First Horizon (FHN) 17 Jul 202020 Q2 Earnings call transcript

Good morning and welcome to the First Horizon National Corp.

Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note recorded. Please now Ellen Taylor, would like to to over conference the Head turn I of Relations. Investor ahead. go Please

Thanks Chief our Bryan it’s questions. everybody joining morning week. On been so very today, Losch, who Susan busy CFO, Credit to much. for are BJ call we take much CEO, a We're and really will us. and end assist effort. the pleased then thanks with know our of Jordan; in what's We Springfield, will provide Officer our results an to us be and overview have really of to that happy Good

to Our results and the on which X may that risks is and presentation remarks you should factors presentation cause that of our forward-looking note our from earnings expectations. we I will differ today available will on at subject statements Page and our should reference uncertainties review filings those ir.fhnc.com. make to SEC are that

today obligated Our our we to statements views update them. reflect and aren't

will the over I'm in measures presentation. absolutely X that, address our should remarks hand our to you and which are review non-GAAP of We adjusted information and our on our With supplement to Page in Bryan. going it GAAP results also

drive X, create This demographics of shareholder July our strong efficiency our On quarter morning, franchise good you, and environment, of In this IBERIABANK. I'm pandemic for sort to merger proud the Thank most team Good significant everyone. accomplished. very joining very Ellen. has the leading with unusual had we've related you Thank or and ability us value. and that we a work a all. economic of slowdown, closed MOE Merger creates Equals with

support across excuse loan and by integration as me clients deferral providing working created the while communities tirelessly on to the ensure associates fees, acquisition branch execution well At IBERIA disruption the remain effectively platform originating the to as continued by loans, track. have Given managing that PPP been time, expanded on our they pandemic, waiving have the the risk. all assistance, same COVID-XX

strengthens franchise more and growth community provides and depth us to compete ability serve expanded enhanced Our reach opportunities to our and our scale better efficiently. geographic gives customers provides improved

delivered performance we strong good as growth our expense results PPNR cyclical driven mitigate quarter, by with fee This environmental strong and solid counter businesses helped income headwinds. discipline,

and fixed results NII as the remained and led stable portfolio. grew loans Our average we business delivered to mortgage income relatively by loans companies strong PPP

helping X% economy coverage reserve with risks, prudently our in our we level, base while to issuances. further the we ensure managing X.X% quarter, debt on review overall. customer about In that but continuing are loan loss or risk monitoring will impact customers that share the and PPP loans and to bolstered order believe to the give companies portfolio. taking quarter, we view. preferred raising mortgage ratio BJ the appropriately assumptions you reserve built $XX we're I excluding During our heightened to We're portfolios COVID-XX of of million the allowance by the lower loans loan evaluate our and cautiously supporting details our and and capital support economic

look quarter ratio as linked second XX well As points over towards which XXXX. positions our to X.X% of us increased expected, basis half we CETX the

our details. through I'll drive to and that, With landscape the over the enhanced positioned combined take industry challenging, we value company backdrop remain it acknowledge over shareholder macroeconomic very to remains BJ? the you that believe to While well turn we BJ medium-term.

Happy Good Bryan. morning, Thanks, Great. Friday. everybody.

merger Therefore for I'll IBERIA highlights As on you results standalone. with I'm be standalone closing some the results but of start should you closed sure are results. with our MOE the some as discussing give Later well quarter X. as our expect results. for a that, see IBERIA as Horizon in to the of quarter, that second impacts highlights know, reminder, XQ let's legal you First some from our I'll July XQ key adjusted one With day

we our XX% interest PPNR the XX% up linked was particular that the manage benefits and growth mentioned, to industry. X% the and the was environment, the of banking mortgage highlights across quarter year-over-year. growth focused fixed X% highly on quarter down We backdrop that Despite headwinds growth costs given we're balance strong to of and delivered environment are Bryan discipline. really results. helping our some think stable income platforms with and quarter rate warehouse in sheet macroeconomic continue mitigate strong the We countercyclical by continue up be income in which challenging deposit As driven year-over-year this revenue lending and interest seeing net nice fee expense generated income we

outlook loan the factor course, a is as Of in economic costs And CECL overall. banks $XX or the provision compared million we our higher March, downdraft by loss an to $X.XX our driving additional models built the for for the further updated share. reserves we

and Moving a helped loan that quarter see disciplined basis point margin. XX to decline growth X, us in you generate despite pricing Slide the modest deposit solid in can the NII growth

was on sensitivity a on average putting As quarter loan the our correlated pressure to yields. down significant most one XXX reminder, basis asset month highly during which is LIBOR points

NIM fees the and which XX time, pressure some PPP the the our basis the costs billion same accretion. excess lower overall, margin and because balances associated down liquidity, we continue were benefited further additional cash quarter lower of offset addition an from points from At helped customer the in point which addition, $X which created in of was loans over by the deposit the on to drag strong nine margin. pressured In basis

liquidity while deposit look from for more on stance be it manage while environment, will efficiently to the maintaining a sheet, the offset As to overall we forward, uncertainty and given we headwinds to additional down in look rate the the will further landscape. bring pricing still opportunities prudent balance continue challenging the

firstly the fee in fees put deposit up to funding work months. X, quarter ways by to excess card and the excess was funding NIM and due which in was the loan possibly the growth next we $X Briefly Those of profitability fixed primarily linked deposit improve to and additional margin we of branches the about compress deferred find income The mid-teens profile, but Truist provide will other XX% few over further by given COVID. from lower on ratio, will could driven XX% the further and Slide will billion the year-over-year. fee addition impacts income temporarily depress time, bank our liquidity while over compensation, and offset range, strength income branches. Looking forward, see

income While quarter fee across a traditional seen in were banking the the industry. more challenged have lines as others

income improvement see in to in some that markets Given a begun of the quarter XX% in reopening, up conditions quarter the at sales and linked as we of was did card March. a trading as and results activities Fixed end the in particular saw that have debit following as and XX% we pickup wealth. ATM year-over-year our start strong occurred some challenging revenue well turnaround volumes, in

in with the team $X.X compared the million delivered during quarter result, a daily revenue first. the million average $X.X of As

to believe highly as disciplined we cost capitalize Given expense to the salesforce solid well On continued X, business remain to fixed a very that Slide results. base. the landscape income may committed to experienced we trends, positioned approach and distribution on drive platform quickly managing overall its extensive remains cover

