Ladies and gentlemen, please standing by, we’re about to begin. Welcome to this Community Bank System Third Quarter 2017 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 risks 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 Scott Kingsley, Executive Vice President and Chief Financial Officer. Gentlemen, you may begin.

Thank you, Shannon. Good morning, everyone, and thank you all for joining our Q3 conference call. It was another very strong quarter for the company with record quarterly operating earnings, following our first full quarter with both Northeast Retirement Services, which closed in February, and with demand closing in the Merchants Bancshares transaction. Scott will provide more detail on the financials. But in summary, for the quarter and year-to-date, operating earnings per share are up 13% and adjusted for cash earnings per share are up 18% for the quarter and 17% year-to-date. To repeat what we said last quarter, this acceleration in earnings and cash flow is the result of both the NRS and Merchants transactions. The per share accretion of NRS, which we previously expected to be in the range of $0.05 to $0.08 per share is running at an annualized rate of over $0.10. Merchants is also running ahead of our projections, due principally to accelerated realization of cost synergies related to both people and technology. We expect both transactions will continue to be firmly accretive to earnings generation into the future. Supporting this earnings performance similar to last quarter was record expense leverage, excellent credit quality or inorganic growth in non-interest revenues. What we underperformed for the quarter and year-to-date is long generation, principally business lending. The mortgage business is performing fine with organic originations drawing 3% year-over-year, pretty much standard through our markets. With respect to the auto business, in Q1, we took measures to improve the return on capital of that business, which has impacted origination levels with improved profitability on those lower originations. We expect that business to run at lower rates for the fourth quarter as well. Business lending, including C&I and CRE is off organically 4% year-over-year. Central and Western New York…

Thank you, Mark, and good morning, everyone. As Mark noted, the third quarter of 2017 was another very solid operating quarter for us. As a reminder, included a full quarter of the activities of the NRS acquisition that we completed in early February and the Merchants acquisition completed in May. I’ll first cover some updated balance sheet items, average earning assets of $9.45 billion for the third quarter were up 23.0% from the third quarter of 2016 and 8.9% above the second quarter of this year, reflective of the mid-second quarter acquisition of Merchants. On a year-over-year basis, residential mortgages and home-equity instruments grew 1.7% organically, as the company continues to sell most of its longer-term secondary market eligible originations. Consumer indirect loans at September 30 were essentially even with the end of the third quarter of 2016. Although our net charge-offs and delinquency results in this portfolio continue to be excellent, we have generally seen some consumer credit erosion compared to last year in the application process. And as Mark mentioned, in 2017, we have refocused our efforts in this portfolio on improving capital returns versus balance sheet growth. Excluding the Merchants acquisition, business loans were down from their year-ago levels, reflective of a number of outside unscheduled payoffs and the continuation of very competitive market dynamics. Quarter-end investment securities were down modestly from the end of the second quarter, but $340 million higher than the end of the third quarter of last year, a result of the Merchants acquisition. Average quarterly deposits were up $1.56 billion year-over-year in the third quarter of 2017, also reflective of the Merchants transaction, as well as continued success in core deposit gathering. We ended the quarter with $314 million of borrowings, which are all collateralized customer repurchase agreements, which acts likes, and…

Yes, sir. Thank you. [Operator Instructions] First question comes from Alex Twerdahl with Sandler O’Neill.

Hey, good morning, guys.

Good morning, Alex.

Good morning, Alex.

Hey, first off, I was hoping you can maybe give us a little bit more color on what’s going on with expenses, whether or not 3Q, have you seen lot of noise following a couple of successful deals? Can you give us an update on one, the timing of further cost saves, if there are any left to take out? And then two, you mentioned some investments, as you’re now over $10 billion, are there any further investments that you need to make as you kind of prepare for, I know DFAST is something that is ongoing? But any further investments that need to be made in the next couple of quarters?

