Huntington Bancshares (HBAN) 20 Oct 232023 Q3 Earnings call transcript

Greetings. Welcome to the Huntington Bancshares Third Quarter Earnings Call. [Operator Instructions]. The question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As

At the Tim conference I would Sedabres, to turn now like over of Relations. this Investor time, Director to your host,

the and Thank Welcome, on the of today good slides section found we Relations website, morning. can you, be will everyone, Copies our operator. Investor reviewing be of www.huntington.com.

reminder, will close about during from the be of this call. X is recorded, being call a available As and replay the a hour

and Steve Brendan Steinour, for Chief Chairman, Credit Our Zach presenters CEO; Chief and Wasserman, Officer; and Officer; Officer, today Lawlo, Pohle, Rich are the Q&A. us Financial President Chief will Credit join Deputy

me statements on Steve. to turn documents, include section it website. Relations Earnings non-GAAP let information our disclaimer the our now Investor are available forward-looking over of which that, and With

morning, everyone, third announce to welcome. later. and We're for Zach detail Thank our today. call joining will Tim. Thanks, Good the pleased quarter which results, you

both our to approach our to customers continues Our purpose. grounded and in colleagues be

again demonstrated communities we Our the lives businesses strengthen that help people's colleagues and serve. thrive we make better,

Slide on key to want we today. are you There with Now messages leave X X. to

a First, includes of and landscape as for near-term extraordinarily The for interest the position environment requirements. Huntington regulations regulatory Huntington heightened dynamic through expected evolving from banks. substantial well this positioned to rates new outlook period uncertain is well economic longer capital higher manage as in operates strength.

built a over sheet than explicitly intentionally balance these profile more were times. Our and risk for decade,

this strength drive in existing momentum core Our capabilities. the the through lean intend market growth and We us position to top set. strategies position, of of digital growth new put into peer incremental in leadership and to

CETX AOCI. managed inclusive top quartile Second, we've of

to for over of additional drive year XXXX. of the continue and remainder expansion will We the course this capital

franchise deposit consistent Third, deposit have granular delivered benefit from a core growth. cultivated and we

date. of the Our in factor and to liquidity beta rate our been over well-managed balanced the base framework robust forms a cycle deposit our foundation has driving

strong unwavering, across and we remains our risk quality is customer at credit selection, driven portfolio moderate our with maintain by low the as starting to disciplined tone our Fourth, approach portfolios, appetite. rigorous our This aggregate underwriting management. top

Finally, on focused strategy. intently we our remain core

We executing expense remaining capabilities support and to in management growth. drive our And to we long-term our with expanding importantly, new while existing very programs. with execution steadfast time. continued over operating are proactive of discipline are commitment With efficiency

the operating the manage expect uncertainty to of of the and level realities through level term some environment. We current in of higher the near expenses

and net However, a also with the these investments will by be be strong a result Huntington opportunities that will be continues significant revenue growth to bank sustained accompanied ahead. growth regional

us further will move on Slide of illustrate strength. our to X to I position

year of Our position higher ratio top our strategies core XXXX. this adjusted III and growth puts is group. strength of this peer strong in the the and throughout extends well the peers relationships. percentage primary insured most end bases game points continue a also percentage Deposit of built requirements. end expansion to bank by the and customer since of our nearly We've granular drive ratio the Basel to proposed intend growth leading outperformed and CETX ahead continued other has of plan of the This we supports We near drive deposit one XXXX. of us execution XX deposit with

our peers meet is Credit unmodified of the level uninsured top Huntington are liquidity an also net quartile and to differentiator top tier. for are basis. coverage twice of reserves peers, Our compared and for the on best-in-class with nearly charge-offs representing metrics ratio deposits, credit coverage a liquidity already we

Our disciplined management has team of long a execution. track record

on small we Xth and continue year, this for the been a our for of for longer to SBA the we've nationally and lender path were consecutive which Interest anticipating the example, towards business access recently some support continue time. rates scenario, reach capital we #X For expand named higher to the for of businesses.

be for remain activity rates potential economic has the higher, to impacted negatively increased. As

