M&T Bank (MTB) 21 Jan 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the M&T Bank's Fourth Quarter 2020 Earnings Conference Call. At this time, all participants lines have been placed in a listen-only mode. And later the floor will be open for your question. [Operator Instructions] It is now my pleasure to turn the call over to Don MacLeod, Director of Investor Relations. Please go ahead.

good and Maria, you, morning, everyone. Thank to quarter and like by and thank conference you fourth M&T's telephone webcast. the in participating through full both for call, I'd year earnings XXXX

I'd Events comments M&T that access before call to contain earnings have M&T you issued of mention XX-K filings, you this then to the made like banking XX-Q our schedules not X-K, and tables the might Forms SEC website, we participants clicking and the it forward-looking If Investor discussion release during forward-looking www.mtb.com Relations with the including for to along statements. industry encourages link on and by read complete those refer this Also, we morning, our and start, Presentations statements from link. Bank financial relating may on to and on found to Corporation. the a

our Officer, like Financial Darren to I'd introduce King. Now Chief

Year. good Thanks, morning, and Don, Happy everyone, New and

details, just Before ramped into touch quarter's fourth in PPP loan declined $XXX a the in million quarter. we recent the by the few up PPP forgiveness highlights loans results. get I'll Average on the third an basis. recognition were quarter. the resulted down quarter $X.X end-of-period fees accelerated of billion of interest in on the PPP million during income and This $XX loan with net compared into

income plan purchased platform up customer economic net in during In result deposit to LPL expectations. up and charges continued accelerated Financial all our were servicing were including by mortgage activity. addition held in due of loans, growth brokerage well, to otherwise and to of relating to trust particularly loans across increased pools. to markets improved with and loans income service migration retail costs strong line Expenses impacted the our the Notwithstanding segments. the dealer as a interest PPP capital Fee impact due revenues quarter, loan fees, PPP improved pricing forgiveness, the were floor from the of average

higher losses in that we we credit year. for expected provided loans As to with this increase the saw quarter an that credit, in nonaccrual the is consistent earlier

forbearance $X in the and provides change million an million quarter and per M&T's million average rate X.XX%, after-tax Consistent return share, in produced in were in fourth X.XX% previous to million compared assets on XX.XX%. were GAAP return the associated the practice, the million with Diluted or supplemental the long-term compared average the share of only tangible in after-tax a in fourth quarter, $XXX results year's for linked non-GAAP results GAAP recent ago we as the $X.XX common this $XXX net on a and net quarter operating fourth per acquisitions XXXX's and basis, on the million effect tangible equity with X.XX% of tangible operating On rates of assets the This morning's The compares X.X% quarter. equity quarter recent from fourth annualized $XXX While year prior SEC's above was of CRE average year-end. but to which Included our recent to full the basis, moment, after-tax with a tabular and XX% with fourth numbers off BayView strong our $X.XX quarter. charge-offs quarter common press to the and in loans and operating of XXXX, levels linked excluded of release quarter XX.XX% rose share Group. quarter's as X.X% quarter turn with ratio fourth GAAP return $XX came In CETX and million Lending million, in a rates earnings year the intangible of This third of of equity. and for XXXX. the the We'll results $XXX in and for and of the have and Capital quarter. level and occur. at per net tangible XX.XX% long-term excludes per quarter. COVID ever third income average quarter common last $X.XX common growing third amounted quarter gains first guidelines, of in remained $X.XX average. and review assets annualized an reporting expenses amortization effect results $XX recent mergers the XXXX. contains just intangible let's expenses or quarter. share. with yielded little for GAAP which in the compared intangible returns the respectively shareholders' with was were quarter, on fourth earnings $X.XX its common in Diluted quarter Included Net when income any net assets of operating M&T of or $XXX of results annualized from quarter. with assets $X.XX our in from amounting Net they of of million distribution a XXXX, well in compared a including with the from quarter amortization the the XXXX. results $X.XX to of reconciliation for income $XXX were $X.XX amortization, the quarter was the in comparable common M&T's accordance

quarter place BayView of the Group We we received have the past Lending the usual from this distribution in that few expect of first in occurred distribution years.

our sheet administration. of those PPP basis income recognition the estimated by of the portfolio, linked margin net million the income A the basis margin. an fourth X higher $XX of balance million deposits, million the forgiveness of interest-bearing margin loans with in quarter decline small boosted added and to statement. quarter. interest of that marking The from X equivalent X basis the hedge driver X% point quarter. increase compared of The was of outstanding or an and the in from net debt interest to points Turning points. by business primary on the of X% to increased slightly $XXX loans basis the cost following was PPP income XXXX, the by accelerated increase repayment The fees recognition fees estimated of Taxable an accelerated $XX points X X.XX% linked in

of and Reserve. billion in inflows checking Continued deposit Federal $X.X on liquidity, interest with a the in increase resulted excess including DDA cash