Sure, thanks. So, look, Alex, I’ll go back and start with that. I think the third quarter of 2017 is a pretty good run rate to use as a base expectation for a fully – a full contributed quarter for both NRS and core Merchants into our total. I don’t think we had anything unusual in the third quarter of this year, that would make us think anything different about that. Relative to cost saves as it relates to the Merchants and the NRS transactions, we’re pretty much there. I think, we’ve mentioned before that, I think, some of the integration activities both from a technological and a people standpoint happened a little bit faster than our original timeline from an expectation standpoint. So I think, we’re at a point where incremental cost saves are probably unlikely from either of the two transactions for the balance of the year going into next year. Incremental cost for DFAST, great question. So in 2017, we did an internal driver run. We have done that exercise. Quite pleased with our results both from a first-year standpoint, both in terms of the process, the execution. And I think, as most people pointing out, at the end of the day, the numbers probably aren’t that important, as we might expect pretty good. I think for 2018, we’ll have some incremental costs associated with validation of a number of the models that we created this year and we’ll obviously refresh for next year. Our plan is to do a second drive run in 2018 that you submit those to the regulator in the same timeframes that are – that the other banks that are in our DFAST peer group are required to do. We’re just looking for feedback before we get into full-blown exercise that’s required for 2019. So we have another center sold per share of costs associated with getting from where are in 2017 to where we expect to be in 2019 probably. But I don’t think that you’ll see those via major blip in any of the quarters sort of going forward from here on.

Okay, that’s a lot of good information there. And then maybe you can just elaborate a little bit more on the margin. You said that you expected to remain roughly in the same range it’s kind of been borrow and purchase accretion. One, what’s your expectation for that the purchase loan accretion for the next couple of quarters? Do you think 1.3, is that kind of a decent rate to use in our model? And then some of the puts and takes on, you mentioned, the indirect auto yields or the profitability maybe moving higher, is that something they could have any real input – impact on overall loan yields, or inch a little more color there?

Sure. So, probably just a little bit of deconstruction of the 2017 second quarter and third quarter just to kind of lay that groundwork for that. We reported a 3.72% margin in the second quarter of this year. If you pull out 3 basis points of margin associated with the FRB dividend, you’re on a base of 3.69%. If you pull out $0.08 of purchase loan accretion from the second quarter, which is double that came out to, you’re at 3.61%. We just reported 3.64%. You probably need to pull out $0.08, sorry, 8 basis points of margin associated and we did book $1.9 million of purchase loan accretion in the third quarter. It was $1.3 million higher than the third quarter of 2016. But as you know, we still have purchase loan accretion from some of our previous transactions, the increase obviously comes from the Merchants transaction. And I think that it’s fair to say that that line item of $1.9 million a quarter going forward, it’s pretty reasonable for the next three to five quarters. As balances go down in the purchase loan side, which of course, they only do, in order to purchase loan values never go up, they only go down. You’ll find that the amortization or the accretion associated with that tends to trail over time. I think, we’re very early in the transaction, pretty reasonable to expect that number to be pretty constant for the next three to five quarters. And what leads us to believe that as we look at the ability to reprice assets in a rising rate environment, knowing full low, we’re starting off in a very, very low, based on the funding side. We feel pretty good about being able to sort of balance those and stay in this range of mid-3.50s prior to accretion and low to mid-360s with accretion.

Great. Thanks for taking my questions.

Thank you, Alex.

Thanks, Alex.

Next question comes from Joe Fenech with Hovde Group.

Good morning, guys.

Hello, Joe.

Hi, Joe.

Hi, guys. Could you talk a little bit about the auto, I guess, business in general. It sounds as though with some of the issues in that business that you guys feel as though you can fully protect yourselves and you have just with the tweaks you’ve made at the time of application. I guess, generally speaking, if you NRC, what would you worry about what – versus anything based on what you’re seeing, or in your view, is it just an issue for the industry over the return profile?

