Western Alliance Bancorporation (WAL) 22 Oct 222022 Q3 Earnings call transcript

Good day, everyone. Welcome to the Western Alliance Bancorporation Third Quarter 2022 Earnings Call.

You may also view the presentation today via webcast through the company's website at www.westernalliancebancorporation.com. I would now like to turn the call over to Miles Pondelik, Director of Investor Relations and Corporate Development. Please go ahead.

to Banks welcome conference quarter and call. you Western third Alliance XXXX Thank

are and Vecchione, and speakers Ken Our today President Chief Officer. Dale Financial Chief Gibbons, Officer; Executive

that over Before to the risks, update any the uncertainties as statements. which to company today's Except to presentation assumptions. any by Ken, are I forward-looking subject contains call obligation please required hand and does statements, forward-looking take note law, not

to that more materially complete the could company's Form the discussion forward-looking which cause the Please from differ uncertainties available yesterday, are statements. company's results a any For SEC the risks actual X-K of to filed website. on and including refer filings,

to for over the call Vecchione. Now like to remarks, opening turn I'd Ken

Thanks, Miles.

performance again earnings, growth, commercial as our This with the and strong interest quarter, diversified margin delivered PPNR asset and net stable financial bank interest complemented income, by higher net loan deposit quality. company continued supporting strong record national its

of building X.XX% points total of $XXX expanded and interest quarter, environment third $X.XX. tangible propelled the For and interest XX.X%, to levels and assets our with which the by rising capital XX% rate return average EPS in of come. equity We million the from accelerating margin respectively, quarter to continue XX net made $XXX basis income X.XX%. Earnings on performance quarters or revenues Western net average prior support to industry-leading the of return common to will on were $XX net as generated record income of growth million quarterly million net $XXX Alliance million,

from $X.X or noninterest-bearing our and deposit $X.X of this continued growth divisions XX%. X.X% XX% growth, deposits quarterly, expansion Loan franchises lines. loan growth our and rose remained DDA from sheet with demand billion accounts. strong $X.X of trailed In balance divisions growth business specialized quarter. deposit banking from healthy billion contributed XX% loan regional banking coming XX% or Sound growth Deposit of quarterly mostly X.X% and QX, quarter-over-quarter national billion our of regional by with added

proud that traction million and business new deposit business is are $XXX We our this escrow one quarter. gaining services of meaningful contributed lines,

of We expect major settlement to our deposit income speed XXXX. loss market that and continue level declined rates to Mortgage climbed The by contribute to growth the of market. funding spiked activity volatility have and to which other escrow initiatives revenue negatively meaningfully services, profile disruption. a Provision enhance driven the continues and reduced affordability the by market and as $XX towards services back face quarter. to hedge greatly MSR million in business banking-related have refinance origination impacted end was restrained million purchase $XX the

properly in implemented operator leading We against strategy prioritize a have have profitability the positioned to operate AmeriHome and market lower becoming low-cost industry on market volume share. focused to origination a

Finally, continues see do horizon. we shape, the asset quality to not and issues remain great in on

through are our position. you quarter, For negative recovery point, net or financial basis recoveries billion $X.X performance. a points. of the recorded net will Dale this And we year-to-date, At loan Wells in X take

$X.XX Western million, quarter, the and $XXX For net Alliance $XXX of income of EPS million. generated PPNR

our linked Excluding quarter million XX% $X severance charges basis. a to preferred and loss the mark-to-market and related at primarily on a other securities $X.X higher million charge on AmeriHome, compensation was and annualized EPS $X.XX

declined in due QX outlook in $XX.X our front-loaded million which billion increased excess year-over-year. million incremental consensus XX% $XX to Net is $XX.X expense $XX net income, Additionally, $XX which softer to income growth of interest loan loan by revenue growth by quarter million million million also somewhat provisions, lower late to which Overall, mortgage the economy. Total of was provision sale while MSR the prior CECL. added or to from approximately on captures of to from to Gain hedge $X.X was the to million and million. million NIM purchase led million $XX million of revenue an in which Total $XX.X $XX due and $XX due of $XXX an quarter. as million banking-related million $XXX increase during loss volumes, servicing driven volatility quarter to was income $XXX rose, on fell the XX% further noninterest fell lower expansion.

primarily higher industry rate ongoing While $XX million, normalized not rightsizing returned. overcapacity yet process to is resulting XX.X%, If ratio in volumes to related XX.X% earnings strides deposit costs made be of expense, would costs in the as it and remaining reclassify environment, margins expense to to deposit were XX.X% ratio has mortgage expenses in interest have was an adjust due lower or adjusted this to Noninterest credit. flat. operating higher increased efficiency efficiency a the as

Turning to now interest net drivers.

protection also sheet rates in $X.XX is date, costs, rising yields of from spot program issuance. nearly provides asset-sensitive the basis with a million and quarter which balance Long-term the in basis this borrowings higher with rising yields quarter and prior linked book. average rose. on rate benefited our capital XX and million basis increased The basis deposits and XX to points to including Short-term broad for of Loans preserved to also to issued linked rates held benefited borrowings $XXX increased XX% a On securities rate as due expense balances total capital quarter basis, an end-of-quarter Our interest points rate expense X.XX%. climb. CLNs XX stock $XXX we and of minimized notes variable loan the to have to Investment growing credit repriced. $XX.X points XX mortgage increased points sale for has points debt X.XX%. from equity this Total little from basis deposits funding credit increased rate X.XX% loan million increased environment. XX issuance

X.XX%. of growth XX% grew interest-earning than as and more $X.X asset As average expansion mentioned earlier, of funding $XX sensitive. quarter interest Interest inclusive costs, million to billion our of income asset net of quarter-over-quarter income ECR expenses NIM linked we benefited points basis total growth XX% from remain or XX

