First Horizon (FHN) 17 Jul 242024 Q2 Earnings call transcript

Good afternoon, all. Thank you for joining us for the First Horizon Second Quarter 2024 Earnings Conference Call. My name is Carley, and I will be coordinating your call today. [Operator Instructions]

I will now hand over to Natalie Flanders, Head of Investor Relations, to begin.

Carley. you, Thank Good morning. XXXX quarter conference second call. results our to Welcome you joining for us. Thank we'll Bryan Chairman, provide Chief which take President our Jordan; questions. prepared happy your and after will Today, Dmuchowski, CEO, and to Hope Financial remarks, be Officer, Credit also and Susan Tom here our We're with questions Officer, Springfield, to Credit Officer, do our Chief you to have Hong, pleased Chief Deputy as well.

ir.firsthorizon.com. reference our available website at is earnings on which will presentation, today remarks Our our

are subject As the need that make remind forward-looking we that Therefore, you our factors our results review will risks always, to our we to ask of X differ SEC and I to our Page make to in uncertainties. and filings. from statements you on presentation expectations that

X to These the of to adjusted not results Additionally, non-GAAP you aware reflect presentation. and them. are release our review And in of earnings please important that understand should be current which but notable the last obligated our are impact we on refer to our not that for items. so update will our it's comments measures, our information you views, Page GAAP exclude least, comments and

I'll to Bryan. things with turn And that, over

everyone, I'm you we and Good joining our for call. Thank Natalie. in another you, pleased morning, results the quarter. with thank achieved solid

demonstrate clients. to consistent returns providing our to for to continue our We produce also ability service our shareholders unparalleled while

environment significant uptick compete competitive and rate the base. at back banks look higher of against for the the last been couple in deposit I shrinking backdrop longer a there especially As officers, growth months, promotional of landscape, a for as deposit interest a has

pre-provision cash for benefit financial $X.XX common EPS delivered per adjusted which tangible to the million. of quarter. the with have I'll by net a shared start we We revenue X, returning increasing on XX%, $X some of driven the on Adjusted from by quarter, improved excess was return of equity share, prior $X.XX to the increase Slide shareholders. highlights where

to quarter XX% We $XXX of common common an excuse Tier with X continue through to intend maintaining income net equity managing fees, and that second while in improvement We on and accomplished ratio. We and stack top to XX% ending X the quarter expense stock of million -- modest $XXX the traditional quarter next. performance. tangible me, interest this strong the over Tier banking equity ratio repurchased the order million year-to-date, simultaneously credit X base

just after that First deliver over XXX the while I for continue Horizon as we quarter results serving strong optimistic remain and past years. customers incredibly quarter, to have committees will our

attractive an the We we and set have year. to footprint, half navigate scenarios profitably of over that a competitive allow us strong second the whatever product culture credit will encounter

that, results more hand I'll Hope? to the Hope financial detail. our With in through to call run over

banking equity XX%. million achieved in find continues Good net On prior quarter. part increase Bryan. return XX% share shareholders adjusted you, the share as in performance fixed adjusted slight income offset to to quarter stable ratio Thank through the will business. prior the you Slide returning was in of a of Pre-provision earnings return from adjusted traditional morning, X, generated the We financials performance ACL repurchases. common be expectations of income the fees net our to of of and drove basis key everybody. up X.XX%. in interest to tangible to this quarter, points $X.XX XX our This revenue capital CETX for within on and charge-offs capital $X.XX, with Credit We coverage net quarter. per near-term excess and metrics by moderation improvement our $XXX target

loan which is loans basis to yields the asset X.XX%. basis X.X% are portfolio. and quarter. from benefit Loan up growth On our yielding million margin. by as from a expanded X repricing spreads mix mortgage improve, prior and portfolio flows. margin from loans fixed first rate to NII X the and on offset also loan of by points highest $X floating increased NII up The in slightly continued quarter to that Average to prior continues points both companies, new you quarter, Slide Funding X/X is benefiting X, rate cash that tailwind Roughly in the will be see renewing partially that side. to the of

the as were within balances stable been down have average, since shift portfolio. basis on relatively Deposit encouragingly, late but Noninterest-bearing X those points March. interest-bearing continues increased costs

deposits supply HX money line XX% industry's data. continued We have we Seasonality our on into dive in retention clients this, X. a and drove prior reduction a in X% with the successful Despite the Slide with further in been the contraction retaining year. in versus balances

interest-bearing totaling on for $XX.X rate We points in average and billion. X first The with balances which increased have seen paid illustrated the time noninterest stabilization average both in deposits basis to several X.X%. is balances period-end quarters,

retention higher During balances basis rate over increased X from end the points of billion rate quarter, first into base the X.XX%, which the from quarter. rate up of offers, cost lower spot $X migrated to approximately

