First Horizon (FHN) 18 Jan 192018 Q4 Earnings call transcript

Good morning, and welcome to the First Horizon National Corporation Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Aarti Bowman, Investor Relations. Please go ahead.

Thank you, Gary. at earnings this supplement, the call section our the we'll slide Investor that of in use are website note release, and financial presentation Relations Please www.firsthorizon.com. posted on mention In this and information. forward-looking call, non-GAAP will we information results of a materials on reasons Actual annual recent earnings number our our for most the in and differ from and may forward-looking outlined quarterly reports.

to The and Losch. remember our such our is views include GAAP on for and call. information not the in this the update website speakers BJ them. are those in presentation morning's CEO, materials. Bryan today, this obligated Also, as our identified of This materials we reflect that non-GAAP and statements please Jordan; only this is and forward-looking record is in authorized Our slide CFO, reconciled webcast our earnings information to call,

Officer, be for to Additionally, Springfield questions. our now with BJ Bryan. turn I'll Susan Chief it over Bryan and Credit will available

for and Bank team did. merger I'm Thank very the markets. of And our organisation. and our an completed did highlighting beyond the that you, a really good. and and into Aarti. work of the Day and laid job XXXX in markets fourth you Capital our of proud our the we think out, our very everyone business. presentation the markets those. sort very Good fourth integration We In of thank XXXX attractive with and joining excellent were business Investor November in drivers the The of the greatly morning I year XXXX expanding key quarter differentiation our for transformative quarter was us.

growth markets. new expansion good saw our across You

XXXX commercial businesses. on year the the acquisition first we cost I of the beyond. and good to quarter. the our saw headed and are and our our all year both saves think to And And expense in strong markets In banking of drive made will you our of acquisition. continue into merger, quarter started our continue see You strong fourth ability XXXX the in drive across progress about foundation and efficiency performance we consumer customer quarter, or realization to saw foundation that saw good the opportunity the we good across the very saves cost this our our optimistic And in with this momentum very We organisation. saw trends. customer

delinquency Our continues and trends asset down. good quality be steady to very to NPAs were

economy in continues on per quality about minute look in saw book good. the little X% fourth increase bit to share. of outlook. quarter, the a back And credit and a the we our value and tangible Our whole a the talk I'll come In

market in stock our stock also around to year bank for corrected back, to of We the bought total as bought million bringing stocks, common million. $XX $XXX back the we repurchases

and While so buying that equity we the our stock, continue in also in doing business saw capitalization X.X%, that at strong future. to common the tangible increasing capital steady X back ratio book tier the lever value the to a opportunity and

evidenced in growth sheets customer into and by there point in shut saw interest don't horizon to very economy mistakes this transition becoming much the causes quarter. concern us we at that policy optimistic. We be in strong, point, and continuing see optimistic. that for Washington to at taken with XXXX we what as activity see is the higher in fourth strong see Customers But balance continue or rates. deposit customer outlook loan be nothing very to and/or XXXX. be very those we continue this or that problematic. on some the even trade effect the we economic Our particularly as still in about transitioned Clearly, clouds down opportunities or There's has economy are disputes

So [ph] little about we the about be from off we saw little operating we still there, [It environment. the from XXXX. this growth are bit year, but could bit ] look softer growth be will optimistic it in as a a probably strong very still In we're into XXXX. all likelihood, optimistic

in all think for very we're well So positioned we strong all, XXXX.

very improved on. good got We good have integration those markets. momentum markets to Bank. the with Capital build and good We've We've of demographics

I'm so, how optimistic And positioned. about we're very

turn So it let over me to that, with BJ.

closing come back take him before BJ? numbers Let any through the few comments answer we with you I'll and a questions.

