Oct. 30, 2024

Rising Above the Liquidity Crisis: Navigating Interest Rate Changes with Strategic Oversight

Rising Above the Liquidity Crisis: Navigating Interest Rate Changes with Strategic Oversight

Can credit unions turn economic setbacks into stepping stones for success? Today, we sit down with https://www.linkedin.com/in/dustinholmberg, Chief Revenue and Lending Officer at https://www.clearviewfcu.org/. With $2 billion in assets and a...

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Can credit unions turn economic setbacks into stepping stones for success?

Today, we sit down with Dustin Holmberg, Chief Revenue and Lending Officer at Clearview Federal Credit Union. With $2 billion in assets and a vibrant community of 120,000 members, Clearview is not only surviving but thriving in today’s financial landscape. In this episode, we explore the transformative power of AI, innovative lending strategies, and the critical role of community engagement. Dustin also shares his personal journey and insights on adaptability, revealing what it truly takes to lead in the credit union industry.

Join us as we discuss:

  • How Clearview Federal Credit Union manages interest rate changes and liquidity crises through strategic oversight of margins, CD rates, and loan growth.
  • The role of AI and Robotic Process Automation (RPA) in boosting efficiency in underwriting and automating repetitive tasks, empowering employees.
  • Clearview's "digital-first" approach and its expansion of physical branches to enhance community engagement and member convenience.
WEBVTT

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You're listening to Leaders in Lending from Upstart, a podcast

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dedicated to helping consumer lenders grow their programs and improve

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their product offerings. Each week, here, decision makers in the

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finance industry offer insights into the future of the lending industry,

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best practices around digital transformation, and more.

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Let's get into the show, Hi, and welcome to Upstarts

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Leaders in Lending podcast. I'm your host Barry Roach. On

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today's show, We're joined by Dustin Holmberg, the chief revenue

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and lending officer at Clearview Federal Credit Union.

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Now.

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Clearview is a thriving, two billion asset credit union headquarter

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in Pittsburgh. They have an airline employee heritage, and they've

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been community chartered for the past twenty years, serving one

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hundred and twenty thousand members throughout western Pennsylvania. They were

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avoid a top workplace in twenty twenty four by the

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Pittsburgh Post Gazette, NUSA Today, and Cleary was named one

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of America's best credit unions by Newsweek. Welcome to the show, Dustin,

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are you today?

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I'm doing well?

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Berry?

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How are you today?

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Good? Doing well? Thank you so? Justin a little bit

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about yourself kind of your your history throughout your career.

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I know you and I have a lot of shared history,

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but i'd kind of like you to tell the audience

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where you came from and kind of how you got

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to where you are today.

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Well, thank you. So I grew up in a military family.

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My dad was in the Air Force. We kind of

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moved around a bunch when I was young, and through

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that experience, I learned the value of hard work and adaptability,

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and you learn you learn how to make friends quickly,

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you know, when you move in from place to place.

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I think I think I actually lived in fifteen houses

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before I graduated high school. So you can't let the

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grass grow under your feet. You have to jump in,

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get involved when you move from place to place, and

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that kind of thing.

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That's great. So similarly, my father was a banker and

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back in the day, and I'm going I won't tell

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you how when I was born, but you know, way

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back in the day, it was very common. Every couple

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of years or so, we moved and it was to

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a town, and that's when the branch manager was sort

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of a big deal in these smaller towns I lived in.

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But I was always a new kid, right and my sister,

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my poor sister, and take her six months to find

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one friend. Within a week, i'd have, you know, the

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whole neighborhood over in the backyard. We'd be playing baseball

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or something like that. So I'll say that for myself,

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it kind of gave me some skills early in life

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and adaptability to be able to get out there and

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to sort of meet people and certainly help me in

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my career. I'm sure you had a summer serve An experience.

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Yeah, I mean, you really do learn how to build camaraderie.

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You learn how to if you're going to fit in,

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you got to fit in quick. And sports obviously helps

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you learn a lot of those lessons, Like you gain

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trust by giving trust first, you learn you also have

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to take some risks. You also learn how to speak

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different languages. And by when I say different languages, we

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talk a lot about that here internally with my team.

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But it's not necessarily different languages in the way that

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you think typically, but it's more you know, using words

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that that resonate with the with the audience, and you

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know there are different dialects around each region, and so

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you have to learn that speak the uh speak the

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home language, as it were.

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So there's more than one dialect around Western Pennsylvania, Is

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that what you're telling me?

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Western Pa is its own is its own unique dialect,

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that's for sure. I've had to learn a few new

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words come out.

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Here, or West Texas for that matter, right.

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There, Yes, yes, the difference between y'all and YenS is.

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But you can you can play in both spaces now

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at this point.

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Right absolutely, absolutely, good good.

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Well, I you know, in honor of West Texas, I

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had to bring on my little bobble head doll here.

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So okay, good, Yeah.

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It's tough being a Cowboys fan living in Steelers Country,

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that's for sure, I guess.

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So yeah, yeah, so we have we have a low

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budget on Learers and Lane. That's the one prop I have.

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So okay, now let's let's uh uh, let's talk about

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things happening in the credit union industry, things happening with

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clear view. It's it's almost the end of twenty four.

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Can't believe it's already October now, And boy, what a

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year it's been. Right, twelve months ago, we were in

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the middle of a liquidity crisis. We all thought, oh, yeah,

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the Fed's going to reduce rates. What four or five

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six rate cuts we're going to see that by now

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we just had one just in the past couple of weeks.

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The two ten spread finally has come back from being

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in negative territory only in the past couple of weeks,

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and we get into a positive shift, which you know

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is you know, in credit unions. I mean, now we're

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gaining to a point where there's sort of a natural

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spread that we can start to plan for. As we

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talk about the difference between deposit and loan rates and

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so on, maybe tell the audience a little bit about

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how Clearview has worked to sort of combat those equity

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challenges that have happened. And if you've had to make

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any sort of shifts in your business lending or deposits

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this case, maybe.