X% to competitive balance consumer that from Seasonality XX, well, continue quarter. medical an as prior this drove real industry, spring increasing season sheet the period-end home focus in estate billion increase loans we or all Slide On will loans for lines from doctor more benefited companies you were the up opening dining we clients. program. but impacted to mortgage see the disruption $X The XX production around in have than as or on

that continued of quarters. also expected coming to the the in pace to though slow loans is fund CRE up,

fixed basis loan quarter X first flow due loans wider mentioned, and yields points increased up spreads cash from to Spreads new were points previously on repricing. basis As year-over-year. XX

rate a $X the cash over approximately yield with flows. flows year loan cash We continue billion expect of provide X.X% to to fixed next roll-off opportunity on of

our both moderation Fee excluding $XX income the compensation deferred fees in higher quarter the the seasonality. million this see second $X by million quarter. $X.X a charges, revenue in Slide decreased home to helped quarter. volume daily a tax income filing services fees business activity. Average fees to growth in our stepped fee from we to offset from for this million be a wealth fixed includes within each fixed incremental higher We [ trust fees, $X and Service the quarter. decrease moderation saw ] income. be second tend that similar benefited rate rate anticipated increase insurance due driven up banking and On income, fees to market trends to XX, within business. fees our million first The down our the brokerage, can quarter resulting our department year market's in cut index. a expect Absent and million restructuring rest the due this portfolio $X Mortgage was to increased of card a in lower reduction trust in cut, as management quarter and expectation are you to digital $XXX,XXX, seasonal buying that

non-income a increased $X million, mostly to tax other gain and Lastly, due from investment. fees incremental credit swap a

a quarter, million. to The was increased deferred down that compensation, $XX from mostly reduction incentives XX, reduction commissions. last we was due $X $X and than less expenses show incentives excluding comp, to in Personnel, million On the excluding from deferred adjusted million increased Slide driven step third-party personal checking decrease investments. quarter a income in by for and marketing into lower the Offsetting campaigns new related million retention $XX reinvestment the down account for awards. strategic was services, fixed and outside which to last services revenue

to investments base our still shared before, men the efficiencies, expenses we we the down technology back us the those offset continuing of remainder operational the to expense we by allow expect in to As plan to to which and half related the flat year. of will costs keep increase over have moderately to identify year,

NPLs Credit $XX increase XX% are payments. decreased X.XX%, office points X.XX% approximately and continues in Overall, driven on loans in largely see to with to an with pleased by this you loss well, portfolio average sector. how C&I slightly charge-offs in NPLs increased declines loans. $XX million basis clients Nonperforming XX CRE X.XX%. through environment are feels of credit Net CRE. higher $XX still increasing million the XX. ACL rate Though cycle provision this very have coverage continue the commercial managing by of Loan we current first the our in Slide has balance perform believe quarter or was with from quarter, on performed still by manageable. their increased, to to increased million offset to $X can on million Coverage sheet as very

we've of the At outlook. the we of our our quarter, On XX, end Slide guided NII last XXXX to previous range. revisited lower end

for expectations we that the to shift to updating down increased in However, our range net are due competition mix quarter, and interest to X%. saw flat we late income deposit

sheet anticipated. year remain balance of assuming The deposit in pressured the and flat as funding are We more loan higher competition client and disciplined our on in from mix heightened selection. pricing addition back a new environment, half for we longer into entrants to market to has relatively continue the costs than

previously see stability are the As our we in first mentioned, I've pleased quarters. noninterest-bearing to several in time deposits for

see interest-bearing shift within expected portfolio. than to the more mix However, we've continued

During rate base the accounts cost quarter, offers. rate lower $X from higher migrated billion over balances into retention of

offset will other XX offer base our seek points, All Our X%. approximately account to and unchanged, improve help average to while return. revenue pressures continue shareholders' and we retention efficiencies basis roughly yields rate is remains guidance

target can Lastly, more and and our the maintain reassess certainty longer-term that as that you we've We we of see moving XX% plan XX%. to gain CETX regulatory environment. we CETX to can our around near-term target XX.X% level towards XX% of achieved around macroeconomic