However, vigilant and thus proactively the far are portfolios. are all managing effectively it. loan highly in remain cycle, customers managing We through overall, our

support reserves Our of win take approach to our grow credit customers advantage and our top-tier expanding be to businesses. capital new to front-footed and opportunities

to Zach, over to performance. detail financial you provide on more our

ROTCE the quarter. $XX XX.X% billion at Steve, ROTCE underlying QX X.X% adjusted Thanks, deposits by per continued $X.X notable which $X.XX items, our million results. quarter, $X.XX items, and impacted EPS EPS by Average highlights quarter GAAP or X.X%. provides by everyone. $XXX of of equity, increasing per quarter XX.X%. and reported Further our common earnings or came ROTCE, Slide adjusting $X.XX. decreased balances Adjusted notable the XX%. or grew good million from optimization. and for common for was tangible by Loan Return in share seasonality both driven morning, of X was for AOCI, common during third The We included share. on of

a rising expanded dollar driven on net by income interest interest a basis margin. Net quarter-over-quarter,

points in We proactively and actions well These with manage with efficiency begun branch the consolidations. coupled in our remains above with XX X.XX%. programs actions the quarter, of efficiencies of strong long-term robust driving XX%. accretion set third in real new as consolidation, of reported baseline help incremental efficiency the have now expense staying capacity capital for of estate ongoing allowance continue us including investments drive we charge-offs capital year to franchise. is staffing for QX credit net Credit as expenses and measures a basis Return and will this implemented CETX losses corporate quality on while rigorous

Turning to Slide X.

commercial dealer loan decreased a reflective balances primarily On prior increased components quarter $X.X fourth or expected quarter. loan X.X% noted, decreased seasonality build levels loan change average by which by the basis, billion to quarter. optimization CRE lower inventory of in decreased of the lower by efforts. I due X.X% declined loans from million, the with intentional QX, driven third finance from paydowns. commercial the balances, by million inventory balances $XXX the included which year-over-year Primary Distribution in our driven $XXX As X.X%, normal average before

$XXX million to by floor plan other auto optimization $XXX decreased decreased categories Asset net million. we commercial drive returns. increased by highest Finance towards continue the as All

In balances growth for by led and Marine, loan quarter. residential the mortgage declined auto RV was while Consumer,

X. Slide to Turning

noted, we deposit deliver consistent to As X.X% continued by quarter. growth the the increased or quarter. in billion $X.X deposits prior Average from

September. We sequential have trend X. Slide including growth in to seen the August balances we previously. Continuing the quarter, Turning saw during in deposit sustained increases and July, third

the represented of Importantly, declining core quarter-over-quarter. deposit broker deposits deposits growth the the with entirety quarter, for

the sequential changes mix at and track of expect point that continue to Noninterest-bearing decreased The XX. continues forecast to would in the basis expect closely and XXXX. quarter, we percentage we mix Slide this to XXX Turning shift points with moderate stabilize second rate this from by to shift cycle. to the during our deceleration noninterest-bearing

XX. Slide to On

billion million interest net to For increased by $X.XXX driven by $XX margin. income or interest X.X% net the quarter, expanded

of dividends net that quarter-over-quarter drove quarter GAAP during We of of FHLB higher the interest we in particularly drivers in Reconciling excluding throughout funds growing end. XX basis The increase prior basis, rose were NIM net longer continued benefit higher at versus the accretion. Interest higher spread expected, the core the to stock and rates the free And cash lower that of a as cycle, quarter. increase from an our and CAGR quarter, income at points balances to a the from points Fed on basis with NIM. of asset over past X% benefit has saw we sensitivity on X a change the basis occurred QX, expansion an years. the NIM the margins and X

continue mix in shared In optimization had July. and These outlook perform efforts margin well. addition, in better we when our the loan across funding resulted in to than we growth factors coming our very both expected

by the interest forward that planning XX 'XX today analyze low the And higher curve. and increase basis to potential basis continues Fed forward rate a continue end, those X The longer. they XXXX, the guidance The be additional of points bounded projects our of a end multiple assumes by through for the in is than at that October scenarios for rate and central scenario ends scenario scenarios. yield funds high rates We flat XXXX approximately to set longer of higher curve. on hire

higher, This we shared level interest fourth to around for in XXX basis margin quarter be than the the is we net X points. to rates the now higher anticipate With previously. XX XXX to move points basis

further Looking 'XX NIM QX continues to modeling indicate point. end trending XXXX out, from higher our flat the to

