U.S. Bancorp (USB) 15 Jul 202020 Q2 Earnings call transcript

Welcome to the U.S. Bancorp’s Second Quarter 2020 Earnings Conference Call.

Following a review of the results by Andy Cecere, Chairman, President and Chief Executive Officer and Terry Dolan, Vice Chair and Chief Financial Officer, there will be a formal question-and-answer session. [Operator Instructions] This call will be recorded and available for replay beginning today at approximately 12 p.m. Eastern through Wednesday, July 22 at 12 midnight Eastern. to Investor conference for Relations like Thompson, to U.S. now of Director and would turn over the Jen I Economic Analysis Bancorp.

are today our our Mark Chief Thank With Officer. Richard Also President good and and on Financial Chief CEO Andy the Runkel. Risk us today Jodi call and Dolan, you, Officer, Chairman, our Cecere, Chief Terry morning and Credit joining our are Matis me everyone. Officer,

risk presentation. our will During reports release of forward-looking uncertainty. with A materially like their any our are on the Andy. and statements I are that described slide press could remarks, website that Form over referencing will prepared current would well to subsequent now on and our X earnings in assumptions XX-K usbank.com. remind our at to schedules copy Terry of slide presentation our be change Page made as Factors and and analyst release presentation, file available during are the on today’s in you SEC. call call forward-looking to subject I a the Andy as supplemental turn and today’s

for Thanks, morning good everyone. Thank our Jen call. you and joining

by Program, and Mark small with impacted the situation. second in a industry, early the quality system of loan the you Slide and will flight COVID-XX defensive X. current quarter. draws share impact $X.XX. supported Consistent Following Increased quarter, strong April, environment. per March growth the of by impacted businesses remarks, Protection strong economic reflected Terry, Paycheck financial of the In deposit we corporations in mortgage the draw will our liquidity and and the impact begin in our prepared is to Jodi, by the take growth questions the I Loan any I which have. on reported growth being earnings performance

our testament income business quarter is diversified fee model. this growth a healthy to Our

payments were slower businesses, economic our lines, fee negatively activity. by including Some impacted

consumer However, Expenses remains businesses and in compared trends flat started a strong held while with some have our activity were spend with payments we first And of compared quarter. volume as the businesses. reopen. improved very pressured have mortgage economies our each ago, to saw relatively growth in commercial products year

manage stimulus structure We cost economic continue and second quarter the metrics beneficial to the environment. line revenue and our Credit deferral in and growth stress with prudently forbearance programs. the of offset in governance increased impact reflected by slower quality

quarters all in loan adoptions. and the digital for Digital in now closures due temporary COVID-XX transactions have than right conditions. an more XX% level of increased share on we compared and available. to about actual quarter can based quarter, ago in dependent credit X.X% information of and the the environment. this branch be our provides economic at loan our second earnings X.X% Slide In to believe the uptake remain trends. for we common X book will to early impacted XX metrics. Shelter-in-place quarter delivered you the grew increased key return During is quadrant economic tangible changes June reserve We our by lower digital that on allowance economic in in the year the we conditions. current equity We performance allowance performance appropriate improving owing value continually Changes and shows response per lower capitalized. a have a with orders losses the three well see slide, accounts all increase X sales. Slide on of service in

by expect to digital We economy adoption stick even after reopens. customers the fully

on color turn and me Terry let the over to Now, more provide quarter.

Thanks, Andy.

on $X.X with review, a second quarter loans of a basis I Average earnings Slide to followed by $XX,XXX. made turn will X.X% includes average you trends. small Paycheck Growth under discussion was loan X, year-over-year. start to Program the approximately The the loans these of a grew Protection businesses second size sheet and SBA’s balance linked If quarter increased quarter. during billion XX.X%

grew X.X% PPP, linked Excluding year-over-year. on quarter average the basis and X.X% loans a impact of