I'm first As this our to company for of my that in macroeconomic we accomplished thoughts. the XX, has outlook give The in XXXX I'll proud has extremely significantly changed the work the X Slide months. of last year. turn half closing

changes experience believe earnings at navigate quarter. heading to and and more to our previous to into now But per the despite there are around economic While X. and of X cycle. of bankers, year we any our Horizon cuts, share expectations I the effectively looking teams knowledge leaders continue the we rate the grow all X First are us, flexibility our quarter after efficiently that give or

the strong diversified model. business we continue our the performance expect advance to half from we As second of year,

continue counter efficiencies will headwinds in operational identify revenue. We to to

credit our balance future. the attractive and returns on performance managing We near will and in remain also our capital, into term deliver our to order sheet diligent

give Bryan. I'll to it Now back

you, sentiments. I Hope. Hope's Thank echo

execute to in ability complete in how We have our and demonstrated profitably. operate competitive changing We environments. and levers have to economic pull I confidence necessary to the know our order continue I our and footprint one established half of beyond. Horizon's doing so to ability First base. firmly our the client and believe of Southeastern is that greatest 'XX over back attributes

client the maintaining relationships competition, some in the greatest that banking While that dedication unparalleled we I have to and associates, South. franchise of the attracts confident the remain the an

always, with the the our As greater clients grateful and Hurricane In committed of of -- for serving work recover. Beryl of power. their thoughts impacted their I'm a for to in those great our particular, are We supporting and thousands associates by associates, as without customers period and tens thousands that Houston communities. hundreds dealt on thousands, long remain the community our they

Carley, we now can open it for questions. up

question from first appears that Our Poonawala. comes Instructions] connect we Ebrahim. It to Ebrahim can't [Operator

So we'll next to move question. on the

comes from Markets. Capital of Jon RBC question Next Arfstrom

that think competition Can in that? you examples changes seeing And you quarter? you talk the you're eases bit pricing what do are deposit more the some late what flagged or of seeing, little us you give And environment? a about

them -- I'll it matching competitors. number effect of month start, footprint. had the had are been who with the up of half our our probably higher of quarter. over from billion customers And to higher on in occurring across There or at Hope $X.X rate We there. offer a so see quarter. Yes, of existing second it from have the north somebody offers specials balance cost quarter month interesting of $X and from small base. third The large that rate impact of an the number third the else the sheet. our deposit or our need -- the There medium in and that the come a came was close saw customer driving last of to back match and that then It's and then increasing of in billion, to up picked pick

to to May maintain and quarter, you of dropped the relationships. was and accelerated cause in If offer the deposits competitive frame. in And early in our early which at quarter the aggregate is the had deposit in really approximate looked this time narrow defend we June in match the competitive cost most flattish environment, costs sense, then the customer

said. Jon, Bryan I'll add what to

You asked about the offers.

marketing entrance of kind a and We they've ] X.XX kind from the been a of competitive employees aggressively when through that's guarantee of here marketed, our new of have And very office our have [ enter me been to gotten year-end. walked southeast branches most a enough mail to from perspective, into houses. offer at their many

-- that saw as of competitive mentioned, environment. we so And that mid-quarter, Bryan kind

Going this highly anticipated cut. we quarter, into rate a quarter, rate the cut expected a

quarter. from and expectation QX we cut, in pulled higher digital were moved as for the The the the to in second the seeing guarantees So rate guarantee. promotional significantly longer from saw We we rates. a the back their rate everyone X rate were the late at offers, the curve marketing, half has term forward was rate marketing first the really a X-month really that of competitors increase And months.

get cut, up, the end you I kind of lower the Hope, don't do lower or or higher to what pressure and kind this end NII higher to we about a And little of of If clean gets this the expect end? to guide a you persist? the of guess, Okay. bit kind talk end

bringing more hopeful am get come Jon, clients the it major the year. this in the that supply we cut, out that we'll or back. a through of offers mentioned, QX rate of competitive as that a economy. year-end. But to The I is further first one continues to see guarantee cut I that some as think that are I shrink the do stays out our money this don't with start environment in, cut gets,

far So [ start with through cut X.XX rate one we second first there's balanced hopeful will cut out if a subside rate. see not offer that, that December to even ] rate to if that. a were an behind in too that September, hopefully, is But still at the there

sensitive. absolutely, as pressure, but far we As guidance, asset the the cut, deposit we hope are rate a will offset