Turning to Slide XX.

closely have its forecasted cumulative up beta quarter-over-quarter peak. increases as QX was or prior from are our percentage nears cycle Our tracking to the quarter, Sequential expectations. in points interest slowing we through rate hits as XX%, beta the X deposit

in cycle of be the we the the terms beta As and ultimately any where before level end game the a decrease. of tops a noted will the have of extended for rate the in out pause of peak, duration function timing past,

higher extended deposit is likely of our peak very Given outlook a the prior ago, was to the for outlook and possibly for a higher more current guidance than pause trend X percentage beta case our months points few XX%. than a

both higher as the have we is returns drive to out critical yields with deliver rate deliver to deposit result. view in the incremental plays to and exceptionally a environment will NIM ensure our We better manage how to longer environment a rigorously, loan asset rate XXXX know from continue certainty. overall higher see is into and pricing solid What for

fixed. benefit point my contributes sheet loan to helped yields. and arms shorter the product, us is cycle. durated Turning construct sensitivity which variable to has indirect X-year approximately from a expanding current XX% is a the significantly XX overall duration of with X-year on our mix our auto, The approximately is to the This rate and sheet on fully balance XX% rate, duration XX% longer asset Slide fixed remainder balance and of of in half approximately

fixed seeing portfolio solid in are We increases asset yields.

continue this asset for supporting NIM from outlook. higher forward, to the to we rate expect the going benefit repricing higher longer Given environment, fixed

Turning to XX. Slide

the cash in Our quarter of level from the prior holding we securities been we've and some cash down lowered as slightly QX. elevated of was

were we cash given managing securities continuing management short-term rates. the as the flows our since We're securities and balance attractive During in did portfolio cash, duration reinvest QX, lower, lower of the not modestly moved the proceeds XXXX. held approach

Turning XX. to Slide

a peer-leading robust has quarter-over-quarter. grown total pool uninsured At Our continues billion coverage. be of liquidity and XXX% deposits, $XX represented end, quarter to liquidity of available contingent at and this available

to XX. Turning Slide

We to be dynamic in quarter. adding our hedging during program continue to the

quarter as and to higher in twofold, protect down remain NIM was starting increase pay objectives most and which to by moved capital to once quarter. $X.X protect again increased forward $XX.X to rates our the capital The billion addition program upgrade us total. rate substantive tail in strategy, to substantive scenarios. scenarios from risk and during protect in This the swaption in is billion scenarios intended benefited upgrade Our fix

added our in support also down scenarios. rate billion $X collars against We to longer-term NIM

Slide Moving on noninterest for million XX. quarter. the to $XXX increased $XX income GAAP to X.X% by million or third

the were was largely deposit by Excluding compared the saw second higher basis fees management On capital on This increases fees. quarter-over-quarter. including charges, underlying pay growth stable relatively an quarter, swaptions, mark-to-market fees. treasury in to markets payment-related we fix the offset lower service

encouraging by Capital by Markets, which Moving strategic Capstone. X on We're of from XX. over set X years, of Slide across CAGR fee broad sustained capabilities seeing focus has a trends grown bolstered our XX% areas growth. and for a the to past benefits underlying revenue

foresee markets While to within this XXXX the advisory advisory and credit-driven growth for capital term. a environment challenging contributor are primary a been several pipelines both to in forward as moderate solid has we and products, over fee certainly revenue continue activities

businesses of categories. and one opportunities revenue relationship treasury across for both the and management deepening biggest represent both Our card payments growth

opportunity offering higher our see leveraging customers. recurring with we assets across trust we a great Management, advisory for our Wealth as #X revenue the and to drive penetration grow streams. increase of In relationships ranking managed the

to and increased on $XX on underlying core by increased million noninterest XX expense expenses expenses. Moving Slide million. $XX GAAP by

efficiency As the expenses I $XX million program consolidations. item corporate to incurred we related estate and of mentioned, notable staffing real

expenses. other higher compared a prior by personnel, smaller professional was within of to these the quarter core Excluding services driven expense items, and items occupancy, set all growth