Fair question. I think for us, we’ve been in this business a long time. We don’t get in the business to get out of business quite a lot of other institutions do in our markets, which are more non-metropolitan. In rural, we provide the stable ongoing source of funding support for the dealers in our footprint. We have historically the asset volume on those portfolios has been better than the industry average. So, that’s something that we would never concede on is asset quality. I think we’ve been in a very good – the place for last eight years in terms of – Scott made reference to historical losses in that business that have been for us somewhat higher than 35 basis points a little bit higher. But for the industry, overall, a fair bit higher. So I don’t suspect. I mean, I think from an asset quality perspective, Joe, we’ll continue to perform better than the industry over time. I think some of the moves we made in the – on the first quarter around return on capital were just related to the profitability of the business. The spreads got too low. The dealer compensation got a little stretch. And so we decided to dial back a little bit understanding that it would hurt outstandings and originations. But it really wasn’t about growing the balance sheet, it was about improving the return on capital of that business. So on NRC more broadly in terms of the industry, I mean, one of the trends that we’ve seen in the industry is an exception of tenor. So the terms are longer. Borrowers are going out much longer and there are outlets for us those – for that paper in terms of those extended duration. And then you guess the – it used to be upside down in terms of loan-to-value very quickly when you write long-term paper. So that’s one of the things that I think from an industry perspective is, we’re keeping an eye on. And I mean, the other is the subprime market has come back. The outlet for that paper has returned to the market. And so, right now things are pretty good. In the economy, if there’s a turn, I mean, I think you would see those who are writing in above average level of subprime paper might take above the average losses. But…

And Joe, I think, this is Scott. The only thing I would add to that as well is, we continue to monitor the dynamic of where people are on loan-to-value, especially used car side. I think, it’s likely that the two hurricane storms in Texas and Florida will keep used car prices fairly buoyant or probably the balance of the year, maybe even a little longer than that. But over time with North American production and sales approaching the 18 million unit level, at some point in time, people have refreshed the car to drive way. So from a practical standpoint, loan-to-value probably only have one way to go on the used car side. So I would say, that’s probably the other sort of that point that’s what we’re following.

Okay. Thanks for that, guys. And then just switching gears to M&A, I know you guys play at a different level with the stock currency you have relative to others. But the market as a whole seems to be a little more skeptical about lot of the deals we’re seeing now. You guys did a lot of smart deals earlier in – particularly some of the branch deals where you got deposits cheap. I think, you talked about your feelings now on M&A just generally. Do you get more picky with the run these stocks have had in the corresponding impact on seller expectations, or is your approach is the same as it’s been and you just continue to do your thing here?

I think, it’s pretty consistent. I think, we try to be very disciplined around our M&A strategy and partnerships that we enter into with other businesses, whether it’s a bank, or a non-bank. It’s really around the confidence level we have in a particular transaction and the capacity to create value for our shareholders around those transactions. So it’s not about getting bigger, it’s not about topping up the balance sheet, it’s – I mean, it’s easier to run smaller banks than bigger one. But with the regulated capital, the industry that we operate in, you don’t have a choice, you have to grow your balance sheet to grow earnings per share and cash flow per share and dividends per share over time. So I don’t think, there’s no different – the current environment has changed our approach at all, look for high-quality partners that are properly priced, where we have a high degree of confidence and our ability to execute. Every transaction has its own risk return profile and that’s something we pay a lot of attention to. The higher the risk, the higher the returns and in vice versa. So we’re very cognizant that overall kind of risk return profile. The confidence level we have and our ability to execute in M&A strategy and have it be productive for shareholders. I think we’ve done fair job of that over the years. If you look at the markets we operate in, we can get 3%, 4% organic growth a year, that’s a pretty good outcome for us, those are the markets that we’re in. So we need to focus on getting that organic growth and executing on our efficiency and our expense discipline and deploying capital effectively to high-value M&A transactions that, that create a return – a sustainable…

Okay. And then, that’s helpful, Mark, thanks. And then still agnostic guys within the confines of the geographies that you talked about in the past, or as you move further from Merchants and closer to the next M&A opportunity, have you fine tuned your thoughts about the general areas of where you think it makes the most sense to head next geographically?

