F.N.B. (FNB) 20 Jul 212021 Q2 Earnings call transcript

Good morning, and welcome to the F.N.B. Corporation's Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. to conference like Constantine, to now Relations. Investor would turn over the Lisa I Ms. ahead. go please Constantine,

XX, to Thank everyone, our related About Vince and Good Commission measures. conference I files you. Non-GAAP morning, reports statements the often call not call. our with be with the turn and should release. and Securities Exchange will with of our replay This President corporate will registration website. Please reported call non-GAAP contain and in accordance the GAAP. earnings viewed will financial financial of materials, included for, forward-looking F.N.B. operating non-GAAP and link measures directly Corporation measures the Securities to filed in Relations results available CEO. and the in call materials statements most this earnings A and section Chairman, be corporate our and website. Services alternative to measures it refer addition our comparable GAAP our over in and available as Investor until reports Shareholder forward-looking Exchange an of welcome financial to, the on Commission non-GAAP Us, July and and to of our to be Reconciliations contained these webcast statement the and Delie, GAAP are prepared in now disclosures presentation to posted and

you, and our Thank to call. welcome earnings

Chief our Credit Chief Calabrese, me Joining Guerrieri, today Officer. Vince Financial Officer; Gary our and are

call to of before I'll their for review results. our Gary cover trends and of performance First, the over I Vince the second Then short lines will key turning business financial provide recent a remarks. quarter

revenue second last record a income discussing XX% earnings million. the total the on quarter increased increase an million Bancorp up week's per linked-quarter FNB Inc. call $XXX of net reached basis. wrap I'll announcement a totaled to share representing with $XXX Lastly, $X.XX, Howard merger and consideration key by Operating

resulted value in efficiency return XX.X% we to the tangible the a savings goal discipline due and X%. $XX increase common expense XXXX tangible XX% ratio on share book equity $X.XX, per or performance an as of of revenue in million. continued achieved increased quarter's improved $X.XX of Our to The operating of and cost growth benefit of

estimated Our company with remains of for well quarter. capitalized the ratio an second XX.XX% CETX

a revenue wealth management these by revenues strong quarter Second capital mortgage segments, of insurance, our have respectively. and growth of lending. markets was X%, record a across continued basis, total from wealth On contributions expansion increased including revenues and increased $X Many over SBA management supported number banking, areas higher and into year-to-date markets. wealth and revenues to XX% as benefit management insurance million,

when PPP saw This that Looking $XX.X of year. across entering of loan. mix quarter, spot funding performance of the X% that pick a and into this the the pipelines balance. the the grew strong second moving and forward. comprise activity we activity footprint at deposit and ample deeper with of performance the a outflows half brings total in deposits Wholesale deposits has billion Non-interest-bearing to time impact healthy were basis, loan flat excluding seasonal up into total sheet to June an third demonstrated as Bank's a FNB FNB with ratio at liquidity pickup we decline deposits. XX providing On annualized a lending fundamental spot XX.X% begun are favorable and loan-to-deposit now Diving encouraged a commercial to are significant translated in basis, our balance linked-quarter on a loan growth

the Mid-Atlantic level in years. highest Carolinas, commercial two the opportunities within markets, which the pipelines significant last the We in reached and Pittsburgh have

for half give are encouraging pipeline, near-term strong consumers on to of pipelines the second by Consistent with as the loan loan April well commercial call, a mid growth given the Additionally, total strength goal year. commercial levels comments in end as activity the spot basis optimism around origination. our us on our a reach for single-digit

rate that note well below I'll commercial remain However, line historical utilization level.

that move are of for second through supply We U.S. utilization economy higher period begins are rates to as forgiveness accelerate the chain optimistic the remaining as improves. industries could many PPP year in the this loans the half processed and

production prior margins the quarter discussed across gain-on-sale call, the business contracted on industry the see to our record the reflecting current conditions. mortgage we As banking volumes; continues near during however, market

the overall since beginning consumer grown of pipelines In have the addition year. mortgage the significantly to banking,

begun to consumer growth the across We experience have lending product set.

to has increased credit and up, over are turn favorable Gary I'll so can consumer begun he trends. detail that, Gary? With banking demand As economic commercial and additional on call we provide loan experiencing activity asset the pick in quality. to

good you, everyone. Thank morning, and Vince,

into points, the and our later results second the were ended reopening decrease the of some level from economy for balances remarks. through XX borrowers non-performing we and level. first, the delinquency, level point more excluding and in the X-X cover losses of quarter to which particularly further the Delinquency the XX let's X sensitive credit industries bps, highlights. walk quarter quarter, portfolios signs net and results meaningfully was of The Positive by at the of recovery. the I'll contributed that in XX ex-PPP improvements But begin detail greater basis The June low. at point basis broad of some driven representing the businesses prior end credit PPP notably across in review favorable second asset improved portfolios, improvement our during second very levels a linked-quarter, show as my basis the a those of Our and half continued have for quarter's of quarter to all NPLs to OREO and favorable momentum also commercial family. quarter broader classes results for our pleased and are decreased remained moving and year. position with

and the that $XX quarter, driven by the reserved meaningfully a was the previously $XX the decreased primarily for. or was million coverage the X through quarter. following very bps June, due XXX% position commercial year, the levels while while for very quarter remains excluding the in points at quarter were a provision which year-to-date X.XX%. balances reduced during X and reserve net NPL at Net stable for improving low during at ex-PPP net a were PPP reduction quality at including annualized, positive resulting at bps resolution very NPLs charge-offs, a $X.X X in recognized stands X.XX%, solid bps economic credit We NPL annualized. credit portfolio, million also favorable million XX a in quarter $X.X net results this charge-offs basis remained respectively. down benefit million charge-offs of reserve to broadly Our nearly activity Non-GAAP and

some of portfolio lending discounts to an total totals managing to now risk underwriting remain competitive. provide our highly our reserve unamortized loan inclusive I'd Our ending color and markets give as and acquired X.XX%. like additional on position overview of approach