We to have we support expense level underlying proactive throughout the year growth of core actions the have taken low delivered.

to half X first voluntary realignment the the In consolidations. the XX moving year, retirement program, revenue Ranch segments we from of on and executed organizational X

we're Now of third in set the quarter, another actions. incremental taking

continued disciplined footprint as to expense demonstrate year. management will consolidations term. implementing well of investment to goal program, creating in the set closures implementation critical toward the branch and the process driving throughout as We company near incremental organization largest long-term planned with corporate support and We're another estate into early business of These efficiencies our offshoring in of resources commitment XX growth with the the real our are actions accelerating the drive we're of also value. areas prioritizing opportunities the our next saves

opportunities expenses, revenue are in manage know balancing us. we As with short-term and investment longer-term we're growth of we the both front

Slide has XX recaps in impacts Tier to common equity increased an X increased X Tier for position. to CETX sequentially capital XX.X% equity X%. adjusted common our ratio Reported of resulted X OCI quarters. and

top maintaining growth. actively Our CETX and capital management in loan XXXX. We're result expanding course priority AOCI over strategy our high-return fund managing ratio higher that the capital drive will inclusive to expect while to adjusted of

very XX, metrics Slide consistent expectations. with well, On of perform with quality credit continues normalization to our

level between low higher This and the quarter charge-offs to are As the for basis cycle tracking for of to of points XX net charge-offs continues target than full our net XX quarter for charge-offs mentioned, points. range points, our and to end XX the basis guidance at basis while XX last X were net points. by XX be basis year through

nonperforming given basis within and from highest for is estate the peer X X.XX% previous credit commercial by total loans, to and As the real previously points ratio coverage guided, being of our ongoing our amongst increased assets the asset normalization, group. losses is component. rating risk in Allowance the changes increased quarter with ACL largest higher ratio criticized

increase the fourth our which loan X%, to in growth for level. outlook expanding associated on throughout year put in quarter the of fourth expected quarter, approximately is at between to the forecast will by the the before primarily full the expenses fourth expected a X% grow to to X% our Core from and Slide matching XX. turn Noninterest XXXX be enhanced interest growth between claims We are X%. quarter net QX growth quarter capital that likewise income the sustained expected of Let's X% investment approximately to X% approximately in Expenses and X% for underlying on loan stable. quarter, from range. driven relatively medical end in are core Deposits into lower and expected markets, fourth expected seasonal fourth in basis with decline prior and capabilities. income a revenue-related by increase new is

year full guidance the of expect We near points to be basis net XX charge-offs the for to the range. XX midpoint

always, for to guidance year. next few XXXX. still thoughts let on with during our management Finally, earnings budget we XX me finalizing look close share specific call. our January on our Slide a We're for priorities more And as

optimize First expansion returns. continued and foremost, to lending we're committed highest to driving growth the capital while we continue to drive

we're mentioned, we proposed strength, from Steve as As of a maintain periods. and position of capital regulations get phase-in we ahead to and expect playing position that

management while primary in beta. result deposits, disciplined continued acquire Related of deepen and growth supporting our customer to into continuing to bank we're This should year, next deposits of relationships. deposit

full both expect Given remain will and sheet the the execution will us X position expected rate payments interest support income strategic higher sensitive, a areas revenue on which Noninterest deliver sustained remains management. will capital for we growth, margin, to for we income wealth for with the net in basis. balance markets, dollars scenario, modestly longer continue year to critical on and fee asset focus primary a

the medium a more Over to businesses. the and these given than fee has noninterest opportunities expect we income the grow revenues that both spread term, quickly for at loans potential rate

considerable into for capabilities, growth next up of actions the enhanced This the These growth over baseline taken will are business have which the including years. multiyear focused the mentioned on expense benefits. we actions and and accelerate, As efficiencies, a process to operation to course investment low will actions expenses, few other offshoring allow level. I to yield sustained hold new on necessary continued set

actions of will the expenses saw higher net result underlying expect in an we rate growth level for the of We core XXXX be these somewhat than XXXX.