We are kind of just multiple states, Joe, we’re not going to do transactions South Carolina or Texas or California or anything like that. A banking transaction, we would do a NASDAQ transactions just as we did the NRS transaction in Boston. But I think generally, contiguous movement and contiguous expansion over time of our franchise make some sense. I think, with the success to-date of the Merchants merger, we have opportunities to evaluate other potential partners in The Greater New England market. There’s certainly a lot of room for us left in Pennsylvania, it’s a big state. We’re really only right now in Northeast Pennsylvania. And so, I think we have a lot of other opportunities in Pennsylvania. There are a lot of banks in Pennsylvania. So I think a lot of opportunity there. As you know, we’ve had discussions with a variety of institutions in Ohio and we consider Ohio as well. And then certainly anything that might make sense for us in New York is in our real house, at least, non-metro New York. So I think, we still have a lot of opportunity in most directions. So we can’t really go north, because we run into Canada pretty quick. But every directionally in other directions, I think, New England, Pennsylvania, Ohio, all are opportunities for us over time.

Okay. And then last one for me guys still on M&A. But you guys tend to do deals that are needle moving for you, but not so large as your – so where you’re betting the ranch on the outcome. I’m thinking the Wilber’s, the Oneida’s there, merchants with decently larger, but obviously you are not much bigger. But would you contemplate something that significantly larger as a percentage of the size of your company powder that what we’ve seen you do in the past or more like it’s been not as a payer pattern hold?

Fair question. Merchants was the largest transaction we ever did, it was about half the time 25% or so of our size. We’ve certainly continued to look at transactions of that size. We might go up a little bit bigger. I think, we certainly have the operating and integration acumen to execute on something that might be a bit bigger. I think. the challenge is, as you get bigger as the benefit the shareholders are doing something that’s small decline. So it would be difficult for us to do $200 million, $300 million, $400 million kind of asset size institutions unless there’s – unless the benefit with other – other benefits other than just the limited amount of accretion in shareholder value if there’s a strategic benefit, or a geographical benefit, or a – there was other benefits to the transaction. So I think, we’re unlikely to do something really large like a merger of equals kind of things. We’ve modeled everything. We’ve modeled large transactions before very large and there’s certainly they can be additive to shareholders. But in my view, the – that level of additional value to the shareholders is not worth the execution risk of doing something like that. So we’re probably never going to stress beyond, let’s say, third – something to the third of our size generally speaking unless there’s an – a typical set of circumstances for some reason that we can’t really foresee. But it is a matter of strategic policy, let’s call it. We probably aren’t going to do anything that’s more than third to 20% of our size is less likely.

Great. Thank you, Mark, I appreciate it, guys.

Thank you, Joe.

Thanks, Joe.

Next question comes from Collyn Gilbert with KBW.

Thanks. Good morning, gentlemen.

Good morning, Collyn.

Good morning, Collyn.

Mark, you may have covered this in your opening comments. But just wanted to get a little bit more color around your outlook for loan growth. Obviously, discuss what happened in the third quarter? But I think fourth quarter is usually a seasonably slowest quarter for you guys, too. So just kind of in general, I know, and then, but yet you indicated if you can get that 3% to 4% organic from a business model standpoint, you’re in good shape. I mean, what you’re seeing in the market? Do you still feel confident that you can get those kind of growth rates, or maybe just talk a little bit about future demand and where you see that coming on the lending side?