I'll Great. morning, everybody. Slide Good results. financial the Thanks, on Bryan. start with X

our EPS $X.XX $X.XX fourth basis. talked an as the Bryan reported quarter, and adjusted was on at on about, So

in Our our our full of was and XXXX, as as Bank as deal talked year up results our execution reported performance well core XX% solid $X.XX In was adjusted XXXX. reflected Capital EPS the franchise. $X.XX, Bryan from about, successful

pre-tax value notable Page million million on from included was we mark sale and a a see bit impact linked in that with that minute. quarter related You'll a due million largely factors. of which $XX $X were items also down to to return related X fair of fees more a $X Bank talk an fourth cards. On our associated debit excess had quarter about a revenue items loan of acquisition I'll a the basis, few Capital adjusted

important volatility fee deferred quarter. equity offset also market line in compensation in First, fourth that note million an in the $X related to this decline It's to in the the was expenses. you'll see

our of month NII benefited because in loans fixed we market quarter. slight of not the a overall business in recall Revenues revenue on loans in decline but decrease had a the is the TRUPs overall from kind We any we to decline quarter. million still a you similar We Second, see higher did the slight that as sales other volatility and fourth change quarter a repeat. did activity seasonal had higher lower accretion either third, at a in remained we December mortgage not the And have saw business average fourth much of any portfolio. levels. company's the gain Not $X quarter. relatively in the third muted the low in in did of may third yielding sale ADR and income daily from

focus We expenses on Circling business with a rest debit remain On that the overall deferred saw which was I the in $X XXXX. to expenses back as quarter-to-quarter which as FDIC the earlier. I the notable line, in be fees item will the discussed from side, on expenses about offset, about of was million. of disciplined flat well and heavy compensation we million, mentioned surcharge, expense fee decline in which around the continue that a benefit decreased $X

returned we receiving million to fees cards. vendor. interchange excess interchange reflects to been on we amount Capital Bank the During discovered cumulative related had fees excess debit the year-end of reviews, The $X we

We have we quarter. increases, corrected per forward, lower absent going will see card debit and million $X.X this fees about volume of

into to we details November I Day quarter we the quarter, want on our in saw during and the as going rest our outlined the getting see momentum the and Investor between the connection of XXXX. make what what the in Before strategic priorities into we

in Tennessee, acquisition, the four, very As lending board markets. deposits and see an with quarter priorities, trends the specifically across period-end X, we Deposit around base. X% quarter with terms on the we grow as end excellent deposits customer Starting two the expense transform number number are in and customer well and on dominate as commercial and saw three, X% deposit optimize gathering as what we and Tennessee; a and number up commercial it Particularly new first of pleased the markets Atlantic, up businesses; relates fourth linked the that in of in at markets were specialty one, in to activity basis. Slide were in quarter the all key mid our reminder, average and consumer the priorities number key two, both Florida. across and experience; profitably are: four

was see quarter, can in X% linked chart, and South right XX%. bottom you the Tennessee up X%, was Florida mid-Atlantic increased As up

difference acquisition new are and a efforts Our emphasis already. customer making marketing

a are markets to in business discussed model As our Day, in confident Investor at we newer ability time. we over our build differentiated

efforts new acquisition commercial emphasis as results. a in heavy consumer placing our positive been both as it's showing have well on behind and We banking, putting marketing customer and already

lending linked Florida with broad-based X%, strong bookings quarter, core December. while particular very saw our We strength the the was saw X, across to Turning a Slide South in in the roughly markets, up we on which and flat increases were average loans commercial growth, Tennessee regions. side loan mid-Atlantic

able fourth We overall, quarter corresponded being asset mortgage also loan the large down volume the growth net of as well as areas loans as saw news Good our the to such specialty chose continued strong lending. balances borrowers to positive pipelines should through growth and was quarters. payoff's projects, and profitably expected, by Commercial several in based is those In CRE sales. dampened healthcare, deals properties companies seasonally Estate as to replenish as to completed that in and we Real next be permanent are exit market our over the transition

Slide NII on Turning and to X. NIM

market deposit of Our deposit balances Those excess as equities deposits higher as as higher strong into NIM customers we more index both largely inflows strong by brokerage declined growth driven due earlier, the balances the I out excess from saw. as to cash cash well were money cash. moved discussed customer

X to quarter. NII, neutral in relatively by points the margin excess basis compressed cash the While the

about XX and of and so, You our months markets Investor will have over in we talking lower costs in Florida deposit the remember Day at market-index gathering customer the overall Carolinas, replacing deposits the last deposits. that and both at newer our of course been or the betas

could business confidently as to we continues. offset of positive more saw companies funding in was the on based deposit loans insured deposits inflows $XXX the This we of yielding some our the first modestly growth in see to higher network the million contracts by you deposit where quarters impacts about growth quarter exit reduce seasonal strong as declines to canceled on our expect the in was were down and business. we coming customer start mortgage that and NII

we positive into fourth impact have encouraged However, the believe growth a going are which on NII saw we will we in by quarter XXXX.