right management XXXX. expense the Our current within current is environment We into position to to our balance expense operate growth working X.X% the of momentum underlying the and is level were compared in we the approximately believe to of level sustain X% approximately this running estimate company XXXX.

moderate We risk with credit will low approach consistent management, aggregate to appetite. also our to maintain our rigorous

believe environment. of close, we to exceptionally stay Finally, we well to ahead evolving the positioned proactively are

time, address dynamic substantially will result coming years. will head this We believe numerous over in in the topics we be and benefit opportunities these on. to And

With prepared and that, you. we to to over remarks Tim, will conclude move our Q&A.

if Operator, will Zach. each a now we can that or you. queue. has questions, she Thank peers, that ask your follow-up. Thanks, X into he We additional as the only and take X related then questions. And ask courtesy themselves back to add person question person

with is Stanley. first Instructions] from line Gosalia the Morgan of question our [Operator And Manan

growth and areas next weaker? the manage also sort is Can expenses you of if in revenue in? bake flexibility that takes pushing you about where are are puts expense maybe the what What talk up and environment revenue for -- year. does to X% have that number that Are more environment

Great that Yes. Zach. I'll And question. one. this take is

remarks Just one and us. reiterate expenses key let to is efficiency the ago, framework said me what in most for driving of now banks set been is I efforts. priority the a product term. and short [indiscernible] our the the strike a do We're medium minute the it prepared a is answer, term we're space, that's trying which years of a a efficient for and in core in right the of banking balance of What to regional

that given to make for significant In we we time we in the low the short the opportunities and, fact, our even maintain strategies But the a revenue in term, momentum outlook overall over key term, in medium we level also to shared. see of higher and sure that environment. Huntington, managing growth just expenses the rev growth want capture

new need and operate. capability risk quickly to quickly that work that management to we and as expanded get other ahead stress add Even we'll

a just a that delivering expense the we ago, back, from step over year TCS of it's billion you take of annual over $X.X merger. were fully saves If

Over of expenses that And first underlying I've prepared just we long-term this with real proactive optimization, new offshoring, quarter, did bank corporate our third efficiencies the then, last X.X%. all and to quarter actions set of efficiency accelerating programs the including across finding felt the talked year we since the remarks, and about year business in in programs took that the in another now the implementing core we of the we're driving actions tranche in process portfolio. branch a efficiencies estate of the

to seeing around As revenue look we we in new resolution are of we've the 'XX right operate the forward. fee investment. management in your enhance incremental Basel, to coming our use strong upside, our opportunity from particularly ultimately businesses we and the just as the lessons really require at can going which will the the we higher address forward, quickly question, last for outlook look NIM performance in than our prior want learned planning, regulations management on now, address the which risk a momentum in good environment, so position We seen is -- as we're program, strength, CCAR,

of higher X.X% on data, So roughly run teams underlying into and enhancing rate, capabilities like management, that investment our with the things it's technology, kind automation. focus driving are that risk a process treasury,

quickly period. step requirements ahead will to India take of is this in goal to The get back, a move through these

strength all really through. rate the then to come a goes come see in a higher back management XXXX, to to around continues to again down go and that and expect rate as expense X.X% We of our back position It be goal momentum that core we higher expected virus, and Huntington maintaining be worth will growth around underlying forward. our run year's to expense of we'll ensuring this of expenses exit the see