Sure. As to the credit prices have been good for us, because we have a lot of opportunity to work with customers that maybe work with larger banks before, or even smaller banks. I think we have a reputation in the markers in terms of safety and soundness. Again, so that was good period growth for us organically, subsequent to the credit prices also for a number of years as the economy kind of slowly turned around, it was pretty good. Where I’ve seen in this the second time, I’m with the bank 13 years, I’ve seen every cycle. But I’ve seen this cycle before where markets get frothy and the three star grown in the sky. And if you look at during those periods of time, we performed less well than our markets, than our competitors during those periods of time. I don’t know if we’re in that period of time right now, it does feel like it a little bit. As I said, the mortgage market is fine. We’ll continue to get our returns there. Originations were up organically 3% year-over-year, some of which we sold. So the balance sheets are up 3%. But the current business was intentional. We manage that, sometimes it grow as 15%, sometimes it shrinks. Right now, it’s in a modest shrink mode, and that’s okay that’s by design. The commercial business we’re working hard on that. It typically is – it relates to seasonality, interestingly not for us. The fourth quarter is usually pretty good. It’s usually in terms of originations our best quarter has best over the last few years. The consumer business is up typically, it’s a little bit softer in the fourth quarter and very soft in the first quarter. But the commercial business usually performs pretty well in…

Got it. Okay, that’s very helpful, very helpful. And then just a question on the NIM. Just trying to sort of reconcile legacy CBU with Merchants, because obviously, I know Merchants came on there, asset yields are running lower than where you’re all squared. But how should we think about kind of where the loan yield trends will be from here, I guess? And is there more to sort of turn lower, or we kind of seeing a – an inflection there?

Let me take a shot at that. So if you look back to, when we announced the transaction after the end of the third quarter of last year, we were roughly a core margin enterprises around 3.65 legacy CBU. Merchants was just to tick over 3%. If you would blend it altogether based on the asset mix that we both currently had at that time, we depended on 3.50 to 3.55 level. What I mentioned earlier is, if you just use the third quarter of 2017, now kind of what’s happened in the year, we’re at 3.56 prior to about 8 basis points of loan accretion. So we’re in that low 3.60 range with accretion. About 5 of that 8 basis points of accretion came from the Merchants transaction. To grow and where we were in the priceless transaction last third quarter, there have been three Fed rate changes since then. So we’ll be probably going to be a neutral. Interest rate mark on the Merchants portfolio actually became your important credits. So that’s just the granular size of how you get to that. I think it’s on the vast yield, I think Mark said is vast, more clearly new mortgages that are going on the books and new indirect auto loans are going on the books are a little bit higher than where our blended average yield of those two portfolios are. On the commercial side, pretty flat still. That’s – then the – as spreads have actually contracted new volume and a little bit higher than maybe this point last year, but at the same point in time, last time, you’re seeing coming off the portfolio in terms of some of the larger early payoffs have been some stuff with a little bit more robust yield. So I think in the current state, I think we feel better post Merchants that were able to balance asset repricing and holding funding costs at a level that don’t mean that we’re giving up margin points. So I kind of look at that as kind of a modeling expectation for us over the next 12 to 15 months.

Okay. Okay, that’s helpful. I will leave it there. Thanks, guys.

Thank you.

Thanks, Collyn.

Next question comes from Russell Gunther with D.A. Davidson.

Hey, good morning, guys.

Good morning, Russ.

Good morning.

Just a couple of follow-ups at this point. One on the broader margin guidance. So, Scott, I think you said low-to-mid 3.60 is with the accretion. Does that consider the kind of semiannual dividend, or would we expect to maybe tack on 3 basis points to that range in the next quarter?

I think you get two to four quarters to get that 2 to 3 basis points each time. So I think we think about as incremental net interest income, Russ. So if you want to consider that incremental net interest margin generation…

Sure.

That would be probably consistent with our expectations.

Okay. And then just given the comments on expectations for loan growth going forward maybe a little slower than we’ve seen for you guys more reasonably. But what will that imply for how you’re thinking about the securities portfolio? Could we see that drift higher as a result, or just how you’re thinking about managing that?

