Western Alliance Bancorporation (WAL) 18 Oct 242024 Q3 Earnings call transcript

Hello, everyone, and a warm welcome to the Western Alliance Bancorporation's Q3 2024 Earnings Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions] I will now turn the call over to our host, Miles Pondelik, Head of Investor Relations. Please go ahead, Miles.

Thank you, and welcome to Western Alliance Bank's Third Quarter 2024 Conference Call.

banks Ken Chief and Bruckner, Financial Banking for are and Executive our today Q&A. Officer Gibbons, for Dale Officer; regional speakers Vecchione, Chief President Officer; Chief Our join will and Tim

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

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

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

morning. Good

about I will financial review for our call quarter brief I'll before earnings always, Q&A. After the our the who join of some Tim make detail. over discuss As Dale, more Bruckner our third will to XXXX, us outlook for remainder in comments results turning

in a third delivered as bank's the rate per $X.XX These share. diversified Alliance and earnings earned quarter demonstrated Western to grow during as and environment. deposit results sustain well loan momentum ability and results changing solid growth economy. billion of credit produced or We deposit healthy growth or HFI XX% of annualized sluggish the $X.X -- demand overall credit for annualized despite loan X% million $XXX overall for

to uniquely segment this us deep where platforms Our expertise. can liquidity loans deposit commercial sustain deposit product national attractive we growth and diversified origination credit then into position strong and deploy and provide

XX% assets. basis yields because interest QX, higher began earning margin compressed net rate the lower for period annualized During Net a transitional that cycle of variable average in interest to grew loans. due on X points income rate

Alliance a quarter rates going benefit lower significant ECR-related impact QX Western from rates. a realize Continued cost We both in and full forward. in enable meaningful from to funding lower deposits interest-bearing savings cuts anticipate will interest rate more of

ECR-related by refinance several modestly continue QX validating elevated the the operational mortgage is results the growth seasonal which deposits our competitors lower. by mortgage were This balances Alliance bank following of excess will in risk-adjusted $X market deposit deposit Western QX largest customer this we are operating and from materially banks, from somewhat core volume space. retreating billion declines earnings driven push impacted drive warehouse mortgage After relationships, to volumes, but market. share costs as helped in deposit elevated QX income. continue deposit poised growth money-center impacted now to loan Typical costs, spread win cement deposit have these warehouse excellence strong to

tempered income was income. million quarter-over-quarter, or mortgage XX% Noninterest $XX by but increased growth a decline banking in this

of mortgage a specifically Our from franchise stronger remains poised resumption benefit volume.

tangible QX, Pre-provision revenue while grew net year-over-year. from share per book value climbed XX% marginally

Lastly, points assets X assets guidance Net our asset quality remains basis within charge-offs to landed range. XX declined points. Street total XX to basis of stable basis as nonperforming points

through will in the Dale detail. results you now more take

Ken. Thanks,

it fees net taken insurance income asset went we gains and helped life banking annualized of XX% mitigate million, $XXX income were new distribution. charges rose per deposit interest growth $XX and quarter, Net of million, loan commercial bank-owned pre-provision policy, held of benefiting securities million share into Securities quarter-over-quarter $XXX loan from to banking lower income. higher which, as $XXX million bankruptcy QX gains, along with $XX a for $X.XX. large fees, net collateral for average equating sold because Western mortgage from driven higher a service as Noninterest increased million revenue and generated During million of the nearly from of growth. by earning $XXX Alliance earnings income balances

was million. negatively a $XXX prepayment of quarter negative MSR revenue from XX% value, of rose the speeds rate production which due hedging, to accelerating loan the Mortgage impacted million. and the fair in declining $XX caused was for Loan by servicing change expense QX net year-over-year. environment, XX% Noninterest

of the income demand costs due by $XXX quarter-over-quarter increase quarter. aggregate, net million deposit warehouse. mortgage In exceeded strong to growth million Deposit this $X drove interest growth in

and weeks the It ECR-related QX. than for target QX end basis QX is actions for occurred costs full us from make impact rate payments Seasonal in confident important the cycle. to quarter rate ECR-related emphasize high of outflows deposits lower point and watermark also recent reduction tax backloaded. less Consequently, in in XX rates prove be this of the a rate Fed reduction funds mortgage the warehouse deposit X were before will insurance to