And so in loss lag as work deposit kind in costs month, back. rate the X-month XX% walk off the that cut of of deposit offers. earlier down in to match loan have and little loan our able replay pricing X-month, local year, more that we loan the the side but as we we'll promos well that A that to year, see as come -- the back the deposit repricing, bit get that we'll be the come the of to

call Jon, I this at gut think largely happens. of it's point what a

its keep I impact deposits demand, likely what tight. with or And is think that very term. is The the think really the might I depends most going costs market or And balance still deposit different months think much higher, in very much environment it thought don't particularly to industry. on what across competitive but competitive we happens very X going sheet rates makes and loan has short a on I it going have the how because whole a the normalization X than don't change ago. cut that think months X the it if Fed to more normalizes deposit importantly it's I stay ago on process. Fed that's this be to through is probably

next Rose of James. comes question Our Michael from Raymond

kind that more count next assume it momentum stuff little income what Just use are looking year. cards? and if early growth there, negative would to -- like in year positive as or balance you you improvement and guys know get fees, sheet positive the XXXX. kind But kind bit the midpoint I the leverage think of rates, in well? factors, to little about a operating the of that, I this a is at be you too And of of fixed operating guidance, do leverage may I return are talk

leverage Michael, put efficiency our goal a with is manage together we always budget to to operating start antennas the positive ratio our have year-over-year. to

the X end environment thinking forward so We hard right to next year point, X we say into rate X happen cut year. and X now, this XXXX. up X to to really to what's this went might And it's this X, at year to has X. The going curve and with

I has supply. I we So leverage, we XXXX hard going still on expect to operating going think positive be costs that a well as but through will an deposit budget and We there's a lot have as of work set will that uncertainty XXXX, inverted curve. money

to for So our that specifically, fees start and us. see curve that fixed see to flatten countercyclical our end needs income out of a next huge capital can year. markets help that steepen and to at the be will steepen, We

do as for we just as environment Maybe you. a follow-up, growth Great. Okay. better think hopefully about a

in -- market. just seasonal low. have is some little come down and we're You've bit, loan from clearly C&I normal benefited relatively momentum a rates a a still utilization warehouse, as to little of bit mortgage But back

had You've things like in fund-ups construction, multifamily some and that.

you some Bryan, hearing outlook your see from discuss growth? can Is going customers? to better move loan cuts see and to and Just, utilization that couple up of demand it kind rate a the take of what you're

helped and to if the particularly drive to adjustable and to affordable. down particular, arms as businesses. curve which likely our yield rates starts become I In start comes the up activity, as these said, is and Yes. that And we operating so countercyclical whole, macro Particularly reducing rates, the -- countercyclical to Hope as sense, businesses. back extent the positive leverage, is yield help think refinancing businesses will our drive we than end when have think always occur we normalize, the starts mortgage curve that question, the to set with more trying and on to be philosophically, in will Fed and first it a short the reset

like be tends warehouse, refinanced. more The actually XX% time. lending I rest was quarter think money balanced mortgage. was XX%, XX%, of something to purchased over mortgage That activity as we ended the

point, a you that rate I begins think pickup to see can curve mortgage to pickup you'll mortgage warehouse as in lending in lending. all in And So likelihood, the I significant think see a normalize.

Broadly speaking, the we would than people cautious thought loan more is about are generally point at in cycle, demand tepid have this investing.

change that between what what think going terms policy divergence of presidential do out elections in presidential is candidates there, what's going I is twin X happen and mountains because the of there the of economic does Fed to and lot congressional in our to are. the a where mean and

more the people day, little of at more the level, to tepid. on I begin end lending spaces. I both So become well commercial optimistic, a space will in think in mortgage rates people as fall, think are the particularly a the as consumer But as

Our next question of comes from JPMorgan. Steven Alexopoulos

This Steve. is for Anthony Elian on

for to follow growth up loan on on Just Michael. the question

So quarter? a just mentioned loan balance the back slowdown talk saw the you year. of you your outlook second relatively drivers you Can the updated in pretty I slowing. growth in in flat know were following of the quarter expect the NII assumes sheet half about CRE fund-ups solid a you