XX income. Given increase by in by the compensation of lower valuations, a is employee in market swing lower in costs this, costs $XX Outside we and increases increase largely market related comp to of results operating the in offset from saw to overall the shutdown. tied an impact other deferrals, million benefited FAS our driven compensation, which deferred stock-based changes

out connection the able million quarter with our of to additional was costs we though as in during IBERIA an Importantly were IBERIA. $X take merger

year total our we the the overall, million $XX the have first of between November two over So expectations set savings when achieved half we this in a in merger we announced of meeting transaction. back companies

in On provide our savings the million We XX, of a generate cost growth of to XX XX merger and we our the very profile. confident to loan funding continue view Slide months. $XXX ability and over next be

As were rates. mortgage loans XX% generated quarter due quarter $X.X we linked volume billion of average I linked driven loan which average refi to growth to low mentioned, on by strong XX% healthy up reflecting companies and year-over-year

We portfolio saw billion C&I of up in in reduction tied declines that early $X wake resulting And first the picked in PPP the the utilizations of lower as also quarter. government commercial balance loans from draws April in the to we customers line a in as improve that end to well. occurred in peak position defensive and started programs the of the saw the reopenings

a XXXX. further only our interest ended XXXX, DDA cycle At and addition deposit with In that savings. the our the note same modest deposit up at funding Bank, rate mix Truist will As to of XX paid stack; quarter XX% cautious cost in than the to our points. and do and to of the Bryan And going XX little the the were for deposit best rates we mentioned, quarter at XX Overall, and of to helpful quarter remains sentiment basis our bearing last points. while the we've in growth points linked work from it's time, second be basis the loan do customer we Regional in bearing basis we lowered base XX to half in expect customer capital branches, basis points. IBERIA costs basis XX decrease different think of the we third deposit mix enhance continued deposits forward interest points saw by driven strength

of and felt preferred and uncertainty, coming important prefunding position our continue companies. debt, liquidity senior loans debt, in million up sub from $XXX we've the basis capital XX.X%. CETX billion securities. We The maturity Slide due of On total augment driven X.X%, that basis $XXX stacks. ratio $X.XX points low our senior loan to had levels quarter end nice period XX to you'll million face unusually were while We preferred. mortgage and of it a XX, of in million issued at back also over increased that was sub a expected, April, Since points million continued capital holding the from holdco $XXX company bank outsized issued growth December, end to first debt that quarter to see $XXX was primarily we economic to bounce capital of XXX by as in

give reduction risk weighted PPNR drove we capital strong and sub debt issuances future. and in and as for Our our the levels preferred a cushion higher us sample assets prepare

While quarter to quarter. in be we parts the we obviously close the be the IBERIA would third the here moving Truist CETX nines sitting transaction low branch next as ratio and today there acquisition many our will both expect in

important healthy really over with Additionally, of for annualized on quarter $XXX built levels Slide attributable XX, ended can net million see we anticipated totaled eight million or did further overall entirely very portfolio macro by losses we our reserves, the you by reserve currently times to We heavily Moody's allowance in the loan note weighted $XX trends. charge-offs. of We scenarios supplemented think alternative it and it's to models the May with that most deterioration XXth scenario; industries pandemic. affected baseline the detailed reviews while

cases, We COVID geographic overall uncertainty. of also incorporated additional programs, economic and stimulus impact factors such data, of as re-emergence the additional

For a detailed Appendix portfolio. reserve in we the have coverage your reference, that table by shows

PPP low X% on have and basis. excluding at a mortgage standalone exceptionally no companies around coverage loss and stands again which loans Our content to to

benign. quality asset relatively Slide see the to overall you Moving picture still remains XX, can that

low While of you consumer total accounts the the portfolios received we portfolio. by have of points, status. customer average customers loan overall. at We've more with that commercial seen and continue in franchise deferral page the representing XX since monitor $X.X percentages made on quarter being details can losses billion the loans some portfolios both deferrals bottom than as on and and payment deferrals XX% deferrals basis of Interestingly, credits, at this see to least in net our asked were of the and came one energy primarily to ratio two one finance in the other loan carefully, driven given charge-off at

will monitor and portfolios customers to We all carefully. our proactively these of continue work and with the

shift to IBERIA at XX Let's expected now impacts results MOE. and from Slide the of our look and closing

standalone in the in growth to important quarter, company Net quarter by by the over and mortgage IBERIABANK quarter and headwinds. highlights XX% the PPNR XX. XX% quarter. was Slide We it later healthy IBERIABANK franchise. fee continue a up also was for of expanded income X% end stable plan relatively first to thought in interest on helping linked file information pro to linked more which delivered provide quarter to year-over-year X% the some deposit at loan financials mortgage we First solid the was financial of forma more generated illustrate rate power the was income up provide combined with X% the second origination but over diversified to than interest as mitigate matched of the momentum strong growth IBERIA quarter. income of record some fueled pipeline new