from loan cash sustained were charge-offs. funds deposits, quarter-over-quarter approximately expense and of resulted banking and balance Juris at sheet sell and declining The $XX notable billion solid of us million billion. The drove $X.X settlement billion $XX in net loan in and borrowing. $X.X which growth securities. $XX offset securities distribution decline million a growth bankruptcy reduction A Provision the of to collateralizing by deposit a large further remained allowed

held a for quarter-over-quarter our while per was AOCI $XX billion continues rising expansion, book billion grew aided $XX in $XX.XX Tangible billion at its by quarter large investment grew Loans to share $X.X improvement to X.X% value over $XXX deposits end. position. million to and

well million resulted banking regional mortgage $XXX as from MSR large Loan as contributions and from warehouse of lending. growth

lowered diversify estate over accounting loan time, loan portfolio categories year-over-year loans ago. overall XX% show for to commercial investor growing the XX%. portfolio shown to allocation for investment $X compared and held real C&I and CLD the XX% year to continue as by same now billion we the the for of one XX% At We

warehouse digital $X.X billion which was lines. more from generated banking of add billion, our our commercial mortgage $X.X grew to uncorrelated seasonal business Deposit of inflows billion continue and growth granular increased consumer deposits $X.X with while channel

deposits Association quarter. seasonally softer growth posted Owners also a in

$X deposits billion growth we reduced as As mentioned deposit broker wholesale was million. decreased before, approximately $X.X Juris core billion. $XXX banking deposits modestly Overall by

yield The drivers. interest X.XX%. X basis net total increased to securities points our on to Turning

remains total yields of points cash assets. position of as to while high-quality XX due XX% loan basis liquid liquidity assets cash, securities Our were to asset unencumbered HFI and XX% were solid repricing securities SOFR-type X.XX% as and Fed's basis decision. a rate interest-bearing in for was of of our quarterly of of loans cost X channel. result growth billion $X.X points consumer The deposits higher digital the decreased advance deposit in

proportion funds shifting by assets of cost mix basis due total borrowings. earning a X.XX% funded of to deposit The declined noninterest-bearing points to XX towards smaller and the

In compare are tailwinds seeing the for HFI wider emerge of difference between just If words, funding rates see and difference ECR-related that quarter, period-end interest-bearing other spot outside you'll we you cost rates is compared to the loans. the the for average funding. deposits

growth. net Net policy margin from $XX $XXX from income interest million aggregate, compressed and new to were balances to this as of million purpose. In QX asset deployed the basis X.XX, earning points but would earning for BOLI average interest assets increased which have flat higher X been loan

Regarding interest earnings rate an analysis minus basis. liability balance sheet, XXX dynamic sensitivity, increase on pretax indicates at basis a Western is a interest-sensitive sensitive earnings X.X%. With point should Alliance risk rate ramp

expected at rate as unleash. banking interest reductions in lower as more on negative expected offset a scenario, a deposit the well net environment income be this ECR-related should costs would by income in In impact pickup than mortgage

quarter. XXX expense Our compared growth higher basis growth adjusted ratio from the the last increase to for was drove the point efficiency quarter XX%, operating revenue modestly

Special of the Assessment Excluding would the in QX, remained impact have rebate flat ratio FDIC this quarter-over-quarter.

Criticized $XX quality QX, classified million. continues $XX declined In remain only assets million special while increased to million Asset stable. as rose $XX ago. relatively $XX from up assets year million assets criticized loans a mention are

asset criticized points XX% assets declined payoffs remain total the pools percentage of to sales. and stable. Nonperforming total to as a expect We X relatively assets basis due

which unsurprising still of elevated given the assets office rates CRE consist Our interest lower by environment office is property loans, nonperforming primarily and valuations. characterized

average $XX.X Quarterly basis or added Provision of in net million addition net growth million replenishing loan $XX of charge-offs. with in charge-offs reserves loan concert expense loans. XX were to points

Our unchanged The a a and nonperforming ACL prior quarter of million. from total of covers ratio XX $XXX loan $X XXX% basis million to the ACL loans funded was points loan for with funded loans. rose

shows [ XX Slide updated ACL block the ].

context to have behind provided our peers. add allowance to We more regularly methodology relative

points support notes, low of as greater banks like categories. LTV loans prepaid from which equity money provided pool well $XX to low asset residential CLN charge-offs as high lift a or loss to basis the linked Compared from to to portfolio FICO and the and warehouse loss to to a mortgage when fund as insurance incorporating ACL have of billion effect billion loans $XXX cover us well greater no no X.XX% a low benefit credit in of XX percentage resources Our we as loans. to peer

increased ratio XX.X%. points CETX basis approximately XX to Our

other lower assets substantially QX ratio total X.X% points to position income comprehensive to XX recovered loss rate our environment. Our as up tangible equity a to basis common all moved from approximately due