have our loan level these ended to on continuing quickly returned to payment Looking schedules. loan new of deferrals, contractual as borrowers a decline levels we ceased core and essentially requests June of with portfolio at X.X%

losses, the economy we future quarter chain outlook These disruptions, are and with of lending philosophy. We our the and targets, profile. consistent exposure all industries. engaged processes, approach actively how strong progress efforts take affecting remained our the while in consideration In a help reflecting indicated to maintaining positioned our operations, us moving shortages their into with manner as of down forth by approval the general we in has reduce year. table trends classifieds, closing are favorably the of teams including factors taken as desired the credit emerging which commercial which labor and improve. stay off and credits supply borrowers made half our solid us put with meet successful also a economic to credit the conditions to tireless transactions for quarter will reduction growth during closing, opportunities have more credit risk careful significant teams successful our continue were their banking broader risk customers workout fit working this respective continue apprised and to by sensitive into high-quality industries Our our XX% our in second underwriting the by overall within and to results that is marked of had profile to in number We desired credit a loan impact rated

Financial economic Officer turn the to As our remains cycles credit quarters further his and timely have across management including over ahead. remarks. center to disciplined management opportunities, Chief throughout Calabrese, in decisions we we front look and our lending risk, proactive footprint, attentive us us make ahead to and the for position all principles Vince well now served of credit consistent core the new call and I'll for underwriting that portfolio

I current financial will our Thanks, results Gary, and discuss morning. good and expectations. Today,

As noted X, EPS increased quarters. first significantly to ago from prior year on the and up Slide $X.XX, quarter

down stockholders for Looking and or increased income or provision at million reflects XX% expenses a million controlled, credit benefit. company's the saw Gary discussed. performance PPNR total million operating growth just $XX.X losses as metrics even $X provision the in $X.X the common million highlights quarter, increased of $XXX.X that an Operating X% We to credit a linked-quarter. $X to for or due basis, available the million well on to net negative were record strong X.X%. improved operating quarter without Linked-quarter revenue

organic both PPP during review the on average basis. to total loan million Through commercial sheet. from Period-end reflecting basis, an the $XX excluding On X.X% the growth to accelerated balance X million and decreased increased rebound. turning Now balances PPP loans Slide strong consumer continues second with contributions a the segments, balance forgiveness annualized economy linked-quarter quarter. or to $XXX

XX% deposits. flat, $XX a deposits increased basis, side, X.X% non-interest bearing record decline managed total the On time in deposit to cost spot over $X.X average high deposits even were a relatively deposits of billion, higher or deposits. comprising billion with the On

the XX PPP to lower The on due $X.X $XX basis accounting million, environment underlying accretion which contribution focus increased points asset X income declining margin net earning points evidenced purchase as cost costs yield to in and by Focusing yield to million by the total at the to trends net first more quarter offset accounting be interest in contribution balance underlying total a interest the impacts, income of mix offset loans basis PPP of deposits remain million favorable million the interest Net Slide million purchase $XXX.X continued sheet row to interest of basis $X.X which The underlying $X reduction increased basis $X.X declined was basis a improved accretion increase balances, representing of X.XX%. the interest decreased X point and as decreased funds. Reported net basis would the a X.XX%, leases stable reducing in points. to on points, by million. cash improving compared to and X the on quarter was rate X our XXXX net X.XX% and X. margin. higher excluding cost bearing partially X second point our When margin was deposit interest interest

Let's $X mortgage X.X%, reflecting normal engagements. a benefits this the in the expect transactions XXXX footprint prior the million stock employee strong. million decreased revenues decreased of decreasing the management. banking double and third-party valuation throughout average SBA decreased each significantly annual meaningfully On now during timing be revenues in remain and primarily Non-interest record quarter, premium non-interest million look on than million non-interest gain-on-sale solid volume Held-for-sale million SBA expense $X.X market impairment costs recovery providers, business quarter. lower geographic SBA size Slides margins year. excluding and million driving income under last services $X.X and in we premium basis, Outside $X.X at XX. assets the on across X near-term first the consolidation quarter almost impacts million legal $XX to $XX long-term or $X.X expense achieved linked-quarter million second and million was on recognized of an or contributions management for technology Mortgage as the consulting expense increased revenue other income industry. $X.X in levels elevated declined and million record operating $X.X branch and reported the related the from increases tightened $X.X basis. and operations $X Non-interest of wealth X.X%. to quarter. from We quarter Pipelines of positive decreased awards income costs through expenses totaled levels last rights quarter. quarter, to benefit salaries pipeline servicing When increased million

in revenue with metrics sequential increasing loan value record strong and We net growth, credit are $X.XX quarter's accelerating to book with income, continued growth, this growth share per very pleased solid results $X.XX. share, quality operating per tangible

our of for turning Now XXXX. outlook to the quarter third

Excluding third PPP up a The slightly level of interest quarter direct expect in the contribution to we income of compared during to would PPP forgiveness function contribution, be quarter. the net modest be will the quarter. second process the

will third a which that $XX forgiveness quarter, loans. see in is contribution around interest income translate million in we PPP thinking of into the current million Our would reduction net from $XXX

levels, However, forgiveness would the approves if quarter SBA reduction contribution in to be the PPP smaller. closer second

streams. diversified area income $XX non-interest high be expect income We revenue of given the million to non-interest in the nature our

flattish to non-interest expense expect expenses quarter. be compared the in operating to We second

and are remains the of during first the by losses loan half encouraged loan of observed activity we trends credit origination dependent on XXXX. Our provision level favorable the for

Regarding assumptions, call benefit expense the current non-interest as historical growth, total government unchanged our ratio to our a I continue loan-to-deposit With liquidity levels. back additional will the turn assumptions growth Vince. we see loan reflecting with below increased year and and that, revenue stimulus remain of full deposit to

I'd pending the an Howard acquisition. like on update to Thanks, Vince. provide

Howard are team. to the We the integration begin excited with process

of We for We in for of in are confident with at the well bankers deep the stakeholders. that market service, allow share months Mid-Atlantic client seamless which coming work Howard. our community should established and a culture talented leadership transition the all a our will

as conversion to and both run core expect operate organizations common on smoothly integration the system. also We