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Well, I think if you didn't make any changes to

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your lending strategy you say that you haven't had to

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make any tweaks, then I'm not sure you were trying

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really in the first place. I think, you know, twenty

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two is really kind of the banner year for for

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credit unions and for the industry as a whole. You know,

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it was it was everybody was borrowing. That was the

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year when you know, rates were still kind of at

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that affordability level, but you know they're kind of still raising.

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It was one of the strongest lending production years historically.

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I'm not one hundred percent sure it's going to go

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down as one of the best as it were, but

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but but you know, from a production standpoint, definitely very strong.

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I think in many ways, something's changed within the marketplace

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in twenty twenty two that allowed people to have a

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little bit more kind of extra you know, budget to

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be able to borrow. Something may have changed within the

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borrowers' profiles that wasn't necessarily captured by the traditional underwriting

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or credit credit models, and so I think that was

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that was a that was a major shift that happened.

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And coming off of twenty twenty two into twenty twenty

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three and twenty twenty four, if the expectation was you

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were going to continue to keep making loans at the

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same pace, and it really wasn't the case. And you know,

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liquidity crunch, particularly after this the Kon Valley Bank incident,

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put credit unions into place that they really hadn't been

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in a couple of decades. We found that we had

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an entire generation of the workforce that grew up in

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a historically low and flat interest rate environment, and we

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had to introduce this new thing. It's called a CD.

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It's a it's as traditional thing for banks and credit

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unis to offer. But if you really kind of think

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about it, when was the last time that CD rates

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even really mattered. I mean it was really kind of

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more before the Great Financial Crisis when that was the case.

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And so we were faced, uh, you know, working with

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a workforce that were new to the industry and maybe

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they didn't even know what a CD was before they

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got into the industry, and so that was that was

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really kind of one of those major levers. I remember

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also too, because we were in this you know, historical

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rise and interest rates, having to write a bunch of

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articles and education pieces, different internal blogs for our team

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members here where I had to remind them that, you know,

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three percent mortgage wasn't normal, that was actually a historical

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outlier versus versus what the six to eight percent, which

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is the you know, kind of more historical averages. And

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so you know, it really kind of became one of

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those grieving processes that you helped both your team and

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your members kind of moved through over the last couple

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of years, and it's really kind of been a balancing act.

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Yeah, sure, that's interesting. I hadn't really thought of the

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impact on the team. I mean, I've been in financial

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services for over thirty years, so been through the Great

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Financial Crisis. You know, saw things in the nineties as

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inflation was rising, and we had issues in the late nineties,

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and then the run up with tech stocks and so on, right,

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that little bit of a bubble. But there was a

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time when you could charge seven pay three. You all

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went home Friday night and everyone was happy. Customers were happy,

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members were happy. Right, it was so much, so much easier.

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But I hadn't really thought of that angle with the team.

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So how exactly do you sort of train a train

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those folks to sort of look for those opportun cotunities

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or to maybe find ways that you can that you

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can get solutions for your members without sort of having

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to make any substant changes to your product suite.

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Yeah, and I think you know, we had some serious

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and very candidate internal conversations, and the one thing that

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we had to make sure of is that when we

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put a CD rate out there that was actually going

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to have an effect. You know, that was really something

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that we hadn't Those were muscles that we really hadn't

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exercised for many, many years in the financial industry, and

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so we didn't know that if we put a CD

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rate out there that members would actually respond. Again, it

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was also became a little bit of an education piece

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for them. You still saw, you know, kind of industry wide,

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we kind of had this balance sheet problem. So many

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of our so many of our assets were in these

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non maturing shares and these short term and kind of accounts,

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and members really were they didn't instantly move it the

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second that you put CDs out there. It was really

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kind of crazy to watch kind of a agile movement

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over time, and uh, you know, it was just it

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was it was something that was that was that was

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a challenge and something that we didn't know we were

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going to be successful at. But what we did find

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is that, you know, the investments that we made into

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our brand and our brand awareness helped us get to

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the right audience. We worked with our teams and were

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able to, uh, to navigate the choppy waters.

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That's great. Yeah, that Sleepy Money sort of woke up right.

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We just called you know, I have a crediting background

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as well, and we called sleepy money. It was just

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those those regular shares that that had been in in

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those accounts forever and were not necessarily happy with the

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low rates that were being paid on savings accounts, but

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certainly weren't compelled to move it until we saw five

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percent CDs and so on. Interesting, just with clear view,

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how did you were you finding new deposits coming in

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or was it more of a strategy to try and

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retain the deposits that you had, or maybe it was

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it a bit of both.

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Yeah, I was a little bit of both. And right,

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you're looking to you understand that when you put those

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CD rates and those CD specials out there, that there

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is a certain amount of that that's going to be

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hot money. But you hope that you that there's enough

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that you get to hold on to on the back

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end with those members. You bring them in the door

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and show them good service and hope that you can

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retain the business.

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Right, right, and the reason for those to posits, I

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guess you know. Lending, I've heard sort of different strategies

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across the country. Some credit unis and banks had no

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problem meeting lending growth goals in twenty three and twenty four.

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Some are struggling depending on the region they're in or

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the affordability of housing, for example, I think the mortgage

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spaces is a little bit different. Talk to us a

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little bit about in Western Pennsylvania sort of your your

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main market. I mean, what have been the main drivers

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for lending growth in well?

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I think industry, right, we had a balance sheet problem,

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you know, we had we had We've gone through so

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many years where interest rate risk was. It was something

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we discussed in Alco and Alco, but we didn't really

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actually think it was something that could that could sink

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the ship. And so we you know, we we had

236
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lent some money out and now you're starting to see

237
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your cost of funds rise because you're having to actually

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pay for some of those shares to keep them on

239
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the books. And so conventional wisdom tells you that you

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want to extend while the rates are high. Well, not

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every credit union was in the in the position to

242
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be able to do that. Also, you weren't used to

243
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being able to get you know, four four and a

244
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half five percent on overnight deposits. And then it became

245
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a real real question like do you take that extra

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interest rate, you know, do you take the interest rate risk,

247
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do you take the credit risk, or do you keep

248
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it in overnights? And I think a lot of credit

249
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unions used the last year, even if they didn't necessarily

250
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meet their their long growth goals. I think for us,

251
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it was more about balancing the you know, balancing the

252
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net interest margin and making sure that there was you know,

253
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a sufficient amount of profitability there to reach our revenue goals.