demonstrated on trends ratio you and As see and over improvement expense solid we course XXXX. Slide leverage can the operating efficiency X, positive of were

in fees, be We As and expenses on from to compensation. non-interest FDIC is XXXX. expense, market a volatility flat of The in few rest ago, compensation expense income. again minutes was valuation will quarter total offset continue I remain focus from deferred a discussed employee the declined in the business. decreases with professional Expenses compensation overall linked disciplined deferred related expenses decrease the and in in declines to the

As of priorities Day, our is from our expense Investor base. one key you our know optimizing

growth We franchise. are to for savings across opportunities the in to expense look reinvest continuing

an commercial did proud XXXX of day Company at be all Annualized asset delinquencies employees and they going into stable. to trends remain basis XX X are low with have charge pleased grades we PD on remain to were offs momentum at XX, historically increased the on To offs year. was the again our provision on to down. net $X make levels. last did We for remain net net provision. overall and C&I and at successful reserved as our and performed to charge are Slide pleased low in portfolios we quarter that of million, credits, had one quality 'XX. in that also a one with Turning two Overall how XX fully overall related year Slide up very the for and We're credit XX. stable impact quarter-to-quarter we and see points for the modest Wrapping what continue the

Investor You'll a from sustainable long what will and to we Day our we November recognize term and doing do focused business continue say on this building be slide we model.

relatively credit quarter saw of talked we our the our $XXX $XX We're stable bought the stock. strong, time, industry And our fourth the capital for therefore, in opportunity alone, and stable. outlook million our across meaningful confident declines as the business returns repurchases Our course about, we that profitability we very At quality XXXX. solid, share kept million opportunistic attractive. levels the in stock on back capital over quarter Bryan own our deployment were same and point, is were last of and in with in as shares

capital sheet and profitably balance deploy capital Bryan. With to are XXXX. strong, stop and position and over that, I'll to have Our we it in back turn continued opportunity

growth. and the year, core solid specialty profitably delivering expense our beating XXXX markets we're profitable on optimizing long-term strategic BJ. of capital mentioned We're opportunities you, was continue deploying priorities growing our as Thank execute key effectively. for BJ of Tennessee and in and us, to relationship, a deliver excited the and about will base we areas, ahead and

want fourth questions. I Gary, on and strong year and did, to will we're all another BJ their with them to in of work hard also quarter, thank the As we year deliver counting our now for any colleagues in that, this take XXXX.

from JPMorgan. first comes ahead. [Operator Please Instructions] Our question Steven with go Alexopoulos

I years. what companies We've so you want to talking the you loan the had Are many banks middle-market investment? quarter on strongest what guys strong in the this? of more also pace C&I saw about you a loan December. on start Can stepping core growth, December? color drove had up growth the Like in get other

We're seeing additional work are among We're There to can buying investments, that investments. opportunities Steve. our also opportunity expenditure that customers us with on some and for making seeing who clients other growth M&A companies. be loan several fronts, are capital are companies activity an

board. specifically thing, think any production and being second from additional calling those you bankers not it's fourth quarter as it's quarter customers to in the We, third to increase to post an across - related the seeing third and merger bank we're out one quarter our prospects. quarter and So, saw know, I on

So of broad-based loan kind it really growth. a was

Okay. That's helpful.

say growth. saw through new-to-bank in strong the We customers on on I'd too, bankers our Susan's to being also addition helping new-to-bank calling point about refocused It tick-up accentuates significant that outbound in process. conversion very prospects And was Steve. a

quarter in About new increases the on fourth wholesale to XX% bank. right. side about but That's was XX% the was

So both. really great work on

was for And more to to XX%. new to that, the add our Yes. year commercial bank loan than just production up

and our an job done excellent once folks bookings relationships the out started new and late we year. our have past building really getting bank integration, to really the we got in see to So

the enter in Tennessee? or is is deal with And BJ, that the that markets guys newer you that Capital

That the that disproportionally to newer is is overall markets. in the I franchise related would say