Excluding access growth pay-downs in markets. In mortgage requirements. quarter, pay-down started their growth was activity commercial down June by future and many customers loans and lines support loans. in quarter commercial in to driven loans PPP, linked accelerated as the in to the activity primarily business capital drew business first and May customers We late see liquidity of

mortgage low balances have declined week, residential lower spend of last the the environment. defensive quarter in of late repaid. activity. reflected second we about first in been rate two-thirds the the due interest saw early draws quarter As growth Strong and card quarter Credit to

increased average XX.X% basis Slide banking deposits corporate to management and X, deposits and on year-over-year XX.X% quarter driven banking, a XX.X% bearing year-over-year. services. by commercial increased linked Average investment Turning wealth non-interest consumer business and and and grew

on Turning charge-off totaled basis, ratio sequentially, economic increased plus reflecting XX% The compared a at Slide real linked while ratio net non-performing to XX quarter June owned X.XX% stress. non-performing with XX. stable estate assets to March X.XX% X, assets was relatively increased loans the other at

allowance approach taken the credit rating for quality credit across proactive have risk considered in entire in evaluation changes portfolio and the evaluating of losses. We commercial a loan our

second the credit the our benefits slower losses economic billion the in $X.X government of growth impact reserve the net was partially and in the and build as The elevated inclusive and of of by Our impact charge-offs our in deterioration June increase considered offset $XXX to of by loan programs for of ratings that $X.X billion. credit conditions of on risk of stimulus estimate quarter, economies in best expectation COVID-XX economic will current unemployment driven of from increase U.S. loss the and reserve and provision related assets non-performing losses increase in The XX. a was million the changes global levels. allowance

fourth declining exposures XX% current to segments of are and XXXX to by XX% the estimates assumes of Slide qualitative for judgments, rate fourth quarter and highlights metrics quantitative outlook X the our case unemployment certain on our key quarter, based While at-risk X.X% environment. the to many and of XXXX. in X.X% second the underwriting quarter given factors base an to

results XX credit We quarter impact their us flow environment diversification, culture and earnings adversely Bank, $X.XX second spend based cash economic to per have sensitivity stress, credit and results. by portfolio to considers allows In provides related consumer current share. produces to Slide which reported and strong an the XXXX, and losses. relationship increases summary. were support of growth the in affected lending we business that at expected the These cycle U.S. a management the consistent supported based proactive and by throughout economic

expectations Slide fully essentially the $X.X lower equivalent the interest flat a on net compared expected, net line cash XX, was quarter. basis to lower income in basis with rates Turning by well declined liquidity interest yield of as curve maintained partially the of a points with as the mix with by demand. lower our compared Also margin The customer balance taxable quarter to impact and margin deposit offset of reflected being higher as funding XX billion as first for and interest growth. loan first rates and flatter accommodate was

service funding mostly in commercial issuance economic the and the product bond revenue was product deposit net banking the higher impact banking and the pressured trends gain-on-sale stronger by loan revenues fees non-interest in highlights of revenue put shutdowns activity offset corporate Strength Slide provides margin, including revenues. more declines and mix. income. in rights reduced businesses, mortgage impacted benefited asset production revenue. change While were margins value activity. by revenue than Slide hedging of the to pressured net servicing reflected on by and partially impact interest of information XX payment shifts offset industries. higher – our beneficial was Commercial XX impact in in exposures payment the and fair and Mortgage about pressure earning related COVID-related Payments from mix trading in mortgage offset quarter. mortgage

Corporate However, trends merchant what declined categories to a early line XX.X% year-over-year, expense was debit quarter and we throughout our sales quarter trajectory Credit revenue performing and revenue declined linked had XX, card on somewhat July. line with continued business our XX.X% year-over-year to sentiment. services reflect as with cautious year-over-year payment Slide in declined consumer continues expectations. Slide flat both essentially the processing non-interest than turning revenue spending better has – basis in expected. and that products improved XX.X% in expectations XX

Second and production quarter related reflected an expense expense related costs markets revenue situation. in and increase from capital COVID-XX to mortgage

working safe consisted incurred premium related to for workers the of of about incremental million. During costs quarter, future pay industry our for increasing related providing and to claims related and related about frontline expenses potential $XX employees. These million liabilities merchants tied $XX other million and the to we approximately airline a delivery $XX to for costs COVID-XX environment