XX Reviewing with the is shows XXX-basis over scenario to net the of XXX-basis a sheet, point on income a over to grow interest is analysis sheet, rate. growth shock static months XX on rate balance from months over interest on we current sheet, income a same interest expect XX%. effect expected the rise our net rise for the balance point Using growth expected Our shock lift balance income X%. net to run a XX% and

to million quarter to which, the high million third, in period $XX.X the during in deposit XX% XX.X%. costs prior a efficiency ROA $XX increased quarter. of operating the rates record last of quarter. This Our year rose the PPNR basis or demonstrating the basis $XX.X XX.X% reclassifying after billion cost decline company. last same credit $XXX improved of XX prior a X% of is revenue XXX million to the expense, quarter, interest deposits to leverage increase earnings increased in and the points quarter second ratio billion, noninterest-bearing net compared higher a to DDA. $X it from resulted Pre-provision in from of on increase points and an XXX, the of from due XXX Deposit from XX.X%

declining from increased $XXX that of to points generation capital balance increase flexibility provide available deposit sheet organic sheet quarter in due and strong on produces to billion billion, borrowings over to Total or significant build or expansion. AOCI. leading the ratios. capital CETX fund basis prior balance $X.XX prepayment momentum sale per part approximately fees. for XX share the prior growth X.X% in quarter a capital year. continued short-term financial fund recorded loan While Balance $XX.XX, loans on quarter increased Tangible in sheet to increased over offset book static $X.X as during per to quarter securities $XX.X Tangible and servicing of an book increased growth balances investment billion million excess earnings quarter Mortgage $X unrealized rights to X.X% increased held $XX.X billion $X.X at quarter over the in or to billion, organic value the to for to prior the primarily borrowings end. $X.X growth deposit billion balances $X.X primarily due billion during value in marks

organic of million and to call by no commercial real backed business estate. banking warehouse grew lines. tech national for C&I by and generated investment billion, $XXX lines divisions. held and growth in core lending. in loan regional This driven and this $X.X quarter, national billion low driven capital in our in innovation, growth very resi was from quarter sound our in in sponsor for $XXX million our we estate C&I XX% $X.X $XXX million business Loans growth million $XXX $XXX million loans, came loss real lending

Turning to deposits.

channels. funding continue experience growth diversified our across We to

remainder. approximately $X.X NBLs up XX% banking CDs billion the the grew regional with of $XX.X billion, million. specialty no money total, growth, deposit earnings now savings third while in our our noninterest-bearing quarter, This annualized net divisions In $XXX generated million, credit our rate. and comprise billion $X.X market XX% deposits quarter XX% of positive deposit or and DDAs or of $XXX XX.X% mix have Noninterest-bearing which DDA total associated drove

attorneys continues escrow funding relationships $X.X has million. up divisions escrow ample up new to support services regional and generate investment services to that loan billion, million $XXX establish and to opportunities quarter. growth franchise large up attractive private to ramp provide acquirers, the corporate business lending Our with this $XXX diversified warehouse deposit with banking Business support firms growth continued

to national as impact HOA, rates to continue costs. of deposits attractive and expect sheet temper business overall forward, fund on to and our businesses the deposit scalable our growth generate ongoing balance Going funding escrow such services we settlement elevated

nonperforming and Total basis of levels. end, percentage assets decreased to of nothing quarter. strong million. asset XX of funded increase QX half lower classified represents stable total net and loans historical assets this points, and trend. as during from resolved nonperforming assets. million been at a we remained are or lows in quarter stable see to demonstrate a remains basis total classified Our points decline of in XX Subsequent than $XX which Special to quarter assets basis XX already recoveries as a $XXX points total still of million has loans, pre-pandemic realized the assets million and increased to classified Total approximately mention last to quality $X.X $X we further assets

continue credit volatility our economic additional As additional accompany borne stress evolve, has prepared the that discipline us for to that business national line for our strategies we through macro underwriting headwinds. out prospects may believe any

not CLM navigate us XX% quality through of or will We sound heightened our have and diversified growth migration decisions observed guarantees, cash preliminary government recovery asset credit safe and trajectory low to categories we brought of on and portfolio recoveries million, net enable basis signs dictate loans $X.X believe Approximately us is XX% in through Quarterly However, credit through to are loss, uncertainty. were year-to-date loss a loan or X basis. our to which the first is any no a net client loans, thoughtful, economic of protected our pressure. now points position average secured.

coverage quarter-over-quarter $XX to quarter diversification. by flat by ACL points. this quarter the has a due ample greater watermark assumed deep are nonperforming on XX ACL focused Adjusting business is trends in covered increased believe remained million. loans superior set economic Total transformation prior throughout XXX% rises our ACL Our to loan underwriting the to our credit a where to specialization to by prior million $XX points, Year-to-date, ratio was to rose notes, sustainable quality XXXX. for business $XX.X ACL linked basis commercial national $XXX the post-GFC loans and increased while to XX These deliberate Western million loans basis that these We from funded total is become XXX% quarter. asset billion loss our and at Alliance's first third greater high bank, loan from pandemic now cycles party. in of coverage than strategy

expertise company While national to superior strongest reach counterparties risk deep projects relationships the and selective on enables attractive with segment management. go with the

a view less Western portfolio, which spent crisis, loan minimize loans. comprising of Alliance of financial makes the risks losses Alliance's in X% against the million up XXXX the diversify decade charge-offs Cumulative to has valuation stock loan XX% global We misplaced primary $XX about last total impediment only for categories. and XX% these of recession. low totaled the a than heading current decade today the loan reserves. risk no of XX% from million elected as concern came the to is into West past book our working business. $XXX net During higher have to loss credit categories to