III the the our is also Given quarter quartile loss points and CETX adjusted ratio Basel including XX.X%, our XX conversation reserve which the XX.X% top capital, AOCI of mentioned ranks that is above our asset about second CETX Endgame I basis and in ratio, class of peers.

growth improving share Finally, negative from AOCI $XX.XX by and tangible $X.XX per our quarter-over-quarter value X/X. book position earnings to almost increased

not per of when will since Our be tenfold consistent yet data performance TBV their for growth. outpaced incorporating end tangible in Even still upward excess relative share WAL's trajectory QX of value is is XXXX. which book and by well the peers available, peers,

to I'll now back call the Ken. turn

Thanks, Dale.

safe, Following expect billion in to XXXX a of our updated as QX thoughtful QX manner. sound be approximately follows: guidance loan we next results, and quarter growth our and $X.XX achieved we

flexibility QX loan-to-deposit ECR-related insurance mortgage interest-bearing outflows betas tax decline of deposit ample property HFI our Our to to expected and of to seasonal deposit typical $X XX% maximize loans. ratio current of and the to and in cost billion mix selectively attractive in are lower payments provides warehouse temporarily costs. deposit and originate management due active Deposits

tied will transitional slightly to Turning income that the to underway ahead rate a of our growth due X% interest QX. reiterate We is next at capital. CETX loan function lower is of funding as XX% ratio to variable quarter remain repricing period costs. a loans in Net that approximately environment got decline market dynamic expected continues. This to

costs deposit income. are a ECR-related in by However, and decline in outpaced significantly interest QX approximately decline net XX% expected to quarter-over-quarter

experience interest future net into have ECR cost in to bottomed incorporating expect QX periods. We expansion to and continued margin

cultivating X% X% firming previously around the the next to QX from and traction the in and typical Noninterest increase in expense the and environment fee seasonal factors ECR-related rate should should decline income X%, mortgage given banking in quarter banking income. XX% expected from costs drop commercial discussed. Noninterest mostly deposit opportunities pivot between

line our remains quality Asset in expectations. with

among rank charge-offs no net charge-offs points. XX best XX XXXX our implies year the believe net expect this will be QX on still basis basis We should full than steady the in which area, point greater of peers. We

Lastly, XX% year the effective estimated full is rate fall XXXX now for to tax XX%. between and

At look Dale, your Tim to I and forward this time, answering questions.

first Our line from America. Instructions] with question Poonawala of the Ebrahim of Bank [Operator today comes

first year. guidance for were question deposits. just last so to So aware the quarter -- raised when deposit around you I'm you seasonality of the assuming Trying we've understand, the

last So these the NII, chunkier impact there outflows? outflows give the on I'm if I'm XQ is fourth on meaningful it just the then the that not impact? trying bank both and Just pronounced sure color deposits of just to trajectory? settlement, seasonality And can was address how is are if little the can in that Because some such a have of us larger impactful understand in quarter of versus leave more near-term And terms could how seasonality? that you that we could year. prevalent some NII

Yes. Thank you.

few I think confused you've things. a

QX, So out We in one, of it to Juris expected that Number did a me Banking straighten earlier settlement we a let large little our expectations. see bit Group very that our than those -- was happen had moved system depends to going the up Always dependent court the and on when settlement earlier. to XXXX, on into forecast what agreeing lawyers settlement and terms hard are. it the are things out.

that out. So came

$X grown billion. we by And have would so in deposits QX that, absent

will and P&I growth got us billion. lending we $X which billion, terms insurance So why year. of we've you'll that And deposits, seasonal happen the million $X net and outflow group, have down broker of of the that's push deposit end see down QX, to when we deposits said $X.X that QX's that flowing escrow always of levels in deposits paid billion. In grew decline we that's $XXX the of actually payments at for out the warehouse

average, have $X balance say, sheet $X growth into per move on billion balance our our deposit to deposit XXXX, for growth. unchanged which is billion quarter all sheet deposits growth However, as or forward expect certainly of in, remains I'll per we you quarter

over lending number good that that because group starting and deposit services that. Also, which as we HOA the our a got is years, added warehouse business. of Juris business. Banking, well services, our our settlement strong deposit line into into years in granddaddy, clarity have has of the escrow have also built business last we We consumer of home-grown and as a sight sometimes corporate the platforms platform trust. digital We've the And X very with known