254
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Sure, yeah, and a push pull between the finance and

255
00:11:53.519 --> 00:11:56.000
the lending groups. Right. Finance group is like, hey, wait,

256
00:11:56.039 --> 00:11:58.679
I can get risk free in the fours. The lending

257
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groups like, well wait a minute. You know, we have

258
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members that need to serve. Right, So it's not just

259
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the additional revenue that you earned from the the from

260
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from the spread of those sort of higher rate loans,

261
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but also putting money on the street, right. I Mean,

262
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that's that's really what credit inges are all about, is

263
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about making sure that that that we have funds available

264
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in the community for those who need it to buy

265
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that next house, or to buy the next vehicle and

266
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so on. So you know, not to get too deep

267
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into sort of clear view, and you know, the fistfights

268
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that might have happened in the boardrooms or so on.

269
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But but I have heard that sort of across the

270
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country that that there was a bit of a push

271
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pull between finance and lending. How do you work with

272
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with your with your executive team to to to make

273
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sure that you're served, You're you're on you maybe on

274
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different cars of the train, but you're on the same track.

275
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Yeah.

276
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I think that that comes to the relationships that you

277
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build with the other executives and the organization. I think, uh,

278
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you know, our CFO and myself have a great relationship.

279
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We work very very closely, have regular conversations about you know, alternatives.

280
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I think we always talk about, you know, what are

281
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the what are the different options that are available to

282
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us at any given time, and we we do take

283
00:13:06.519 --> 00:13:09.679
a good holistic approach. I think that's with my background

284
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also not only being in the lending but also having

285
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an enterprise risk management kind of component to my background

286
00:13:15.000 --> 00:13:17.799
as well. I tend to take a much a much

287
00:13:17.840 --> 00:13:20.720
more holistic approach to the revenue and what we want

288
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to do is we want to build something that's that's sustainable.

289
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I don't want to just go and go out and

290
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make a bunch of little gains that are that are

291
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one time gains for the organization. We want to invest

292
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in business that's that's sustainable for the organization. And I

293
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think you're exactly right where you were talking about, you know,

294
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we we want to keep enough powder drive for our

295
00:13:39.440 --> 00:13:41.960
current membership. I think that was also a major problem

296
00:13:42.039 --> 00:13:44.519
coming out of twenty two and twenty three. We really

297
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had to raise rates at a very drastic rate so

298
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that we could slow the low growth because that once

299
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you start that engine, it continues like a flywheel to

300
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keep producing. And what we what we found is that,

301
00:13:57.440 --> 00:13:58.799
you know, we kind of had to put the brakes on.

302
00:13:59.320 --> 00:14:00.720
And what you do, I don't want to do, is

303
00:14:00.840 --> 00:14:03.000
you don't want to put the brakes on so aggressively.

304
00:14:03.039 --> 00:14:06.000
Did you start communicating to the industry that you don't

305
00:14:06.000 --> 00:14:08.960
want their business? But it's still like you were talking about,

306
00:14:09.000 --> 00:14:11.840
it's that push and pull conversation about you know, making

307
00:14:11.879 --> 00:14:14.840
little tweaks each month. I know that there were some

308
00:14:14.879 --> 00:14:18.639
nervous days speaking internally between myself and our CEO and

309
00:14:18.679 --> 00:14:21.559
our CFO about you know, yes, we're still growing at

310
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a really rapid rate on the lending side, and the

311
00:14:23.919 --> 00:14:26.720
deposits aren't growing quite as quickly, and so you know

312
00:14:26.919 --> 00:14:29.240
it's about yes, we're making little tweaks. I know you

313
00:14:29.240 --> 00:14:32.639
can't see it today in the production, but everything has

314
00:14:32.679 --> 00:14:33.600
a long lag.

315
00:14:33.840 --> 00:14:36.600
Oh for sure. And that shift happened so quickly. I

316
00:14:36.600 --> 00:14:39.120
mean the end of twenty twenty, we were faced with

317
00:14:39.679 --> 00:14:43.000
record deposits. There was a stimulus one, stimulus two, and

318
00:14:43.039 --> 00:14:45.000
then we didn't know three was coming around. But it

319
00:14:45.039 --> 00:14:49.240
did just more liquid into the system, which was great

320
00:14:49.240 --> 00:14:52.159
for those who needed it. For those who were charged

321
00:14:52.200 --> 00:14:56.120
with finding new loans, not so great. No one was borrowing, right,

322
00:14:56.639 --> 00:14:58.919
and anyone who was boring was paying those loans back,

323
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which again great, an historically good time to lend. However,

324
00:15:02.679 --> 00:15:04.720
there just wasn't a whole lot of demand for it, right.

325
00:15:05.440 --> 00:15:09.000
But you said before, I mean your your title. It's

326
00:15:09.039 --> 00:15:10.639
it's in the title. It's not just you're not just

327
00:15:10.679 --> 00:15:13.759
a lending officer, you're the revenue officer. So you you

328
00:15:13.840 --> 00:15:16.000
do have to take that sort of that broader look,

329
00:15:17.000 --> 00:15:19.720
I would think for clear View, because you've got some

330
00:15:19.759 --> 00:15:24.639
pretty significant goals around the digital experience and and enhancing

331
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that that that member experience and the ability for your

332
00:15:27.320 --> 00:15:29.679
members to be able to do more and more business

333
00:15:29.720 --> 00:15:33.480
faster online without without the aid of of of of

334
00:15:33.519 --> 00:15:36.320
a human or or of an employee. So the revenue

335
00:15:36.360 --> 00:15:39.080
side that becomes of the utmost importance I would think

336
00:15:39.080 --> 00:15:42.279
to be able to fuel and fund those technology investments

337
00:15:42.279 --> 00:15:44.360
you're making. So maybe talk with us a little bit

338
00:15:44.360 --> 00:15:45.200
about that if you could.