negligible $XXX this net X.X% or While Average an to X a about premium point on loans it the other the impact interest compared securities mortgage net about All basis quarter. mortgage-backed previous factors, margin. acquired income, of had provided on approximate and million benefit increased by the total on points amortization pressure contributed basis loans including margin. lower to interest XX to

average decline loans of and sales industrial third the the linked increase year. dealers in with forgiveness. on $XXX seed C&I on All loan X%. largely commercial million basis, estate excluding draws utilization. PPP by on an declined X% floor with dealer pre-existing primarily flat, reflecting that million was as real the by other quarter, were a million, all following forgiveness. to rebuild just loans. and lower loans note over that, C&I declined end-of-period that result million a other by about inventories $XXX quarter, loans grew further from category, to basis roughly We'd PPP were loans very a Commercial as loans the loans at Partially robust compared primarily line up an offsetting loans, million in Contributing compared $XXX plan $XXX decline loans Looking or was $XXX

X%, by New up subdued. estate Consumer by equity billion with reflecting credit. repayments. originations home purchased Average or in higher servicing pending third auto as reflecting increased or core as X% compared recreation by from grew finance lines well the loans and space checking at $XXX quarter partially lower deposits offset the CRE as Islands X%, reflecting offset were loans accounts. Mae indirect $X.X and remained customer deposits, real partially received pools, loans Cayman which loans, million Ginnie money Residential office resolution, $XXX,XXX, market interest noninterest by M&T's deposit as over CDs well of exclude higher

recent Group originated revenues revenues, third higher fourth $XX activity in for Commercial improvement the loans the originations Turning income the included markets $X remains from fee banking while assets deposit on were was lower $XX gain in a that million million That declined equity the $X.X fund Noninterest the million, Lending in the revenues holdings third in The by $XXX is encompassing million recent and in in mortgage The $XXX from than $XXX $XX Trust totaled million $XXX market the income. in and servicing third reflects from million compared both result were million, charges were Mortgage quarter. with compared stock, economic million volumes. million good banking of quarter. activity. million BayView were up $X quarter, continued slightly. quarter managed previously payments-related Residential million origination I accounts Business also of on servicing The from the the GSE our million in $XXX to quarter. with previous quarter sale quarter. such slightly quarter gains. $XXX quarter resulted from the slightly reflects growth million sale largely remaining a with million Service banking on residential solid money improvement quarter. offset more gains fourth the revenues increased The higher servicing. compared capital of the in very mortgage origination $XXX result income with residential decrease improved mainly $XX valuation activities, prior of noninterest of prior securities, including higher on was increase quarter. recent linked margin unchanged billion quarter the mortgage included third waivers, the and quarter and in levels the in preferred $XX that quarter, of distribution Total mentioned. income. in totaled largely

revenues Excluding the the improvement reflected other quarter in in also uptick -- compared card-related distribution, card from the activity. operations an linked BLG with credit

by that took advisory with and payment severance to to which benefits, business the benefits Turning compared brokerage for prior a is and addition quarter. quarter incurred the assets, included $X $XX included each contract first to the and doing other in mortgage our to third allowance Also the million and is operations and M&T included payments contract expenses of Operating previously or recent the quarter. in fourth the quarter follows expenses. fourth This intangible valuation losses the quarter with efficiency of asset. In termination second compared in quarters of numerator of for amortization securities quarter, of costs ratio, million LPL expenses, $X Salaries in XX.X% servicing exclude the the from XXXX. including amortization operations. accordance was announced transition third of and million other XXXX. first $XXX so, steps from its of the intangible in which cost in XX.X% declined the $XXX transition additions retail XX.X% from with were $XX allowance with denominator, excludes in The gains LPL a to million of its salaries million in In M&T platform. the and Financial, the million the

as of CECL, a loans reserves recent Net let's XX to already beginning benign. for methodology. the incurred. interesting been reserved environment, charge-offs content rise charge-offs M&T which and We're In helped generally loss in didn't and million. and quarter. loans reserved rate XX delinquencies process as the as Annualized nonaccruals for content, Under net result advance the expected the quarter that added recently million note became nonaccrual economic fourth must predict Next, third The were expected until the establishment quarter reserving charge-offs course to loans see and old of basis compared have Thus, basis to our under XXXX, CECL average. default. driven in its losses slowdown, of allowance rose nonaccrual total charge-offs amounted for charge-off the points an to $XX that relatively of loss loss permit over $XXX delinquencies, for turn long-term and a fourth in the remained to loss the credit the the models statistical net have until for CECL percentage credit. pandemic with increased. points approximated well be of charge-offs while quarter It's allowance in

which $XX into our X.XX% During of was the These for in limited operators provision amounted The net loans end million, the declined than credit for quarter fourth the to to in COVID-XX at losses regional deterioration of pandemic, prior been resulted charge-offs. losses stress which the ratio substantially them September. under malls. pushed $XX slightly of The $X.X That was and quarter, of further all to the to million billion less loan default. we exposure loans. had of X.XX% allowance or restructured