So all to a these couple perform existed our really and now are are that businesses inside ago of homegrown-deposit of years admirably. beginning never bank

deposit the that -- lines regional commercial business. comes previously of growth business In our or as our addition, we've from known got good as

see XXXX I'll lower $X or say, deposits sort ratio. and balance very that's expect, we loan-to-deposit we're on just loan running So to average quarter. growth, on into just we of a so the a deposit sheet, also -- per much billion as And and forward deposit move while

we say, loan these loan businesses if on, to the put as throughout safe any the to comments? some want opportunity do growth Dale, could and the good, Do liquidity to we add report year. we growth, So to have have increase you. that, our you of we and thoughtful

No.

sheet yes, think Ebrahim, be I that from to liquidity And so mean, bank. Ken. ratio that's pretty that. in below need XXs the addition, isn't the balance was able on But we I such, fulsome, into loan-to-deposit presently whole to kind this, to have like see we able in pushing be there we that maybe basis, an our of our up the as we depositor still. on HFI largest this do anything XXs the And should proceed.

QX, coming whatever. so or And there in maybe follow-through -- isn't QX

I might question. we your have one Ebrahim, Yes. left pieces of that last of think the

of going questions income? asked, to well? interest hear as Was correctly your with net directionally did one of what's I You sort happen that

to It be was going follow-up. my

yes, I So, think guidance. please, you've given the

deposit us without costs NII goes, that ECR rate plus to Just how talk cuts? with or

I asked might your of right. it. feel like I as All Well, kind for I you. answer question well

for of end deposit So our year, overall, at X you'll cuts when -- X is more as outlook then balance each way November you if have and forecasted, we December. So sheet, quarter scheduled we next forward we all look look first, the this is look our see year And the forward, of for rate right? we what at inclusive costs.

We are liability-sensitive.

that's in margin, QX interest interest rise deposit continue to net through will will margin, adjusted our less So and rise net costs XXXX.

continue income interest XXXX. net as rise then QX costs, forward deposit into roll And less okay? Those steadily you will to dollars and in

For the reasons, some plus sheet you'll volume that robust still the So are on remain helps, as the going costs growth 'XX well XXXX. is well, higher get for and to costs interest in clear growing income from obvious balance deposit than okay? XXXX that net throughout QX as I enough declining, less wasn't XXXX QX actually, should And that. deposit be if pickup

Okay?

Jon let earn you year. next can [indiscernible] plus you, I'll whether clear. very All ask not Okay. or

McGratty from with next question KBW. comes Our Chris

was an Ken, the could noninterest know X% income fourth you for or on adjustment, if a the little the items but wonder this I around I MSR maybe in quarter bit? fees moved QX quarter. growth to help the XX% for line outlook of some for because had unpack Dale,

Yes.

turn the of related piece, MSR the mean, I mean, lot to in was really that I a So rates.

presently. mortgage we which in book, happening a of more backtracked see to there of So behavior a again, rates kind significant we was mortgage XX% pent-up just don't saw a initiation than degree lower but constant kind on that We increase prepayment little is thought. the our at of maybe rates,

fell of -- had result asset that that the we what the than what to more on gain the constant. the is against value it on put valuation of we hold so And the

things. then about so we of talked forward, And going a couple

of one there. a BOLI revenues that continue. transaction. That's will those to So is -- we consistent them new going And be will did

of had deposits, have collateralized of that think third other quarter. the the kind what have from We is we we was into do quarter. We We nearly about gains. service see some in number not went It securities one terms also that, talked with magnitude that that second some the charges. the You can in up of distribution consistent.

So collateral as gains, sell the going security more we're I those. some too, we think have related probably off to to

All our when of really because collateralized you liquidity improves else actually deposit, anything that do with can't have you it. a really

situations to us these push for to that, an it's substitute things able that and than As gives presently. different -- deposit opportunity as really higher into what in return assets we're it move

in follow-up. I you that guess, And Okay. guide? is my And similar I then guess, a The the security just, mentioned, gains with magnitude?

in a in than magnitude what quarter. third smaller for would It we the the be guide had

Our with Barclays. next question comes from Jared Shaw

that side, opportunities could the you for of us seeing pipelines loan of growth? sustainability referenced, at maybe you of looking where on early sort if C&I the Maybe bit you at and give the the that? growth And that expectation of the terms 'XX for are in had little especially just look a

Yes.