protected. credit of and and classified to net ranked notes improvement where credit-linked height issuance consequence drove even the rapid charge-offs held as whole know bank We peers, that have fight. the through the to quartile hallmark loans Excellent nonaccrual of industry quality ratios make Lastly, been below has asset during in a of been while essentially the they new the the XX% recovery net the has of the can of intended portfolio with the top wall, other year-to-date. have no pandemic. in Nonaccruals minimal quartile this continue the Classified even charge-offs the among loans one pandemic. top recognized and consistently best have the hold due the

net relative $XX held and traded Similar stock a $XXX risk domestic mitigation for has XXXX leads income A highest XXXX U.S. with peers, publicly further. banks Wells greater to sustained the hallmark other of earnings economy growth weakens and volatility. our sharp be model and diversification in been excellent to to risk the shined with among between produced critical assets returns, during credit - adjusted billion, ratio growth. if XX that Our large traditional the expertise income risk-adjusted superior is net reduced business growth has average will publicly Wells the billion

and growth they top the our the return. separately, leader in strong lowest volatility produced earnings or in weren't growth While earnings risk-adjusted has combined the steady

to regulatory industry-leading organic we ratios. maintain generate assets, Given continue returns well-capitalized capital fund and our to growth equity on significant and

value than throughout do across equity Our the in X any to addition With next impacting ratio X.X% year. dynamics common we ratios of issuance CETX with capital were slightly equity builds both tangible as tangible AOCI We book anticipate utilized to ATM assets lower common industry, be our of Tier and needed X.X% earnings. solid strengthen total share quarter-over-quarter. not will

our X.Xx Ken XX.X% Finally, annually of call X.X% book dividend for or group. share, tangible value per level. to $X.XX inclusive the peer book of per value which our comments. tangible $XX.XX, quarterly above since rate the I'll Notably, payment to is share XXXX, cash grown closing our QX increased our hand of quarter-over-quarter $X.XX now slightly has back the

the industry-leading changing performance. simultaneously of operating rate Thanks, sheet to operating the position balance results. Dale. executional growing balance bank both in and produce to capitalize team's interest focus economic sheet environment sensitivity I to record on with pleased ability the interest with to the was Thoughtful and adapt management sides while net growth income conjunction with

mortgage Our superior operating banking leverage offset the decline income. in

elevated stable the of quality stress. for with solid a grow potential capital and we Asset signs earnings Organic of remains as no should company reposition ahead slower growth slowdown.

you could me let what here. So you expect going tell forward

growth billion lower loan-to-deposit Deposits not to time, high-quality at credit deposits. tighter will grow approximately which and future and growth our prioritize while plan criteria billion loan ratio through quarter. loan currently still to it's $X uncertain the targeting Given accompanied stands at deemphasizing quarter. are This growth, over reduce pricing environment, by we to loan economic believe double-digit We operating per XX%. $X.X measured more expected but prudent up increased to surgically a

Our including to ratios pre-AmeriHome key back XX% capital CETX. the goal levels, to next bolster is year over

average of produces sheet significant bank of CETX return points on flexibility grow dividends with balance provides us growth. ratios equity quarter, industry-leading of organic fund which tangible capital approximately XX Our significant per common to basis capital and the net

in Net programs. expect aided muted balance growth with to growth We sheet expansion pace - at strong should rate we expect continued growth to by rising QX continued environment, expect throughout mid-XXXX, likely to given risk-weighted Fed and Total anticipated drag of CET even and continue the revenue decline to asset mortgage quarterly to to similar interest NIM and reprice securities income XX% our income restrained due fixed increases interest achieve expected is sheet optimization continue to loans as rate QX, assuming by interest banking balance continues. we rate and net XXXX, the to in target a pauses margin expand net after from the volatility. moderate,

expense given low our the leverage of should XXs Our deposit the inherent impact of operating business. excluding in costs remain ratio,

XXXX may we In and not entered would with of today we launching well. some XXXX us deterioration that slightly The At have we change Asset as material happy we're ranks time, a this higher, industry's but recession, have key also peer while take for anticipate well an see Officer, we continue should for EPS EPS our conclusion, questions, $X.XX technical your which ascend. Tim best. is Credit as quality believe pad that said any can to above remains and standing. move Chief to here Bruckner, I positioned do the among our ratios

ahead. Casey from first Your go Please from Jefferies. is Haire Instructions] [Operator question

Yes, thanks Morning, good. guys.

color So you're obviously - funding going there. the loan does expanding I through little year. side. on a it be help about betas sounds some want deposit on seem next growth bit NIM could Obviously, and the get you tougher more on on if pressure selective But which little the front, the the comments to to bit a like yield it

and but kind your don't I beta just year? is what betas, in kind next allowing of that to is know you forecast the still deposit you guys drive - expansion through NIM deposit So manage of what

Okay.

tag we'll So this. team

net I that a and throw start for then we off through make are the to XXXX, it consensus FOMC we're clear to QX me Let over interest Dale. just I'll forecast. sure income growing want and and using vibrant projecting

federal downward, to home going interest liquidity Number forecast excess grow that funding having we're than will from So costs. And income grow borrowings faster deposits drive after increase will growth we XXXX and reasons. or loan several comfortable FOMC feel lowering for rates. with get into raising the this loan to continue even net NIM the bank concludes one,

the we've being levels at higher future priced banking from liquidity as withdrawn and system. current Second, seen growth is loan

with $X.X repriced can quarter we higher and we $XXX rolling billion of totaling XX% which we about is million some spreads, every fixed loans think item rate securities get repriced and see - our also from. over quarterly, at benefit loans Third

would taking interest net also other focused have achieved. I as is, The rather we And the results to company, income focusing than net net that income the since EPS produce us on say margin my over CEO, thing interest allows then on to return interest rate. we

spreads, since going certainly before us, see And XXX% in with we for beta done beta. kind mind, Dale, have we that? which increasing the what been you for so anything deposit but priced we the is, materially have beginning have us XXX% to loan rest our And forward, to of year. the do to even carry QX, that, the of want add of