As offices discussed enter loan combination through of production selectively de decision has markets novo acquisitions a our to growth FNB well previously, strategic locations, today. higher and positioned

to number Baltimore grow With share the DC density while Mid-Atlantic which region, Virginia. Northern the in meaningful Washington adding will deposit the and Maryland, Howard we covers the to six merger, customer MSA,

organically in markets market strategy deposits prospects. and our the the fee we long-term is share over the and to to where through long-term our company Our universe best have clients ability income grow cost the low position loans, expanding and increasing of

book If our relative to a market came in you acquisitions weighted acquisition expansion price cost with tangible look of our average in at Mid-Atlantic, lower since X.Xx. a the XXXX four strategy

annual in Maryland to for Furthermore, of to of products Our have growth the we loan XX long-term growth strategy in revenue also company from to in XXXX $XXX XXXX, our than nearly of annual more offer has doubled non-interest population product the do access investment businesses which markets relationships. a million Mid-Atlantic to are into our services, suite growth region our XXX,XXX but base. we than million provided very end with client as a Since as about greater and compounded $XXX XX%. our income we potential organic broadening XXX,XXX. overall, capabilities bringing since Therefore, million, expansion and FNB our customer our excited and most those is deep Howard's with our for

by while Howard franchise a highlights. the transaction Looking creating $XX billion total $X.X basis, increases in specifically more billion $X.X organization pro The on FNB to than of assets. a some forma of billion at combined Baltimore deposits

with our than neutral in approach includes be the and the carries We XXX market transaction rate with the at value of return is financially improvement the end CETX phased-in book EPS management, metrics, pro with profitability expected given fully transaction to efficiency as X%. execution minimal of Additionally, synergies. transaction lower cost point a Consistent capital an internal included tangible risk which savings the forma X% dilution enhanced greater and basis attractive XX%. closing and ratio accretion to view to

quarter. alone growth dilution back earning earlier, was this As I noted TBV TBV X%, essentially one quarter in the our

changed quarters. we hasn't Our couple what of said the strategy last in M&A from

where organic has low with and focus becomes market, First potential carries dilution, growth. significant on potential But value is if cost for opportunities our foremost, is arise, evaluation. target execution of and tangible book acquisition minimal the in the worthy risk saves

continuing us to for we of gaining relationships Ohio consecutive based diversified Northeast and call which lasting to and in operational with Workplace efficiency as honored month, the XXth commitment opportunities on Top the that, more scale Xth questions. are creating recognition as about Operator? operator meaningful We our our be position the feedback. Last the solely advance are named are a and we communities for financial over value for Workplace overall, and institution. cultivating our the our by on our in year by excited closing, organization continues turn to focused to culture front I In evolve a and market will as our With clients flourish employee and simultaneously were while great shareholders.

Thank will this [Operator from question-and-answer Sandler. Instructions] Yes. Frank you. comes first session. the And Piper question time, morning's with we this At begin Schiraldi

Good morning.

growth. utilization now, or Does just loan want make the the Vince, on that that single-digit I growth there rates if moves messaging? the then are expectation low to at and sure higher? that mid guide could I for assume, understand XXXX. be they levels Just Is upside line that remain

Yes.

on the some guys the I Okay. so a there's much credit coin, have is, function, more always know And then side pricing the on and imagine I chasing in about I worry could had such other loans liquidity a little bit good in find could banks companies, you of and – price thing terms presumably out strong there, banks degree. get aggressive would terms the on sidelines that to themselves

terms So there? your you're pricing, just in evidence terms wonder thoughts general I tighter seeing and if of that of marketplace in just the tighter

can tell turn then regions. he over credit Frank, to But as you, I more other XX I to we relative I'll try have to tackle trends Gary, the pricing and initial sees it the response do. I'll than

has X%. were at you by huge a growth up of portfolio. the the breakdown They look region, Pittsburgh If about

up Lancaster which X%. is almost Scranton, region, were just and they Our Redding, Harrisburg, capital

which Carolina, Charleston, were South up they is principally, XX%.

was SBA and Raleigh approximately we our was X%. some then Finance up saw decent-sized portfolio. growth pretty And Builder South That portfolio. in in

enough that a trends that think have and day we move selection geography in strategy one we booking granularity, and was to kicks where adverse assets up come from dependent haunt I wrong market back So single on was us. that to not the be direction, end in the

considered with asset of risky from into know, the conservative. situation, were that we moves of thought even long we leading late made we the to discarding the your what the and current very history are very pandemic. you the Many we in term were we proactive cycle be we As company, classes before because this

from I positioned very So perspective. think well we're a credit

I have think don't any it. We to we're make about exceptionally proven. bones well. We performed

had In have because fact, in have. problems certain I of that many credit without stimulus, of peers which might more would we argue substantial don't our concentration industries,

some that given company, think I and markets vary I going about our to are ahead, and pick pipelines, but within we've that to going well irrational, all you're in So we're trends market-to-market the the slack. it's areas talk in, designed away, suspect to and can pretty would from which Gary. back working let other I'll seeing. everything up those you it's we lean Go that

and as going seen Frank, in spots Yes. those high-quality terms with seeing to standpoint pick we'll and more great continue we'll as from activity pick surely some spots. strong clients M&A opportunities. more nature going a it some quarter opportunities is play pricing of the space some my I our in we the with have. it, on and that really compete of our We've in and we're to during remarks. competitive mentioned of our clients, There's that We're

very very assets that of to time we want space rid do able for classified one roll come we we want credits it's We we that of sheet now. the during The as And balance is we get reasons quarter, in significantly. aggressive some and some Banks were into other of good more upgrade seeing long-term. a that are to down credits to the of continue some don't importantly, also that it's the rid those right QX. that the helped which expect didn't get why on are thing number

our spots we clients our some each as get and be and take there. we every of opportunistic benefit additional But we'll care hopefully, to So day. pick do

you Great. bill if for what potential Vince, M&A. I talking terms in fit Okay. you've one, the partner. Certainly, last few one for And does then strategy just look last in of of about quarters, the Howard terms could, a the or of in been what