million, grew together, quarter, resource in billion. finance So of group and some said, financing another X X% as It really $XXX about I The we all grew annualized regional this loans total when million, leveraged our of portfolio. $XXX came some from lending $XXX segments million. grew million, to warehouse grew X you almost about those that's $XX.X combine $XXX about or

million, $XXX this billion million, nearly for $XXX it or loan that $XXX million, $XXX So growth to was almost us million $X million, $XXX million quarter. $XXX -- got of

continue growth. give look confidence the $X of loan going that billion of guide to in restate reiterate forward, couple So as us and we a quarterly areas we to see

basis, they we good But to businesses. good decisions and credit and group shorter generally these of our And evaluate any is but allowance pipelines which we've collateral to credit reserves, have. allow of lending since us duration financing to type because lower also for warehouse a risk businesses collateral, like our we've lending, and showing First, on are also this continuous losses loss in loans, loan are our we goes non-financing, they been never goes reward. MSR loss at a it this those that categories. taken good

additional also allows financing along and Then value provides fee lending also our regional banking, comes management accounts. to that loans value commercial operating gather would treasury resort our added growth lot but more the or of say provides with us loan growing I income and lower-cost

another like. we And so area that's that

construction year-to-date, more on at the really on side, C&I total C&I, Overall, downplayed our for year all see the performance have if focused we've you you we our look growth has and and been lending flat it. and we've And to loans, kept which our grown. hasn't as development. And our also down well, a owner-occupied that we've lower taken also CRE yield and residential carry

we'll put put higher some the on have to opportunity new in -- some come to at So we have books a loans them yield.

a XXXX for you of thinking prepare hope I how and to we're it. sense kind gives doing what that So we're of about

Okay. just looking capital That's Should to continue other you'd And alternatives capital from be it we won't that to call that. I sort you good. you target, follow-up, out Or of, with here? but expect this XX.X%? then there the above utilize or XX% at as calling XX% my would grow CETX management

the question. I Yes, Yes. understand

are to going assuming CETX or dry to than and more think sort way be there's have powder above at our support our And that. for XXXX, stays we that So our going-in for growth there to loan or we could modestly be And quarter. billion that's $X want the above -- of program. -- CETX coming because at or per we XX% XX% above there forecasting stays

we're loss that upper discussed came bank I look his assets in the want to is addition, billion for today. get we we quartile of as get bit at We other Dale where which and loan okay, do little we being the to category to and in bigger, CETX bigger plus that measurements that QX less as AOCI adjusted target down we get QX. allowance we a comparisons, closer But total And In CETX, know our from for prepared remarks. the $XX reserves.

we that continue at to to looking grow. as well guide we're as a way so us And as

Our with Piper next Clark Sandler. comes Matthew question from

First question around the ECR-related costs.

in curve, going volume customer dynamic the range assumptions expectations rate is or assuming and service the for and Given rate out good either cost the earlier forward you your XXXX? what dollars that forward laid of

The it's warehouse, the to mortgage skewed reason XXX% which related it's why beta. toward has really increasing is -- been about become more

fourth that similar the had should have reduction in, And in. in expect in came quarter third next so whereby Again, we we as a these believe out. into so consistently unwind HOA fashion year costs our Hence, a XX% deposits that go that scenario year. ECR the we And to it going relative Ken's continue to we've we're quarter. as a risen to comment see in year

is mortgage to continue, We to warehouse expect growth that while the our in be going tempered.

to see pull of insurance forward related and also number of deposit You're us an in area of made less that's an focus fourth going going are to in total the terms the kind quarter, to growth. outflow that going be what's it's payments primarily to going But down. for

So words, XXX%. going to those to cases, opportunity in to and -- be of in some to costs in lockstep we're able action, fact lower above FOMC an in kind have other

QX But million And is answer Yes. Dale decline... dollar XX-ish $XX you for about percentage gave answer. the a asked percent a -- question, that you to because

million. $XX

$XX million.

remember, Sorry. to got -- QX Just QX bang sorry, QX, that million all of my you came -- sorry, I'm sorry, point it's to QX, about XX from bad, $XX QX QX a million. remember, right? I'm out meant And I basis decline to say to that $XX QX.

that in per as as quarter, very a but way. down methodical model $XX million it coming model rates don't So

Okay.