Sure. Yes, that's CLNs no deposits and Casey, $XX.X And interest and asset terms our lower of funding DDA so that levels primarily interest-bearing than in that has to mention ECR borrowings loans other we we and do because have sources, securities. of of billion. earning is

it's so and into high going funding And on we're okay so beta bringing we're continue going as to see that. XXX% long to beta assets,

challenged I They deposit believe to withstand the institutions they've think that some on that they raising the of going other cost. or they've have have deposit it's been surprised. their else, and actually something because held consumer been back and then

now And betas at XXX, looks so least of we for there. accounts, know what our haven't excess We funding been they in have some like.

kind that relied of haven't by. can sneak we things We

our we rates, seeing in pricing to we're of kind our have what of confirms been be. it where And this. - is needs spot there right in terms terms And of it so

so our the the points. at for So the second for funding was quarter XX case during At basis quarter That's we deposits, was had X.XX%. the Meanwhile, were up was floors yields we third X.XX%, were end yield, up spot costs of our of example, basis and tempered active. not up And we end is, the XX on the to because our had second XX living costs, anymore. our still third loan XXX, what loan points. from quarter rate again,

hasn't maturities. then fixed right loans rolling see And we rate liabilities than have in to repricing to on that now, up, those going And about because the are would liability so we going to is today, lag. more rate and reprice we're terms XXX points basis see that current picking over we're do offer what of that below going us for dollars more

Case, you give I'm to going quick a story.

I the going like like. you here, will But coming greater, pricing. deal. our the loan senior of a of pop ask credit. them wasn't XX too turned enough initial credit for think floors We because and to move the then or we we didn't were million we a in quickly up. alone the not because I'm everyone okay? Either the high great committee. price down floors, down or Those the to downs or We like is And phone loans decided step turned on $XX quiz down

they accept loans, pop your And do and so we would to XX higher pricing quiz. How we them against the back did level? here's the borrowers went asked if

very Not well.

XXX, wrong. We XX, XX for XXX for which... You're right, went

all took price. the higher They

A price, people feel you're right. little almost higher sell day it us the bit house XX the back one One, to a on and came market makes you us - it. like yes you said, on and your things. that put few told And

say, you it sold God, oh cheaply. I thing - he First too my

we things determined for week seasons. and really And the what natural is when bank our that's we and and of liquidity to for we be try versus went try a bank that loans, was back remain the us XX couple really to looked leaving right? we was others that that we is all period of from what and different for at seasons, determined one a the system, what's all for So open over - but

for incremental compare pricing. credit some us the may getting. of of funding open. higher one we've And tightened reasons we previous come deal mean - things of the that have. criteria, to been is our it remain equity they more we're higher in costs we short-term longer-term Now because see of the may people loan But you the one mean deals which have get done this loyalty in that that to a mean we they're which come we that value continue has to the have. doesn't that It because above asking can And the may and they cost what or volume volume guide developed and know we

So wanted answer. - simple give and we you a asked just to long I you question, to a decided

I it. no, No, appreciate Yes.

Okay.

XX% do right, you're is is that going - Just help target runoff? just organically, Or that to any without the is on - CETX that that short the in order? the moderating loan so that like part that's Is midyear, it book anything else there or of by anything - is there and ATM, there bond growth? you there on

Well, to that's there going our XX And XX billion up basis doing. to basis are probably repositioning organic we're Certainly, quarter-by-quarter. the that two growth quarter. just points points per how billion. loan to you points, things for get We growth, out or subtract is us generally XX-or-so $X.X $X.X grow of do to basis help net

hitting to commitments, of just The And ask here late we And CLN going and Bruckner's as don't expect of very deal that around of thing time, the think to all optimization or through this we smaller without think and unfunded with a activities QX. maybe at it's Tim is well. a the combination other one or a QX, are ATM. a level. you us XX% without it's our - be drive all worthwhile he's I maybe question. that note other assets, bunch It's sitting that There is specific things this see, quarter risk-weighted those us, led reoptimization quarters a or happened, specifically in may but grow this two. you'll

step-back. I'll thanks, Thanks guys. good, Very Okay.

Your of Kariwala Bank next from ahead. go comes question from America. Ethan Please

of in around around perspective Obviously, comfort there's guess Ebrahim back your just pricing, deposit around comments some going growth, maybe industry, the Okay. around I billion here. there. the to lot around a growth. plus $X deposit concern

conviction and we like its we deposit in about your deposit then through think how and shift those mix impact meeting level think So numbers, XXXX? as costs on growth should

and We're cost will team it one going volume side. the the to side. take off tag take split as I'll well. this Dale

billion, me history. that we've wrong we've some want what our enough, at franchises then go if that the clearly I'm if running you But know if looking you that confidence us been correct strong. here, deposit the And I are Well, really and on very $X heard you so and gives around several got back to right?

is business, We of We Settlement okay? That's XXXX. started build have XXXX. $X billion our now something rolled out services strong. has in we HOA It deposits. in to

a of want everyone, years, be back what I any our couple no, deposits. really so don't when will will perform. we always gee, - when other future deposit capitalization we everyone the and in say determine that, banks franchises well how And the more We market going said,

services. out business services. rolled We we out settlement So rolled escrow

But X that to billion, to quarters, goes we've and company want the owned it We also have lending regional bank. that show a I produces the of we because tell AmeriHomes we it interest provider $X saw a has you - from tech been deposit I emerging business $X that bought In AmeriHome, generating strong billion important. standing really back to to would you forward. bring not been from we income going said, of the X also a start quarters AmeriHome for deposits really $X Warehouse zero moment. side in This taken $X growth. that a bank that, the extrapolate deposits in to has And very sits on loans. billion $X us. an right? that we've is of When for sat we of AmeriHome, every bought it incremental you very of

channels. are those the growth So

Dale? the take cost want to You side,

Yes.