Hope. thing we've need is seasonality to mortgage warehouse. of -- this One Anthony, got you look the at that is that

the increases little seasonally mortgage then is significantly X/X QX of or [ in on tails warehouse, of and home which in about bit increase off buying in average and the season So quarter-over-quarter QX. -- during quarter X half a X ] the kind

loan normal is a the increase part As of we have growth. that just in

lot X originated in end of end seeing as ups the market. pro-CRE in a reaching we CRE large We're continue. from are near originations the of in we not loans of we or years last had the -- We the whole the fund really

So to in new what will the we're flows come half tread back in lending the be. with cash we paydowns, going see as year of kind water of

a we -- Susan. growth and there's as if Michael's go think it, and question better environment. couple do about XXXX, go this in earlier I a know is of Anthony, Add into I

to opportunities work with risk the ready in clients some rate lending to C&I get with cuts do burner, of have capital are assuming who they you'll think reengage may clients want who burner, our some profile. back front meet may we those those move activity, the you some put and and outlooks on better, back the If I and some see to clients, we'll stand specifically our projects

the provide services? the for in guess saw And on press third-party investments. campaigns you you then onetime more deposit how my I increase outside marketing can versus in color and to much tied follow-up, nature? attributed you services in $XX million is of Are release. the sequentially increase is This strategic sticky

to at into It the Marketing and is time to seasonal seasonal especially marketing a with tend new accounts. not we year-end where banks. lot be tends spend a checking between a movement be of here very year, see going effective, just doesn't

direct-to-client And and we typically are effective QX marketing. more where QX see so

were end than this so think mention an did wouldn't as started of I calls technology sticky originally in slower We had And year to previous as seasonality get year-over-year is our investments anticipated. year, that I some at say there multiple when we little last there. the a and

So and technology the marketing I now years the right think the kind past run year, of spend as well. that its hitting in seasonal typical throughout being

marketing back of look you past increase If seasonality end QX in same earnings, last the in QX. see to of year's you'll and type

question from America. Poonawala next of comes Bank of Our Ebrahim

maybe what guess is cycles, just half, question, around, rate seems clients, a bond at on prior good it you in more fixed restructuring rate like and cetera. million countercyclical, can your book Bryan I $XX lot I see a just said you run back income, for recall the from et cuts, the Hope, I first think should

that I assume strong to up cut So rate my firms is September the that understanding. steepening pretty outlook push curve would the be levels yield and should of would the

Or you talk when So conservative missing something I markets about are outlook? am cap the you there? being just

daily average to, there's at pretty a point put graph that revenues. sort I'll Natalie the it in does very shows Yes. appendix of what you to

the any aggressive up. our than about about are What likely We're the the fixed down assumptions is daily talked down, basically income better is steady are to a making talked you're an about instincts see average the environment. on rates we've in more be that being likely we've right. on moving impact is cuts if business. your to more for not extent fed making But So it rates To following broad rate moving there whole, revenue significant

in And it. business based enough side Got other what the on hearing countercyclical around a mortgage of at cuts X%. rates Or business on I to of fed mortgage pickup that other guess that get there mortgage we to from momentum is a level balances? if mortgage you're rates warehouse, occur your clients that remain around of going? the Is activity get sort get and front needs the to

see rates activity. think got real pickup drop I refinance you've to mortgage more significantly to in see any

I steady refinance think rates But than anything of of you'll terms still think continue going to flow activity. to to I drop to you're that. meaningful see purchase see a in more have activity, see

pick and little shaped we're will a to up normalize have to stability lines. by we rate business some And optimistic share that's that pick that's We help an normally that does as balances curve. a yield maintain nicely get and had opportunity think increasing up that, environment the And bit there. of a going

may. Got I it. And last one question, if

pricing lot what and more, sounds from banks far I've mixing the season. earning to relative this You're I so deposit a heard think, circumspect

X from think loan-to-deposit is Because a managing causing I in most learning we're First months deposits pricing, X, deposit And a banks that it? things is there and us, more active am some overreading which cooling bringing I be ago. or lot one, Horizon to, X, what retaining deposits? remind you're is to lower So from repricing in ratio

sure just make I to anything. . I'm missing want not So

Yes.

pricing loan-to-deposit but attentive is our relationships. thoughts. is that's ratio, a driving think existing One the as we much of are strategy to couple customer not as it defending deposit protecting, I

that's So we're it the relationship side driving things. activity. about thinking a from what's And of

up about you customer some If quoted existing covers, underneath that we I the numbers look relationships price.