kind okay. So it. it not rate it's -- sounds like more driven, volume-driven Got of

what guess hurt your like they few to yields. sure I'm that came little term? cuts, -- XX down that came running of a fees looked then about happened Fed also the there? know the a kind do the near from SOFR ahead It how the loan basis think in blended had for then level question I overall down been points of I loan around bit. And Okay. your just prior NIM and just on XX the we quarters. a And in around quarter, bps and

Yes.

is really in period. I the that that I the mean, -- rate with low fee kind of the current we should you had think go run number

we we're see of up income basis terms interest mentioned a to quarter. alone, more in in our will on expecting NIM, than contraction the slide the In net for. I that mean, But that be made a fourth

as [ Ken we earlier, of about quarter So through including a global which that actually talked next for will NIM, ECR expect looking watermark was successive we're ] combined quarter in XXXX the each and in increase the year. third

comes from Gizycki next of The with line Von question Bernard the Deutsche Bank.

you how MSR puts margins? high talk demand mark. Could the sale the just a production of takes on you the being to pick gain mortgage, called XQ, you the on versus obviously on in out were up nicely declined. sale maybe seasonally to up negative needs XQ Just but previously margins gain volumes while see weaker And and guided to the to loan obviously, pickup

were be handicap honest And is the quarter, That to something is the of difficult around X.XX% and mortgage to during at a with X%, that today, they're X.XX% QX about the the rates end little to declined right? very area. they into in up quarter Coming you.

of cost, go been rate coming. the timing, at consumer of today for based buy so It's and if when you would to a i.e. that's a couple you also home little consumer of out based behavior us cuts on a you that, a you, it's know there coming And on know are rates handicap struggle. are and bit

been find to and hate And if at people is, then they home people we just and And so we're go their saying in rate rent their mortgage have now refi say trying their new what home. the is we see rates, least love to they mortgage want forward. what a business mortgage as

past, the and in Okay. as think backing like X about said to I rate X% guys? you but of is get production. closer And what cuts again, of you forward we to But with meaningful kind mortgage like and the for then increase rates more cut X% rate it down and dynamics just wanted is kind you've what's broadly maybe mortgage a X, of up, really like think of mentioned the gets down coming maybe thoughts help the your mortgage expectation. comes some hopefully just the pull really low on based just to the maybe maybe then X.X%

to your pick that thoughts rate want up get revenues on of a volumes maybe think kind mortgage level you production the So and follow? just

Yes.

think to of I if begins part early pick see where you low the to beginning QX, up the that repeat of Xs, coming into volume. the start down rates a

X X.XX% that's the think mile, okay? to how break some of sort under those X for begin speed that we then the the you spot gather is And for sweet X that that's X break You record, you that's somewhere great us, and remember if of really that we X.XX%, once then once okay? the the breaking X-minute -- in mile barrier. to have a handle to begin the The think. is barrier equivalent And with, X-minute X-minute opportunities of

our area, to as a where that's barrier So that there's think we we the into more volume coming and X.XX% drops lot way. break need then it X

get not works say think of going maybe almost I going refine And things if it's rush costs are we again you in rates not simply to because that you're there's now, if that is be going it's done. X to rate decline, may of might that to last expectation in reason mortgage a favor. to our more suddenly, is to actually the much. fall believe right the refinance that elevated the an refi it's have as why we processing I months, tempered XX-year relative a And really worth think part all

a if cut that a cuts what and bit, really at XX-year it's little makes the I'm bit for that and so dissipate it disparity reduction gives been least for -- has mortgage expectations maybe futures market over that time. XXXX to from actually it more example, number the we And of been little view that, in the of between think see treasury, rate that, in sustainable frankly, we is can And were rates a the historically. with pleased

next from Fargo. Wells line question with of The comes the Timur Braziler

XQ -- and clarity the you trough on up? should expectation Or to for XQ the then balance I the Is sheet NIM XQ just margin be the be compression the to get to additional get well? compression wanted maybe some want volume makes as from asset-sensitive it some for expectation NII that trough.