I never, off or largely thoughts guess never your say able just to more that table Just the are you but wondering, of side see given for side? kind what on on, something wondering on just larger organic guys, do could you you expansionary M&A the maybe you the is

think to I book governor. there focusing we're up. Well, on tangible be still that come dilution Opportunistically, organic going as focused We're opportunities on growth. keenly maybe value the

transactions, as for shareholders think in fits take well. been. hold out. So the drive a metrics going right. our forecasting executed we it to I moves organic I we has don't and returns it reflect prepared been extraordinarily our that for pretty to our strategy, active into get that which strategy, Unless there's strategy think I where missed back look can fits quarter of comments, we've what and out said XXXX. it those to would is substantial kind certain cost I If clearly, strategically growth within and out our and I works thought I it we're

again, those almost and the an I the accumulation phenomenal against it's that execution done that and done have of it's market through job call, growing strategy I growth. So organic our through We've of on all companies job acquisitions exceptional companies. on our a organic employees non-interest income. expansion and than we our mentioned think integrating double, the brought more the

work of the front from to do perspective well So we've a and exciting. interface technology very we to digital that to continues a that's on activity our improve continue I continue to And drive us. and got think to lot bode for

pretty you when think that's I all at that, So our M&A of look much strategy.

and script everybody. I hopefully in reinforced clear think it for that's the I've enough

all for I Yes. have. Thank color. That’s all the That's you. great. Thanks

Thanks, Frank. it. Appreciate Yes. you. Thank

And from you. Perito Thank question KBW. Michael comes with next the

good Hey, morning.

morning, Mike. Good

Mike. morning, Good

from me. questions of Couple

the the ahead first Just unchanged imagine, in start Is I'm full-year. to year for half of that $X.X trajectory guide, perspective? I revenue the there a that production terms anything I of of should there and around likely outside It for billion of is some think, standpoint in wealth revenue that likes strong, approximately back kind here mindful that you're actually of Like, we the tracking timing year? months be what's some else little PPP anything that from the the recent the curious or revenue like been potentially back example, a of six on of has in seems could a you're recognizes. else there for normalization the of just on through half the when conservatism slow forgiveness, the from

Well, I I territory I'm we're being optimistic. because optimistic here. be person. want I conservative to in we're mean, think, an unchartered

That turned You few have on gone accused there. is tried that there times. upside I a I changes me that to out guys really with of unknowns have many it some but the know stay that quite things positive, pandemic, also down.

volatility So balances they the I in C&I segment we or achieve reflected quotas the haven't particularly chain that commodity can't that unwilling get There be on they're portfolio? meet price can't price increases in revolver product can't with get in greater current balances the full production to of number because take the market. outstanding they been Their increases risk because loan supplies. Absolutely, issues, but in supply the companies are think corrected. loan and needs a growth to in the can

fairly inflation quite business, somebody they coming that had they've call, we mortgage do. you had look there. what So that we We the on varying. in asked a and few there's unknowns that out Inflation, been substantially. came will in gain-on-sale last and margins indicated were the saw at When signaled

are income, there a pricing out the we've we benefits the I'm having consumer small XX-year middle said Having the think all one some when best difficult So of When business pipelines too in It's particular, banking at hopeful that there – one turn is up of the of And pipelines and makes can rate a volatility the and changes substantially. non-interest and there in base it market the that one quite bit fee-based down is number so up. in to look around. forecast. is in that that, there's when is up, has one diverse think I interest activity picked execute businesses because you had a up such years. other of the the I of

is SBA decline. So leap significantly. and mortgage all up organic experienced in condition. the offsets fairly had because values Wealth really growth market that some because of a asset big net we of That improvement

pretty capital syndication's markets fee solidly. our capital with XX-year and from think future, we have we in. the for derivatives I continue it's I into more you still great So opportunities that three can there now, tell some We've right a debt income looking markets we deals $X.XX at launched. perspective, that but think is there We've in platform conservative participated got The to now hanging a probably little would been about I four seen the or like rates to fix. looks already opportunity in an to people

all in So environment. this it's to difficult forecast but exciting, very that's again

sense. overall of the Yes. of of indicator liquidity deposits I kind a the about Maybe are grow loan to but playing just continues growth the Appreciate in in But that growth particularly, to materializes of if position, position maybe any thoughts the from makes on two conversely of the pace color. No, is stimulus that you lot which deployment kind you thinking cash and bond book normalization question guys of curious quarters. how customer kind Just there? last the in and with quarter, here. good imagine and/or hoping the a some the guys out there's sitting in the over a the heavier recover? economy I cash in this margin deposits, mean, continue

quarter, Yes. say it. size mean, portfolio. from opportunistically we looking I off portfolio increase flows We're flows. this second would cash here during not the I investment mean, to side. reinvest I coming the cash to the XXX% of on our the of reinvested plan is

a portfolio bit. in opportunities grew some June. we late in There were So April, little

we of here were million compared that a even down of sub-$X. and about reinvest from today, $X.XX were kind plan $X, to second put the Our they $XXX year, $X.XX. the to quarter, to the month to rest reinvestment $XXX just could Rates in they go rates and The million think working.

do we'll when pause it doesn't to sense So make that.