At second incremental capital half related dissipate at We capital methodology to X.X% equity XX, implementation Slide highlights XX. transitional begin expenses capital Tier to with accordance to the of was year. credit X calculated the COVID current in position. the regulatory our June loss requirements XX common expected ratio expect these in our June

ratio, the forward-looking now implementation was credit provide will X.X%. full current Our common some I reflecting equity Tier X the expected guidance. loss capital methodology of accounting

expect quarter. quarter third to fully flat to second net compared be XXXX, interest relatively the we taxable of For equivalent income the

for compared remainder second We likely expect Payments industry. the in through basis the quarter to slower a continue basis of on revenue and due reduced the year likely activity. spending is business affected on refinancing the to it year-over-year third the reflecting be strong a be activity to to but consumer mortgage revenue decline quarter, is to year-over-year with adversely

sales However, volumes. in continued improvements we expect gradual

be both credit second government outlook stable performance any offset on build conditions and a of of and expect factors, depend quality, relatively We for to Future changes compared the the reserve beneficial from in including portfolio expenses will stimulus. levels non-interest reflecting number economic to quarter.

allowance will We the conditions as losses assess for change. – to allowance the credit of continue adequacy credit the

equivalent full it we expect XX%. remarks. hand XXXX, year rate the our approximately back be to taxable Andy tax will closing for to I For

highlights to recent of and actions employees. on taken Terry. Slide communities I end the help our company support my as Thanks, we have will customers, a few XX, which remarks a

We not economy, the are times, our uncertain but society for for only general. operating in in

However, make together leave each the we trying on all lasting other confident I will of side changes can impactful that better us am and times. that

and focus near-term well value. are maximizing this We to positioned on shareholder long-term manage the lens and company challenges we with for continue

deliver liquidity model things highlight through positions Our our ability that to and to business I us. the are continue remains support and returns will our for strong a capital differentiator leading would cycle. industry three unique

First, second revenue industry-wide an and mix against slowdown it earnings business results quarter allowed this the activity. reduces growth diversified revenue consumer rate to deliver in us quarter volatility. backdrop and even as good indicate, interest our our And challenging spending

at and faced economic significant want employees do but disruption. opportunity we an up through Bank, support foundation credit puts couldn’t position it. discipline U.S. have to third, all favorable informs and in prudent growth our to the them more consistent our our communities customers Second, they culture take return underwriting navigate to how while and only our time-tested their remains proud setting and to in come what together And a we of downturn, do us hard for this work us be resiliency. not the I environment. strong to more I which thank economic economic social and to

Q&A. now the for will We up call open

[Operator Siefers first of Sandler. Scott the Paper line Your comes Instructions] from question with

morning, Good Scott.

guys. for question. morning, you Hey, taking thank the Good

wonder for trajecting the the you see you takes sheet growth expectations guess, on little the puts you third from balance question could the and if I just margin talk sort would the about for Terry, of say, you Let’s I a meaning here? where NII quarter, bit and gave

would down. clearly, expect we From that we growth, quarter to but linked basis, Yes. year-over-year going on see perspective, be a will a loan again, it’s

end continue quarter draws first are those that and early associated the had of We second at going see quarter. to with pay-downs to we the defensive

forgiveness will that in it growth quarter dissipate simply linked quarter third loan because from put pressure help second So, but to the quarter actually a does PPP standpoint about fourth of and downward on start program. a quarter, will as probably basis. think we

auto was has a weak and June. April in lending on and gotten it’s consumer the generally in So, It but stronger little May bit. side, been

think we lending we that’s consumer quarter, has simply been spot the overall likely but believe consumer So spending going be be third because down down. as that, to a bright is to about

stable of will to be think that’s Margin, believe to relatively the little there of you relatively takes we but impacted bit a is kind about puts bit the be pressure loan will little side So It a bit and be but the second curve PPP, going the equation, a growth. on stable. little of yield helped by quarter.

if given interest issue Thank last start you. correctly become do in area And and to absolute time waivers money this. recall of fee perfect. the market then the were rates for an Okay, just the level rates, from I

if of the would So, I see? of thinking guys show that sort up about in up show those are they you what’s something kind would they where think impact trust fees you guys and are

Yes.