of we million is $XXX escrow the cost million services. that in I'll talked $XXX note, we business on non-ECR Well, from about side, of brought that So in DDA. deposits - in

got Wells we're and think application us operation. cost side, the likely tell OCC with we've kick to team also to off there. from that got We is a So an that on should help commence getting traction trust corporate to I the pending this for that, you, going of forward. kind going We we in hired source of of after Fargo deposits. us And they operation, terms their particular and time. then funding that's sold a a be think to

growth. our So at And again, trying consistently. a in to at we've to what rightsizing of would pipelines as wrestle exceed come But going we're super the growth versus everything funds bring that the been has standard we harder past forward are or loan couple did than this QX we're has little in in it not demonstrated that that forward. quarters. been they've as from we to deposit cheap, market there and ability thought. rates. not I rates necessarily have good We least We're say

asked a well net it Casey Let back question to tie to me just interest tie and it as that back income.

you loan growth high deposit growth very to in it. in is have a at because that harder to If cost bring coming don't it's incremental growth, deposit

have rate those seen we've that, the to that match so side fact we make billion, in grow at allows to growth XXX% loan excess $X.X with said, us and We right? off spreads. as beta loans can And deposit compared the compared And marginal it, of a on beta increased we've the ability to XXX% to spread. the you've -

model, that I'm back we going model model credit get to of gives and And what business our do. benefits. the is almost on our us other than I and right point to is us again, to every - different enough this and I'll bank's that's So hopping kind you for think start it, this, allows business what don't

it. Got

follow-up talked embedding into - should ACL reserved terms you downside piece about your a macro, do I'm of of quarters? that. what points, As there's what other about EPS that's XX basis with credit no because we costs. Dale, few far is you if just you that the very guess pulp, in I different the And the next where risk look fine question. as this that at the as another is economy is the like that is portfolio think headed see building understanding recession When

Yes.

So we SX on kind take the on we then have but model versus weights most think weight use like is do. Moody's heavier I of much And a the preponderance consensus. the We SX.

would be. it I to of kind numbers pull in a more appropriate say, an have they And as so more expecting charge-offs in those terms as little second, quarter third would not ACL did we're occur. over what of become bit did impaired up

we're as right side across And long on board. LTV so lender are up low the LTV. we a And

of at residential underwritten is is XX% terms was now - probably under Our book in but LTV. XX%

Our real is XX%. XX% about to anywhere estate done commercial from

looking had this the able - then Moody's there's floor time. back forward like loans strongly structures down in really hotels saw we cost on Because in type terms of at residence so We doing. close of that happening, took the cost worked, going that And for terms the it go entire something direct their travel to These model they losses. people didn't me that and XXXX. XXXX worked select we service that central we're lose and And like to hotel to boxes, a to were We sponsorship, deals we're be of clearly in loan and good low throwing of well other and weren't a showed the at what book if the I anymore are and and from us. doing dime brittle a - and not very and back hold in flexibility. during numbers the big hotels, terms And where value, every feel we're in have weren't of hit lot business, coming severe we're people unless hotels pandemic, that. do we to and

that And make I Got correctly. you it. to just sure heard

earnings anything? I run grow off believe of quarter. think you mentioned $X.XX year can that rate fourth EPS into for Do you in about EPS full $X.XX you

sorry, here Yes. I the I'm didn't clearly. - hear

the maybe actions sustain can think mean, continued we what you which obviously. margin at. there, And us implicitly But - given is that what are going can If the happen at this heard Street that number we - in expect predicted throughout to is Street the fourth the opposite FOMC what more that of I to I of us in had terms we period have little a that to what the from is the that's we futures yes, from of curve. as Again, the a the loan expansion, $X.XX that is than correctly, quarter tempered XXXX. be backdrop Ebrahim, bit growth, continue

questions. for understood. Sir. Thanks taking my

Thanks.

JPMorgan. Alexopoulos next Please from from go is question Your ahead. Steven

on cost to side. I If the the wanted deposit cost I of... include Hi everybody. start

we you get just phone. up. can't the Can receiver talk closer not Steve, got clearly. hearing the really to We're you you. Steve, to or hear pick you up

Is that any better?

better. Much

Okay.

the cost On up related are cost deposits basis the include quarter-over-quarter. these points change and credit calculate points. we the Earning XX I if deposit earnings side, XX cost the of of total, by assets about basis

up XX. it's from a view, So about spread

that spread quarters? it do that you how over next at lens, trending few through see the Looking

- much of little momentum Probably, most side I the we're the side. have to mean think loan we I parallel. of the in Also, don't yes, on think But back on cost with we there. shift of held there's And loan of because a that comfortable funding were more kind better increases. go pricing floors. we're they likely, - I parallel because bit getting

Okay.

think per how deposits, come quarter do you will should the from moving forward? ECR how $X the On about that? assume of billion we much And growth that cost

to expecting deposit going at liability not side that on the is our We're all. be improving structure

these And ECR so moving in is as predominantly interest-bearing some escrow of think in is business others in, terms other got not that bring that what factor we've but growth opportunities I and we've do or with dialed I needle. related. services stuff a that of some either in to major mentioned, in

be we're think I to going deposits. paying for

Got it.