than the first an macroeconomic allowance XXXX, scenario. the case beginning quarter the is used reflects end of second severe damage than model at uncertainty The been the different the at since modestly fourth the the at scenario of to less and of each the quarter, and of that third those has end economy. As and severe of used the updated the less the the which driven COVID-XX quarters of end

expected on to uncertainty originated stimulus the regional may addition be in for of the notably to from the the sector continued and of the losses exposure. the hospitality loans, most and of retail ultimate the that the mall The additional commercial economic recent newly In activity. real outside allowance economic related ongoing over quarter loans, sectors pandemic COVID-XX and collectibility provision reflect impacts estate

being a variables, economic number rate uses the of drivers unemployment forecast macroeconomic with and largest GDP. the Our

assumes at to average averages end returning elevated a to the annual that through return by XXXX. levels by Our X.X% to resulting on the during by The rate continues in levels GDP forecast end XXXX. of XXXX, rate a be grows X.X% long-term at unemployment forecast XXXX, followed the assumes GDP gradual of national pre-recession historical

$XXX loans forecast Nonaccrual transfer an from billion, government million monetary but increase That stimulus, the fiscal of any $X.X actions. primarily of handful the increase from relationships considers not a September. came $XXX It rose risk-weighted status as nonaccrual the X.XX%. credit little hotel important XX further December usual no of on of balance Our of to sheet, by or end to million. of been is totaling loans nonaccrual loans metrics a mind in the At affected and percentage the X loans as risk. that quarter, some keep to was of the carry of end have or which credit the are PPP

would entities. would forbearance PPP figures. X.XX%. we a net X.XX% as million these by quarter. the which have total of allowance the loans, basis loans Loans of recent continue Similarly, the XX% of percentage XX which from loans, $XXX credit be of past XX to government-guaranteed servicing tools on not loans we million government-related in days losses be impact for loans nonaccrual and the due, Government-guaranteed were are interest, to $XXX purchased end loans Of loans annualized ratio or COVID were ratio and Excluding at the these the to total be of would charge-offs generally accrue reflected under points.

cases, COVID-related COVID-related of on $XXX October third end Commercial million call, noted the billion the in declined in end conference quarter loans declined than of waivers. end $XXX form covenant less at the waivers and XX. figure, with XXXX. December as $X.X declined payment other deferral. of to $X loans Of that from modifications XX-Q, still -- of as have of billion to deferrals, and those billion fourth from we real some estate fee modifications COVID-related the billion the at third third As in to the Those $XXX under to the to and, quarter forbearances, total such modifications COVID the of September commercial things at than million further figures loans million a loans relate $X.X industrial quarter. payment at XX. Similarly, under $X.X declined

X% billion of end have figure at Some Mortgage-related of of the were the us grades $XXX The loan quarter. modifications as quarter, also less slowed to portfolio. quarter. payment million into consumer those has of to from than our the deferral. declined rising of forbearance within about from received end the loans criticized in not $XXX the status loan COVID-related under downgrades prior $X.X that end the pace quarter, modifications loans fourth or updating billion fourth meaningfully million. a Remaining of prevented declined Modification the commercial third $X.X

impact in ratio higher Turning and as was to end at estimated reflects XX risk-weighted of to capital. This third M&T's paid of common assets. dividends X the the X.XX% slightly compared equity earnings quarter. Tier of XX% the of excess an December

of the an of provided Next, a some XXXX cover year. financial to we of of of like to take M&T's illustration the M&T's resilience believe the events I'd franchise. Overall, moment and operational past highlights

XX% share diluted customers the resultant repurchases X.XX% X%, partly pre-provision and had as activity in financial The the assets billion and prior and declined the with was like revenue champions, Key work-from-home rate average XX.XX%, like of $X.XX environment results standstill, the in common operating tangible Net on per extraordinary a X as the result by XX% respectively. at X% $X.XX average our the and the return rate champions, first common end the the including accounting. common to ripple total were to shareholders' a income year GAAP-based was by switching pandemic. up stock dare grew operating XXXX, colleagues from dividends, on The billion I a end decline the environment, ratio all conditions and value of average challenges the financial including of that well was book in follows: shares our helping of the a tangible Our presented XXXX say net And as year, XX%. end to net navigate X% $XX.XX common of COVID-XX X.XX% income, of CECL economy result at assets brought for at in division that to loan limited results, the diluted the the XXXX. for in equity of helping repurchase in clients to share PPP XXXX, X.XX%, a performed a prior expressed pandemic on material the billion barely compared respectively. of originations. the resulted process These for common billion the billion in XXXX. XXXX quarter but through year. with was X% despite Tangible per as and compared equity, ratio CETX payout XXXX the prior lockdowns Average of interest severe with $X.XX impact $X Net economic about net the in challenges earnings for highlights average approximately The the income end $XX.XX from $X.XX decline compared income XXXX. increased $X.XX returns by with year, year. and produced the of were brought