So to growth focus the is origination, main the pretty the have on going of the year of sheet cash investment area second deploy the in half we loan the and much intact level is loan that balance then end. that strategy – on in

opportunity said, there that market Vince once of deposit classes and use opportunities would of transaction. close some kind use our There's throughout As too. then is the some borrowings there sense cash of cash we make to the too some of the to there and there's some lot

level of position. cash a kind that's So high the as plan far as

Helpful. the then one it. And last color. appreciate Howard. for additional question just regarding. I me, Got just

initial of a despite I critical a at greater have region? your some have can for on two and Looking you retention with and I'm Howard's growth just in show Baltimore after operation that to mentioned, expect good of it seemed particularly, going – recent provide curious, growing them you additive First already into they'd you kind to the to color mean of their organic results, slowdown be the the like team after Baltimore guys I to I'm kind Mariner. just you if everything of kind on you imagine quarter fit that's how this last piece start some over they or of lending trying really growth. your as curious transaction any

great question to happy That's answer I'm it. a and

to you do due and into first set us here Tom, been team credit job, is at XX doing Mary been targets. analytics there's XX,XXX Gary quite the Gary, have personally doing bit culture, substantial for struggled customers a little do know And of quality fairly market. impressed for a we strategy on of marks we when on. We seasoned whole diligence believe many but diligence dug with I our were the those of has deeper of had, the the our when extensive provide a we I've the I data don't the bit, became information, I the accounts, company with Ann's portfolio. We're on know side due confident digital what team opportunity goes me people, and I Fisher, we out with teams, would his very as risk evaluating that we've or the the leadership. in one Howard. With years. the acquisitions the with We lowest number a with find I But and the remember. the here think XX, within consumer had this the the that for look people of we very quality of think and Baltimore just in at think a DDA the extremely benefit. us,

mortgage total, look banking you opportunities the in lending with it's mortgage amount a success. region. consumer the to big Mid-Atlantic that segment and for they of in If relative market, a been mortgage at are the tremendous perspective In opportunity us The banking. provides contributor our from a

their international legal treasury they offer. pretty derivatives. offer limit They offer don't while offer relatively as don't small, services They many we at lending solid a If banking, commercial think, was have don't banks. a management base. They as customer you look we really,

substantial not we time, over I don't credit income and think have due the talk way, this has We know with the we all did we diligence So Gary, been there's portfolio opportunity. an evaluated opportunity of opportunity, a just company with rest the about non-interest that growth, or which to want you modeled. the the like with if by

The We deep The of done Vince many commercial Howard market has the team totally X.X%. loan these reunderwrote a the it checked very mentioned, of and team. it's diligence at work does group transactions. the XX% Yes. nicely. Vince that very, as credit and out due mentioned book

the retail underwriting, the commercial book also felt to philosophy around was very of the across XX% reviewed risk comfortable We really similar with there, of ours. evidence underwriting underwriting books. so the lower The very

mark a has the the done that very at good and lot the work again, team work there, So with comfortable credit done Howard. of felt

So good we a match cultural from feel standpoint. it's a very

there. been in perspective, double-digit we also XXXX performer strong Baltimore a perspective have us since an per we've from from we Baltimore. year leadership XX% a And for grown organic leadership has

a middle is up well business. good small bit have very for have us. very very probably Their strong focus So It little say, we further a market. is in our market team. They people. focus I'd and fits

of plenty Officer. there's the So team and to opportunities for join Credit our their bankers benefit we keeping plus are

is The be team So of management the there confidence. Senior Officers tomorrow. because he will in will Credit the one be there marketplace

don't things serve they'll said and a that very I I individuals. those double tomorrow. clients. of in excited that about a think tell their products them There excited remember share you've there convey with and have our the to seven. cross-sell players will me the asked number be that else, deposit We're to to are and six some you think share I bankers doubled for we but about opportunity with the Baltimore. meeting excited we opportunities think we've we're additional anything to about deposit I I will able services large very number at to And today if number billion, nearly of the $X.X we'll be So

and it there. fairly up So dramatically from then moves

additional that is critically in in important. having Baltimore, scale region Mid-Atlantic the So

it for And substantially go organically I in what same accelerated after to look in happen the grow our and did it Pittsburgh. think us will market Pittsburgh, there. So opportunities middle ability

of of like I out. lenders, Got was other being kind actual element it sorted think but formal the retention Helpful. still sounds only that's it. Yes, the just

substantial working retention. allocated still Believe are we through that. And we've me,

to that our a wanted number despite of would we've of done We say, process this We've retain have done to everybody we what retaining I a pretty times. evaluate believes, throughout a acquisition. of flight use history who good and job we talent risk.

say than can't more I I So that, any think.

helpful. Very and time thank for perfect. the That's Everyone, you Yes. taking questions. the

Thanks.

Mike. Thanks,

Yes. Take care.

Thank you. question And from with Wells Fargo. comes next the Shaw Jared

This Hi, in Jared. guys calling doing? for you Timur How Braziler are good is morning.

Good.

Good.

mortgage putting current of the get mortgage guess, versus need production on Maybe them, for selling given higher? banking the would what and And I happen the really portfolio would whether going outlook do banking more up mortgage what the on and be to forward at revenues to mortgages end that not sheet? looking those then mortgages or you're on first question balance trends, that should expectation the

a would guess, say, I I things. Yes. few

in So quarter. the just a comment activity on the

As we over a significant mean, gain-on-sale in XXX of margins we basis had our points. mentioned remarks, decline I in

During dropped in steep amount the the and quarter, the mortgage rates XX%. declined saleable of first after XX then quarter. to change basis and a run-off That's the quarter, points third quarter driver the big about in pipeline the in second the a second

So then that's factor a our key valuation also MSR and reserve.

We have Then in $X.X million positive first recovery. quarter. the in $X.X second quarter million of the we had

production the we're keep versus banking our there. jumbo key So selling kind the to those a those are to and – first second actually having From all kind relationships. sheet, of sole of go that saleable standpoint, balance quarter more loans the quarter-over-quarter, private variables really the loans we we three on of most tend loans, that quarter

have programs more geared are that We certain that. towards

of second million in really kind up overall loan. quarter, versus billion comparable. production The by $X.X $XXX was the of the the hold So and production from a sole nature sell the is was

the volume there yes, having but rates, in go selling. it's but on stabilized we we is Things as quarter, the first here, So sit looking we our the loan, know for it's of all forward I level, and is depending the decisions, portfolio happens upside same margins like activity to whether the predict, as we're definitely positive sale which make on or in we stabilized impossible indicator. around and said, at another growing based it's here on to nature with some third to I what we're of purchase gain key mean, XX% today, and as about quarter, XX% retail so I as the somewhat margins have kind from forward the mean far seem go for

Are over, Charleston the had helpful. switching on That's second that MSA that good How in you. make another like efforts to size smaller attract Are through going of there. supplement smaller seems confident provided Baltimore? on there Or compare standpoint gain been Maybe I from good that and you know of quarter here growth opportunities was in market and organic that growth detail Thank to quarter to it market it there had there M&A? of Baltimore a last what quarter organically? of relative can market does and grow Okay. those to you just just your organically? the the amount that talent expansionary easier DC, an kind

Yes.