a we relationship. have where our competitive we a in well we increase flexibility easy but the pay back. customers costs, net aggregate desire any just balance able driven credit rate defend to certain It's sheet attractively say. Clearly, We Attractively whole to for loan-to-deposit support balance as but our priced, to ratio, I our was were it also We and saw of really because will in by we to the significant to me dynamics move in attention sectors. cycle. customer deposit had the through on structured think said, of

So sense Not won't constrained positioned for to not make that we're in our term, balance customer feel we to like that, relationships really the near near but fund say term. change, sheet. in it's the that well

I'll Ebrahim, X things to that. add there's

than bank, with are the Southeast the Southeast think national We talking a their of all releases regional they new about They're national growth look at Southeast. our about for of banks. and you differently competing bank. announcing most talk When new everyone we the they're hiring one everybody and I are that They're and competitors exception target branches. their But the about teams. so growth, opportunities, a talking being announcing

both side on trying or footprint their And banks interfere. also become to it's so increase I deposit and think as more are loans, average the in loan the competitive Southeast the allows us than to grow but more more

ratio, The see funds we that mortgage drift always and second, on the as QX, up warehouse in loan-to-deposit QX up.

basis may that being point the into that we with time, yielding X okay brokered their loan-to-deposit up increases. match I'm ratio XXX have As I've mentioned go before, or a quarters, but and wholesale going asset. heightened during line during funding to deeper

XXX basis points spread.

catch, Good Bryan.

Our next question of comes Chris from McGratty KBW.

terms do velocity trying what exit that the you June the go you think you're with with year as I'm about next in to of deposits? doing as have spot XX, of Hope, margin, into

was spot for X, the spot do Slide which but X.XX. didn't quarter, on the have We margin, we have rate

June. for X.XX

Great. Okay.

Slide X. on As

that. X Great. have must the missed XX%. you're on then I at Bryan, capital, And

clarity XX%, going You you talked about the is half that clarity that on Or regulation and event clarity ratios? XXXX on of Do you could think have a XX.X%. down it's year? the keys the to probably to back take down a to that economy being the the capital possibility in

question. that. plan not we're prepared in XXXX but near the And until of that greater for different clarity, Yes, on is soft see don't a everybody, most to we doing. the We think term. hopeful than I planning about Fed And the what economy, we're reevaluate that. our the want thinking We're it's path for still a creates landing and changing to as economy the see that we something rates

comes Haire Our from question of next Casey Jefferies.

Any thoughts using asset know of you, improving capital some there? some thoughts small bond the there. to a NII. it's wondering but towards for on just the updated I Follow-up restructure yield a book and

of timing AOCI This answer anything probably is Yes. view, of a restructuring over portfolio Casey. difference our to earnings in mark not. short capital of creates creep our a is back going friction really and buying the time. In Bryan, to earnings. doesn't is than The lot create or other discount really the That the

because it's something so we doesn't lot creates evaluate economic economic just any that's simply friction that, time. -- of a it create that doesn't it over value unlikely that And create

Got it.

then give Okay. sounds was credit to by geography? I wondering driven it that? switching migration, if The And what's CRE. or was you driving like on any could quality. just And NPL color product

point to is selection macroeconomic in portfolio us. our Casey, higher would the they Office This the certainly within the What by Yes. performance continue well as client think we have long anything driven itself CRE of environment. is longer is our to, range environment of CRE that really in I to a this we was don't run. prove as expectations. other surprising is we're particular just think within in portfolio, the I I more out predominantly strong believe kind and I What I Hung. was the our was driven though, is think by Tom It office. point to there

our footage kind high-level our information, you office of [indiscernible] portfolio of who kind to XX% or Just give of less. profile office of portfolio. the speaks That some

only stories. buildings we have In X that are XX-plus fact,

and the the And right right where a projects, the with we're so borrowers office have portions good outcome. long-term I to right of believe

from question Ben of comes Citi Group. next Gerlinger Our

a a the has math because that little up. has stock the total, but little of a probably repurchase talk tenant could you we of share kind and far. the different the buyback gone also into banks good how month If bit note so I consideration about and bit the CETX, about was curious pretty or to is relation kind year a activity -- taking guys think the the math then outcome next

if because I'm curious back, you do continue So kind reauthorization activity. you thoughts use to see curious calendar share we could overall Just just your this another year on of buy purchase theoretically

stock activity, we repurchase reauthorize sit year a I next, at relative thoughtful that Board industry with to this don't value capital we about the expectations and our whether evaluate values. improvement last we still of continue think discount shares. in we and here about decision. buyback to relative we across opportunistically, significant The or prices as the how price are even over will few a would today know that's we're a at weeks, to the We buyback Yes. long-term think use

the have We year in coming this that plenty of XXXX. expires January of capacity under authorization have that we

to we evaluate appropriate. maintaining it we can we hands we shareholders that a through appropriate buyback return capital But as when is in so the will shareholders. our And more do that think excess of put probably it

about make whether decision a we will be authorization so later And and to on our at increase we'll not. valuations, relative or need we continue to look We'll opportunistic.