339
00:15:46.000 --> 00:15:49.240
Yeah it clearview, clearview. We're a digital first credit union.

340
00:15:49.240 --> 00:15:51.639
And by saying that, it's not to say that we

341
00:15:51.919 --> 00:15:54.799
want to make all of our products and services and

342
00:15:54.960 --> 00:15:58.840
only offer those through digital means. What we are also

343
00:15:58.919 --> 00:16:00.759
not saying that we don't want to talk to our members.

344
00:16:01.039 --> 00:16:04.759
But what we are saying is that, if all things

345
00:16:04.799 --> 00:16:07.480
are equal, we believe that most members do prefer to

346
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do business on their own terms at the time that

347
00:16:10.360 --> 00:16:12.840
they prefer, and so I'm a big fan of meeting

348
00:16:12.840 --> 00:16:16.519
members where they are not overly complicating processes. Now, this

349
00:16:16.639 --> 00:16:18.679
is not to say that we're not we don't value

350
00:16:18.720 --> 00:16:21.519
our physical presence. Quite the contrary. We're actually in one

351
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of the most aggressive growth plans phases in our physical

352
00:16:24.879 --> 00:16:27.600
presence and in the companies more than seventy years worth

353
00:16:27.639 --> 00:16:31.720
of history, and so we're investing on both sides. But

354
00:16:31.960 --> 00:16:34.519
you know, we talked a little bit about speaking different languages.

355
00:16:34.559 --> 00:16:37.960
I think in lending we're awesome at speaking the language

356
00:16:37.960 --> 00:16:40.679
of lending, and members might as well think that we're

357
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speaking Latin. And so it's really kind of trying to

358
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take those digital processes and make them convenient for members

359
00:16:47.879 --> 00:16:50.919
and meeting members where they are we want to. We're

360
00:16:50.960 --> 00:16:55.440
always focusing on clear and concise messaging to those members.

361
00:16:57.200 --> 00:16:59.679
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362
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376
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Thanks and now back to the show.

377
00:17:40.799 --> 00:17:43.920
Right, So, with your branching strategy. Because you and I

378
00:17:43.920 --> 00:17:46.039
talked a little bit before this. I started my career

379
00:17:46.079 --> 00:17:48.839
as a teller, you did as well, right, I still

380
00:17:48.839 --> 00:17:52.079
remember payday Fridays with people coming in with with physical

381
00:17:52.119 --> 00:17:54.559
paychecks to get cash or to put money in there

382
00:17:54.599 --> 00:17:56.400
in their accounts or what have you. Those days are

383
00:17:56.400 --> 00:17:59.680
long gone, right, and and good because you know, why

384
00:17:59.799 --> 00:18:02.079
line up on Friday after a hard day of work.

385
00:18:02.119 --> 00:18:05.880
I mean that never made much sense, so that aspect

386
00:18:05.960 --> 00:18:10.240
of branching is less necessary now. So where is branching

387
00:18:10.319 --> 00:18:13.440
going for Cleary or what's your view, Dustine, of the

388
00:18:13.920 --> 00:18:16.559
need for branches, or why are branches still important and

389
00:18:16.599 --> 00:18:19.039
why is it worth the investment that clearly is making

390
00:18:19.039 --> 00:18:20.960
any branches well.

391
00:18:21.000 --> 00:18:23.359
I think the research out there suggests that members want

392
00:18:23.400 --> 00:18:26.599
you to have a relevant physical presence. It's not necessarily

393
00:18:26.599 --> 00:18:28.599
for the same reason that they wanted it in the past.

394
00:18:28.640 --> 00:18:30.200
I mean, like you said, it's not like they're going

395
00:18:30.279 --> 00:18:32.279
to be walking in every single Friday or every other

396
00:18:32.319 --> 00:18:35.319
Friday to castro check. They just want to work with

397
00:18:35.680 --> 00:18:38.480
and engage with their local institution, and having a physical

398
00:18:38.519 --> 00:18:41.359
presence is one way to show that you're local and

399
00:18:41.400 --> 00:18:44.200
in the community. We view our branch network as kind

400
00:18:44.200 --> 00:18:47.519
of an extension of our brand awareness initiatives. We want

401
00:18:47.519 --> 00:18:50.920
our locations to be convenient, but more than that, we're

402
00:18:50.920 --> 00:18:53.559
working on making them visible. We want to communicate who

403
00:18:53.559 --> 00:18:56.160
we are, our values and our partnership and our brand

404
00:18:56.160 --> 00:18:58.000
promise to the community through that network.

405
00:18:59.200 --> 00:19:03.359
So is SARAH a community involvement tactic? I guess for

406
00:19:03.720 --> 00:19:06.640
your local branch managers. You know before, like my father

407
00:19:06.759 --> 00:19:08.839
as a branch manager was kind of a big deal

408
00:19:08.880 --> 00:19:12.359
in these smaller towns because you know, seen as sort

409
00:19:12.359 --> 00:19:14.240
of a leader in business and so on. Are you

410
00:19:14.400 --> 00:19:17.440
seeing a similar sort of or are you taking a

411
00:19:17.440 --> 00:19:20.119
similar approach with with clear view in your branches?