I time will our because similar will be think more gets we bit in probably revenue of the growth, show recognized. up impact little maybe what but be last that’s and management investment to simply would it because fund but it given, saw trust where fees, money market a

Thank perfect. Alright, you guys much. Okay. very

Scott. Thanks,

Deutsche question next with from Your O'Connor of Bank. Matt comes the line

Good morning.

forbearing on that what include and assumptions the next quarters? income on some clarify of of that the of your from or the so in couple if of PPP benefit to Just net interest repaying of kind quarter-to-quarter, terms are stable outlook does

Yes.

all it basis loans will So a on I there quarter it in Like commercial but associated takes. decline includes draws, said, the benefit and linked will terms because of of the with be PPP. reflect some a puts

essentially all and puts includes income. net with it interest takes the associated So

could in funded to maybe amount terms if some talk incurred you wondering I And wonder to those small, or approach it I just the your you after that go have kind more the insight am versus seems Okay. of smaller at cost kind that look PPP, and originate on total granular the approach your of give if And of like really was just businesses loans? applications. to us small then

then is We Andy. applications serving took outside and this the as came bank. initially, in our they the ultimately customers of Matt,

had saw, over we average you and the was As XXX,XXX the in applications XX,XXX. balance

a business employees. we So a lot of lot small are our and helped customers of

the more manual job. much bit a process a a team So, and in a certainly did round. We process the went great to of started automated with second

and on requests based that just was came the priority it really So, based. in was the time

kind just from to of bank was originate, to of just one it then Okay. cost the or? And part moving resources another

entire yes, Yes, had through and the company the help was, bank actually the well, technology We supportive. yes Matt. as the it throughout was process from entire that us process, particularly started individuals manual this but

you. thank Okay,

You bet.

the line from Saul comes question next Your UBS. of Martinez with

morning. Good guys. Hey,

Saul. morning, Good

issuing but the gradual first consumer bit us recovered then much give good Hey, how you were drill June us down declines there. little really the seemed card rates just a to sense say all, second should that in the give acquiring they release and I business categories those I improvement could to in I versus in sequentially guess in least quarter. of it to second you sharp just I March? volumes as at adjunct as right? suggest versus improvement growth And but nice could thinking terms seem you why is in tough the your I that see to would wouldn’t June get to sense payments morning. a in a like volumes and of in is year-on-year exit Terry, the – you an Obviously your comments, sense on of guess, sequentially in on the that sequential bit am lessened, wanted sort of versus the what quarter, a see about that the year-on-year suggest acquiring improvements and little of just volumes and pretty for a and can whether want that, terms revenue really, of a versus

right think I are you Yes, Saul, on.

looking I business think a payments we at sequential end up on our basis.

in are fairly see of to we XX% about volumes in maybe we give level, merchant of at expect still spend perspective back and same the commercial commercial it’s there, corporate in down our or spend some credit and kind today simply saw you but at consumer XX%. our payments not almost because was particularly equation, the merchant, would on also card of end will the we are closer – cautious, spend, customers April, kind that XX% sales ballpark growth, know You the to and but the that side the growth, really levels of between the the

going to really of come has for entertainment, and is back things continue has the The it industry with that a the the are some impact So come associated nicely. mix that nice. very airline to very back while but

Your that credit credit respect said on. With sequential in nicely point we right April. kind XX% well. as to range was that card, on And have is growth of card down in back come has

then the down cautious. still the spend somewhere in XX% relatively be again, We better of of kind – me, debit to on terms it’s the trajectory been of while of that going expect credit that down. the get reasons, continue have the XX% in between little to has would wouldn’t of be third XX% that strongest XX% timeframe. of to in XX% to still expect XX%. revenue of CPS has around And in and equation, been simply to level of sort sales a or still down sales, In card, in was excuse so the pretty CPS, commercial kind be it third kind card quarter. the strong. at It we into pretty And been think third expect I April to maybe Debit We to quarter than the down actually strong because in a card magnitude around that side and is quarter XX%. XX% up it the couple tends is range. quarter. spend it on higher side third to government quite that the It’s for And do

hopefully, some or gives you insights perspective. So that

lot service to know charge I or or customer, just deposit maybe COVID. fee do helpful. more on that’s how you think is fees, we you about and that think of a to us normalized million, a another obviously could I that that how super compare mean how related squeeze we could give If in related quantify can about I coming a the forward down quarters? don’t commented the and going how the to that Yes, waivers I sense in if one do $XXX level