NIM, benefit December Just we about the XQ so think because hike. a in on the see so you'll of NIM,

after Assuming how from you first the pauses the BJ, progress Fed quarter? here think the do margin will

forward, assumed one of 'XX so position we interesting no the deposit manage which going there have Yes, time would been thinking to It's if think be competition look NIM we help. and to heated at though are liability still we incrementally up. would over in NIM about stability particularly increases our June as stable. to But has more trying rate asset

asset-sensitive, now. neutral started we're So to whereas pretty float before we close asset-sensitive, very down used toward moderately darn to we be to and

incrementally in So I think the getting we're to the volume growth that helpful new the margin. production we're be will seeing

helpful loans saw next in our think but back net less of because could us, tailwind certainly headwind. companies, particularly rate to I a fourth to a modest mortgage the could given could year the be position in up the in to XX-year of be increases liabilities the we that quarter asset going be that

overall in at as we're in So outlook to all-in-all, X.XX the that's that same the had you saw shooting X.XX Investor what November Day roughly we for. we're NIM of terms what and

one. final just then And

million guidance? from would $XX.X range What's for range the in accretion which guidance, - reasonable In in had be the contribution you terms of XXXX that NIM accretion. X.XX X.XX, CBF

$XX I forecast say aggregate. down is think I'd maybe what is. And or our in come it'll so million a $X million current quarter

Our Demba next comes go ahead. Please question SunTrust. with from Jennifer

Question, what two in C&I the charge-offs this were industries quarter?

non-bank financial The It's reserve non-performing is services Jennifer. one that we a we against the talked put Yes, a about - last taken and one had it. one quarter company. other

is paper manufacturer other of products. The

business outlook. detail XXXX? you you're And Could question on a in your little just fixed income what expecting on more us give

I'll outlook. start fixed income

the meeting. the income asked in outlook, participation follow-up expect after first in and interest fourth market improvement FOMC where in quarter. comments been there’s interest about - part to modest Powell rates quarter. maybe markets the Steve more reset And made the the were what of some fixed Chairman early from Actually, We we rates the

pay as flow factor a think expect It of of significantly, government is one of bit mid-XXX modestly shutdown to we that little wouldn't probably a we SBA is the that is range the attention the to think they thing be activity. say impacts is, So, And a about have I of to reasonable the just there's and shutdown well. better. I the to other I'd probably it.

a that but on SBA there, pull securities. and environment Not will have bit trading there's loans securitize. little to impact is coastal of still no So the flow just to

impact. our might of little XXXX whole, the fourth this better have So rate that outlook in than a had bit first on the But we quarter the in quarter of probably year. run slightly for is that

KBW. Gailey Please comes from Brady question ahead. next with go The

how understand price that the income million bit by deferred in how little million? impacted a $X base comp. the lower I and impacted expense about $X reduction was just with Maybe the fee talk stock

Yes.

test comp, those which to defer behalf aren't skills, assets you, people to trusts, compensation, invested of are participants. rabbi and then can you put those accounting deferred going really, the my Brady? You're on So in choose

shows have value of terms And depreciating. time. in because at in so, that the given side a appreciating up liability we the side, or income on of And expense assets participants those asset what owe we are in those the fee fluctuation any to the

so, a them time go the down assets out But And pay income down, the they like to then, of our the did less. over is income. fourth the obligation go markets in when fee value obviously the contra then is fee quarter,

rules are banks that other that suspect And I they such you not netted, know I the don't so, forward. from mirror. see largely would that why going accounting but would that's

cause So it's again, issue, an an visibly they they largely but offset. offset,

fees, fee you income, at million. if look also then they in deposit And were $XX

I think of back per million a forward. gets going you're to you that about quarter you saying million then, and said, million reduction $X.X around, the back kind add one-timers, you up $XX to If expect of $X.X

less 'XX? rate a quarterly you down XQ we start get in of run maybe a kind $XX million and that little does as So to

reasonable. probably that's increases volume Absent

then on finally number fairly stocks big And the cheaper wide The mean I fourth you know gave all are in a I it the just a quarter. even was buyback, today. the of what payout that range. ratio trading how to the be for and end it's on upper toward range to going you're 'XX, I've but think trade stock got and the

to is we Bryan. repatriate stock have in in our earnings If the our going stock This of and strong ratios, significant buy earnings to strong has the noted take stock, we is through as undervalued into actions the expect to when undervalued, earnings, great think indicated, in XXXX. a the go around We past capital portion quarter as it. And undervalued, our noted this period to earnings. will BJ and a we're follow-up a And view buy fourth we is an blackout repurchase some. release. it's with opportunity to opportunities we in think With we've

question from Merrill comes The America of with Please next Lynch. Bank ahead. go Ebrahim Poonawala