412
00:19:20.599 --> 00:19:22.720
And I think historically in the credit union industry it's

413
00:19:22.799 --> 00:19:25.319
kind of more been the branch network has kind of

414
00:19:25.319 --> 00:19:28.720
been had the service center managers that that weren't necessarily

415
00:19:28.759 --> 00:19:31.440
those business development people that that that you that you

416
00:19:31.519 --> 00:19:34.440
see and you know from the historical banking perspective, and

417
00:19:34.480 --> 00:19:36.720
I think that's where having the background of both working

418
00:19:36.799 --> 00:19:38.519
in a bank and a credit union is really helpful

419
00:19:38.680 --> 00:19:41.160
because it allows you to use the best of both

420
00:19:42.160 --> 00:19:45.000
best of both sides of the the business model to

421
00:19:45.480 --> 00:19:48.799
kind of maximize the opportunities that you have. I think

422
00:19:48.799 --> 00:19:51.039
that's something that we're working with and working towards and

423
00:19:51.079 --> 00:19:55.119
building a proper sales culture within the organization. But yeah,

424
00:19:55.119 --> 00:19:57.960
that's that's definitely the more locations you get, the more

425
00:19:58.000 --> 00:19:59.440
you kind of have to be out in the community.

426
00:19:59.680 --> 00:20:01.960
That's where that's really part of that brand promise.

427
00:20:02.480 --> 00:20:05.599
And do you see branching and the digital experience like

428
00:20:05.680 --> 00:20:08.200
how do they I mean, obviously they co exist, but

429
00:20:08.319 --> 00:20:10.200
maybe for different reasons. But do you see sort of

430
00:20:10.240 --> 00:20:13.559
an integration of the two happening. Maybe it's not something

431
00:20:13.559 --> 00:20:15.920
you have now dustin, but something that down the road

432
00:20:16.039 --> 00:20:18.559
is maybe under roadmap to be able to to to

433
00:20:18.599 --> 00:20:20.119
provide that for for your membership.

434
00:20:20.680 --> 00:20:22.880
Yeah, it's a balanced approach. I mean, you know, you

435
00:20:23.200 --> 00:20:27.680
do need a well situated branch network that's that's member focused.

436
00:20:28.160 --> 00:20:28.440
Uh.

437
00:20:28.519 --> 00:20:31.319
And you want to create tools that are that are

438
00:20:31.319 --> 00:20:34.279
intuitive for them to uh to be able to use

439
00:20:34.319 --> 00:20:36.880
and be able to introduce to the communities. I think

440
00:20:36.960 --> 00:20:39.599
you know you coming from the branch network, no, uh,

441
00:20:40.079 --> 00:20:42.880
just and appreciate how many different things you have to know.

442
00:20:43.559 --> 00:20:45.799
When you're working in the financial center, members come into

443
00:20:45.799 --> 00:20:49.119
you to ask you all manners of questions and that's

444
00:20:49.119 --> 00:20:52.279
a that's a huge that's a huge undertaking, and so

445
00:20:52.319 --> 00:20:55.599
we try to we really do place a focus on

446
00:20:55.759 --> 00:20:58.720
developing our products and services that are that are intuitive.

447
00:20:58.799 --> 00:21:02.200
We want tools, uh that are easy for our members

448
00:21:02.200 --> 00:21:05.000
and for also our frontline to use. But you talked

449
00:21:05.000 --> 00:21:07.920
a little bit about that integration between the lending site

450
00:21:07.960 --> 00:21:10.920
and also the branch network. I think you know, the

451
00:21:10.920 --> 00:21:13.720
branch network is a great members will come in with

452
00:21:13.799 --> 00:21:17.160
some questions and I think you know, there's there's certain

453
00:21:17.440 --> 00:21:20.519
applications where where a branch network is gonna is going

454
00:21:20.599 --> 00:21:23.000
to have kind of a limited amount of information that

455
00:21:23.039 --> 00:21:24.720
they're going to know, and then you just have to

456
00:21:24.720 --> 00:21:27.799
have that seamless, seamless pass off to to the more

457
00:21:28.319 --> 00:21:30.920
qualified lending people on the on the back end.

458
00:21:31.200 --> 00:21:34.519
Right right, So you know, up Start we're a technology company.

459
00:21:34.559 --> 00:21:38.559
We've been using our official intelligence for underrating of lending

460
00:21:38.640 --> 00:21:42.240
for many years now. And and AI is it's it's

461
00:21:42.279 --> 00:21:45.160
a new topic but kind of misunderstood, right. I mean,

462
00:21:45.920 --> 00:21:49.599
there's some doomsday things around AI. People are nervous about it.

463
00:21:49.720 --> 00:21:52.440
Is it mean that all jobs are going to be

464
00:21:52.480 --> 00:21:54.359
done by robots and so on and so forth, But

465
00:21:54.640 --> 00:21:56.920
you know, I kind of take the view and you

466
00:21:57.200 --> 00:21:59.559
gave an example with brand like branch people have to

467
00:21:59.599 --> 00:22:02.519
know so much about everything about all products and then

468
00:22:02.799 --> 00:22:04.920
how you service those products, and then what if there's

469
00:22:04.920 --> 00:22:07.480
a problem or a complaint or you know, or or

470
00:22:07.559 --> 00:22:10.759
there's there's a compliance issue or something. I mean, there's

471
00:22:10.799 --> 00:22:13.920
just so much more to know than what you and

472
00:22:13.960 --> 00:22:16.480
I need to know years ago as tellers, which basically

473
00:22:16.680 --> 00:22:19.400
you know, stamp that check and and give cash. It's

474
00:22:19.400 --> 00:22:21.720
it's gotten so much more complex. Here's where I think

475
00:22:21.759 --> 00:22:24.599
AI can really help those branch folks, because if there's

476
00:22:24.640 --> 00:22:28.759
an efficient way that they can take those those questions

477
00:22:28.799 --> 00:22:30.759
that are coming in from from the membership and with

478
00:22:30.839 --> 00:22:33.359
a prompt be able to come back with an answer

479
00:22:33.400 --> 00:22:37.599
that aligns with your your procedures, your probably your your

480
00:22:37.599 --> 00:22:39.519
policies and so on and so forth. I mean that's

481
00:22:39.599 --> 00:22:41.759
kind of where the magic is, right. So you know,

482
00:22:41.839 --> 00:22:45.440
do you see with clear view like AI being being

483
00:22:45.440 --> 00:22:48.559
a solution to sort of help that down the road

484
00:22:48.599 --> 00:22:48.799
with you?