Of as XX let's given outlook the and well the course, accounting the of merger was But move of provision macro the in the updated up on expectations for our XX. impact Slide on now cover in expense to significantly quarter environment. impact the

and X, As marks the our current updated July we of based the detailed on those for of on portfolio portfolios. landscape estimates the a review

will million into X% $XXX that at through as coming the of an portfolio of you for of page, net will the and of million back approximately capital over purchase losses; of will marks or with of estimate of million are of liquidity it's go that interest interest to PCD The of for allowance to we will the not In expect and Slide the top loans related important credit of indication with discount designation note up initial for including the as does show back mark on initial the in can a CECL table you about mean perceived XX $XXX at considered be non-PCD to interest our million content that total of it $XXX that estimate million have marks and loss $XXX slide marks see $XXX little of time. will double the of capital. the million see rates/liquidity, the we out the defined the the income reduction bottom the credit be total of to $XXX $XXX over record we PCD approximately bad, that portfolio of the can loan the laid now total portfolio. currently by loans, income retreat credit non-PCD. and remainder follows: $XX.X the of or total You but into an It's not current as intended count. And non-PCD million, that associated deteriorated million accretion billion be timing half and designated a $XXX

million the will with alone. at the company roughly common about the reduce of close. we so by million expense tangible initial roughly in the with you XX, savings achieved the in gain So million half a this accounting as results around XX, we're of the Page estimate that On of first connection will in $X recognized third statement provide to billion $XX for far reminder result million capital in year earlier, which marks current addition our $XXX with we CET mentioned On the combined equity. a targeting quarter $XXX Page XX in basis merger merger. I And see the have through the quarter that will $X.X can be income points our adjustments a in non-taxable

of of of We rate our exit expect cost to well an and targeted way to at have end our run achieving we XXXX that. the are saves on XX%

that we Our strong merger the able and will our ability on our integration the the with confident to of to we belief track efforts are and exceed benefits are savings a in deliver be targets. on

hand back I'll it Bryan, that, with So to you. over

businesses, us sheet, this base strong our our liquidity, and difficult mix, With capital well in including environment. BJ. they Thanks, serve will balance all strong business countercyclical our

Despite opportunities built enhanced on with underwriting maintained to to portfolio and and are scale, create efficiency, value. profitability. shareholder uniquely power diversified a headwinds, earnings improved merger positioned very economic the that capture better we're focused standards have We strong

you we our We times. will that, our continue outstanding impact assist efforts dealing and all to overcome these your to with questions. With and take and associates' COVID-XX's Thank commitment unprecedented revitalize communities client's efforts of now associates economy. Andrea, the for will in to

begin from will Brady of Instructions]. [Operator ahead. And now session. KBW. our question-and-answer will first Please We question come the go Gailey

then back say heard and loan color I I look Maybe utilization period just the of And the I about ex-PPP? expect you're saw best If going half growth PPP, just of ex-warehouse you and year modest more went excluding comment linked on a BJ, for balances but forward? growth, on growth end warehouse XQs maybe you growth loan just little were think down quarter. at at Maybe on comment kind mortgage excluding little how the you loan down. a thinking loan

outside or an The mortgage bit. down start warehouse on little this Brady, growth and of absolute PPP I'll pick a up. can Most BJ basis of Bryan, then Susan and was loan Hey, that line when draws the that down. economy you in saw by in first shutting timeframe down occurred those driven in started more paid what was quarter March the broadly, late the the significant lines is

loan at If to new as to low reasonably would BJ tended were Most very characterize say could did existing second two relative the is the to be the it modest. customers loans that quarter, look of through you XX you years. earlier levels last growth the be or months at and

of don't rest is least of So worked to activity take expect on draws that and line throughout support a some this the this pandemic. customers in to continue growth the will to of we marketplace. we opportunities get their the side the of and way customers at existing tremendous have both system sort will our year loan have that until through we But amount the expectation other

clients we very new review a and remain range brought the XX we credit. growth through would believe limited lower in work as But of very have program. but level Brady as loan in for extensions on some can continuing last you and have to But Bryan imagine prudent compared on of could relationships underwriting, the prospects higher be some certainly always would as that is, PPP our add really full would I remain in we focused thing there that said the we Only with remain to we expect do to XX months. opportunities, so our

opportunities Yes. to Bryan pandemic. add to because we'll customer it's we'll just continue business. activity There's definitely but we're across clients look obvious like I one good credit question. -- I for just relationships. It's the It's Brady, that caution about more just from continue -- of looking thing. talked for extend to not lower open mean, just look would portfolios, grow to

All right, next helpful. your Then dividend. that's common on

been there's post. think dividend I CCAR earned the we results last didn't quarter, it earn some pretty focus the When payout your dividend you investor this quarter, but on is high. the ratio but saw you

the quarter the thinking you stability but you you $XXX multiples, how dividend are If of by gain million your forward? next it earn about going include will

And Hey, to board as of I a but the we don't the looks The publicly dividend and would looked Brady, in the we dividend, that at to this confident least long-term. directors. looks recommend that us don't say is our modeling about our the we what board that indicates know this adequacy only backdrop, we capital to board at and available from it's will as and capital not position important know are it, to made economy quarter. we dividend at be again. been Bryan Fed our the continue every rules considers in outlook at and a while

our consider outlook, So our that on we dividend understanding of levels. rules very recommending current will in change they the Fed confident to based continuing at modeling, framework, we be but on our the the that could based board feel our based that on

that a about that few reality to with than that. accretion Yes, probably unscheduled, probably right, finally helpful yield some see right accretion But for was doesn't so that? for scheduled next to just yield include a think is that forecast payoffs, one. the you'll numbers it any have Is is higher then the little years. the the And Okay. quick BJ the way

a be timing transaction, change much assumed then on could it's to like Yes seen If an Brady. be our on is you're going this there there's based correct. right. this other that's we've Yes, in and -- based acceleration

next comes Please Evercore. of Our go from Pancari question John ahead.

of question Hi, around behalf Rahul this I Patil is had on John. a mark. the just loan

how How loan $XXX the I around update So back also, July. you you rates of worsened come like in looks macro I with the kind then argue And it XXXX. come And lot looking provided down deal that bps mid-April, obviously believe mid-April because come had around around the November influence million. time XX total did since was rate an did in that? just And the a just did to that market? at million not stayed XX market? sort your since then. of And that the the credit I'm had the mark that that at mark influence around million credit in mark. And $XXX $XXX has is of it like close bps, one announced influence total questions at through now? rate I'm like mark that the also couple looks level quite the wondering so of that mark know could consistent clarification How right have

Sure.