Yes, nicely similar of checks just spend in sort and all of the different terms NSF impacts customers has have levels of it’s expect back types is of down that and basis, then year-over-year and as quarter. declined incidence second consumer or similar would to be on going stimulus to still in card. waivers On basis, simply we the because related impacted activity a things come and but fee quarter, a the merchant has will sorts third consumer you to down our helping just sequential activity credit

to I So, back time what guess? level a a get that it sort of more take some normalized normalized to or will more was

Yes, that’s right.

Alright, Thank very you alright. much. Awesome.

you. thank Yes,

Our with Bank line from next Erika of question Najarian of comes America. the

Hi, good morning.

Good morning, Erika.

have My season. been first question your all a during the on this question getting and peers is this is reserve that earnings

asking, also I the So, weighted. be your about years? and question case of, the those And let’s your I to scenarios but way base CECL that, one that represents to say, the related peers are reserve is different talked scenarios are that loan have represents, a another base recession the say, it’s And always X of of is so here building? world tends for case, reserve ratio like terms in or let's done five you to the that in your that loss X.XX% I cumulative guess that, think rate to guess, of view?

if built weight scenarios? account versus base could am give insight was some you other much that perhaps taken had I to you so have case reserve, as in how terms wondering of your us And

Yes.

are reserve question. you available certainly we take that estimates at the have in upon reserving, based end you point XX. and that We the quarter right, believe losses of that information you And about appropriate particular your are for there. So, absolutely any particular at the at the let the when me that first the cumulative June time make think not is

quality in again, what differently changes or but our upon highly So, than terms we economic credit reserve, to expect either going dependent future if of increases the in we expected. that what wouldn’t had changes be is factors

right, modeling to thing is we with unemployment based important apply CECL your have I how Coming you the that it. that like are but there an going are to is to is theoretically in and part unemployment multiples information continue XXX the assess to we ended important quarter mind, how the to now, respect that different us, that factor, reserve the question, process. every trying are So, giving second information that upon up keep is are we available you that’s the but works to to of

weighted complex, was scenarios we a got information lot because So, you many ended portfolios, multiple really I across of of looking you it’s But different different pretty average etcetera. unemployment, the gave up types the at. that

was we this, look We at look if etcetera, you case information upon will, many So, base case you unemployment, multiples. at from develop GDP, around terms the weighted are when that but look in things you sources a that we gave at based and right, etcetera. scenarios those like we of information I multiple weighted. base But then

give should have that. about comparability you you when it you to think anything So, Andy, add? some

have said you it well. No,

Got question it. my is – second to Andy. And my follow-up

think just will obviously, told done continue. us look terms building. what quarter imply this was reserve in that PPNR could And So, of your resiliency. be I And would Terry that the impressive about is forward particularly this we Andy,

here? think environment operating the from about as more we a growth about future for about As think you how banks, strategies we inorganic and difficult thinking are

sort of balance comes back, diversification much is of part income park interest of net the of it there. fee products mentioned, And of on probably as helps from a out – well other some pressure mortgage talked the a our quarter Well, positive payments, you very a XX-XX represented had about. first, or Erika, think in diversified terms then as – it revenue because our This quarter so. and the activity We revenue well. mix how commercial it revenue lot. that I spend is this sheet the Terry as mix a hit of But this had

well So, helps in and different businesses like different environments do in that really cycles. economic this

planning future that As continued we the to It while normal. think are a spend has back a think to for will I take we about rates. future, for get lower

So as the going digital are businesses manage about. continue the to in And also those I doing what to with – which today. initiatives thought invest in our offer with to have for we us is opportunities virtual we the to opportunity that think opportunity only And that as are not in going in mind, well that expenses we it offer our I in will talked customers means connect expense will initiatives digital the run. long are

are the So, are we about it. those thinking ways

any And strategies just thoughts acquisition? on inorganic

Yes.