485
00:22:50.079 --> 00:22:52.119
Yeah? I think that's that's the one power of AI

486
00:22:52.319 --> 00:22:54.359
is that's able to crunch a bunch of information and

487
00:22:54.400 --> 00:22:57.079
come back with relevant answers. And I think that's that's

488
00:22:57.160 --> 00:23:01.559
something that we're we're continuing to adapt our a our

489
00:23:01.599 --> 00:23:06.440
a roadmap here internally. Uh there, you know there's a

490
00:23:06.440 --> 00:23:09.240
as kind of a buzzword out there, right, it's it's

491
00:23:09.279 --> 00:23:12.519
got you know, there's a bunch of different applications and

492
00:23:12.640 --> 00:23:15.079
trying to figure out exactly what the best applications are.

493
00:23:15.119 --> 00:23:18.119
I mean, we we do use some technology here internally,

494
00:23:18.160 --> 00:23:21.119
but we're talking very much about how AI tools would

495
00:23:21.119 --> 00:23:24.319
be extremely helpful for you know, those question and answers,

496
00:23:24.759 --> 00:23:27.559
uh for for the frontline staff, you know, because you

497
00:23:27.599 --> 00:23:30.519
know it's on really us as executives to help facilitate

498
00:23:30.559 --> 00:23:32.519
the learning that our team has to to do and

499
00:23:32.559 --> 00:23:34.880
provide them with the tools that are that are ready

500
00:23:34.880 --> 00:23:36.839
at their fingertips to be able to answer those members.

501
00:23:37.160 --> 00:23:39.160
Right. I mean, this is it can be an aid

502
00:23:39.200 --> 00:23:42.000
as opposed to a replacement. Right. And let's face the

503
00:23:42.039 --> 00:23:46.519
critits have been using our PA robotic process automation for years, right,

504
00:23:46.680 --> 00:23:49.400
just to sort of simplify those ROTE tasks that a

505
00:23:49.480 --> 00:23:51.920
lot of the operations folks may have, just just make

506
00:23:51.960 --> 00:23:54.160
it a lot easier to execute that on.

507
00:23:54.160 --> 00:23:59.000
That particular concept you mentioned earlier that sometimes people think

508
00:23:59.000 --> 00:24:02.319
that the abouts are going to replace our jobs. And

509
00:24:02.400 --> 00:24:04.279
I just tell I tell my team all the time. No,

510
00:24:04.359 --> 00:24:06.559
it's to make you more efficient. It's to help you

511
00:24:06.599 --> 00:24:08.720
focus on the things that are really really relevant to

512
00:24:08.839 --> 00:24:12.160
the to to the decision that you're that you're looking

513
00:24:12.200 --> 00:24:15.319
at in front of you. I mean, it actually empowers

514
00:24:15.319 --> 00:24:18.119
the team members more than replaces their their job duties.

515
00:24:18.440 --> 00:24:20.119
Is it going to replace some things. Yeah, it's going

516
00:24:20.160 --> 00:24:22.599
to replace kind of some of those mundane things that

517
00:24:22.599 --> 00:24:24.480
that maybe weren't all that much fun. I mean, we

518
00:24:24.559 --> 00:24:27.400
all have our little things that we enjoy doing. And yes,

519
00:24:27.519 --> 00:24:29.759
if you if you replace those tasks that you know,

520
00:24:29.799 --> 00:24:32.599
we we find comfort in them and we find that

521
00:24:32.640 --> 00:24:35.319
we're it's valuable to at least to us to give

522
00:24:35.400 --> 00:24:37.680
us a little bit of a re brief for a minute.

523
00:24:37.680 --> 00:24:40.880
But in reality, it's not. It's not necessarily helping you

524
00:24:40.920 --> 00:24:44.119
be more productive or helping you be able to answer

525
00:24:44.119 --> 00:24:47.400
those members and be quicker with their inquiries. And so yeah,

526
00:24:47.400 --> 00:24:52.160
it's getting that technology there to help facilitate those processes. Also, too,

527
00:24:52.720 --> 00:24:54.519
doing the same thing over and over and over again

528
00:24:54.559 --> 00:24:57.240
every single day without without making a mistake is kind

529
00:24:57.279 --> 00:24:59.680
of difficult. That's the one thing that's awesome about your

530
00:24:59.680 --> 00:25:03.160
computer rpas and such. They do the same task and

531
00:25:03.200 --> 00:25:04.559
the same order every single time.

532
00:25:04.759 --> 00:25:07.079
That's true. Yeah, And look, innovation is not a bad

533
00:25:07.119 --> 00:25:10.200
thing when we were tellers. Tellers today or tellers yesterday,

534
00:25:10.319 --> 00:25:13.680
very different jobs, right, but there's still a need for tellers.

535
00:25:13.680 --> 00:25:17.160
There's still a need for those that front line member

536
00:25:17.400 --> 00:25:22.160
and customer experience and support. So yeah, it will be

537
00:25:22.200 --> 00:25:24.720
an enhancement at a replacement. I agree with you there.

538
00:25:25.279 --> 00:25:27.680
Let's talk a little bit then, for clearview about twenty

539
00:25:27.680 --> 00:25:29.480
twenty five. So you're in the middle of business plane.

540
00:25:29.480 --> 00:25:33.759
I would think right now, earlier i'd said what twelve

541
00:25:33.799 --> 00:25:36.359
months ago looked like where the cleary was still an

542
00:25:36.400 --> 00:25:38.480
issue and we thought we'd see a whole bunch of

543
00:25:38.759 --> 00:25:41.279
rate reductions which never really came to pass. I mean,

544
00:25:41.880 --> 00:25:45.960
without getting too deep into or revealing sort of your

545
00:25:46.000 --> 00:25:49.079
secret sauce. For twenty five, what's clearview thinking in terms

546
00:25:49.079 --> 00:25:53.039
of where lending growth is going to go or deposit growth,

547
00:25:53.079 --> 00:25:55.680
or what s your focus areas I guess as we

548
00:25:55.680 --> 00:25:58.119
look out to the next twelve to eighteen months.