to which in deemphasize Okay. lending back bit, are the terms here? you of planning then pulling And finally, categories a

Good Yes. Steve. question there,

very as And to a we've so do said, this way. tried in surgical I

resi too then going million we for forward. wasn't basis quarter, liquidity under and QX back to loan in growth, So drop drop it just I under to it billion expect our to ago long we're going refresh on this $XXX But that was $XXX to $XXX the memory pull would at points. those $X sitting to had million that XX in phone, million.

building emphasizing going seems then. the book thing be appropriate to a to going to do We're residential it now And forward. back be up not so

places line subscription capital other hope cross-lending they call the company the is in had circumspect on you'll us have more opportunities that we be not. The portfolio materialized, see did seen space. We to haven't really

deposits, and this surgical We on going eats thing the a bank unfunded higher not saying, And growth, recession. it to I lines, other said you're in We're challenge is do our lending And clients, all so to we growth getting to also That entrepreneurial we're Steve, our deposit and to loan is, the and connects is pull as look on you're kind working the no why could the a that. loan going growth yields will this back that billion some CETX to well, senior on side, an credit ratio XX%. close we not grow. significant that up back for over. to we in certain gets focus that will to well. to the terms probably I stay That's commitments. we without Bruckner always relationship pull and under We if people unfunded outperformed be that lot move up at bringing the extent, there. on continue we're are guess why can our we our to loan for trying optimization. of the would a we're just for back, approved, loan us where we'll coming level loan - has say, of big of most naturally. of And think and keep and company, made think frankly, quite therefore, a And a I into to Tim then that, over business But $X.X slow a all certainly more as growth on

it. Got

taking questions. for Thanks Okay. my

from question from Milsaps comes ahead. go Piper next Please Your Sandler. Brad

good Hi, afternoon.

Good afternoon, Brad.

low ex to sort of that ratio I deposit would impact thought costs. of efficiency the correctly. heard Ken, ECR want heard I the the make I think sure you I you that mention XXs stay in

was from severance some in benefit think growth, get on we on pulling And the costs trying expenses going just because ex you're small there quarter well? and So the back forward? - be ECR? to wondering sense does I'm mean then the the maybe severance should a that the might of back of of expense growth kind as pulling what if - those finally,

Yes.

$XXX ex low always several XXs. you Number management hear risk invest in we one, And I that the So look, Brad, it me that to can deposit take threshold. did technology, it for we think And I've ratio if keep correctly for mean, been but billion to do calls. on previous day we're continue I to preparing down, efficiency not stay clear we're there. we're reasons. in costs, about the which don't the we this over the going we need that and doing. grow should

product, which until the a going But corporate trust, new We built little And it products say about and mentioned Dale new expense line. new I also X, a our in to as wait services ahead was brought are continuing going to new that some to our I we've of actually base business well, deposits. and invest in next - rollouts. is new got what year on we that into was

So components we're answer to not that I EPS into keep all the as why we that's XXXX. will our it That help it's important XXs. for us us are going of will new low total and to couple growth continue Do to a deter There question. of lines, them? to build or in up business your these roll in

costs see pace going thought it's forward. change I'm deposits in just of on or those Yes. And ECR then are beta decelerating, sure that Do follow-up of Do you that the maybe curious kind going the up? your you not that as a kind question change again. rate just around my accelerating? pace just see the to but Dale, in which of of that

it, gate, a one Alliance history. is no I I we but not mean been Western this out a most of others, some in of telegraphed rise were the the And little that think, I aware widely scenario, more anyway. than sluggish had don't. not rate has

And in FOMC or lockstep so with participating. yes, effective so Fed basically They're funds. moving they're fully

Thank you. Okay. Great.

Thanks Brad.

next Tim Please Your go Fargo. from from question Wells Braziler comes ahead.

going MSR shift the quarter, fourth at this on little around appreciated? kind the just help volume? bit idiosyncratic looking on would a hedge color gain kind Maybe just continue morning. with loss Is can for Was any broader kind given thoughts revenue more sale greatly rates? just direction good be And of that of the AmeriHome our frame pace kind in the Hi. of that of us quarter, of in to you that?

Yes.

Let broader direction and we me in give the XXXX. planning you for you what tell are

servicing forward. - I'm XXXX. are total So that. We $XX sorry, our million revenues going $XX much throughout go XX as is of mortgage as the the we QX base But for better base planning million do than to using purposes, forward our we hope

think, first I thing. So that's, the

Regarding the $XX million had. ball hit we that

model cash that, but to then models we And for hedging back. the discounted we hedge of model, the out some the out and enough XX months. in of Our when years, XX that instruments. there's we hedged our we in model the flows loan it all we life things, After not liquidity

And so out volatility we a months. little the going in a took above hit of bit XX

MSR valuations. Now should back and say, should half in that have what we we pulled opening I in the here, said the statements of

firms, outside valuations. at the have look We MSR

that. million $XX a took And so about while we back $XX million of

impact in So $XX also the the million. net was something But we're different business. doing

in probably count about people We continue business. XX% there. total We're rightsize down that to

we that sure in not We're And win low-cost purposes for share win profitable are operator space. only. the we're trying to share. share we're trying So to trying make to

hopefully, margins will So be this we the less. the follow volume correspondent of that will pushing and the see are and also increase. moments that purchased will market we But

early And is in that work. beginning strategy to is early QX results so far,

And That's talking then color. one that. just asset appreciate when great to comments Okay. maybe I Dale's on back going quality. of

lending provisions kind of you're those landscape, seem guess I I out as here? some what softer areas that that of You mentioned credit view kind you're verticals of pulling related. the you on your look back economy. but a are across on doesn't the softer focusing capture, know

or the softer Tim mean answer. Actually, more let areas. I'll opportunistic You

can take I Yes, that.

we will that is respond, we I headwinds or the back think we saw where pulled have we where that some correct? signaled economy in

Yes, that's, right.