I think, over the last 12 months, for sure, maybe a little longer than that, we certainly have not been putting money back into the securities portfolio on a consistent basis. Maybe a little bit different portfolio close to Merchants. Merchants had a much higher level of MBS activity. So the cash flows are actually a little bit – a little quicker than lot of the bullet securities that we have historically owned from a legacy CBU standpoint. But I think in a market that expects rising rates, I’m not so sure this is the right time for the inflection point to be filing in the security. That’s quite maybe some reasonable growth on the core deposits gathering side. I don’t think we feel bad if we had sort of uninvested cash balances, which you’re going to get return overnight in the 1 to 1.25 range, anyway. I don’t know that we would tick down a lot of asset extension in order to build that up at this point in the cycle. Mid-year, next year, maybe you’ll [indiscernible]

Okay, very good. I appreciate the color there. And then just lastly, if you have it, could you breakout the wealth management and insurance revenue? I think 3Q might be a typically lighter on the insurance fee income and just trying to get a sense for the dynamics going forward?

.:

Yes. All right. Thank you, guys. That’s all I had.

Thanks.

Next question comes from Matthew Breese with Piper Jaffray.

Good morning, everybody.

Hello, Matt.

Chinky tax question, hello. Deposit service fees were up quite a bit this quarter. Could you just remind me of what drove that increase?

Actually it’s a Merchants transaction. So just more transactions, we’ve said this before, seasonally, the third quarter in terms of deposit service fees is our usually our best quarter of the year. It’s not that much better than the second quarter. But given the fact that we only had Merchants for half the quarter, that’s a real driver, Matt.

Okay. Should we expect a slight decline or flat for the fourth quarter given?

Yes, what I would say, it’s modestly down in the fourth quarter, but very, very close. And then as you know, historically, we generated $0.01 or cent-and-a-half a share less of banking non-interest income in the first fiscal quarter just less utilization of debit cards certainly other fees that are tied to transactional outcomes as opposed to account balances. So the first quarter the only one that really kind of fall below other three.

Got it, okay. And then along those same lines, can you remind us seasonally what are the high and low points in the insurance business and what we can expect for the fourth quarter there?

Sure, absolutely. So the fourth quarter typically has a reasonable amount of – we recognized revenue there on a renewal basis in that business. So the fourth quarter is usually pretty good. The second and the third quarters usually the low point of the year. Fourth quarter is a low but better than that. The first quarter as you see pretty robust, and the first and the second quarter, you usually pick up the differential from your current expectations perhaps maturing in contingency payments in the insurance business versus your actual receipt. So this year, you saw a natural spike for us, because we had a very, very robust contingency profit sharing year coming out of the 16-year. But again, now and our size from a non-interest income standpoint, not really enough to move the needle certainly under a $0.01 per share in terms of fluctuation along that line, probably good time that to remind you and others from a modeling standpoint. Usually, the first quarter for us is also seasonally challenged from an expense standpoint. One, you typically get the impact of a merit change on your employees from a compensation standpoint. Number two, a $0.01 to cent-and-a-half more of payroll taxes associated with the early year payroll processing. And for us usually a $0.01 and cent-and-a-half a share of utility and maintenance-related expenses, it never gets old to say for us, it’s just clearly more expenses to plough and heat that it is air-conditioning model, that’s just up.

Understood. Upstate New York gets cold still.

Okay.

And then, I just think about more broadly margin stability, perhaps some slower loan growth. And if you like your ability to grow EPS on a year-over-year basis and what would you expect the impact be without additional deals?