Steve. is this And

new think is to terms dynamic top intend are and sort of Zach all to this a come in to us we the have of you the that, businesses, with off our We Will over the investment. talent, of to in be which the capabilities, plan numbers front-footed of shared of and time play to do that. be if Just number in We'll have and more will that will. colleagues some you. require more

mentioned it. through you as think there's go you're modeling that you more then NII next fees. And Do into upside year? higher positive putting because does for leverage just it you operating How trends operating can Got you leverage? drive still to together XXXX play

key you guidance give over goals. It's that, a little is our operating toward of like element on but driving precise time a leverage

spread X term is You'll it's driving to of we're critical we about will and this quantify the sure the investments the And again in critical X financial I But the for point. us what's we rate. just coming growth Talk back, we and for revenue make have at of year efficiencies managing for targets that we'll remember 'XX next that opportunity leverage And [indiscernible] that outlook do we growth some maintain both want for over set for the ourselves. see the as and [indiscernible]. major would solid can [indiscernible] fees. underlying expense precise for those part plan, to even operating time on

Appreciate the detailed answer.

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

interest income curve us I -- expect magnitude of net you fourth as you're the guess I achievable be terms in looking know implied assumption then your the based you of can it's Maybe then in for on you commentary of current And that would the and assumption trough terms you under upside? Maybe on NII if year? expanding quarter a the can at? think growth help you what up XXXX. expansion through in indicated you that us a the size the question that frame same the the at Just front. fair help look through margin around what's

question. a that I'll is This take That's one. Zach. great Yes.

basis quarter of our saw really expand points coming think NIM I recur. reducing third a around the increase program, take of in those from QX back, of items the we We've to Fed QX basis saw What dividend FHLB really asset where that and in saw of through NIM. from got half I overall won't second third note repricing we the the quarter. and just temporary are will a that the points. management nature, step elevated benefits cash a items stronger X sensitivity QX the levels effectiveness about Around stock drove highlighted from in were NIM was you FHLB quarter, was function that, some in asset in XX of borrowing,

underlying we in I quarter However, in X third a move the see as noted. spread did positive basis point

expect think about expectation we quarter. QX, through which And As have and of our earning and a basis higher as from trending both to points from to benefits X% time there. in we've X% I would around than Based we're the or the that then this dollars is bearing higher which to from we're points, in NIM around of the better be that by on QX informing accretive and and to is quarter last trends basis dollars the we NII seeing expect for coming XXX X through. in QX rate I the thought XX XXX the see between net trough in ratio it's and really overall is fourth in a longer scenario, NIM interest driven would assets, seeing NIM, down NIM noted,

particularly outlook side are be repricing, I asset to categories major continued higher expect as the in I think continuing We'll QX. really scenario. to progress XXXX, on things into to quarter solid expect this The prolonger noted. going increases I NIM see the again, fixed rising, are on sequential you're And seeing the for flat see on that to asset fixed

next accretive continuing the as we portfolio, gradual year during received maybe overall be benefit, spread that as throughout reduction the year. will basis of noted in next over the trend estimate from second to X the do the of think. well. It in benefit data of XXXX we Even year the a points good before, the to hedge Will carry we've also on swap roughly half negative from course course as see we

say growth as that point. NIM will couple dollars I with But we're at we more in flat rising get assets seeing guidance drive drivers NII to in precise We'll are get higher. with would January. [indiscernible] I So know loans, those a this that, overall the major into that as growth

real Very alluded -- -- XX% It on to I there estate. Or scrub portfolio that sharply. exposures real that you was shape nonperformers expect estate helpful, Can and commercial in a that there effort we the zach. Was up you like lumpier comments, And know credit. up Criticized sector? looks of through is your you're I drove here? reserve your you separately all this added loans starting quarter. deterioration a as lot the linked pretty commercial to dedicated A your this to are believe working move then also take and in to that's and

Rich. it's John,

and we've this XX million declines, QX basis where if were Let of me lowest over then. the had NPA little around start quarter. a level the with bit Brendan at in points, we're you think that you can totaling that, quarters time on and happened give over year. then right had points to back third XX was $XXX to to we X which I basis since turn color consecutive it is more what QX, since GFC, we've level our today, The last the level at was

to around not level point me, to your concerning at So it's that's proactive. a being

reclass We had [ the from see similar X the to nonaccrual talk commercial as are an X about on been expect ] ad our principal increase have a quarters. you had story. in that. were and about discretionary. reductions class NPLs And lot quarter of you a that We credit We we crick in to normalizing, would interest. The current of X/X the is their previous think of

So I wouldn't categorize the movements jumps. as huge

into us. low But insight normal a Brendan, think why levels position the for bit little at of you I don't very just it's a QX give specifics.