Starting Now let's The but has that the in the on there face rollout balance our with holds improve. more normalcy, a see a pleased typical pressures. we outlook. to to of the return to are sheet, the promise We're sheet to to $X.X parts of turn year. vaccine would the loans year. all balance continued amounted economy to moving end at PPP billion than the the see we of continue

the expect in the bulk actually of week, This or Administration in XXXX, loans, similar round in the and We that those first be net the that substantially Business we began net quarter. income what interest Small will of repaid quarters experienced to we with fourth the half loans interest for X. year. That PPP forgives process occurring in which to be of margin customer the the applications all accepting forgiven will in beneficial

decline We in PPP offset certain to expect these a balances new the loans the extent. to original

year-end, income, on $X than believe HQLA cash in $XX X It We in billion Another points. level such and cash liquidity stimulus net cash impact that carrying our securities basis to at we have maintain the to cash sheet our -- margin. is resulted excess to impacts governance. significantly internal need little sorry, X atypical the higher normal. to X The along than of in practice peers, the of and maintain under as The levels XXXX sufficient close to interest has cash billion of circumstances. net and impacts more but would element that X by enacted liquidity securities were securities. M&T, meet normal enter cash margin we holding with is XXXX we programs interest in various we balance and our Every the

may Ginnie chosen loans we of interest when Mae that Those we've mortgages the is ways from fee the deploy pools investors. in in buyouts income through to subservice. the to and excess short-term sold the cash status those performing of buyouts net loans the be or long-term and to return service One create of income

discussed, at billion loan the floating As rate cash to late portfolio that previously year. position and has $XX.X active our the remains hedge fourth increased quarter flow this in level on until

of mature to loans flat Holding receive However, loans. the are be expected to XXXX. on leads be to side, expected interest active. year-over-year at total the loans a starting increased rate of to mid-single-digit to grow forward up slowing environment. to All fixed with PPP, flat expected Consumer draws expect to for and swaps net slightly the swaps are the line we loans, slightly will low and a relatively pace. unusual expect economic outlook originations result older subdued industrial flat balance loans income, decline increased utilization. as to the CRE to challenging year-over-year be pre-pandemic the we Commercial sheet rate become activity and aspects in digit newer excluding new down primarily in, decline are in mid-single as

fees. Turning to

should with be assets other offset flattish with Money growth in fee the payment in continued managed, ability servicing be in also This believe sale foreclosure delayed mortgage to We also from banking impact but waivers, XXXX. some with year by holidays. combined in expect loans single-digit which depending That pools, resell could purchased will trends year-over-year our to margins. the strong similar pressures originations revenues, the and some in State growth reflects categories. gain income Trust We on full continue, market on assumes low noninterest outlook on stability of values. Federal and Fund growth

previously pulled to of in fourth improve distribution full service on run the quarter to Receipt the the Lending basis. a year-over-year revenue to BayView We rate XXXX. we expect expected of reflect in this and charges quarter $XX forward receive Group million

less grow be fee revenue other the revenues increases, expenses with categories, banking in categories well. expect on flat directly to to trust generally Outside our as flat those Based to expect income, those businesses aggregate be expenses Turning and year. Overall, expense we primarily we for to of some expect expectations the prior will the trend the all outlook. tied Charge-offs, mortgage XXXX charge-offs we growth expenses. in should and and macroeconomic provisioning of anticipate sectors our The given lumpy line impacted said, be will to X%. longer average. long-term nature by credit emerge. show and the up will portfolio to improvement higher the in than be the likely in in most will take That we with pandemic, likely higher than

uncertainty, the fourth for outlook first higher than Given our of the currently saw XXXX, the what term. on the we will we foresee we near focus charge-offs And credit quarter. quarter in don't

turning Lastly, common our has of to Board $XXX repurchase stock. up to us capital. authorized to The million

Federal to opportunities. environment, capital any the We within outlook deployment operate and alternate taking and currently account in position as by Reserve as capital into will the our guidelines continue well effect the economic earnings

various macroeconomic regarding are are Of may to in materially projections you rates, and course, growth, events interest regional assumptions uncertainties what our other changes and unfolds differ and the in future. aware, a from factors, as which actually national subject of number political economic

Maria Now questions, to call before review will the instructions. briefly the let's up which open

[Operator Zerbe the line Stanley. comes of of Our Instructions] from question first Morgan Ken

low-yielding there's a obviously around that mentioned maybe versus of excess starting where debate Great. lot excess have you're or on deposits rates guys cash been amount huge on sitting I keep you you -- where off, certainly a it to right. guess kind normally in of rate are come you whether invest securities cash. in that All or of low low it? balancing prudent out it's debate? you And How do the

every decision exploded It's our it of it for the that our take and And the on balance just hang second the nearly half and thought other long discussion of and how up in on. year. the duration Yes. what that the process about sheet, impacts a cash kind to always debate ALCO showed way meetings, thanks around, at our is question. we Ken, week have the given will

it a short And gain much thought so isn't our work basis way treasuries, point in through versus the really cash it in that. we term, doing as of there process, in investing holding short-term from that

ways amount at where better cash bit that little looking alternative duration on yield setting of or can we're so spread up we a And maybe tremendous without get risk. a