– half the about of Baltimore, the I size a great half a than When of at it's a think, little in terms look was question. you again – Charleston Charleston, Pittsburgh MSA. opportunity in less

marketplace. to what doing did expansion We we're market and branch we the a de it. an into that of see performance the ITM to ATM marketplace So and take combination with to would cover tried and analysis within size and it novo adequately that

Some of deployment. it co-branded ATM

and expand properly from think analytical customer grow the in that that if XX% out, the our over have a digital and at the perspective. we leveraged open into right when look the for I production a to of of market access positioned were well. growth and our tools retail from it locations marketplace additional the we then that two drive a perspective mean, to to locations branches came So we could seems within the people the our be conclusion tools and we rolled you we and working Charleston very year I been had top

team, we the loans you interacting solid If and job. who Len of I get bankers. thousands They with, his customers in of done couldn't helped the on in PPP recruited, larger really because banks bring an a gave then individuals to opportunity they're key very because look team And over actually Charleston it phenomenal us of clients. that at have team process number the the C&I that processed. the a Southeast great Hutchison brought PPP too enjoyed the some accelerate

for together has us. well all of exceptionally worked that So

are take and there South I we done and strategies pursue, So others think de opportunity that similar is and too. novo Greenville, Charleston off we've to starting a they're Asheville, Carolina,

So I both. there's think for room

go that in particular to to to deploy more makes and way evaluate our that how novo. have want de it the resources it the us for sense for Charleston's returns We provides in we instance, think I a shareholders in highest do and

for one how much and of of And Gary. for seen all contribute release? if Understood. get moderate to versus pace out release what the little at back The a level day and that qualitative do that slower to allowance? relatively factors and spitting Okay. you pace than Are release still bit what trying can, reserve can second one, actively outlook reserve type in is what's what seems I future the ratio one quarter to to model closer maybe think I reserve just slowing a you elevated then allowance last guess you the others. the we've the

inflation I about where when look that. risk they're the today, exists chain at we in the economy. talked and supply issues, We sit still other Well, mean, around you items

have You also some starting to pandemic up pop again.

we So bit to to at with we're that. an ex-PPP. one, When ACL from we Today, day to standpoint. a you cautious continue started CECL be X.XX% back going X.XX see that go

we the continue the to move tell get that that would you I work and some to time pandemic normalization. economy as So is some and downwards surely to room through over back there

XX%. all generally We're as today. higher qualitatively, our scale from the end That higher here sit right end now. at we ranges at So XX% told, the of to we're

future is at we I the some normalizing when with there. we're economy today look spot some And room benefit time, think to I there sit in a over good come. So as here

the Thank for questions. you

with Thank comes Seaport Bishop Research Partners. you. from Dave the next question And

Yes. Good morning, gentlemen.

there. Hey,

morning. Good

basis to that you thinking a normalized color can but we how that any you or don't you're so. Would there loan loans, terms growth you think of churn in the there's about normalization under basis? can quarterly you'd know through once can this, you curious assuming quantify of stay topic, reserving if more Gary, be the on reserving Maybe of just a get get I if back some X.XX% PPP Hey. on in outlook

yes, When of I alone situation spot where to from feel There it. in Mix play the normalize an or at is going comes a portfolio these standpoint. CECL, comfortable things moving be to a provisioning very is back but a you're at economy normalizes, activity close life lot would important look under that and days. you into is that part normalization the once

the mentioned, we'll improve and appropriately the growth it So just to still starts I and normalize. stabilize out uncertainty economy manage it some and as there. We're system to there's as work think going continues through the I to

look quarter-by-quarter and quarter. So every each be it at we it as a analysis will

only thing add we of growth The would spot had, is too the we've growth I $XXX million, provided that for that.

probably or that so. $X was million So

really benefit million was kind except of for $X growth. negative million, that $X So that loan

So growth. we for provide loan always talk about, we need the to

But quarter. a provision problem of was pure a kind have underlying standpoint. the from is good the that little bit of So in to kind a release bigger

of credit really that metrics, that improvement lot and reduction. classifieds was it talked portfolio credit that direction a all positive we in that Yes, in drove really driven, was with driven the about by reductions moving a all the the in very

they of the like And then remain looked stable yields loan terms here. Got relatively it. in

the onboarding you of significant quarter, some is if there difference regions? various a terms you're your in the seeing curious this what and new commentary loans can yields originations of Just markets across and provide of

this board. it's think At the similar. I I competitive think pretty point, amazingly it's across

we've the funds. spreads, there's feedback the over So from the gotten priced some on pressure cost of yield, credit

everybody is where the in loan we're flushed to environment liquidity with that's everyone's grow the given that obviously, think trying book. I

it's very So competitive.

mean, I it's phenomenon. add I want sustained I new yields to is have that, this I think quarters. several been on similar. you a quarter-over-quarter basis, don't been a know the think don't pretty think for if Gary, to I

and and as When stable where we'll our our much I that. agree Yes, there. with here. effective pick sitting spots I mentioned occasional the fairly quarter-over-quarter, pressured. that been it's you earlier, gets would transaction be And pretty clients really It's look it's with

priced quality getting higher similar the is obviously credit very The market. in

are long the justify capital can markets products returns it the definitely as invested, cross-sell you think But as can ancillary capital on I spreads and opportunities, work. opportunities, services, credit in.

it. the Appreciate color. Got

Sure. Thanks.