X approximately are us class, provide estate To levels. XX% Rich. increase a you'd of approximately There and ABL in see higher the our Thanks, group. was little focused places [indiscernible] more to real commercial expect color Sure. bit

the side, and more was On between C&I. FDA equally commercial split it real estate

concentration. For mentioned, concentration in both weren't office. the NPA real C&I And was and estate noted, material side, preclass, the focused exposure the there I beyond on ABL as you mostly really

what I said, bottom. bounce as think the very it's you're So just off low numbers, a Rich a seeing in

Okay. the Thank detail. you. Appreciate

the question line of Bank next Poonawala from of Our with Ebrahim comes America.

Just for maybe you, a question Steve.

banks I of about talking But being of banks there for all are next transported loan a I into. back ton to mean, if lend to are there's to -- I'm that wondering have think year. just you demand to going be speak talked loan about growth coming

a get customers what your from? us seeing loan that you increasingly across is see coming are footprint, give Just cautious? sense where Or demand of you

you. and Washington. reacting East, Thank Middle question. resolution. great We've that an a Israel are not the think businesses I UAW what's Ebrahim, I got in going there's of are strike believe cautiousness. is outlook have apparent [indiscernible] round on a And going, growing does in probably uncertain growth. to all our Rates of and headwinds where companies of but next the our using economic the are customer to their sort that XX% the They're liquidity, base rates up.

said about guidance we'll our year, you businesses in in gave be X% to of earlier within growth believe, that, that And We'll will we year, the that doing year-over-year. see in areas up are I be Having good couple you particular. We'll have continue growth. well. next gave Zach a

we business. in It and engine. grow continue reduced new be will winning Our that the distribution to seasonally a quarter, expect powerful up to this is It by quarter. finance fourth

well. saw levels asset-based and We And are lender. more before. a demand, we're continued significant play will there'll XX more onshoring, And That albeit probably not finance top we 'XX lender. and equipment be at in more the automation,

there environment. outlook on and So huge you activities customer growth. should need base, well know, next demand do as we moderate think, will And a we'll cautious for finance this within our will small those are asset small be related have I businesses in business support them. The year. more bank. all will that overall of sources there's overall an those more And loan some impact be on, just But of

repriced. That's helpful. you solid at fixed it. mentioned Got I the portfolio guess Zach, in increases a And follow-up. yield target

post Just playing Is some spreads are of And us kind the talk worse some ability looking at coming loans? repricing? it terms is just there's these up when the of the impacting pricing for narrowing negotiation to time in a the of of their to borrowers cans, these terms debt service out these bit in of fixed in contractually, of of of kind repricing? that terms credit are if rate

let those. and Great questions, Yes. address me

points it So intentional couple take asset I'd demand. new most date, the say loan driving production and notably on higher it's is an often also over outcome returns, what of XXX to is how things, the really incrementally we've had and been a trajectory through terms into yield, driving in basis for cycle back, we're of really higher -- that which in terms of

in the cycle. we're through on auto, areas that the indirect actively modulating [indiscernible] example the fields we're So up course with the great lot example, and come of a seeing of for where a tremendously optimizing is that

XX% one why that. It's balance the also just though structure of fully terms of sheet. we outcome the just detail a around the of did And natural quarter to was variable. the We're more into slide we of reasons transparency there added this provide in

higher of portfolio. benefits come rates seeing through on So you're that

in durated XX% shorter roughly auto. fixed indirect Another

noted, really As sizable we're there. increases I in portfolio just seeing

back XX% Another in come longer a just increase we've for are coupon in which really across than arms gradually every increase seeing longer in portfolio points the the and through QX, portfolio, portfolio the yields. in duration, seen XX book categories, basis of X-year of fixed [indiscernible] basis new those remaining that the yields greater scenario, higher third XX we're one asset the in of including point