I on clarify So wanted to expenses. just

the fee reversing comp like So reverse adjustment first does should the deferred we XQ the this here stay no expect and that's to quarter, move or stock? the expense the there if in both going in impact in is

it and fluctuate should markets on equity valuations, based yeah, again Yes, asset the but, I it normalize. just mean,

$XXX the upside? absent at on capital think like million about revenue we $XXX at times where's headed in expenses base, XXXX any the and sort as multiple if of so expense million you markets look we focus And BJ, mentioned the quarter fourth that

about Investor focused from at we expenses Well, we XXXX on that levels. managing Day talked are down

focused be on doing. XXXs million to that's and to so - what in $XXX we're I million $XXX more XXXX low range think would levels, the And so

credits, of of a terms pretty benign for charge outlook terms in of in of just obviously credit guidance. separately And

offs year that to be Your to you for range still the - and credit back with coming or bonefish think if do XX XX normalizes the years. I points, think normalized basis going when next would a charge of previous

on the of low to good points I lower then charge guidance, to this what we as the off for year, and that cycle, be of built. of it's the and through end we actually on And we've portfolio range still today. know XX XX could the XX we going - would you say as about then the based than strength that think on Ebrahim, that the low feel be basis in based

like from today still level And the ratio or XX around ex way points. run the off expect capital, are reserve should reserves basis here? If somewhere that do we the seed appropriate portfolios reserve

today, mean, Obviously, portfolio I that in - based adequately think could on started I know or you we if build. I we're see our know I see would coverage I - economy, that I anything think what steady. probably in seeing today. stay we'll reserved the pretty

seeing As it slower remaining things outlook I you the do non-strategic that this we would positive saw pretty we on runs have today, coverage all quarter, being have from releases see we equal are - reserve based But off. steady. as

accounting Let too, me knowledge math. a test think it's BJ's matter I accounting of because

and As time the ratio by will simply runs it originations is just up new naturally portfolio down Capital by over Bank accounting replaced move that that.

think - I And the non, or talked banking right. yes. about it he having That's

Tyler next The with Please Stephens. from question ahead. comes Stafford go

question. the taking for Thanks

guidance pieces loan on I Just just continuing? for moving there would year, for non-strategic the the mortgage the you runoff Can you to growth growth much warehouse in just guess and X%. like understand how us expect example within help the the X% that

Yes.

So of mortgage customers in added think loans we in companies, good new we bank year-over-year - growth. mortgage. X% had to I had amount We a to

including which loans quarter, that we think we commercial the time. saw in increase. growth warehouse some seasonal Page that dampened X, the several one to the payoffs show the mortgage digit end strong But, in to our saw one the growth over as talked about large in growth we by of you mortgage strong I in quarter hopefully regional had is company pipelines could the was pages I real optimistic even declines replenish X% we estate, growth bank talked So I in annualized being businesses. in And - overall of growth think really see strong going And commercial. We business. into mid-single we're about specialty

Bryan seeing talked we hit. we're what based we're customer about based is that can So earlier that range activity still on on pipelines, certainly optimistic as something based that on

it. Okay. Got

what see - to I'll said. add to continue something BJ we And

relates of business. pipeline loan see with the synergies the the on as Based capital the will be to the in and that invest really synergies the momentum it continue transaction consumer seeing and we're We today that bank expected wholesale opportunities we exceeded. positive to what

point last I'll One add.