Davidson Mr. next And live. & the D.A. you. comes Thank Navas, Co. line is your from Manuel question with Navas

We with comes are next from The question Inc. Samuel on. Stephens Varga moving

morning. Good

Good morning.

for other drove wanted it what on, to the size the auto about and bit that's due little get loans And larger the just a due and guess, was loans to of car or wanted a categories. ask if and to I increased wanted side, the just particularly to home perspective to direct the a there, loan feel due get instalments loan I just on so, equity the whether the to I increases volumes prices?

really book book. was active. by the It home driven equity The very home is equity Yes.

home There's as growing equity The slightly. well growth, Our very automobile instalment supply us for a product product with seen solid good been issues in. we that in activity has have inventory. chain there the book solid new good

but of that point it's product that terms book, it's instalment at equity at pace, growing in driven this a home much being So really in smaller

going pipelines confidence. to my People either to paid They people as a have beginning the And value that dollars We're the all new in little flowed anything, cycle regain taking trillions which where – led they're a get to pandemic at house a home do seeing us overall and individuals, I'm added terms before people what property of economy. the you our to appreciation, they to we I stimulus right, relative – consumers pandemic. would and because they hey, of the of began and have think sudden and more afraid of the began to XX% stimulus more bought I of think confidence, than into has to the renovate decided, of gives now risk that's pandemic, we're of escalation the are in were effect in property done. And improving then the an see. starting the direct in seeing where instalment particular grown portfolio principally

right? moving is most we more demand of for are, what's that and product the we're of think perspective, that of all up I'm kind that I the terms of I think happening. an function sure from not it's LTV think blowing I economy So don't a in in lender here, aggressive

the kind That's from there. terms having dealers standpoint. business, space, growth in with trouble impacting you a that it's of driven. In auto The our of seasonally of the that part seeing are but are vehicles that's new activity smaller

holding There to linked-quarter about was that growth and there for a question. can for side just color the mortgage books? due so there. X% then that on Understood. to was quick returning we the assume a Thanks just the And production the

Yes, that's of just the nature quarter. loans during that the the we originated

just I from that's yes, think. activity. all So origination It's

Great that you details us one the and me. you to the that? final expect over could expect give which and you With some one regards to on acquisition, then to recognize recognize from accretion timeframe Howard

Yes, I that. can on touch

mark credit net really with XX some totals smaller you only the to items, the when mark accretion about and So loan I accretion. mean, X% bps it of accretion of

So basis, cash on looking accretion. a kind of more X.X% accretion you're at total

five a over much time that's and Now, in the straight terms pretty year line. and we life of frame loan what accreted portfolio assume of

a relatively million. it's like on basis, So small less and net $X than

X% included wise. timing –

you color. Appreciate Thank That’s all for providing the it. Got it. for me.

with next from Thank the Brian question you. Martin Montgomery. And is Janney

guys. morning, Good Hey.

Good morning, Brian.

how or that any guys year? picture seeing out in quarters of the the just the Hey, just thoughts of of big $XX one recognition or the forgiveness on you're remaining timing Do how the PPP, the of plays just million. unfold you on next next that and have kind into couple

that mean, to We'll would that will just point. accelerate I opened we mentioned XX% million starting with some ramp based exactly this be full is the SBA most know And Well, or think year. the billion, would this year. We up was expect, forgiven into – will the Brian for round pace as that $XX forgiveness that quarter, about start over two, forgiving to this us and XX% into don't XX%, sales the next second to we I will is would but have XX%, the that have contribution next year, – get year, $X.X when. going go in to at carry is some probably for

left quarter, our we of for we're through little majority higher, but this that are the So year. come number cover the $XXX with be million assuming and to opportunity a third the more conservative for that what's vast

Got you.

on though perfect. accretion sounded the quarter, then of any core it on give minute. margin second that go this increase. from margin just quarter kind to And obviously the margin the comes is for Can this then thoughts just a incremental Howard? Okay, And the as just of you

give Howard if going on of how getting to guess, just about it but add better, kind maybe then a you're sounds higher of the some and and a at continue trend core like that based I margin utilization you any bottom growth on Vince? forward? Just color and thinking margin, loan should it's can core just commentary

Yes, let comments and Howard impact, a finish comment margin is just I me – of which I'll guys you that, on touch on the couple there. the core when

So went our PPP net million interest too, the up was [indiscernible] contribution up while there. $X income push

that saw growth as that by the we loan we driven in continued deposits. growth bearing of So interest the talked by the well was XX% cost spot about, reductions as

So the side, here, if spots it on interest I cost we the XX bearing at XX quarter, end go points brought down is the ahead of from for basis bps mean, the another quarter. X bps, deposit

$XXX a basis maturities basis so. We to books XX that yet continued from million points. the to on points months month continue XX around to million benefit have $XXX next on down. XX mean, mean, I to I roll basis for three CD points or there's the

side X some guess which portfolio, total So that that of into baked XX some guidance. at CDs to to on the by in bps, end provide so still I year X bps down come of And the perspective, of or kind put our look the will benefit, kind the and of for that another opportunity too. commercial is basis continue cost points and already that's we to

loans PPP, – ahead kind I their on be and as loan third the mean, we're income comment. the for of to slightly, core variability we course we you up would from normal here. excluding the net from stronger of which look interest get I is, the we the there, be As quarter trading growth this commented flattish to expect NIM PPP stronger

that the loan margin on to income So of deposits. flattish on net will of growth bring cost opportunity interest the continued roll the and factors portfolio, the those of given but up down kind that plus through kind

margin Yes. know, overall than with And combination, low margin the you mid-Xs. to the higher the impact Howard's as to Howard is in on ours

to to whole going items to of execute kind Vince wouldn't plan them when So say accretive some sheet also And to that flap of earlier margin. lot. you that it balance that's due we I on. to a alluded is of a be together, part on the modestly

very So margin. I'd higher modest of say contributions

Perfect.

how I'm just portfolio the today, loan and Howard I maybe and Maybe commented sorry. missed. I Okay, Baltimore then the on or if that, that guess does stand? you

of you portfolio? the are about size the it does how say, you stand, asking When

Yes.

loan? the portfolio how Baltimore Just that is trending today,

is Yes. It's exposure are trending total right upwards, Brian. around there $X.X the in billion, balances million $X.X and

$X.X billion.