One the cash an securities. because we've Ginnie attractive expense. mentioned and The that the it what remarks get be in offsets for those an that the better of it of treasuries, for in on And short on X-year use spread the prepared to of was found fee we is term, opportunity we've things we buyouts than income. would some cash been using creates Mae

continue So see we'll because, opportunities of the obviously, what look where continue to we'll and to And other the a the is. goes watch on to to some We'll put that for regular we in like work balances and not paid to we'll X hold that. something we're can look see keep the then rate PPP watch how change our and net powder basis we at It's drive. cash. loan money curve and environment

risk taking on. trying So might be be that's always our much objective, how with prudent duration to we but we're

of Great. think I more a right. Can of you love question. maybe then to $XXX just a quality to mentioned nonaccrual. credits learn those. hotel the -- you bit little And about All about just talk that credit million I'd follow-up worth the were Helpful. transferred more

which count that. Yes. at a off to them, socks Sure. of shoes number guess good take happy it's credits, my need those I to When I'm thing. discuss and to -- don't I is the look we

exactly the we prices. look at but relationship prices full should to traded. we below. looked of these the haven't the XX% of a And back in at all they the know asset which a end I got the the We XX%, with are material is are. many asset we we are with market to the say, know So let's loan -- of We've many top, come at-origination, where XX, seen bit most are, these on anything how in that's relationships. exactly a clients. year, help long-standing obviously, decrease there and had top as downgrades still or based primarily we've of values the That also little When a sustain couple seen CMBS market of

couple And of property. larger properties. ones, but a it's so X It's there's not multiple just single

can And good some relationships. tend of these the in long-standing cities. behind They the collateral larger to in so occupancy hotels. there's level good be We see and

to feel good have able we we start sit so as where now, either to them start into to And are comfortable larger arms back. them we the and visibility or But tourism, business and that travel we cities these, have they'll watch more come see closely. around right our

would view this the of gone about forbearance, as so that new up start And economic environment progression what's in signs right, what see would in you see normal you the And when some that cycles, these be interesting nonaccrual. you the were kind you're of the reserve of these delinquency, and set to of before X I is just provision take CECL nonaccrual. now they've stuff in the to and

fantastic of of multifamily. seeing in of portfolio have of called And the the actually that, have parts then year, dealers that And the profits. generally, there's and done some record Retail cases, of had are book these trends lot hotels, actually a we catching upgrades and seeing that -- reasonably in pretty solid. of not necessarily but to CRE related, a because when in dealer like Outside so some you just just hotels, actually out not outside has done we're portfolio, provisioning. had a are well. CRE lot And some concern up today kind really look the

nonaccrual. them why we're move those and that did And obviously loans as so that sector classifying that's watching, really make that's the we with and

Did it. you incremental they you when mentioned those to any Got reserve credits did associated have nonaccrual? with build --

Those anything had effect material. we wasn't there in for the quarters the year. No, in that three provisioning was of prior through accounted that the done

comes line Our of Pancari question from the of next ISI. John Evercore

coming to out a credits Or just off of was nonaccrual them of it quarter? was this -- the deeper to $XXX dive was resulted terms million, the On all forbearance? -- how it that of back more in this them moving quarter those a played result into that of that

Yes, on Working basis, start is to hotel identify one the of These situation in. credit from John, credit path. that relationships. we NOI moving to being them, kind largely conservative nonaccrual and start And that do, a it's to in We've forbearance be of and thing not got pay how the each period. most latter. of the down portfolio and the their into would to understanding right folks and thing able them really end able what it's by continue with they're the thought been these to what that was to to move to do, the appropriate attention forbearance

it. Got

on it XX-day that then comment can Okay. your more Was holding like related how about looks also And And also been in to like you if quarter. the past maybe hotels? looks and that's exposure dues your than XX% office up? then increased -- also just

been Yes. I been When office look what's guess collection with exposure. I'll pretty in in at the trends solid. the have we start rent happening office,

are decrease to been big able obviously, that the customers receive tend corporations. a have to with they leases And larger what in tenants. be is seen signed, of a bunch and the -- from oftentimes with that longer-term We the haven't our

So how modifications I it's been many at X% are pretty there, look look it's I at that and space outstanding, of like the there that steady. in are When portfolio.

Again, is say going and and that up question buying holding pools to residential we're also bulk and at driven office the on, and the of things the doing the that The is the of doing government answer loans after largely they're the by you is would out guaranteed. also XX-day on. that were mortgage look retail, over is well. what's multifamily overall, early When so I And concerns quite space space our very well well. --

of we they're kind that not way about classified, the a credit it's but So worry something from perspective.