business started that. mentioned warehouse BJ You and with the mortgage

growth it, keep it's you in mind, when think it you The I seasonality an have at business time, much about people the naturally numbers through and in And loan annual refi mortgages. think important first to activity look it's don't to headline over as more mortgage and come as fourth the driven down our has warehouse move in has cycle. quarters. the more by purchase money

quarter-to-quarter that does but to seasonality we're anyway numbers. look is, volatility when at to has. in so, to loan line have fourth The you inherent to and in our treasury very tolerate XX-year having mortgage profitable bottom which headline what a that to third bit willing seasonality makes in But is it it headline business, be mortgage or the appreciative of doing from be It's and always And warehouse whether affect seasonal yet rates is we'll and of saw ought it's the very business, they'd effect and seen. and quarters. helpful come spurs the relative the the growth factor what then down effect you we the it, the activity on start ought to factor the and see to the wildcard growth second that a the is business in we quarter, it's quarter that and stable growth we're numbers, first see fairly the to contributions to the

$XX.X what million the between accretion quarter, you what down break do was have prepaid? the Of scheduled just of and this was

my don't it. off to it sorry. on get I'm to you top have of we'll Tyler, back I the head,

last then That's basis margin X here up but loan the this aside, and quarter, points, something on yields up just one our for me but margin. cost core basis can funds only higher liquidity of missing core totally points. were impacted I'm just XX were negatively the appreciate Maybe, fine. liquidity And the how I

commentary how asset bounce future we're figure not core the to out here, a was see with going sensitivity the margin struggling once what as of just and the hike. earlier I'm So, to being it given from back rate about

- moving will here? from So, does core the pieces the how move margin higher

different loan and was surprised of didn't so that it saw loans-to-mortgage been more seasonality was payoffs seeing as right. I and little one, when the CRE first I had were company Yes, things yields, more, think I happened. The it well a expand expansion because loan a another, we yield couple

And so, higher certain are those a yielding more little bit aspects. in

so, the loan yield you mix, thought. look that when didn't And see expansion just the at we we

for think have to to funds The beginning costs up expected. would have the our we of made from when we was bright a as down I cost year betas continued again last deposit move come relationships. deposit the existing of shore strategic

And it's to so, that beta has continued come down, but a very environment. competitive

margin. the at Investor the the manage so, of we we totality said as And Day,

and opportunities the opportunities those. to we of see profitable mix, the see way. margin sustainable yields, time, to margins, defend have in when we a over for deposit take we when But for that. we'll grow so, and our do is we loan When and will advantage stability And maintain focus deposits

so, doing on earlier what that's we year, about terms of I X.XX% outlook we're what in going the talked as range can. be to I see to if as this X.XX% And being focused for on in

next Placet go Rob with ahead. Deutsche Bank. question The from Please comes

And those X, in your on like. cost was the mid-Atlantic it like? deposit markets, the mix and each you just new of deposits what average the then, your is in - Florida growth looks your of markets what representation fair cost of had a that of of growth looks new Just the deposit I in deposits the growth Slide of new incremental each on curious

those imagine, one might different consumer the the majority Over a couple I coming in money bring of is then A of are, you little other new are the but CDs letting they say. with markets markets money obviously, we're deposits, Even services. of index sell, at as side have that in, costs is we cross I'm bringing currently banking not just on that checking. it's levels what is market go. we those than it's Number focus bit I in the market, deposits and things the in will talked to about our time, what better obviously CDs are in money and that as

be very trade margin So and going very, to I think for over us good our time. that's for a

On activity side, it but probably of building on quarters seeing three are commercial very, the very I was on very say good interest-bearing seeing deposits. good of commercial treasury the to are success would side, we it we services. two-thirds

so the Carolinas second , mid-Atlantic As in the XXXX fact, our region a were half matter region, results our in of excellent. of

were XX% in treasury. close through and up calls and starting The margin new is Our XXX%. growth. to that's business flow pipeline Client up XXX% deposit the were sales up the

time And us to going help so really that's there. momentum to sustain continue over

So happening. at what's all very and pricing the the we're mix all, pleased in of

turn plan absolutely We we but which we that have to to it into more like core say. do the we checking activity

on the in to on the just market from see the runoff this - where the deposit those related kind update of I few the index timing, guess, was quarter, just next you deposits I or curious Maybe increase quarters? over balances Thanks. an trending And reduction side, get just given here.