I think it you say more importantly?

being Thanks Yes. one. for

is So, have come we only up. The lot in the clear opportunities a even this I vision say terms not of certainly in for future of us. Erika, there a uncertainty thing is it’s will look environment, and would at

the at are stresses So, look. think because will do we to of someone opportunities look and a there else come will with be that will lens out but that up take I challenging,

you. thank Okay,

bet. You

from next Your Mike comes line of question Securities. Wells Fargo the Mayo with

Mike. Hey.

Mike. Hey,

Hi.

your scenarios And average conservative one I than it’s know least I case. of this but Just it’s was I look, banks, case, by that. and of are of – the at challenge that, lot that’s – all the want So, more X% to the but end Fed and of challenge your year, conservative know again, a to want most base your base the unemployment I one of on you conservatism some peers weighted

the and why just, not thought, different if about the nothing flexibility then the but is case. be your there am or it. I be like little seems a pushing more It’s when peak So you assumptions bit I scenarios, builds or crazy that, the are you won’t economic take wrong, said average like back if reserve conservative more weighted have you that this

to there? be just So, and kind your But in sense. how improve along why about leads we down COVID it are deaths, that should increase big lines, closing you more leads had that a to cases, sequentially not which payments which makes those comment of more look, some And progression? feeling conservative

Yes.

reserve, use So you to is maybe with kind up establish available you question, the know what to in to what us. upon like. believe what looks have that we when up information address end that as come to you the the based projection And and first establishing of other of Analytics order like appropriate unemployment an you things you example sources have Moody’s

reserve you sure have. that that have based your to the appropriate So, you upon is that make information

You that to best upon I build of can’t Based try it. conservatism have go terms round the tons of will of to our cases. side in equation of to on see so in it payment continuing is part But the speak and into wait we again, of kind that now, COVID estimates, right think are this can. that go to open states I versus think last around, they stay the

exist before, and different but health based what lot to uncertainty of think sorts of or information a find information upon existed treatments it’s it’s early is we honestly, that are things quite of better have sort different There to out. all different you I and know. too going than

the changing right, sometimes day change Yes, I and on. Mike, are are facts think daily, weekly and hourly. I’d you add every things

are So, are assess that out continue get are given What going there. to think telling he we manage continue happen. we data and just we going to the and as to said, is the you changes Terry what is to now. company everyday seeing to And going what assess right is we he

of running are lot a We models.

understanding scenario occur would scenarios, including sharing are much that. of board with lot in and harsher a a We what our

are in are we our unknown you is the there I but a So approaching financial way of yet modeling. right lot being conservative mean and are we

#X, to like happening Slide what of bring with And up putting what’s at slide us your follow-up of I and front and like you trends, then digital you moment are the engagement that to your terms certainly of one engagement branches substance question can center, of third and look as the but it’s date digital that anything in mean does you if some slide national must seems been always it’s as this you put I earnings steroids of it – your part in clearly the know terms in third of your because the strategy? are putting be being way bigger highlighting it’s now on expansion deck, this, which it’s else, like but in – important, mean and are

talked nearly and accelerated The a So, recent has of always customer that see In ago. has you changes, sales about excuse the in as Mike, but I have lot. digital a activity the a doubled fashion. as think important, me that far the platform branches can occurring doubled in been down even transactions transactions branch sales I actually, in behavior side, further. And total are, it now loan But the numbers, a versus have you on the is events the year do XX% digital sales. since

digital continue we expect consumer, the just do in so together words but activity or other investments do yourself is do for co-browsing it going virtual across to important both to many it lines. And business and those be not

is connecting run. the So on that the two with they in fronts. efficiencies are also investment in making the to in best that them important important customer to sure offering we are it’s choose It’s ways we giving make and long experience

to of because I to fewer over will fewer important, be of about, would and less. fewer number of XX% have the size behavior. and still the customer Branches we this them have, talked be the that we of in expect we them XX% to number ago branches changing number increase will branches. terms but announced expect a that of we that And year As

on number? branches, the number updated Any those

than to XX% that a have expect, and to to to be don’t about expect think we but that out assess do are Yes, will assess higher we it occurring as we there number. continue closures are and XX%. the the the I changes what continue We

Okay, thank you.

bet. You

Your Raymond of David comes the James. next from Long line question with

David. morning, Good

Good morning, everyone.