helpful. Hope, Got I And expenses prepared in know it. your you remarks. said That's then

half this kind But get down curious XXXX call the a to I'm sizable think franchises second you of anything have. of out you on pushing you relative down kind into flat today? was I guys be said year. there's curious that levers you could of pretty how can is I with that done in always especially to just

-- good second revenue Yes. that Ben, financial quarter. a the spoken business flat about question. before, of half be really high bond in good in as do expect we or a year. high to QX, expense and Part to the of had a and quarter We down we've the is had our

back retention. had TD come down. to that the We've expect We

half stride in back down we and the step our year, of this investments. the hit think we've of first The technology

And we so operational efficiencies. are at looking

over We you to be look the need with have our to on year, and ways as every don't parties that letting can before, Bryan can I not in anymore. cost we're very money How as cost commented has make we and spending environment. over sure as do our need. that growth grow continue The to a much a reduce the to headcount we significantly adjustments, our looking you we with shifted restructuring efficiency that time. ratio, at we opportunity environment and last previously -- efficient at you third Where focused low have

-- making trying about year. being It's correct? intentionally kind another Well, Okay. next like think little I'm by just so cost decline you of That's bigger that the to helpful. there's bit to hill not it that, a managing

Correct.

question next Varga Samuel Our of Instructions] [Operator UBS. comes from

just one go to back wanted I second. for NII the guide to

growth kind close guide. And the balance a with to of the assume you're year-to-date, obviously, middle loan of You the flattish sheet.

LMC the the said of help half seasonality the going obviously, to second and the You vertical for year. and isn't

assumption trying So staying loans of of the year? the shift and there is within sheet? cash for mix should of half flat sort ask, all and we second securities I'm think flat Or that that relatively are sort balance to just any

in Sam, change hopefully to of run thanks change for set question. your whole the you the a When guidance, only year. you once scenarios

up, things sheet, all deposit flat answer the hit will to down back half going slightly of feel happen down year, is we a flat X% we to is whatever And could the sheet. guidance and so in between zero, flat that of costs, take Increasing the And down the balance that new a X%. slightly account into the balance happen.

the where deposit I about just then sense guess, on thinking increase of And the XXXX would what Understood. those I front. like you accounts? franchise you're noninterest-bearing would get franchise? on to So to Okay. the retail wanted in gross expect have the probably the they for a sort that return side, actually clients NIB commercial dollars the hold to commercial your happen in from for,

a account answer we've both. is trusted -- gotten on marketing the We're checking I think campaign.

lot saw years done the haven't in the And a since We second we of MOE. quarter. in success that really

that, stabilization about I'll continue also our bearing, so lot talked there small bearing. commercial when investments. technology we the And interest-bearing hope we'll the noninterest will that, a of in we also but we amount and We've see that at about look talk clients. noninterest is a as mention,

approved be biggest And expect converting clients on we that QX. We we're our and is relationships treasury investments the management. back the and system. retain to expect attract making -- half do with of deepen of and to able One into and convert and new complete upgrading attract we'll conversion some that and our that that, treasury new management

Yes.

both exist world, accounts, too. In And the competitive, attractive I times, think plenty invest you its last that footprint, sheet customer markets It's growth they've declining so balance if it's market a be of the we money opportunities is many of and Fed the in of to where sides. on treasury the at for will shrinking ultimately accounts, out in of over to the grow footprint. effort to on completion that a think very these of been look of customer terms think product, optimistic opportunities, gives are we year shares. number And We've signs continue consumer got as attractive sides. both cases, some Hope and on we both integration process. showing We think ability the our a so. back that in significant in offer very or side. have there in said as said, we us we're but really several the smaller checking months opportunity is to going growth very a higher good grow that But a very coming

optimistic we're so to about ability and this XX-state footprint. our And across grow invest

comes Montgomery of question from Scott. Marinac next Our Janney Christopher

in there's in you that that was a are quarter the there's as CRE slides. renewals I had very the had limited, on outlined Susan, flexibility question there the if now the reserves. I and lease rose given curious And

is So question, repeat Chris? you your Can the question

because Is limited we sort addressed flexibility to renewals grow CRE on less got your you reserve Can than and there what quarter? reserve? you this last just saw of just needed you've for

well, going everybody. they rates believe to if think, real especially been relief on I do commercial to and a estate see, continued that, have I bit -- and down, C&I we're good actually come the have Yes. they as rates stable, -- of