to months we contracts looking the contracts see I mentioned of we which deposit saw what over We're roughly continue next growth. $XXX several because several Yes, so we go that, we two earlier let deposit that the would other on - gave Rob, notice growth as are million. was at

and Atlantic, would And elsewhere, we deposits index overall. that book be know and said $X so, billion-ish Investor three the be you that our at deposit over Florida in quarters next we great could several helpful would was margin our core to mid for of if with Day and in that years and better replace mix that to half our market

$XXX quarter million so And first a good continue. that expect in on really it down the is payment I to and

The next Garrett ahead. Please go with question comes from Baird. Holland

outlook? Most improving XXXX just But productivity of in it's what extent reflected RM to Capital obviously Bank covered. been the is the curious,

huge particularly the if RM in the outlook from And Day, productivity and on Bank if I it's mean, answer look side far, deposit relatively to the about the deposit But line. the hard colleagues. on deposit Capital sales First those a about bit mid-Atlantic commercial are metrics that that versus Capital about that talked it's performance little the Capital from we treasury our was but per in had you of we're we've with our productivity RM specifically Florida example big and I and second back the is, the side, in just a talked South lower. so indicative remember in seen opportunity half on Tennessee short Bank part. productivity a with some of momentum lending say Bank to of services we've you at seeing Investor mid-Atlantic what year side, the was for the

obviously to to going dependent us our grow we're what is good and has X% was growth very to do the - in newer aggregate that. markets on X% quarter So a say, we doing start fourth on

then strong. quick of that's The growth encouraging, just very period, follow-up. And helpful. end Now, one C&I was

just or 'XX, attractive. into on geographies very risk-adjusted seem optimistic Just heading where returns and you at curious growth verticals bit there's looking curious any - if less a are - guys

looking retail, those large speaking seeing cautious we types certain question. we're for generally multi-family I'm lately. Real a maybe of pockets things. more don't volume But lending about sure significant that that Yes. are that. watching still not were anything that I'm has of lending leverage those well, as there's like been - turned not That's Susan we've but at of down a stress that a Estate, in markets Commercial do some while that lending, a it's There's good pockets

our not X%. fact like, lender, leveraged less it ago year than is lending We're was it's year-over-year In than now the less leverage a X% of down a actually commercial portfolio, yes, lever. is big

seeing conservative that But we always as fairly we've are mentioned, talk about, the brakes we do that emerging there. part BJ on. and of There's nothing any what we do. So risk put is

of watch I rising managing just he costs good normal franchise course in business said we Real certain Estate things Commercial we that a watch think, yeah, way. segments, the As finance labor as with always such

Yes.

we're at moment. a mix with of and we're seeing this it's pleased think, Goldilocks kind the I the particularly that point, growth

that's I grade I we're growth, to we're we're quality, is to growth, loan good solid returns credit now want is be lot want well risk very seeing which think pleased cold and you core our where don't seeing cycles coming does multiple and too you think too from and don't see commercial be adjusted on that hot what right through. so of to through it a coming growth

The good thing is opportunities with growth deposits the core higher treasuries. commercial loan for full and relationships,

great our example markets. core treasury noted, I management an commercial with mid-Atlantic it's of in the on focus that the key BJ As increased work think in

comes next Please Brock with from Vandervliet go UBS. ahead. The question

want on. of to I couple that to back Ebrahim circle the just themes a touched

help expenses, a efficiency on terms bit an you the that of consider? break on be should you we us the kind years, mean should but couple put the Would I at to a terms willing stake that? ground or look figure in below expenses, read ratio In focus in XX% really a the of of we in our of little ratio this next is this could should - we to how that? understand efficiency could

It's BJ.

over is just pointed talking efficiency progress for pretty to from efficiency ratio XX, And which that time. make to to been that Slide about and I of ratio I good XXXX. see expect our improve think, outlook we've continuing perspective, on we what you'd an kind

has Day, reduced able to talked As ratio a We us be we've for ongoing at meaningfully discipline, improve to to over that's continue critical about Capital our two Bank, last ratio Investor profitability. efficiency the years. plus expense to improve know

be some to And to incremental on with formula the get discussed, we so, there. expenses growth, revenue is that discipline going coupled

we're is So Slide tells that. intent for think delivering and 'XX you we XX our kind on where outlook of