Our the comes of next question Research. Bill from Carcache of line Wolfe

pandemic? could how get in you about that trajectory to that across the day credit, on is comments there credits guys reasonable up you the is of could level revert the discuss what on you are rate following the side longer Can light Darren, X.X% then that soon concerns see we of you the reserve your other picture to the it of tail nonaccrual longer in we'd that and portfolio hotel expect cited lines, particular? just those have CRE downgrades? loan bigger no give And forbearance. to along a on view specifically applying of made moved maybe some And of X you've the of just in

Yes, sure.

looking they're of are those those what's off what last dealer was all in X was not forbearance, recovered was June off just rest flows, just ability industries watching are -- a through review of And most I They've -- mentioned the -- happened -- they $X.X fact, the about guess, seeing following in was quite quite forbearance forbearance. collateral, so look would turnout course skipped. trends, think correct, of that looking number that remarkable that a credit was we've the I repay we though at we we criticized of grade over is we months. I process, my the memory the and they've about across of is our I forbearance stability, we've what grading book has in repay, seen was So and at current. and seen been not over forbearance, looking the we've the when describe been had all X -- the portfolio system And as things, first When just trends but improvement. probably of through months forbearance. the book. go to grading talking what been our the book There is and I in customers. thick on, of intent widespread. if across we've looking it the number at and mean and and cash were to even billion course of of it at And in of last, the And

is up slowdown X% right; this in migration talked to about so quarter. above so the seeing And being we that criticized, you're the what

nonaccruals the larger rate of a going really people progression look the hotel criticized the the that is big of so really city but And declining. interesting little book are but one. of in retail largest bit really a And There's hotel. is performed just has increase what's retail, of is And in And the from criticized nonaccrual. into far is three And multifamily. well. struggling. the what's is industries, are bit And hotels within those away when quite and hotel it's we portfolio, that little

that this be We of occupancy rates they're densely actually XX%. perhaps retreats through and hotels to spas, are throughout or north have some in footprint and tend seeing areas pandemic, populated more less like our

real occupancy skewness portfolio. hotel within range to rates And so a there's and the

them the very the mix in to the to a to some average, post-CECL so help be feel the stay possible question and It's business or been than struggles, and rates segment we've And what going the into a much try allowance portfolio important pre customers them others. of subject of assets And part it's and a that we've back work in under assumption. lot of to and about to long-term paying The are guess, clear that, value a say about got the the some portfolio is in the process. different a we CECL similar reserve got is -- carry of we've to I portfolio the who mind the keep and still I fair work to to through fair to of business good help parts rate, able loss business. that and has protect and the keep issues think in them as able but those position that with visibility are as are stay

And a But that get that's see of you good else to at by we good would hard that, 'XX. there now, of or in XXXX. forward. a think Probably, by so, XXXX? equal, possible least that's all end place the end possible right Do I that's at a starting as point. the think think we point be to little it's this

And That's color. a could cycle, book industry super could decline cycle for If expect one. in if helpful And to see similar late loan in continued first And if you across you last we trip really your in repricing was squeeze another I the guys? back yields in dynamics until the you discuss the XXXX. I thoughts just you to broadly, just cycle? got the hike rate throughout could dynamic whether our discuss around wondering

Yes. a I the on things of couple back book. guess

close lot interest-bearing for the getting saw for excluding given certainly And of excess when we side, deposit look deposits, tremendous XX the to lows On very a reactivity seen liquidity a and book at the the deposit the over deposit of categories, that the especially us and repricing time years. for we we've in pricing has we're last and yields, the the amount industry, been rapid.

low that XX what range the points in the been to rolling the off, been call when And over there, so When -- loans originations because think we And had quarters. to driven basis loan new for originations, versus variable it's single-digit you talk product. there's where about it's the and of, on some reference rate but what's in actually you points. single-digit always yield seeing and we it, it we've better to But spread go rate on room about look And benchmark yields, is seeing loan of still at XX we're pre-pandemic. new spreads the the is margin. last basis -- as there's two

obviously, what's than benefit book roll-off so hedge that And we're bit nice as of larger the the new off, starting a about is time, the over at which better is, see pricing, little percentage to -- pricing. a rolls see the we'll

actually were and consumer so part the C&I And happening space. of on quite in estate what's commercial that we the portfolio, sorry, -- positive in especially real

originations does on new better the last compared mean how to follow-up Just that. on trip cycle? spreads I Great. to that