XQ NIM believe well as I the on be Yes. Yes. can trough the side.

to Okay. question. put then And maybe a point Bernie's just to then -- Okay. And finer on

at mortgage guess, earnings I rates are you risk assuming and within So what kind earnings at for revenues that of analysis, analysis? risk mortgage the for

Yes.

we something that ticks of would that year. X into maybe high end The handle, next X the a by X. So into tail

then Great. for last Sure. just And me. thing

add just the just it interest okay? about flow income wanted year, to just He throughout less to I really think he referencing NIM. was the NIM clarification. a way that point I is or comments the costs. move is about okay? about it, -- you adjusted net was deposit upward that's talking that that And NIM, Dale's Sorry, when is adjusted going little make the want all to to I think That so a when upward

to Sorry, I didn't mean interrupt.

the thinking then just to just me, be about bit And in there NII. appreciate assuming to little just lastly deposits I clarification. punitive rate-down No, nature, going I'm a environment that a HQLA for short-term is

then maybe HQLA what growth about Just asset might from that asset perspective? the and growing, a look base or how are levels rate you commensurate like with thinking

Yes.

we've HQLA we're of these we think in HQLA with little collateralized we of deposits what presently. disposed were came a intact bit terms categories. all on where That are of we of kind down number kind have that in some because So

to us our grow show gives deposits. we're the loans it again, growth commensurate in rate here, latitude from going with to So

$X going includes at so then we're higher in match of fall to growth rest other decline that if you have XX%, that And if loan the XX%, going growth Ken to mentioned, grow And as of into like $X categories going you're can is to it And that. HQLA. deposit billion quarter growth And to so then grow on that average. those in already built deposits the into billion earlier means quarters. fourth that's like

line Our from comes Elian next question of Anthony with the JPMorgan.

broker XQ include seasonality Does deposit of additional the any is really decline billion the $X warehouse? of Or from down your coming deposits? of paydowns guide

of seasonality really It's warehouse.

our flat. expect be broker fairly We to deposits

Got it.

my guess also XQ. enough from headwind this outflow seasonally be Okay. there understand for opportunities But areas seasonal specifically? other is of quarter warehouse are going deposits. to the I to not And offset that to then on deposit in able company follow-up I the

a larger do, that of to So that growth. areas Group some the -- seeing, negate deposit fact larger but Lending other -- outflow channels Warehouse contributor the a has deposit is you're in other

than either have I industry so the competitors or thing seeing this, happening, or should several just and retreat the from group the we've we are kind of industry, can't more the expected. lending significant in And that's And it reverse in that we in inflow -- a and QX. in leave would emphasize inflow I as came way. normally out And QX will had that -- other is warehouse

them, we to that harder our larger after call XXXX. in as help for come it's cover QX why But hiatus do we inflow throughout that's in back have into a QX. they go these liquidity the come us deposits forward channels us on starting roll with back QX, other as will So and deposit

the D.A. The Gary next question from of Tenner line comes with Davidson.

ECR thoughts forward combined the the appreciate costs. I on NII and

Based the deep to quarter, points wonder how could for the is NII of you a bottom? kind think dime be of on finer per just NII Obviously, outlook. from just would forecast the GAAP year, you're dollars willing if until you your I put basis GAAP would on next the quarter year turn a it XX into lower fourth the rate So guide.

kind XXXX and given expect announce our get more we I into year about XXXX how read conference other -- is think point, around I've of what clarity to as what look expect any call that full I to we'll earnings, construct to so guidance this going think to what we've detail of given we're But plenty here than here get like. leave more QX that we on XXXX. in it we And as we've At far. going

comes line question Varga next The Samuel from the with UBS. of

let's near to would X% normalize funds what just touch again. if for, are on people ECR Fed lot the be pegging, lower? I expected at how move be But off XXX%. around floor that -- rates rates? I that your point and I at initially say, understand level just is the on least ECR to the not get to sense Dale, does a what the beta wanted of wanted it

around during Well, mostly pandemic, ECRs bottomed when where our of were at XX rates were than basis the I mean before, points. if to kind even you look that we lower

for in still mean, of to frankly, what's things And to down. a continue there's lot all about it's alternative the money So these. I push room

institution okay, So be X% funds some to I generally that are financial number these have going more example, X.XX%? other what because that it X.XX%, Is they they your -- doubt in it's elsewhere. if be than a to paying are going paying available so means like, funds.

so have can diversified we've we the these that funding of that meet these so that we all So channels we kind credit have. got sources demand

there to we're that to as look in -- to alternatives we sticky for can before. is they alternatives -- lower their if as really And just a for us much terms lower it's of go see other and that they're funds. going but sectors well get don't I going were and for for So pushing number not there things

not move is go. going from can what for that low the rate So I mean, of they're market terms away how to it money far in

risk. benefit Is offsetting you us the us more income mortgage the it mortgage. assuming for, give Can side? for just -- NII compression? AmeriHome fee my you're you can rates know it's obviously, the ECR on the at give exactly hard earnings guess, a or sense Got the sense on helps from on to what what it. in then a follow-up us But And I