Paycheck the have to little you Program, you may bit we billion loans expectations the a where be talked there, back for plus in Protection but forgiveness your PPP start forgiven? $X timeline Going about do to on think a

early going third do some that’s the take there Well, that as to going Yes. we to be forgiveness is expect as quarter. place

going of some run-off just because the So there to is be that. balances of

expectation our of quarter first terms right happens the of third That’s think I vast majority now. and it fourth late in early timing.

And do of that’s taking the Got in side of okay. size how deposit playing does trajectory liquidity the impact you consideration see built deposit very balance sheet the there, and on that it, rest and PPP of good that into growth how through the the now year? the out then the all obviously

Yes.

sheet at that amount system. year is is it’s of a to I have but Fed think growth a look the have is and of end to that are be to the that. question so, of to on the going early future, benefit I you certainly opportunities the to perspective continuing side strong deposits associated if expect trying with if in the programs. we challenges strong not from into in expectation is The pump Our the next fed because of loan correlated was do don’t, high liquidity balance the to continue into to going deposit least the impacts year, through The really if you for great, identify, funding the get you growth growth the investment foreseeable

you. Thank it. Got

Thanks, David.

Your of Jefferies. the Usdin next from line question Ken comes with

hey Hey, good Hi, morning. guys.

Just of one at revenues obviously off noting COVID of of the mortgage but the will you think that that stronger like costs type some be some on costs a especially even sequentially. the than side, are and talking expense softer expected I would coming incentive-related mortgage, stuff much about like costs question

about some flattish maybe would comments expect you flat that was of of I the – sequentially? the about And expenses to can you if terms reaching talking can still expenses made are only the see why you wondering expense sequentially. of put in Thanks. context of kind in broader you future just You base with

will in COVID-related see coming of expenses a revenue that of quarter. all areas going think to growth you related I to sort are expenses down mean, PPP coming still things basis, are sorts not, will amount and a going sequential significant associated cost The on that going see Yes. is of up I do see with happening down. fairly or end to There third be the we you that

that loan that just for The mortgage getting other ends they expenses I play to, think end example, up relative coming thing that occurred. into timing production recognized other to with up when respect the is

timing lot is quarter the in revenue the expenses the unlocked, So, and quarter which closing up of in of simply that that’s happening the we taken because thing. recognized that of in of end following the application but loans sort

the from big keep to in up growth driver to quarter that you quarter So, impacting sequential second that’s third have ends that a mind?

follow-up fee the that waiving money put in today at or an waivers, numeric of complex And management on last is had Okay. time, and you for the versus peak you market through the larger differ context Thanks. basis on then? would into can terms expect us, were annual last cycle a them how mix mentioned you either asset much how that earlier to than you be

Yes.

prime there based level significantly. money were terms certainly In opposed of The end that probably today That’s management, But more is think ago. govy a XX of the fairly as – years up end to under you of when assets declined overall than the base looking a government the mix reason. sort base. we prime market at offering, at higher up product it I the or

rate waivers be phase we kind that just right And in I of but on management management trying what think Ken. looks of similar, the the the to kind I that like fingers under now, my put is but assets certainly fee will higher. get to can wealth the you, back of am pretty

follow-up. Okay, will thanks lot. I a

in Terry, a I when plus will they or implemented million are think range fee will minus. waivers $XX that be – we quarter somewhere

Yes.

of with the the from question Juneja next comes line JPMorgan. Your Vivek

Good morning, Vivek.

Couple thanks. of questions. for taking you Thank ones. Hi, the

reserves started coming and you Have or us come where of Firstly, off? in cards, cards to customers, seeing also deferrals? deferrals customers reaction the see terms terms to card the and what’s can on credit asking off been paying amount full of deferrals what to are are you extend the the give in you

going ask to to I am Vivek. Officer Mark? Thanks, to respond Mark Chief our Runkel, that. Credit

on card question at credit end XX.XX% the ratio of was June. number reserve The That’s the one. Yes.

terms XX% have normal very of strong in we make got seen have have in to The time. programs of periods of that the customers we place customers of come that second some off have those after those started About payment those performance payments today.

moved about far, has performance. into so We few good delinquency, a and of so rest customer reenroll so have seen the those then on XX%

as this may if suggest know use? That’s I had quarter, sneak you. for to a in one Other I lot a what Terry, would it us great. you for Okay. run-rate of noise income,

Yes.

kind what So environment a good think second if would look current like quarters the estimate just pretty end looking end quarter the are Vivek, run-rate up at you is going to at that of about are we the I least – future of while. a when I looking in, for at given up

Meaning at had? this $XXX you million that

Yes, yes.