BJ. So it's

So it's and year between a to today. wild November been of trying estimate last on marks ride

that. gave And so during said, like the you of updates interim we course

marks that basis rate and interest assume points. in November, So had of would have recall we mark X.X% announcement credit about if XX you back of

The mark. So you're mark. to And rates/liquidity been that substantially I would emphasis that a higher referring but put on interim X.X%. credit more the little a -- a have of liquidity captured bit that would interest more would have would mark,

out. put we liquidity a it couple of and ago, crisis been markets fear programs was had the Fed in the the fully before when So height back the at disclosure the rolled out months that

higher rate but has around Subsequently, liquidity markets future was that more lot down, a and on have back has credit interest on rate come outlook expectations assumption liquid the our mark. interest in the mark gotten much So the liquidity deteriorated.

table, mark Interest higher But by of in same interestingly landed back we credit So can as materially the non-PCD probably is XX% all has November. see in changed thought all, place. as you rate/liquidity enough, of what in the in would our the have mark PCD mix the and kind than well.

the of we've feel building we're got in bottom healthy into additional comfortable is absorption of capacity that accrete very the work So, But moving the through on lots here. line that have income that extensive done over to teams $XXX million. go reserves tune that loss parts And we will about our evaluation back very allowance. great time

estimates So we're got. very with comfortable we've the that

Okay. Horizon's And then just the question standalone expense base. on First

believe it your I in six looking at $XXX basis; I'm expectations ago, months was was numbers So a like quarter. for $XXX came around it And at XQ First per on Horizon's base million, expense $XXX core around million. million

So much expect income coming normalize normal fixed stays million that like in $XXX strong? how performance, fixed First million Or kind we of this your in do of expense sort like differential expect that quarters? assuming business rate income driven is run to partly base that but differential of by should Horizon for $XX you stronger of kind obviously the

those We from we that had quarter, benefit will expense. positive as moderate. to expenses which that you're expect Yes don't talking to that is how is, compensation related the describe there's fixed with variable as XX% things. mentioned, to additional I'll so all that well. And you materially income it up gain, income about were quite that additional revenue One continue. compensation the we a in our this That's quarter is certainly net comes so deferred increase two pretax

like we still which we'd will. strong we that think income it remain to fixed believe see So

a you and I And in take expense once impact merger-related meaningful cost we the would, saves I to declines expect then basis out quarter. layer to on look were deferred if time in the to combined in see base. companies over start we our at our So compensation this start

more a unfunded was this BJ, add quarter I the that $XX zero. $X quarter, last that would provision essentially for year-ago that is million list which vis-à-vis one was to credit, million

you. Thank Yes.

fairly base. They're -- sense related it that our flow in losses two expense credit to Those the through happens to just credit are for they're unfunded significant. potential commitments related pandemic

a is great an point. reiterate that to just we want expenses. our Yes, of I have line excellent bottom managing job done

here all And and to and are on expense the very, and very were discipline. so either things two are I increases income of focus we discussed revenue pretax Bryan support to additional strongly continuing the that related

from Please Our next Fargo. go comes Wells of ahead. Jared question Shaw

just Yes, looking securities use. to the deal. we -- the deposit and the cash for be thinking growth sort into the the your IBKC of I either in deal with should from What guess growth and for start securities -- expectation at customers Truist expectation or guess the additional and of margin deployment how I about cash that cash the or

the as quarters, we sort we So of position? net through few go forward next should looking how be at cash that

Yes.

several going higher to the that securities, I of ways that in my in in range. out to loan margin managing growth, mid-teens the earlier terms addition as So in to $X said cetera. we're third deposits, of over next cost figure And the et the we think the to billion months, quarter, depress from net comments, either initially few other of funding the maybe Truist deploy is going down

be that margin. the depression we a So type temporary of expect to

the in if cash. the to quarter, margin being the of of down to the just be way, different think the not excess mid-teens completed would relatively was we modestly a down Truist in stable said so And acquisition as the addition opposed would because

deferral credit any about a type go that get of you to additional the or enhancements Okay, are to able processing period as great. extension forward? beneficial expect then bit talk either restructuring there? hence you do little be And as approaching extension those how term XX-day you And can initial

case-by-case first XX-day about Hi, commercial deferrals number Jared. potentially asking sponsor customers specific sources guarantor at requested a and end other to of on a support, portfolios. of slides, looking Related by guarantor deep to equity the related of et other we're with really oftentimes, and And in this a deferrals his point on cetera. structural getting round more the the we number it's put as getting are of remarks are guarantee, owner BJ additional our some the of with to questions loans our our we really whether customers had asking At elements. to reviews, cash, in in mentioned, we've basis portfolio