And there. we've side that we've also we done so I on the as grading think about duration. we will and proactive been see the some think conservative really healing and very

Absolutely, this And as built things time. there moderate, time, be. so build we're and adequately expect reserved don't believe at we reserves release I we've there as time, over At are could to this opportunities to

of to Great. Or And bank? be the accelerates, then mentioned management you it sort going of the technology pace, question other be as for things like to back but I towards would was just had as spend. it on it know the I core a mentioned? Hope initiatives slow is treasury that there it pertains you the

and on early what we X-year dating of and was had par bank lot plan on, MOE the calling the systems we're integration GL, kind like is we working the end didn't management put out. things following on Early following that run treasury XX-month end-of-life had it that up the a and and cording of

to the the big back we're about this management. big getting some ones And next bank you with X, of As are that X-year share -- talking trying we're which we'll be to year, GL that, through, are next we're about half we'll the in as -- we year, treasury talking well. year, more doing of that strategy. most our And facing investment the run doing client change is more of

question next Jared from [Operator Instructions] Barclays. Our comes of Shaw

what just was guess for NPLs increase Rau is I office I particular? more the office in in we little performance Jared. geographies, into portion on any NPLs across from a color guess just overall if on the has there migration and John differentiation get This portfolio. could the And portfolio? on office within been of

by is of John, portion increase Tom NPL this large driven A office. is the

that and I rate to we about kind broad think But would we've it's mentioned, as we've all believe surprising. the selection. -- have environment reiterate good on client in. we're and had not of I we I believe what based that's show probably educations the the I information on the range that environment of I continued based that underwriting within

potential we increase for we go certainly -- vacancy deals, change in to interest rates and so stress rates test folio so even rises these on. in into as And always rates

cushion seeing And has think overall is you're rates so been obviously, higher, have smaller. as what just I been the

so see grade And negative to and we wanted always grading sure some we're portfolio, not our appropriately, why migration. if conservatively make you hence,

just from this you're just articles what are seeing is said. This And real out things John, others databases. Tom a Susan. that in estate coming and to I'll add few commercial

in in the some some of Some So -- Atlanta, we seen at that have areas the bit southeast and of of the Texas around a little weakness geographies a cities. some office, couple

in again, -- but not of think by these necessarily with many estate real an underwriting as of project -- what So to been for at these we commercial this many, still issue said, project Tom years. geography. And conservative of kind are reiterate more we've specific point, indicative and a

across we types that And of projects estate all report upfront so equity significant. the commercial real is

not properties loss with the we've there's been or seen downgraded drops content maturity. loan-by-loan reappraised some lot basis. a we in to that they've on something price credit event, We've we a a of there. a even seen because value so either as And But continue evaluate

office portfolio and do in LTV on We we're just office of book. closely, information currently our traditional an about it watch stabilized have, I Yes. XX% we looking on based our would the average that add at

for any is do that a amount cushion So pretty significant of softness.

we is before thing John, I'll reiterate charge-off the we is other guidance. said what our reiterate

the up year. payments, behind So current and charge-off stand we quarter. guidance this still full on . our NPLs XX% for of are them are

good And on reserves I the then expanded like due CRE That's color. office. Okay. reserve, mostly it Great. guess sounded to really just

CRE portfolio Just and can reserve number put what you on office of the what is a the reserve rest is that? the

CRE break don't materials the there type, were provided. by -- coverage overall is as that property in down but it We the outlined

have no questions. further We currently

CEO, Jordan, closing I'll hand Bryan to So back for remarks.

your Thank questions have and need We everyone, let for joining appreciate any you further you, Carley. and or us call. great thank attention. additional information. Again, Thank day. a you, Please our time have

joining. call. today's for everyone to concludes Thank you This

now disconnect You may lines. your