Okay.

And it's been rate. moving XX% at nicely up a

of like. Yes. kind That's

I Okay, I trying where the if mentioned there, two potentially the M&A on what met from on I if earlier, guess a it an consider you lot mean, that? lay happening was a could or the understand dialog if can you understand it the a and on the then then an color just it just Vince, one you And you consider last curious big you what's if out transaction just appreciate how you are, to may criteria gave on just appropriate? some how from was you kind perspective, just give – of and of opportunity color would just M&A M&A, me, looking just to be large opportunities at today.

Yes. think, to to mean, Brian. the I don't refer again going that I'm back comments I

that ends best start the Obviously, deploy invested. capital us on if to being that we And focus loans evaluate we're when usually up tangible on the IRRs to this for strong and at at book best going shareholders. capital for the transaction, time. we're this return look is nicely growing going to this highest think I dilution, in what's you minimal value way point

on. given obviously activity M&A at going This look we how a of there's particular, quite everybody it. bit activity, that's So the knows,

We the right. So very on that's it across I how stumble going to move all know comments my to sums think doesn't take be prepared of it and We're up. much – yes, that. all conversation, kind disciplined forward we

just how just buyback, guess, Okay. curious that And you're today just unfolding just is I that in… how Perfect. then see was or about thinking the last on one you

deployment the our again my in mentioned of on comments, forward, change look right. was as to tangible which the minimis, the a value not take whole dilution it how acquisition that. we vol It's capital I book We moving company not at already. Does basis de old going dividend, of earned includes buybacks,

strategy going quarters to disciplined our to few you we're continue be capital part last deploy our we to out management decision-making for So going that laid over the process. still and that's of

We will the share on repurchases. opportunistic be

in definitely So the…

off-the-table. not That's

Yes.

Okay. Perfect.

clear wanted up. that Just to

taking questions. for So thanks guys the

it. Appreciate questions. Thank Thank Okay. you. of you. Good spree

question Thank you. the And from Truist comes Michael with Young next Securities.

pieces then ask be for that all. basis taking are over for moving Thanks X time X XX net historically loan low time terms it levels, a in Was higher charge-offs, there net there but XX provision There at just just are basis of kind follow-up trend to how there look within that kind you depending CECL back outlook recovery one anything of and any that points points Hey. or to you is levels obviously would affect at question. of basis of kind was expect growth will low on on of helpful? or the in to we a and like Wanted charge-offs should lot and actually points at Gary.

acquired really been know acquisition it charge-offs Yadkin as you million over years it that net was other million from one last account $X.X the by in that the and $X.X few Yes. write-down had of Actually, the Mike, We working during was driven way. a quarter. through quarter, we've the went the

previously absent quarter have reserved So would and recovery net that, was that, we for quite while which a quarter. had back. Absent that a this

eventually levels benefited really now. about that portfolios that ours the would charge-off time. over we've asset book Right positions the of talk off moving really things made risk Naturally, expect the has the really years and last across all classes we will that is now, normalize nicely books in performing higher some of number us. over normal the right I the of in So of range

more also into upgrades an here earlier, We sitting for are QX. should some outlook going with benefit I as provide which mentioned

the I've and this position So and it sit here it, good feel the we about regularly, the of really moment. today portfolio as at been we communicating

remind Fed tell everybody you, I'll regulated. our OCC will I and got And we

have touch oversized and professional on with started OCC. several we been our So very portfolio, reviews what the a strong since constant gone pandemic have in we've through the

about team good terrific So his here. done a have we're credit feeling pretty the Gary and situation job.

on last relationships. that PPP for additional thanks with expanding what's going maybe is just deposits about just qualitatively the guys great, Can one you Okay, color. customers you forgiveness. happens? retaining My as on or talk Are

kind of the as that of Just year? qualitative should thinking be this factors we throughout continues

don't were hundred at or know out. you don't holds, brought as But in customers, have PPP round kept were largely fast loans prospects. They but is several there more, Mid-Atlantic Southeast fingertips, regions I hard or any what first the for two the mostly approximately PPP rounds. that there several provide Yes, but were timely I think were people so probably because in X,XXX our large my facts I fashion in prospects. that X,XXX for we that centered around and a loans purely banks our couldn't third

well. those So on PPP converting we fully have had our of as have clients. process and capitalizing we borrower that part Every authentication because as now the we process been depository automated a opened

which our many those deposit of deposits why gone demand up in one particular So is have have balances substantially. fairly grown,

element of is touch focused opportunity that on very retention an are. that's facilities been companies renew. staying waiting That's the those there's the where on team with their to credit So in for and on gone bid we they

in So any why substantially. particular gone is of fairly our have those balances have which grown, up demand deposit deposits

opportunity So for retention are. focused they an there's very And waiting been in That's to is of on that's those on facilities their where renew. with the that bid going team we staying credit on. the companies, touch element

Thanks. Okay.

for us. and clients our for [indiscernible] Overall

concludes And you. to Thank any Vince this comments. Okay. the our call like closing would session. for question-and-answer Delie return I to

team. the thank I'd a detailed I'd solid like It calling quarter. congratulate questions, had to questions. very we great and for like everybody was to

really in the really they've for portfolio and it expenses, tremendous quarter. the taking amount out takes to everybody shows thank that work. stepped team focus, loan of company in like redundant I'd was everything a And growing the costs of done that's managing was And up they've a think and focus. I the a of stepped field in all up our

support your Thank questions, thank and you. detailed So the today. questions you great for

attending has now The you. conference Thank for concluded. you Thank today’s presentation.

You may now disconnect your lines.