549
00:25:58.839 --> 00:26:03.000
Yeah, I think you know, Cecil's really throwing a monkey

550
00:26:03.039 --> 00:26:05.880
wrench into all of our all of our lives on

551
00:26:05.920 --> 00:26:10.480
the lending side. I think it's really you have to

552
00:26:10.519 --> 00:26:13.519
be balanced in your approach. You can no longer say

553
00:26:13.519 --> 00:26:15.200
I want to grow on this part of my portfolio,

554
00:26:15.279 --> 00:26:17.640
that part of my portfolio, with that actually understanding what

555
00:26:17.720 --> 00:26:20.920
that does to the overall mix, that what kind of

556
00:26:20.920 --> 00:26:23.559
an effect that has on your on your revenue streams.

557
00:26:23.599 --> 00:26:25.519
So I think for us, twenty twenty five is going

558
00:26:25.559 --> 00:26:28.519
to be another year of balance. We've had an extremely

559
00:26:28.559 --> 00:26:32.039
successful twenty twenty four, but it hasn't looked quite the

560
00:26:32.079 --> 00:26:33.680
same as it did in past years. I mean, we

561
00:26:33.720 --> 00:26:36.680
didn't have massive loan growth in twenty twenty four, but

562
00:26:36.720 --> 00:26:38.599
we were able to manage our margins this year and

563
00:26:38.599 --> 00:26:42.079
have remained profitable. And so we want to make sure

564
00:26:42.079 --> 00:26:44.359
that we're putting loans on that that keep pace with

565
00:26:44.400 --> 00:26:47.880
the market. We understand that there is you know, we're

566
00:26:47.920 --> 00:26:51.559
going to come back into this rapidly reducing interest rate environment,

567
00:26:51.680 --> 00:26:54.279
and you know there's always that question about well, what's

568
00:26:54.279 --> 00:26:56.519
your runoff going to be on the back end, Really

569
00:26:56.559 --> 00:26:59.640
none of us know you really still you're really making

570
00:26:59.680 --> 00:27:02.880
project actions. What I would assume is that the run

571
00:27:03.000 --> 00:27:05.119
down is not necessarily going to be as quick as

572
00:27:05.119 --> 00:27:07.279
the run up, but sometimes it might be it might

573
00:27:07.279 --> 00:27:10.119
be quicker. You never quite know. I do know that

574
00:27:10.400 --> 00:27:13.759
the second that those the prime rate changes, we have

575
00:27:13.920 --> 00:27:17.160
a large percentage of a portfolio that instantly reprices, and

576
00:27:17.200 --> 00:27:21.559
so it's really just maximizing the internal rate of return

577
00:27:22.880 --> 00:27:27.319
by making sure that we're paying appropriate deposit rates. Sometimes

578
00:27:27.319 --> 00:27:29.799
you can't just go down the same same rate on

579
00:27:29.839 --> 00:27:31.359
the deposit side as you do on the on the

580
00:27:31.440 --> 00:27:33.839
lending side, so you're going to see some crunching of

581
00:27:33.880 --> 00:27:36.640
the margins I think in twenty twenty five. But it's

582
00:27:36.680 --> 00:27:39.880
a balancing act putting loans on that optimize that risk

583
00:27:39.920 --> 00:27:43.319
and return calculus. Make sure that you're getting the you know,

584
00:27:43.319 --> 00:27:45.279
you're getting loans on at a you know that are

585
00:27:45.279 --> 00:27:47.799
good loans at a good rate, and that are going

586
00:27:47.880 --> 00:27:50.200
to stay on the books and not necessarily just reprice

587
00:27:50.279 --> 00:27:52.319
every every thirty to sixty days.

588
00:27:52.519 --> 00:27:55.799
Totally. Yeah. So I live in California where it's really

589
00:27:55.880 --> 00:27:57.799
really hard now as the first time home buyer to

590
00:27:57.799 --> 00:28:00.759
break in right, and it's especially hard now when you've

591
00:28:00.799 --> 00:28:03.839
got thirty year mortgages over six percent and so on

592
00:28:04.240 --> 00:28:07.960
Western Pennsylvania. What's what's what's the prospect there for first

593
00:28:07.960 --> 00:28:10.920
time home buyer and how does Clearview sort of match

594
00:28:11.039 --> 00:28:13.359
or meet that that need that that's out there for

595
00:28:13.359 --> 00:28:14.759
those first time home buyers.

596
00:28:15.079 --> 00:28:18.319
Well, I think the you know, historically Western PA has

597
00:28:18.359 --> 00:28:20.920
been a little bit maybe behind, not quite as valatile

598
00:28:20.920 --> 00:28:22.920
as some of the other as some of the others,

599
00:28:22.920 --> 00:28:26.319
certainly California, UH, definitely much more volatile. But I think

600
00:28:26.359 --> 00:28:28.359
over the last few years you've kind of seen home

601
00:28:28.440 --> 00:28:32.920
values rise pretty substantially here, and so you still do

602
00:28:33.000 --> 00:28:36.079
have an affordability issue, I think, regardless of where you're

603
00:28:36.119 --> 00:28:38.359
at in the country. And I think, you know, it's

604
00:28:38.400 --> 00:28:41.319
a it's about trying to work with your partners to

605
00:28:41.400 --> 00:28:44.400
develop those first time home buyer kind of programs. Some

606
00:28:44.440 --> 00:28:46.599
of it's some of its education of the members. I

607
00:28:46.599 --> 00:28:48.640
think you talk to a lot of realtors and they

608
00:28:48.880 --> 00:28:51.319
you know, a lot of mortgage uh mortgage executives, and

609
00:28:51.359 --> 00:28:54.440
they talk about, you know, you marry the property, but