Okay. Great.

everything, ago, So and stress we construction-related real a year real to adding a started estate. heavy development, commercial

Okay? one. So that's

segment. underwritten had We've positioned stress, in advance think become in that We've conservative rate that's more us interest with we that. a heavier underwriting. and So well maintained I our significantly tempered

side, our year, we the starting stressed dependence On methodology. in investor November last enterprise valuation October/November of significantly –

would our early. more adjust areas stress, portfolio So areas those we given weighting two are that and receive it

which We're this the referenced, or to out also is our of about major four to bringing our how government categories. portfolio last this. which did XX% insurable into insured of is it. Dale coming year credit portfolio, The protected guarantee We portfolio

and of sensitive. then basically sensitive And time the our category We and the have actually of economic, deemphasizing resilient in economic economic the insurable with economic have the spending and our economic been X, we been we've resistant resistant categories other terms loan lending categories, pursuits. more staying we've

when an of Got that comes left certainly just be know kind a there? would to around guess, big it. And the maybe then broader market the is opportunity lending. warehouse I have thoughts just as And a warehouse how outpaced it is appreciated? follow-up, And you network. good component I AmeriHome into guys of of just tapping

Yes.

first components So we a That's business of at is lending, but No couple and is we'll see node we've embedded note-on-note rounding LTVs strong or warehouse to be this also position. financing, about the point. One that. really when financing in we'll opportunity. where traditional of financing very warehouse is lower, say XX% our maybe got in lending, a

that are and is other I seeing back. And in would lending. so you, as other deliver that seeing throughout XXXX. struggling it's warehouse there, a of helping that little comfort a we're group, a embedded share people that taking MSR level lift honest some are lending to from have in we're service coming still deliver. market the pulling And has lot interest bit. we And too. lot the with of that borrowers, warehouse we to we of side But lending We're people type some be good is can And grow also growth as say

you for appreciate Thank Great. the it. color. I

comes Your next McGratty from Chris from KBW. Please ahead. question go

messaging of Can liabilities. make want little and is repricing, today. about you assets on balance I I the and to Dale, repeat if repricing Great, a incremental sheet? moving to of back of go loan just kind the the get could, comments the just sides I and sure trying what both betas slow thanks. deposit to I'm on

from spot on I greater isn't the momentum four at because, to to then floor it and that's side. is So average in rates, I more in on part, look QX been And held coming nothing that think than loans were the side significantly today. we QX, if captured - the close has because - of loan back funding a is our have the rates a

carries that think in of I like looks forward. what terms that so us going And

from loan as well, we be going loan loan deposit anticipating to deposit we're beta high. it no is so betas and a mentioned, committee, cost. and especially higher, which we Ken all the as the that very to take so a higher these underwriting And to XX reprice do here lower We're beta, yes, than the with had with, continue we'll of we came that can if long from back even things to our at senior have returns

to So we carry think, we're well situated that.

in in really, doing see funding our a and our profile little fourth I repricing and maybe the then we're that think on that Now be XXXX, is don't tail. lockstep. already book with with I quarter, then for fully anything we're in have funding - kind that in moving XX bit a our I there's loan mean, I But because to the of dialing a don't book XX and we think really isn't book of going

$XXX opportunities benefit not our million some DDA have like we related. do of we XQ, where Now in had was ECR

to I we don't have kick in, those but think things of some going do that. to are

well, a expansion as a than more the betas have net lower we with largely, no expansion be has demonstrated as have with variable able to loan loan rate of to - be we our the our securities that sheet. and continue book modest do is and balance deposit margin of have to the to all interest then couple long which going we're So betas, book,

said high of very for you put a Did help. future that deposit. betas? a But That's kind you number on

No, our optimize interest and We're trying no. We're mentioned, I DDR. mean betas. trying net Ken not income not that's thing. really, as to to optimize management

understand $X.XX point. I the just that full Or - off net per income quarter is me, that is right the reiterated, share? earnings starting you that Just one, year remind sure annualized? to just make Okay. fourth that to trying is get Last

Yes, year of of income correct. an would kind that's operating full the what be,

Okay. Thanks.

Please Stephens Andrew from from question next comes go Your Terrell Inc. ahead.

have might at average of size that loans Most But remind just And rate and on portfolio? us then book the do morning. you for sale you been good Hi, for already. addressed Dale, can the the held the spot asked of the of have expectation end quarter?

than is rate spot the modestly $X.XX. book that we that Yes, $X.XX. at was where we be on going lower And think to ended balance

thank perfect, Okay you.

question go from Please ahead. King comes Security. from next Truist Your Brandon

Hi.

future? Just will I the But rates are kind I'm when to have one you've I the actions been recession and event actions me. have from question are taken curious, in in rates of a we rising. that you've if against just theoretically what and the benefits fall, there understand that that curious see taken place protect any

Yes.

during that really led else the that loans are we get thing helped us and by one mandate pandemic is anything that syndicated somebody situation So active on. we isn't basically a

kind rate, rate largely rate say, based the that. ineffective doing at we XXX that, of so interest better floor and yields maybe did income. the this up it's like much at if And really, in And next hold time going way a variable we'll up But be mean, points it's held be higher would point be put XX that going current We're will lot current if there. floor of in, money. some year, upon then a lower XXX much is instrument that the in loan basis than a of in improved our than you us I because net and others of still what reprice floors another insulation our They're would that to terms se, to able those the per days, we I to a closer give lot rates like. the out which of

is say The mortgage going rate also. certainly jump get we're a ready gosh, in my - mean, and I would that started, market is, lower environment, I other to for I it's the think thing

And on rate other, I been balance no well? contemplated being hedges as that interest the or put sheet, has Okay. guess, collars

put that. fixed debate always hedges basis of We low the We We term in back when kind were - some some points. rates double-digit swaps on.

that downturn. time. the we'll again, So to that's at mitigate evaluate that just But kind of

question. my taking thanks Okay, for

from Your next RBC Markets. question Jon is go Capital ahead. Arfstrom from Please

guys you are how thanks, doing? Hi

Good Jon.