In as of some a government reserves, CARES the various we've many Otherwise, borrowers. PPP of our over are last potentially their what around operating feedback good increase. restaurant and fact, round. the risk round closely we were as nearly received maybe our of be grant we're the be customers the clients the we programs. two in combination big to do continue industry cash talking pockets states of second COVID but they covered good point the portfolios, not of the deferrals the finance XX had first this based programs we're the benefits in be at round Really -- of real near expect of and XX the hearing some over very related in about to XX% the to program, our idle situation things their lower days, we're would watching bankers with only what we and we were at reporting not some round to higher on expenses, Obviously, of of liquidity, dynamic really anticipating that that deferrals them. number first hotel companies program, including telling second We a don't are franchise

So the now first had glad we the to to a lighter be to again, second much right during request deferrals appears But time. round. customers round on of assist we're be than able this

look from macro you're from for macro with we Moody's to we deterioration that overlays similar going if any That's MOE models, as deterioration willing be just see impact all future protection should more additional the qualitative would based see the color. do we the impact? to credit finally on assume forward, that or a should we use at are the expect great And Thanks. additional me,

for on actually overlay quarter portfolios second we So baseline, the qualitative in some to first but from apply potential of a the in effect bit in good addition either that did have we more and have to quarter, the quarter, actually second even COVID. a of the it Moody's the or did number

entertainment, not on a included additional living then profit, nursing would for where we we we more of the qualitative an very we and homes an look even even great there type redeterminations, which hedge So living, the and as strategies, healthcare other very, portfolios some of some borrowing expect the did et significant went areas then a energy senior restaurants, overlay hospitality, base had through like clients a you -- things retail, that with strong as and deal example, like took qualitative cetera. assisted a

did. feel we're a of reserved continue qualitative dives And the and for obviously we'll point, the that next robust quarter from both as got based so but the do for it. have did quarter, the deploy the near quarter, feel the we we but that we like quarter, we evaluate taken in CECL. the have gleaned that process we second get continue as we as I guess portfolios to expertise we'll quarter in this evaluate said overlay to overlay qualitative end third information we and like deep At well this process, then good I good a we we've That that subject Moody's on matter and

need we as Susan as add qualitative we outlined. thing. would used where we IBERIA overlays what to Susan I that the loan marks same the around stress particularly evaluated sectors We the said on to portfolio, do, And did

So First had and we on Horizon feel very marks reserves so. standalone like the have we we fulsome healthy

But we world trying many it real an and Bryan. how better reserves And good that charge-offs in did It's we and burdensome. then put and they're yes, trouble better is -- seeing and CECL time an if ill or re-shutdown? might interesting doing loan you happens numbers fully job Susan of now, the enumerating you overly at it's places it round interesting you with than helpful out between loss if places. this in there happens be you're a the ways stick But in various programs is components, the places round Right liquidity net go doing figure borrowers if might are Congress today expect and loan a I'll $XXX loan lot emerging. shutdown some happens time the together to have can What $XX that of doing are stimulus? of million reserves. economy and from portfolios sort is think. to think the a where works and more the are what we're -- estimating million economy of than This those loss while look Fed change? borrowers and fully administration a all in step another you there's don't back disconnect What if And call

we picking Lending, liquidity has the really the has Treasury attribute place economic reopening. like that work credit are been the PPP, in card up been used relatively since and programs we're environment have still lot that which in, the consumers a to the economy stimulus but Street payments, not the strong, that Main volume started great done with of Fed programs, Given

And in to of we've But year. on in if restaurant individual you're were through quick on speaking. of got might at go you and in. all, back and And the up you the you're you some portfolio, remainder take business depending outlook cautious much the all in you things serve this time. XX%, sober the than are business; comps better your the borrowers pre-pandemic restaurant expect individual So point business, happens cases, largely where a elements over to XX% in when you're talk what doing the you are

what of to loss look to flyspeck is just it might loan So time tale like. And losses right an and now. a loan be of out many there life it's reserves trying stories odd

of ahead. Steven JPMorgan. Please next Alexopoulos question Our go comes from

reserve does everything you now, of you're CECL is the with do an Bryan, on behind time it the the think at stay looking majority this you? odd building conversation reserve now being based under

we perspective, book an we from life information have loan the are we and clearly think losses. accounting of we take what Well,

what economy it It's out until information in I we as available don't virus earlier crisis. get know plays the I And to a medically all solution think think to a sufficient we that, cover us, the out. it's losses we And hard to talking to today. said stands know dividend, book this the how plays driven if have assumptions, But so how yes reserves the it plays have about as in I But portfolio through we based on we consistent set don't that the with so. about know economy. of

the deferrals transitioning to you're these second and is qualitative using half the need the it And reserve? plan are building into that start you'll as these default. we to then some Is reserve likely get into to Or overlays of today? establish specific a

anticipation problem. clearly the in reserves that reserves specific these think built some in qualitative of I we of Well,

our use be would those So they intent as to evolve, yes.

then It I'm range. been It's think you And thank you the Okay. at Thanks. did a these levels? how see through trend was to it's nice to shifting and then do quarter? while, direction ADR -- income. the fixed above prior ADR And curious, sustainable

the start do throughout transition as trended and or ADR Yes, sustainable. positively I good very quarter, strong quarter very the we third would is it think We the say quarter well. finished to a

across more securities and industry, the are And question some came good balance across the extent sheet of portfolios opportunity securities industry. to of loan macro the is cash on the growth about not financial that's it comments is sort institutions there we growth extension about of the happening the up made loan and and for

impacted reversed. revenue we quarter by of negative little call the So a business. average was quarter the being splits end daily reversal first the what the The of bit that's good excuse for and third of end this the me

or occurred. or our outlook year serve would look our good. income buffer that trading always countercyclical average is for continue has that name daily good, it business looked Another But will the gains we’ve revenue remainder gains of fixed a the to the And to portfolio believed as losses be the trends and that be.