610
00:28:54.480 --> 00:28:56.920
you date the rate. I think, you know, we got

611
00:28:56.960 --> 00:28:59.400
to be a little bit careful coaching people to uh

612
00:28:59.640 --> 00:29:02.240
to always refinance as a you know, as a way

613
00:29:02.279 --> 00:29:04.880
of freeing up additional cash flow. But you know, I

614
00:29:04.880 --> 00:29:07.359
think if you're offering good products with a good value

615
00:29:07.359 --> 00:29:11.079
for your membership, and and you're pricing them appropriately, you'll

616
00:29:11.119 --> 00:29:13.240
be able to keep those on the books. But you know,

617
00:29:13.279 --> 00:29:15.920
affordability is going to be a big issue kind of

618
00:29:15.920 --> 00:29:18.000
across the country. I think you you know, when you're

619
00:29:18.039 --> 00:29:22.119
seeing new home builds go, you know, for a lot

620
00:29:22.200 --> 00:29:24.319
more than what I paid for my first house. I know,

621
00:29:24.960 --> 00:29:26.839
you know, three to four times what I paid for

622
00:29:26.920 --> 00:29:29.480
my first house. I look at you know, my kids

623
00:29:29.480 --> 00:29:32.160
nowadays and think that, yeah, this is going to be

624
00:29:32.160 --> 00:29:33.839
a very different world for them than it was for.

625
00:29:33.839 --> 00:29:37.000
Me, right right, it's it's a new normal around rates though,

626
00:29:37.000 --> 00:29:40.519
because you said earlier in our conversation, how you know

627
00:29:40.519 --> 00:29:43.559
a three or four percent thirty became the norm. I

628
00:29:43.599 --> 00:29:46.480
want to say, the first mortgage I got was probably

629
00:29:46.519 --> 00:29:48.119
like eight and a half I think as a rate,

630
00:29:48.279 --> 00:29:50.839
I was pretty happy with that, right, But that was

631
00:29:50.960 --> 00:29:54.119
that was at the time, because you know, six months

632
00:29:54.160 --> 00:29:57.759
before was probably at nine. So it all becomes relative,

633
00:29:57.839 --> 00:30:01.839
right it does. Yeah, all right, Dustin? So uh now,

634
00:30:02.039 --> 00:30:05.599
bold predictions. So I need bold prediction for the business

635
00:30:05.599 --> 00:30:08.000
and a bold prediction for Dustin. So you know, what

636
00:30:08.039 --> 00:30:10.799
does the next twelve months look like for business? It

637
00:30:10.799 --> 00:30:12.880
could be clear of you. It could be the larger economy.

638
00:30:13.880 --> 00:30:16.880
And then what's what's what's a bold prediction for Dustin?

639
00:30:17.160 --> 00:30:20.279
H If we get on October of twenty twenty five,

640
00:30:20.319 --> 00:30:21.119
what does that look like?

641
00:30:21.559 --> 00:30:24.400
Oh boy, So let's hope that I end twenty twenty

642
00:30:24.440 --> 00:30:26.920
five that I was as good at predicting the rate

643
00:30:27.240 --> 00:30:29.720
forecasting rates in twenty twenty five as I was in

644
00:30:29.720 --> 00:30:33.000
twenty twenty four. I actually got lucky. I think we

645
00:30:33.079 --> 00:30:35.200
only planned for two rate cuts this year, and it's

646
00:30:35.240 --> 00:30:38.920
actually looking looking like it's going to be closer from

647
00:30:38.960 --> 00:30:40.440
a from an interest expense.

648
00:30:40.680 --> 00:30:42.799
Well, see, you just are lucky. You gave it away, right,

649
00:30:42.880 --> 00:30:43.759
This was supposed to be that.

650
00:30:44.359 --> 00:30:48.279
Yeah, protections projections is just a guess if you if

651
00:30:48.359 --> 00:30:50.480
you put if you say that you're any better than that.

652
00:30:50.559 --> 00:30:52.880
I think that's uh, that's a little bit of humorous

653
00:30:52.920 --> 00:30:53.519
talking there.

654
00:30:53.759 --> 00:30:55.720
Sure there's a there's a there's a place in Vegas

655
00:30:55.720 --> 00:30:59.920
for you, right there is? Yeah, yeah, so money for real,

656
00:31:00.160 --> 00:31:01.079
right right on?

657
00:31:01.240 --> 00:31:01.480
Yeah?

658
00:31:01.519 --> 00:31:05.319
So now, bold prediction for Dustin. Bold prediction for Dustin.

659
00:31:05.799 --> 00:31:09.240
You know, it's it's to optimize the Holy Trinity of compromise.

660
00:31:09.279 --> 00:31:10.839
And we talk a little bit about this is the

661
00:31:11.240 --> 00:31:13.920
you know, the three things that most institutions are looking

662
00:31:13.960 --> 00:31:18.599
for as profitability, member engagement, and growth. It's it's it's

663
00:31:18.640 --> 00:31:22.039
optimizing those and finding a you know, a risk smart

664
00:31:22.400 --> 00:31:24.720
environment for your for your team to be able to

665
00:31:25.759 --> 00:31:30.480
really work with their members, but also not necessarily give

666
00:31:30.480 --> 00:31:33.480
away the farm for the year. And that's you know,

667
00:31:33.519 --> 00:31:37.119
if we if we finish twenty twenty five as profitably

668
00:31:37.119 --> 00:31:40.559
as we finish twenty twenty four, I will be extremely excited.

669
00:31:40.759 --> 00:31:43.480
Well excellent, Well, thank you so much, Dustin, and let's

670
00:31:43.480 --> 00:31:46.599
hope for that profitability continues in twenty twenty four and

671
00:31:46.640 --> 00:31:49.400
twenty four five and beyond. Thank you again for your

672
00:31:49.480 --> 00:31:52.240
time today and look forward to talking to you again soon.

673
00:31:52.960 --> 00:31:55.480
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674
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675
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676
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677
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678
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681
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682
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686
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