Well, I think we’re – we continue to execute on multiple elements of the strategy in order to grow shareholder value, because it can’t just be for us organic. So it’s hard to predict what those kind of things are going to be from year-to-year. Frankly, we don’t really manage year-to-year. We manage at a somewhat longer-term time horizon in terms of the investments we make and the expect – expectations we have around those investment. So it’s not quarter-to-quarter and it’s not really even year-to-year. I mean, that I think, our objective is that, in three years from now, our shareholders will be making more earnings per share, more dividend per share than they are now than three years after that. So I think, it’s very difficult. I mean, we may have a year where our earnings don’t go up, they go down, and I don’t think that’s necessarily unusual. I don’t think it’s necessarily – unnecessarily inconsistent with the way we make investments for the benefit of our shareholder. So that’s – it’s, I mean, year-over-year it’s a little bit short-term for us. But the goal is always to increase earnings year-over-year, in fact, our internal compensation structures, incentive compensation is around rolling your earnings year-over-year, so that’s important. We make every efforts to do that, but it’s really about the above average value that you create is not a year-to-year exercise. And so it’s more of a longer-term investments strategic exercise. And but with that said, we manage expenses very judiciously. We manage our – the trends in our non-banking businesses very judiciously. We manage all kind of elements revenues and expenses very judiciously. And hopefully, over time, that creates improved performance when your revenues roll a little faster than your expenses. Certainly, organic growth is very…

Great color. Thank you. And then, I guess, my last one is, in regard to reserve, Scott, you made a comment that you have seven years worth of historical charge-offs in there. How should we be thinking about the reserve for total loans and longer-term the impacts of seesaw on such a robust allowance?

Yes, great question. The second one is a bit more of, yes, but I will say, yes. We think our reserves are robust today than absolutely we do. We believe that on a going-forward basis, this level of 0.75 of total loans, because now almost $2 billion of our loan portfolio closed since it’s acquired, therefore carries no reserve against it. But I think kind of that 1% uptick on new originations and legacy loans is probably a reasonable one, but it’s a little bit harder to predict provisioning characteristics. That – historically, we could always tend to start with net charge-offs plus or minus loan growth, because we have such a large book of acquired loans today, as they just naturally sort of mature and roll through times when a loan that was acquired sort of re-raised itself two years from now. I think it’s a new loan as opposed to the acquired loan. So there’s probably a provision allowance set aside for that. The seesaw question is a great question. If you look at us historically, you go to an historic model. One would think with seven years worth of net charge-offs, and it’s seven years today and it was seven years two years ago and it was seven years four years ago, that we are probably as close to being covered as almost anybody you could model. So I don’t think we think that seesaw is a gigantic impact on capital for the banks, but we’re very early in the analysis part of that process. And so they’re too – certainly too early for us to give any kind of prognostication of do so much for capital do you views up or fee up, so.

.:

Thanks, Matt.

Thank you.

[Operator Instructions] We next move to Jake Civiello with RBC.

Hi, Scott. Hi, Mark.

Hi, Jake.

Guys, you’ve already provided a kind of great details. So thank you for all that. Do you think that consumer origination volumes have been tempered this year in part due to some concerns or fears regarding potential federal tax changes? And really the possibility of the loss of deductibility of real estate taxes, which really, I think, has a greater relative impact on some of your markets that have – that you have elevated real estate taxes?

No. I just – I think people made us, people move, people – I don’t think anybody is doing much. It’s certainly not the consumer level, Jake, as it relates to potential changes in tax impacts. And as I said, our mortgage business has been pretty good this year, pretty consistent usually is. It doesn’t move much over time. So we have – I don’t think we’ve seen any impact related to potential changes and the deductibility of home mortgage interest.

But you did on the hedge, Jake, in our space, that would be a big deal proportionally to many other states in the country.

Okay. Thank you very much.

Thanks, Jake.

Thanks, Jake.

There are no further question in queue. I would like to turn the conference back over to management for closing remarks.

Thank you, Shannon. I appreciate that. Thanks, everybody, for joining, and we will talk again in January. Thank you.

Thank you, ladies and gentlemen. That does conclude today’s conference. We thank you for your participation, and you may now disconnect.