Good.

kind for on if I One a the it's know run you Just $X.XX the questions. on $X.XX, Chris but McGratty's few get the annualized take to we nitpicky, question you're cleanup just rate of deal. think for you mean I $X.XX clarify number, saying have to on stretch us of but by $X.XX, to too kind what the that quarter, to do that's low, that? get you fourth

the $X.XX is operating EPS. So full the year

So above you I maybe Chris' I a have bit. to be misunderstood question little -

that. to take You $X.XX somewhere have to range going be that. to you or above able of kind to do be That's in the there to

that's for jumping And quarter. Yes, 'XX? for you're the off point the fourth saying

Yes.

Yes.

of Okay. I've had questions. couple a

you guy ratio efficiency in ECR about expenses I'm how the us know ECR the can on want to think the model? talk with about think people I the and talk you call about last maybe, that the expense but and

something, actions Well, both you call to ways. like we're it. what that's it mean smells it me, maybe should I looks if and showing

really geographically. really it think I maps expense. how That's acts it the not like gap interest

here So we are.

better expense. eliminate can in architecture, terms sensitive bank still interest of if of, that one one, are look much considering your think we're and it just as ways. And and then is to or those gives you you keep as in low kind And we we're I relative at it kind do higher, revenue expense? out the and appropriate. think XXs at operating completely. of So And interest asset is not, a as expense look we I view income that it much not higher rising in taking how it it both both the

And the efficiency going net I looking we're to continued said, deposit position relative XXs grows interest on our Ken low of including expense, again, for the is forward, As same ratio costs. interest income roughly appropriate. think improvement

FOMC But is as projected near just, to the XXXX, deposit will thing tempered, I'd based and enter go QX in same be again, rise as QX. we Jon, one to XXXX see the increases. only that add through won't you'll noticeable we as that level it into on be begin maybe costs rise rate as

Yes.

Okay.

just I two I if more have can. Okay.

to I'm on where? different, the of kind the curious of you you cycle. in winter Because a is question timing I and hiking And just that's that if look all know little models, out starts do kind of peak? margin just when Just top the but high your you were topic, and business when Xs in out think think just back last approaching my the this the I on might

our for So But we of little of couple now, the kind we on the in the right rise have XXXX. Yes, again, alluded throughout is by have weeks, for a what continuing a forecast. We to - least actually there rising to but It in at that at of in lower anything the don't see quarter-to-quarter. that's what going see year we everything us we terms the right nice do, in of the consensus. XX. all rate, towards bit excess followed certainly as the our now historical end predicated bps slope still flat of that But out in very NIM, in us is is That's what's the may in that actions you year. to. which, XX than highs FOMC even in a see in upward

Yes, yes.

as the XX - well. maybe - do you competitive to but last positive, pricing, what But And that's question on about guys It that And as you it doing, you could what learn that this. learn XX? from have are understand What that? I what XX higher one have, go take could for right. and cause I All you I but XX a competitive Okay. you like way other environment the I environment? you the what I to mean, say then from does well. is that, the When ask really the are what that for pricing did

Yes. Jon. Thanks,

the competitors probably back us for other have On banks, competitive reasons. telling it's several that pulled other side,

their that we liquidity one. they in because have their have focused. don't foremost, number or fresh may that be be base they more it's lending, coming and deposit niche they that think First product two, bank, may regionalized we or into more Number just

lines to the the We bank. least different capital we national business to and ability have deploy XX at liquidity have that inside

So it flex gives us our an opportunity really to business models and capability.

may different be on economy. the a third perception The

we recession, going we a with quality the in. and I we feel much why comfortable we and our would us Now we're feel that, for we the all occur. as that course, are lower comfortable. is reason And to of of we you and doing do. expecting the are expect think And recession are everything test if rates getting our and underwriting things But underwriting lower and higher vacancies rents and stress a modeling to other borrower

One pay reasons being equity for always credit change given to just help we're environment, either a compared to open client, the short-term but nothing while get or rates. in interest that criteria economic of rate little the cost borrowers interest grows because They you the back the acquire to a bank they're We deal loan the to assuming all and going we'll a a come back to uncertainty But realize the you, and should always bit to about we're borrower. around to is, benefits of said remain pencils going with seasons. out that And be we're as to they this to them pricing. going remain try every dealing deal I've longer-term higher us And and good from open. able is get.

once re-trade. so to say return side, we comes force the close shake has when dependability, back the clients hands, going to and to ability we a And positive to that we we're having service our don't And we lot this us. to close, close of to continue

of structure of pricing our for always time something mean, our to and But promised, I that's even to have worth they're provide what a in is consistent commodity service, We it. because than willing our deliver almost so clients of said, Ken the kind as and on pay higher others. in normal terms ability to to times,

thank you very all right, Okay much.

Thanks Jon.

this questions are no proceed. There Please time. at further

forward all going Okay. Good positive call. forward, next that we questions. Thank we attending call our on to speaking you we quarter January. about and liked the had to in do for we're what you can look We the and

it's to, early, a those talk but have holiday. For I good that know Thanks, don't everyone. I

call Ladies please your participating your today. We lines. this you ask for and gentlemen, conference disconnect thank that and concludes you for