UBS. comes of Please Brock go Vandervliet question next from Our ahead.

of begin some to Hey, clouds here. good part the morning. Nice to see

very been do just Steve's repeatedly the flat do climb comments, this to the I in would it kind you question; because of our I beaten securities more your into here? here sort from is from has It's of be so of go and performance which wanted back back very, about on mean good. and Bryan, out a you expectations half Following to could set or worry think actually still up strong

quarters. were you of, of it it's that decline lot I and forecast wouldn't you sort average that, of you of it growth think the would where if a to my lot, you in sort the will of show area been be outlook the couple going a whole wouldn't be out, in sort show a last

net know margin. And bit. that one a the interest defining I at remain where of taken clouds a Okay. areas the of BJ, you've the kind around is crack

PPP; coming you've or got the branch You've the branch in. got sale purchase

look kind IBKC of of as QX, at? should and you As what NIM look core looking maybe year-end you a course be at we

Yes.

know why get income So good the don't Bryan fixed by I the the question way, NIM. tough strong on and question I gets on

to of the deposit we those we're talked to going some earlier work got core problem continues a is through. as through hopefully can to about pressured continue reality the have deposits But that stabilizing paid; have of still So the I liquidity be excess we on I think high that would year. expect we're that room mean rates we've that the half I yields going NIM still and bring to class bit. down. back We loan have to a

into excess it the because in depression declines I that be to NII wouldn't through, at accretion goes largely the Fed compressed material got even in margin. balances into a and liquidity, we've margin going that's coming if the translate wash. So by excess overall the it's is

be that it's as a countercyclical got just record as soundly which mortgage continued, IBERIA a opportunities first as quarter beat a again challenged, that to to the it's So going quarter both it, Bryan interest combined the but had and we've what got income well mitigate record then about company, businesses origination in in we've the net to talked line that companies the loans has the and mortgage quarter second in income, platform quarter. fixed

we much as think mitigate headwinds. as levers some of work to hard offset that can multiple can. we So we these have And we'll

comes from Bank Our Please go question ahead. America Ebrahim of Securities. of next Poonawala

modestly. follow-up on BJ the relatively going to you be NIM you ex to the Just wanted Truist mentioned NIM, just expect down would earlier that stable

Truist, you com So for expect put correct. let's get this mid-teens we PPP about place reflect to reflect sure Is call XXX, The XXX. decline, when we we just maybe might some that some more make IBERIA, around terms a decent we as it to a wanted runs NIM so there reflect XXX deploy to or it around be should relative now upside liquidity have is in XXX. off, number? then to And a the of downside core where core NIM that as numbers that that PPP

XXX and the NIM Truist is Yes, speaking contemplating just look And I IBERIA so takes I been half goes. standalone. I'm about merger, our second thought obviously core in the I'm not and said and puts acquisition, the of when the had what the it contemplating mid-teens year I've quarter. the like,

liquidity mid-teens it's we Truist. think I that will liquidity, excess the primarily yes, the from from So see

the about off, XXX PPP [indiscernible] by of you And view be expect spending. Sorry in do what's to on the year? of end forgiven actual running then most this your

we do. Yes,

to trying for Okay, these the of out you the got into like or would both their And sense it. earning balance quarter what of expect with all what things pro we the earning have sheet added? a XQ should balance looking assets were size end what in sheets, assets forma just of terms get

at earning forma pro June XX. assets So

loans Horizon, without forma together you PPP at about X/XX IBERIA both billion. pro is So look if $XX for First

the loans, And over billion, thought so We obviously asked of PPP. billion. $X.X a combined know PPP I'd had portfolio I for assets. give about you all that's little you earning But and I without $X go

forma PPP million. basis June if loans you include on total pro are $XX at of a So the end about

even earning assets roughly I've I've $XX Yes, got, just got of billion.

question That's one for Susan. guess helpful. And just I separate

off finance think model details we've customer done restaurant, about terms a say and alluded and this by when customer, don't at to exercise, in which customers' you withstand you relative based around these if portfolio like what handle to you portfolio, decent of point are of around have the provisioning the So seen you've worse Or imply of uncertainty would mentioned half? at you you just Bryan to looking a get you this materially a still the decisions still sense drop level on you've I first in comfort talked is loans macro. granularly credit on would as do get based a and too, a making good loan the ability things sense hotel? what looked At a lot good or credit have the

then level at portfolio are we're loan and loan information the lot with going what's hotel various of with to on market customer-by-customer what's at bankers occupancies on around based by again franchises addition looking on a we're by looking we're space, going in but in that also updating and ADRs on looking our at, a loan information at finance feedback, So franchise looking information loan, that customer basis.

continue we that. to will do So

this we Just Horizon talked the Legacy commercial range. in it reminder, to that we've very the IBERIA the to we Legacy average I but things this XX% equities last about as about as like real a good quarter, disciplined applies First the in relates had feel financial say book, underwriting both estate hospitality, would and and since last crisis

of travel, family data we up some some our And because that some also back cushion, alluded through occupied. had of when do portfolio the something convention were were fully our it we've that type on a that of when them lot cushion, very hotel so things saw heard have July in tend to Bryan and Day hotels from travel, on was large to like restaurant open in a the Memorial the hotel Maybe unprecedented portfolios -- the you business side, to X, COVID hotel limited us the this but we restaurant point distance June clients lot to gives a it be driving starting smaller to have customers exposure saw pandemic. cater side, this business customers clearly

thinking buying average out, take were more We some in I as people would, also saw, restaurant about, because as went later. checks did Bryan if want they more up were might went said, they they than they

and both studies all we get they're about talking industries we seeing. in seeing market individual that on but also data customers we what that So with our are of did, the

when shutdown quickly. reserve BJ will at said, you both. We back we believe some our But look also and got I have to we're and increases additional clients the then with continue lifetime as that so up. open we customers, will based what a things that and resiliency on saw pleased complete for out saw shutdowns But there's was watching we know really losses underwriting Bryan our occurred. what pretty So dramatic But again, prudent be we've again resilient have of the I today.