Yes, Yes. okay.

Okay, great. Thank you.

question comes next RBC. Your from Gerard with of the line Cassidy

Gerard? Good morning,

out Andy, How pain What claims What color give are the still talk seeing? guys Manufacturing numbers some you Andy. as example, we and they came commercial are Terry. but leisure for the unemployment crosscurrents real today lot are and some can are you? little your remained economic they of Hi. elevated. you State But February industrial a positive customers customers and when on the since on are time feeling first very initial seen your well. telling the what to the Hi, Index information, in better Empire understand have production hand, today other you? coming us your restaurants customers a

Yes.

reasons, are many signals. of shutdown right. and competing So mixed makes stimulus the economy in signals PPP, categories, There of those forces offset mixed the first, those are which mentioned, that’s by some And are stimulus very projecting they in excess about cushion the competing occurring all a small sort the have initially checks, absolutely would distress this Terry that drawing I larger two-thirds modeling most the is factors because billion, environment. you things. difficult is across the larger very And down benefits, the the unemployment companies think as from in for but $XX back. I defensive of paid less businesses struggling say were The lot than of different of principally are companies. they

in industries Terry, so certain small, bit continue you well not industries doing to doing a challenged; you’re large, be while mixed; are remark? So would add so some that and better actually some under little stressed, middle environment, much. and seeing a this

think I right. I said, No, well I that’s think mean, it’s

obviously the this provisioning see lot specific in reserving, follow-up, it, on say to the in quarter, building that of a as you as you distressed now you’re provisioning just just I did Andy. the there guys moving allocated would the is how versus But then credits reserves? to touched a you was much you know And mentioned up parts general starting

lot have to side kind net consumer charge-offs end But on things looking movement, will add the especially at of of there of equation. when hasn’t up a I the mean Mark this. been that certainly like we I and Yes,

starting early. starting I but we still, it’s commercial grow, are what relatively We to as see on assets would to about, non-performing talked say,

the kind I is that some you upon the of of that plus government what real end of, reserve And on More conditions at particular of muted as economic of this commercial at really outlook for it’s about XX% Mark and focused characteristics period products, add? forward. probably underlying would kind it more and most think you those build consumer driven think stimulus heavily more like at when opposed going really some it then estate the based weighted split the looking kind least see. or of point. of we programs our credit of at things have of wholesale between time typically to

might mentioned The thing through downgraded credits I early the add you is, this gone very in and we portfolio the have only appropriately. the granular comments

all So Terry is into we the noted. been analysis. that like feel our as factored economic has the change bulk the really of But of assumptions

you. Thank

fee question waivers, quarter third second Hey, Ken. your waivers. fee basis impact the to back of to was sequential a on Coming

that have ballpark. about $XX million in So we

line And question David from of Autonomous. your the final Smith comes with

call. Thank taking Good for you the morning.

Good morning.

Just the guidance; XQ XQ? expense to expenses COVID does clarify in include the stable to on XQ relatively, that

of inclusive. is some but coming all expenses, going earlier about it that I see total production-type COVID benefit those it’s talked Yes again we down, And of up. will costs

and particular Thank commercial any color you you. the also, in give non-performing jump estate? on And could any, real loans

Mark?

you the And then I One that sector. the Yes, but the exposure most energy heavily on estate are low note, today. point as say some going a It’s commercial very industries that would related be the retail just it’s focused on real of really are have of coming is to really off as retail and the industries a different impacted in have commercial well. those on been is side couple they highlighted. we

Alright, thank you so much.

over turn At remarks. for time, call any like back management I the to would to this closing

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