Bryan. is this Brock,

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will likelihood should. all future. it So in Yes, in at XX in some all point below likelihood, push it

credit, on recoveries, credit us that your separately especially be just non-strategic. how Now guide? you've of tailing had sense Can a that you is a long of feed into net may kind of off, when give period and from

could non-strategic again runoff. some know said, we've order small We going given have as it to as going of still that But Brock, as any have runs is provision releases to the not we continue to non-strategic. we're off, - in that out opportunity there.

started call the in our very of bank, portfolio, about to good regional For Bryan in it. out economic outlook I terms feel as

commercial stable Non-performing stable. PD delinquency average strong. in FICO noted, basis were you and our overall at like X Weighted loans the grades quarter-over-quarter. down strong points XXX. As portfolio over were very

charge this were the So quarter of two offs kind had that isolated of we types idiosyncratic situations.

any the for portfolio good outlook about any the really credit, the very that big feel economy could change in and we absent portfolio. So affect

from The Christopher question go comes Please FIG next ahead. Partners. with Marinac

deposits, index you market is you takes call? or the customer the do anything influence of quarter beginning of are the how and on puts behavior there just explained BJ, of goes, it The there kind you whims more the can to at very at like

from enter types that ladder are so we anticipate contracts of Yes, them based things the on what multiple we needs deposits. and is we are those into there way our work these obviously

they contracts balances and will range so you any time. deliver into of a have And those that given at to contracts you enter

liability you When the come range from a that's quarter fourth float these all brokerage on which in contracts. there's so cash and the something happens, planning. like asset influx your higher accounts toward helpful And into the of of where things for end obviously significant what happens is

NII to more you And and needs try obligated any hurt invested the because we doesn't commentary, does given to inflows. et at just you are NII, But work tell during cetera. these. them need We with NIM. turn really NIM I it overnight, so that time, them said we contractually and and your are certainly sometimes don't Fed is, our at around reality get than the it - what around Like but you're take more commentary it's the or dampen our the

and So sheet. do will customer that stronger in build deposits and a we'll this we and I replace think the overtime to deposit with I'm base it can that confident balance optimize it continue

terms you happening just any were And quick and in a this criticized, one one-time for give Susan, of, what's Can more then classified color the sort but that of on, offs you. charge quarter? below us

Yes, of back really loans really criticized been portfolio stable year up and a as over terms saw portfolio. very the stable or have of percent relatively quarter-over-quarter of the we the in moved remain percent

and things have always you have you some upgraded in to in. out. move them and get So, move off, Things paid or

pretty we've or ins that still steady - the four normal So last quarters. outs and five the we're over seen. seeing overall as I And level, remains very said, of kind the

is Please The Merrill next Lynch. follow-up a go question of Bank from Poonawala with ahead. Ebrahim America

at index if that or these correctly go contracts back in. on index. going getting the we outflows inflows market clarify quick and the BJ, rate fair But are I go question. for that soon? want Is thinking Sorry away? assume some could to market Fed XXX to very that cost done raise Is if the just basis of doesn't the Is higher points? the margin lower higher about given of the

Depending effective points effective, anywhere contract, plus the they XX is between Yes. a Fed Fed premium, X plus XX on basis what and on points probably it's basis basis to based points, They're basis all in. charge points. X

we are that And the what those again so, But it XXX% weighted right. that rate depending - beta, contracts impact will cancel, on the average is.

Fed they're if But actually lower deposits, focused So at those the get lower deposits. we'll will does well. some point, continue rates and customer as rates on We to customer like replacing them. not be again,

midpoint the to rebound to cash XQ? like - but your of margin excess to extent X.XX% to guidance, in do all the the was closer XXXX X.XX% appreciate the range And expect X.XX%, that you at and I this

sure but over say the range. not I in being are would that course on of XQ, focused I'm in we XXXX,

to like I closing any Jordan would question-and-answer session. back our Bryan over concludes This turn the for to remarks. conference

the Thank and Thank us in joining We our morning. Gary. spent you, time you this appreciate your with us all Company. interest you've for

everyone wonderful out much. have any Year. New to be to to We'd questions, try follow-up Happy reach you If the very please Thank you a respond them. and has happy weekend a and gather us. information I to hope

presentation. today's attending for you Thank concluded. now is conference The

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