our strength and unusual the nothing to the resiliency. have very changing to business I really it their you the customers testament, is is customers circumstances creativity way of in a the amazing. of adapted see creative been in adapting their business, an add U.S. And to Customers else, And it model adapting to the meet they've would economy set testament if an circumstances. and overall

Our Garrett of next Holland ahead. Baird. from question Please comes go

Good question. morning, thanks taking the for

near-term you had expenses. on as a one Just a half think QX the good core over What's expenses, range about for the back of year?

or --? Standalone or combined

will great. combined The be

Yes.

different I think merger-related there's to IR of so those one-times think parts format. that better because defer of a be -- in think on and that with terms have to would many it I types I things moving our and follow-up what you folks in got that give I'll you we

would announced how its you the this type environment recast though in about the Understand. combined you potential. positive thinking guess I for return changed transaction, bigger just company advise has or deal I know just the very just but power on And closed, picture, of you sound clearly, potential since environment? earnings the the

Well, I it short-term. would I way think characterize is the

strong right think funding soundness strong and and safety are reserves, capital else profiles. healthy and focused liquidity I everybody on we levels,

is, is Beyond businesses, we next huge the what it's environment, in our a us our controlling combined material support this of our taking control of what that we way course quarters. countercyclical can lever of for control. organization over several pricing and out deposit And in discipline, costs can our very particularly

ability position maintain of profitability So, I very several to will our those next quarters. us things over think terms well in the

are very scale our come build We're we’re that the long-term to optimistic attractive in enhanced we a combined about that the Beyond markets. business got with countercyclical opportunity continuing mix in; will businesses, saves diversified convicted have as organization. will cost and very help. We've we

the over like profitability long-term, we a over medium well still So building long-term we're can and company to the that. do generate and feel us position we top tier to

is Bryan. this Hi Garrett

hard today, what as very is numbers we changes in strong good in model the businesses seeing to -- November numbers both CECL franchise. was about I great of this there think in were what's it's in We're our of sort But deal talked leverage. is seeing PPNR. activity think because and the We a everything. today that

merger, of In couple that go first based seeing referrals business post-merger the fact, business. our timeframe lending we're into in of asset weeks

modeled the on revenue the side. I'm synergies, hit commitments any of, be haven't in we our to plus. of synergies certain have One but million is $XXX the those ability thing So there will we

on at basis the get upsize individual combining how a have are understate think the an that in I we opportunity Equals. in environment that couldn't important we of an is These And like this. I lever time. can't to by over two a that no Merger costs premium organizations

We $XXX of you to on have annuitize. create an ability plus million can savings rate pretax basis the that annual run

over will And that so be the a that's months. big that XX big deal next and a driver

out cost to the of we're think levers pull have with I run, longer-term, there base going terms the shareholder balance creating we going said, our in of with growth covering have that to position the strength businesses BJ as sheet, have and superior we're team playing be are to and going meaningful our bankers our we're we're the a going And savings short be that with So, that's to that in customer on markets countercyclical in value. the field, our opportunities. to in,

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

Hi, Jennifer.

morning, Good Jennifer.

Good morning.

increase. of you. trend your over levels charge-off you're sequentially what terms next the net six know months. Thank about quarter. you're I stayed and the seeing expecting also loan about from the quite that most talk low then Just where criticized second in they And talk can you in near-term

standalone and information as Jennifer, well. First as got criticized to we loans then Horizon on I've basis relates talk combined a some about and it

you at -- If look

mute that please. you could Operator,

Jennifer move Would to have the seems like us hold. to on to next questioner? Apologies. placed you

don't Why go ahead? you

question. and go answer the Yes. will I

loan about asked Jennifer So criticized changes.

added And Horizon so lines criticized we IBERIA added for million. standalone, million $XXX just under quarter-over-quarter, $XXX saw First to about

conservative across I So look appropriate took quarter-over-quarter about grading energy portfolios. and both was which the say on took would portfolios a companies million to added criticized the two the our had million we $XXX approach loans we $XXX energy-related in needed of as those. very about we that action through

on loans, criticized exclude the portfolio percentage of the portfolio a if basis Horizon pro X.X%. of loans. First of ended looked loans went way, PPP percentage quarter. loans at at numbers from the again a up of on forma, So on combined By And end then about the from to about are X.X% of first the basis, the these quarter criticized the standalone X.X% about you'd X.X% it

some increase So we criticized loans. see did in

specific So forecast have for I don't net charge-off. a

expect in what in Based We don't bit have the portfolio we've criticized mentioned know the loans. to net higher that know did quarter. complete would and specifically on because are charge-offs the would well CECL believe forecast we because of some there's as increase fourth this At lifetime what have and got risk the looking that obviously losses third portfolio. based we the I we economy, in that the in at the and we a really reserved point, a on the good for though today works, really dives I today we're the of But portfolio how we earlier we uncertainty. deep on --

near-term of would that increase that the obviously one being on. Susan focused the and to majority energy be just talked most the about of would Yes. we being portfolios say add; And I energy