Well, gain income that kind of offsets I we origination right? that the is estimated from mean the have servicing, their mortgage servicing that and manufacture What depending mortgage then value rights funds they down. what sale what income is fee kind side? of on So the these. And the on mean, so of determines on we value they have amortize I and come

So why concert more I of in rather kind look singular that's them element. at a than

was the to would think, had they the third say, the important really have were most I'll more in constant And bifurcated excess terms August I that we what that of rates response. quarter in took models -- in in it we captured. place XX% that related think that of, where increase prepayment I more, was in was

The from KBW. next with question Chris comes McGratty

over couple question Ken, about next years? Dale about How down ROE of a the are you environment. in potential or rate thinking ROE Great. longer-term

Yes.

that couple the income. get with come So know think ratio costs adjusted costs so. ROE the environment. upon we our We organization. dependent of have i.e., But to years against the for don't or that that sheet to the of we going we X efficiently manage that -- up the interest on an we potential instead spreads deposit X the don't -- can with capital I the begins really we're rate to that obtain believe efficiency that past back we we're our on need, basis, an a That netted balance that we have, is is the can based continue

with frankly, upper at in is our that to to leave our And that so XXs not we're And way going a believe that's headed. ratio. on back where that's because there of We're the us we our should the before get kind and and CETX get to leverage ROCE we're teens. -- with where higher were lower we

question with next Arfstrom Jon RBC. comes from Our

your Ebrahim on I for with set cuts on generally? you thoughts. the Ken, Are rate hear you outlook? But current more company the up, me rate and optimistic I good recent 'XX the XXXX this Is guess.

for for am. giving guide loans And for optimism to years that And And work billion that. boy, and of $X we I continue that that -- guide on we now we've sheet, first And over -- credit deposit comes for Yes, like I years, platforms. we've the well. have average couple think right? I'm from do given deposits, added my been balance of Yes. these we've the a seems platforms the right? $X billion that origination

feel can about guide achieve And strongly confidence so the very in my balance -- I the we is that sheet.

falling a think Dale overall basis, about as an net I about, bank, The getting this With sensitive on of the income in environment, we're costs. us, rate better. coming at adjusted cuts see liability we rate of deposit and nature talked exclusive that interest talking

gives me some that as confidence gives us well. so And --

wood. knock Asset quality, stable, as we see it today, on is

more previous than yes, higher level have so a I difficult to the tend always we get always have but next I confidence that -- I believe is And year, be there. year of can to going always

Yes.

Okay.

it'd on in -- lot helpful I run some a you going transitional this have but at gain word was the and have quarter? your lower feels you've your think think, going a here? and There's sustainable I unusual a I the quarterly that. like guess I on understand an kind of like for don't gains, know, of on a if mind on. hear a used you, you got was guys, I pressure. repeatable, You mind you you kind EPS MSR, rate number non-GAAP BOLI, like do EPS for core transitional, It lot I because shot ECR be a a sale, mean, in there lot lot just quarter I

get that don't we asked Dale where what of the decline it was that who out collateralized that's We deposits gains that $X.XX, things was the and to think in of off we are deposits rate. think we captured us. think rolling Chris that in The business And have the is a I mortgage it's from X was the have kind by QX valuation Yes, kind help reported. offset gains I we're -- to securities see deposits, as question. and for collateralize those and MSR decline as going said, think settlements fair the which QX run that we question that equal that from other collateralized in

question line Our of comes Truist. next the from with King Brandon

like a Stripping quarter. on ECR X% like for out taking of it costs, seems me looks deposit in X%. higher the core run one rate around costs, expenses. the deposit growth was next on And your quarter commentary I Just noticed

the over within should run expect of run X% foreseeable Or core is the that rate that anything future? rate growth, X% few we expense that to quarters? something over next So temporary quarterly

deposit is near think get through fees. And QX of that, the as come it will the way the the about end I course we excludes efficiency adjusted the that So I'd think of ratio XXXX. or XX% it at at which as come of over we by XXXX, out year

the see efficiency we adjusted So through ratio XXXX. declining

Okay. grow sort to CAT far towards as on And as as commentary continue being that, within the build any you a of infrastructure IV?

embedded there. in that's in That's there. embedded No,

we questions the are Those all have.

call the turn I'll back to so any And closing for Ken Vecchione remarks.

our the Thank to you We talking about January call. forward you to results. attending for look QX in all

again. So thanks

lines. us today. may Thank and disconnect your for This call, joining concludes you our everyone, now you,