taking risks without even actually necessarily blowing up our balance sheet through kind of leverage. I think the remix of the balance sheet will be helpful. Obviously, the funding cost has always been really important to us. I think that's something we've been pretty good at, over the years in terms of, you know, building a really stable, sound, low-cost core deposit funding base that sticks with us through the ups and downs of markets, including rates up and rates down, and recessions and credit crises and the whole, you know, the whole gamut of things that, you know, that the economy kind of goes through over different cycles over time. You know, I like where we're at pretty well. I think on a shorter- term basis, you know, deposit rates are probably going to have to go up, you know, at some juncture, and we may experience some, you know, more challenging, you know, deposit retention environments going forward, but we haven't seen it at this juncture. Yeah. Manuel, maybe just to clarify, at [Stymestar] when we talk about checking and savings of 75%, we think about it that way because our savings accounts, I would call them nominal interest-bearing. You know, so they don't show up in the 30-something percent that you look at from a non-interest bearing perspective, but the rate on those is a few basis points. That doesn't scale up with betas the way our deposits do. I mean, you historically have a very strong deposit base, and you have more non-interest-bearing deposits as a percent of deposits than you've ever had. That's what I'm trying to highlight. That seems pretty good. We like it. All right. That's it for questions for me. Thank you. Thanks, Manuel. This concludes our question- and- answer session. I would like to turn the conference back over to Mr. Tryniski for any closing remarks. Thank you. Thank you, Marlise. Thank you to everyone for joining today on our third quarter call, and we will talk to you again in January. Thank you.