Our energy the be portfolio coverage around combined X%. of will

on the significantly side. standalone on we portfolios increased through marks So reserves and the the both those

that about So, along that's talked places the other we one that earlier. the Susan in with sectors of leaned

will come Jefferies. of Casey Please ahead. from Our go next Haire question

Good thanks. Yes, guys. morning

update as given have an refi well any where It us are could going business there? as warehouse mortgage give what's on fixed the I unless and but it on seems it, mortgage missed guys outlook color deals today? income legs you where like between the are purchase and the So the split rates

keep So they is point XX% thinking is mortgage kind in warehouse which hit we rates, and quarter, second what purchase low expect you refi go again. would down the their refi of about with they've

in for good been the about that X.XX% mortgage warehouse there. Yields were there's activity So quarter second portfolio.

outlook talk mortgage let about So as for the But maybe count mortgage years warehouse. we in have I'll the to customers the over three customer last BJ warehouse. added

think first the significant you had top up in $X.X -- and if Casey, ticked quarter I around period Yes, five very the quarter, in of I pretty the strong companies of balances second. first billion $X and up actually elevated balances range, right. They balances the billion. The to through period would stayed saw end loans activity to end average remember mortgage we were you weeks -- run a last down the pretty in at because quarter materially more see you'll than

and of based mortgage So on the business the mix the refi. and flow and flow does originations ebb purchase of

continued in the the quarter, third into strength business. we see Going

period range balances from second be likely saw end it that billion balances to in average expect we And so and the in we quarter. grow the the $X of the of

vertical of strategy picture is versus world the just Great, portfolio capital it different you Horizon for November was are obviously early you. plans. Bryan, to that Things given there the and either perspective November? at about how question announced side you. the cost just is IBERIA how -- or guys change on anything a thinking First house much, a be guys tracking loan or save strategically But today this is different deal you When thank in big much least world. from seem perspective

And the the and by team come been has while first to since has of a with leverage about any I'm portfolios opportunities way still across we've WebEx the electronic it merits has the up equally together. organizations. but significant the mentioned team business we're Zoom been or transaction. remarkable no. all business come very, not We're are environment face-to-face you seeing mortgage businesses the well. that March, with, doing and I some IBERIABANK as to and ABL, other BJ mentioned, that very and mentioned both together table. brings come we virtual It there can means bring the and And four convicted the to I the that extraordinarily title people in had the Well, doing pleased changes, together months

a lot So still We'll we some that. things. see fine of tune

One about of the the the a bit the -- if in little were numbers, basis this you on look combined X% at commitments quarter, closely it energy of you'll a portfolio. represents see for example, down

opportunities post bringing we're and macro the willing the the world. we're sales economy together. starting continues to convicted hard and basis, is trim glad So And place. the still of two to work equally beyond adjust then about pandemic we're line these On the organizations to a as I'm in the our pandemic

done. And going months. time we're I to see created we said two combine So when as that earlier, it's a lot to shareholder exciting next XX think value the I of get these over companies

Marinac of Scott. Janney Montgomery ahead. Our from next Please come go question will Christopher

the are the look than to addressed does and sort it BJ last strategically, Bryan, this on we focus wanted and earlier? branch differently How acquisition did you had do you just -- fall, you? liquidity high are in that also given morning. of at any where Just that Good

I from a are with you excess pleased deposits today different transaction we're environment. it point; transaction. accounting very, standpoint, us think of a strategic in that an rate and I economic sort think for Well, an home But a and run zero is very raised

As BJ going conversion acquisition this mentioned that is and on earlier weekend.

North to Triangle Triad and a a it we and in presence in in the So deposits up those North would High terms branches Point, Winston-Salem, is branch in of Carolina significant. triangle, was customers do and merged up middle with be it in and back the those we'll of we me area, building pick average Greensboro, excuse pick in And when Carolina. years converted the presence $XX the do call the meaningful XX will in XXXX, and Capital of And said Carolinas is Hill, over Bank, Durham area Chapel it weekend. the will the to wanted million part to meaningful in in what Carolinas give five branches have meaningful share overnight in us what we share top to

And so create partner were now XX in SunTrust, from a building a strategic standpoint, branches acquire is these XX, we just these to XX quality we Truist if to franchise This and this branches, lucky started couldn't branches. of we quality with BB&T years.

of proud Virginia, Georgia we're transaction. in with and what this So we're Carolinas building

I could for the fully you it we converted; more about can context. those Okay, branches great in with you And guess when that thanks so systems start that. too. have Right, do thinking

will absolutely. converted systems Yes, the Sunday morning. But be

be done will weekend. this everything So

a to nuts this So soup acquisition. weekend on it's branch

the ground have next we technology banking these the who weeks. adequate running hit to perspective, communication, things few the over deferred, of running it's we're helping hit we'll the this financial and we and banking franchise be centers, of ground But morning. with last First running. be training, part ambassadors all months be will People a reasons got Horizon of centers systems really couple and and will of centers the branches, going ground worked we'll hit that and So the do Monday the in position like we've these adequate really, weekend wanted First customer from to in over one to the hard Horizon

does that the expanded bringing in areas in work done enhances presence see having but mean consumers, companies middle branch the only already have businesses improves ability and our so really it reach bankers a calling from have to market like where that It obviously in centers situations a before. I didn't presence additional to our few on additional business banking we'll presence have help. and still not small we and all

So addition but side. to the we also consumers, that business to in look forward serving

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

importantly most care clients integration, the lot our I as Andrea. branch community. of mentioned, conversion, merger plan you, the and our I hard and work an associates there's but all taking doing. appreciate and are that And our Thank of awful

very you the well So positioned Merger the your We amount morning. we're everybody call appreciate the for branch value on work. going of Equals. our your and with consummation thank our transaction and of a joining shareholder tremendous for create to in hard us of this We're company. Thanks, interest

further questions, information you. Aarti need Bowman, us. to out and help Thank additional you you. great If wonderful hope reach happy a or feel of safe weekend. us all any to have We'll you I have free know. please be any Taylor, to Ellen and let

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