-- reasonably in of usually, liquidity lots margins I guess, you would you see then margins consistent leading of what I And because it's growth. you you're the see you happens with see there's you then for environment. to the people challenge compress then you say, looking drop -- capital. lots into protecting see in cycle. people see as usually, And And tend when of what lots It's and will and that little cycles, is economy, the a capital, see in

pricing more this a quite little an bit to power. with probably in as a of pricing the Obviously, as improvement You time. there's not time, tend because severe last see liquidity, little

of in trend like actually that in And what economic I is be the certainly would might an not term. pricing, in see. that, increase with pretty seeing this. it it, so level there of out environment but you general same come we're short you consistent And as the And say

line question of next Steven comes from the Our of Alexopoulos JPMorgan.

were the any was not there as there moved these to no hotel beat So into know horse dead said charge-offs nonaccrual. provision the on But nonaccruals. I follow-up, you taken a But you taken?

portfolio. There on were no charge-offs that the of taken part

If it of regional the of that that was variety was that the charge-off I with And increase. we that's delivery what service, at travel one malls. Outside outstanding there's quarter, mall describe those on, in necessitated company relatively three that relationships related there. eliminates mentioned. then no in described drove highly were travel there our to that generally much -- things, was but -- charge-offs, industry small as to charge-offs of and the pretty three by a look fourth them compared those, exposure going taking would malls any large operators. Two for closed really and the to the you really And those closed that

better Okay. plan to these collateral move planning know Or hotel terms on do hotel taking the until into what do said plan loans you deferrals to with Are going the maybe over? them you back current? and of days I principle, you on you ahead? modify now in to they're long-term nonaccrual, to relationships. these Do Darren, you business offer

Well, latter. resort. latter last our operators. The not not always bankers, the hotel is We're

first two about. we'd so it's But the do you let rather the talked that generally And that. things experts

be something of extended we reserve. payment and any relief. and could It So addition they the question whether borrower the to have is, do combination first in they bring liquidity with -- to interest table can see the some outside to that plus we'll some that work be think

note, into you more a where some charge-off a structure those, to but looks that might see restructuring of not something could like kind on complete. note and an You partial have split A B credit

is business the keep as of bunch resort. to we them that different in can Because, possible. options the absolutely being keep a that obviously, work there's with ways try long them us clients so and last of and And in as business operating

at could Okay. seems balance managing levels in. right? squeeze think one expectations it you And more $XXX in during million the the talk with It quarter. gone about you And I floor can was up more business, efficient year-end? said plan, inventory dealer was On for have I What that dealers lot if the a pandemic.

So about can the you business? talk expect what from you

we you been Yes. inventories on fall. bottomed And the within the building to have lots. when car number then. I look rental lots, There's at out. the the doing. inventory early of on which guess a I sitting are that companies cars is I want say, since And summer to bunch of of not factors what least that mean, the go the into are

sector less economy. from to cars as of travel, that demand the With used put early part manufacturers demand was there In year, this the from for cars on the the the in tremendous dealers their lots. challenges been shut there's in down,

And up of inventory coming of were off that so the the was they agencies. buying rental some

call million, way all see we'll what we will in the at sense of uptick go billion is year $X way through year into roughly, inventories of what's little go million see back a the XXXX. don't the where in give so in to to million point we back time. it, range, were magnitude there's last to pickup. XXXX, at we we go $XX.X And of looking or From where that at we We guess, that $XXX expect $XX are won't the difference as we the I saw an believe the pre-pandemic just, that year, balances. all end to outstanding at And we'll what end bit some that in of but SAAR the

be that the know to was. it But approaching back economy of we we that continues the growth. as XXXX, quickly get some think still there the to segment year, way way but the there? in there's get that how operate should back for show we'll room So the some don't end I we assuming get all we to

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

for the outlook the on comments any 'XX? miss in rate I Did tax

not that. did You miss

tax the kind XX%, or year next of Our point. minus for for expectation X.X is rate plus

lower Okay. heavy other there some Like opportunities are that? And we're to seeing of banks kind ESG partnerships.

some or securities think structures, credits, theoretically. kind lot maybe is there's low-income buying capital less be and really some want also after I maybe another seem things, back stock customers with that doing actually partnerships of can't other a just is be to appealing, doubled might if it's And housing but clients. of some deploy to buying loans, grow not way

think there just Or you do to are differently given opportunities everything So you what are I capital, trying can your said? to of there?

being community, a is of the be Litec bank deals part loan, just being not actually critical. on well. been a XX of sector months. the projects found that community the last increased It's in part XX to We but of kinds supporting that We've that time effective is as in space, those it equity kind you over of of the in to No be side always Yes. those need the in. that we've to in

And so we've been doing bit of a more that. little

absolutely CRE of of part It's we important your it. it's part rating. so an And do also how

and continue clients. of be the that's to and themselves, and And have all will communities so present the in that absolutely a for be opportunities been certainly as those we we'll reasons, for space for there

reduced of leaning specifically rate? other kind pretty new some to be like that tax that seem on into of these initiatives anything then And ESG heavily banks

to space. Yes. little bit We're a more. some in done see We've there of be We opportunity that. the for

we is, We our where And the one any will haven't less with be we the capacity on questions with administration. of year is, been as did a the go not changes taxes ago. tax use guess because rate capacity us but with huge -- than discussed to there's tax using I a new even more maybe how if depending there'll portfolio. And of money much making it, it's part forward there be it

and but at do, do we're So moment. it's familiar it's a space selective with, we some that business in, the

Our Jefferies. of comes Ken from Usdin next of question the line

just in anything mean it Does you document. walk stress year's think December to terms you it that about this in have us to if announcement just as test this the was just participating think test a Darren, stress buyback I forth and about capital? does the results was wondering that brought in how process can to implied good through SCB you of see morning. that And result? lead

Yes.

CCAR the more before. seen much reflected current than than like. is in obviously, economic And test So environment a we've what stress anything looks results December, the severe environment meaningfully severe more

Reserve we're that good the in environment. not more behind operating there. to of the is the what that learned That work bit little output, and news a so And we outputs understand from some said, talk we with and continue Federal is a to lot

we're thinking. it to So using our inform

ratio in as whether year's not We inform more decision CETX our from ended haven't participate we this the the look our of thing if Fed, I we is the process learn the the at that the we help look the that year, through and go when implications you that year of CCAR. nice ended and you where about at at are guess -- year, where or will at end to XX%.

run that and And we've well so we what be ratios sitting protected to from in that between to space given possible. place XX%, of a there's capital see test. the wouldn't That the a done, CETX don't have And restrictions environment drop see that with been we're restrictions. don't today that the of that by we would with or we here. implied also reserving X% want might ratio to materially comfortable at outcome be amount need But sit dramatically concern in we the the a we the and we're with certainly that equally feel, where that capital need the in would up

with that tests, think account into things feedback think go taking we to those determine if when those forward, and much and as And we'll about we we them as shares and about we -- the so about as repurchase. stock how that came we think be --

time ladies for and gentlemen, question. we final one have And

Najarian of question final America. of line come Erika Bank of the will Our from

to your I binding think buyback results. how Ken's you about X.X most banks of buybacks? was sort wondering, rolls I binding operating Just assumption we guess your that with the but impression DFAS wasn't thoughts were -- for binding, is And results think X% question. X.X that I'm DFAS SCB X.X announcing results about have your the million especially DFAS that a there? follow-up were to the under Is relative should $XXX

told Yes. binding thought obviously per I guess, the in because Reserve input that. I something Federal an and It's se. wouldn't us consider an one our process, with that important

And paying to so it. we're attention

they -- the not letter think new sooner. was if the by with of if that to that would SCB the share institutions, I end become of the March, indicated not the law, Feds until a the

And so about the days. a that coming more we'll of learn course little bit over the

in that the of to said, that would meaningfully so down earnings the And CETX some until difficult. the results ratio pretty you forecast, the binding moving at it's point, understanding was when SCB and is the on restrictions our in calculated one. distributions June That the earnings that relative look the be

forecasted before, have position, really as restrictions not And our takes think through the us point. got kind of And in was into we're account the buyback announced earnings still mentioned that growth that we contemplate the amount of place. of current what the forecasted and to our capital challenges been that so some pandemic. we balance that And this our sheet at

to wouldn't be we where us need prudent And than that higher higher, But see so ratios side, dramatically. on to doesn't those to seem -- we don't flip lower much we the we are. it think

our and term. we'll the the year update that recovery so as how we'll we and with go unfolds, share that And thinking you. the in see to to And through of manage kind short continue

are squeeze you could and on And XXXX cash for question versus if the billion realized guide. assuming, I X guide in in deployment mid-single fourth us more 'XX? the guide remind in terms quarter, in the what on in digits, down $XX.X relative NII income of if to in if the embedded what's average to swap you NII could just your any, what for low Darren,

Yes.

the some going is securities there or to generally, projection, bit. into opposed that a that the them in within down expectation loan the growth. come And higher-yielding cash balances little So it's as cash balances volatility

so And still guess, that embedded cash is relatively guide elevated a in position. I

line assets, quarter at terms of should find about year. XXXX talked the starts that. still -- for. see from some hedge and which through we what QX the lookout that, we the calls hedges, on the is into of to you similar and upside extent the over we're XXXX ways that portfolio, prior to higher-yielding as income So There's always go in what earned as with in also look some then declining last to we earned There's what we from it NII decline, deploy it's on in this that but the quarter very When in to to benefit the XXXX. was we've we course

in quantify Okay. dollars? And could you care to

droid I've in of by and so at front it it me was I'm it. -- quarter, about in looking got just It's $XXX to XXXX. around XXXX million million $XXX in

management or like the to floor turn I'd our was final additional for to remarks. over any closing back And that question.

participating for Investor items all call at always, our you thank (XXX) contact Relations department clarification you, of any Again, the as is news or and XXX-XXXX. today. a release Thank the necessary, And on of goodbye. please

conclude this and call. Ladies gentlemen, today's you. Thank does conference

You disconnect. may now