growth and think repricing we to as noted. as and XXXX. that We're will fundamental trend into portfolio-wide more not here stability for key credit-driven I And much any I really, do go drivers substance it's substantive seeing yield the continue the

with XXXX appetite the Ebrahim, cetera. risk quarterly et disciplined report us add, very over been is years, just we've auto you've We've aggregate a our superprime, seen to diversified very in resi, [indiscernible] since book, moderate got and consumer to portfolio. the which

base, the and reserves, on we've couple a -- that robust in to to said So to and during offense got with moving in position, we these our share to tougher in have leads liquidity we're us we we've our portfolio support of a we're confidence customer that through And them, ability relationship years. as We're feel to this orientation. do a and and we will strong, playing capital is our position next stance our here a sitting in manage cycle.

line the from with are Scott Sandler. questions next of Piper Our Siefers

we the to full positively heard NII. Good 'XX 'XX morning, on Are quarter just everyone. 'XX correctly year if clarify I or me, just over it pardon base? just wanted full expecting to -- grow fourth I the year off

going Well, full well, of be Scott, as NIMs which year-on-year out and trajectory of year a overall growth great function and a assets earning is to question. I've been and as pretty as the year rising full to on and flat growth able in comparable basis, year see net to clarify well to growth both a been [indiscernible] loans.

third a And X% question what I these then they Maybe maybe bit. of the without growth initiatives been guess kind are? initiatives growth -- equation that some on Perfect. began to wanted have the on cost guess And you substantial have Okay. -- expense thoughts quarter, sort the them. might I how just cost of begs about in becomes the despite we'll I revisit

on So sort just up further thoughts will et we're of what end driving cetera. ultimately exactly any where investing, this

efficiencies significant personnel with expense of keeping question. underlying we're growth before Yes, model investments. for at I been a benefit core outsized XXXX, growth. level these this this were are additions the to solve I underlying like equation and expenses that We've XX capabilities the investment year. for in initiatives that X% If self-funding the on talked XX% underlying tech, and in your of generating XXXX [indiscernible]. almost and what driving investments the in And which XXXX, X%, months of think that's new support is cumulative strategies, run estimate the we marketing, in underlying into up terrific key to X, last investment efficiencies around about low we we level will core, benefit funnel X.X% earnings competitive with around those expense in seeing the that we've the that. [indiscernible] about were managing expand a that

that the saw in is go drove model we 'XX. what into As we overall roughly X.X% growth that

environment, think seeing the is underlying some cumulative inflationary of underlying bearing also just will management the somewhat into XXXX incremental in of and similar modest really the program, of impacts the clearly, we're efficiencies expense roughly environment as well. down light modeling but adjustments I go rise what we as sort

net kind have I the that year run would expected around underlying so into X.X%. of next is rate And

we're risk on If the regulatory I then that of this TCF briefly, And is top investments, investments That's that, expense as we delivering the year. response, are think go these again, about on specialized through talk [indiscernible] into product X% and management expertise wealth to X.X% with represents markets, next that, bank synergies, rate alteration. to division trajectory. additional capabilities core on we around growth the data investing where fee the focus Banking dealing Consumer continued and and payments continue in strategies accelerating on development to our growing specialties strategy revenue management, clearly and and commercial Business top interest vertical digital and planning and resolution Banking revenue drive liquidity then additional of risk in these CCAR, areas and capital our

on. add to Just

X% are and initiatives QX. also included see number several also we'll that You'll new that announcing and in be QX of

charges this cost we I one that any increase, quarter will unusual quarter? Okay. saw just final Perfect. fourth include guess way The ticky-tack the And question.

this $XX So we costs around quarter. saw onetime of million

to earlier accounted portion that the expenses in costs That's the $XX within taking the million expect as guidance third those a we're the [indiscernible] fourth of onetime Some I of initiatives able that quarter. same roughly to gave things. result not were included new not scheme place, expecting of relatively in arise for we to I'm onetime quarter initiatives. additional related the be

$XX taken million those to be the So total, actions, one-timers I million [indiscernible]. in which, to again, expect total approximately related we've $XX

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

business. strong, at building capital the uncertain on understand leading and AOCI it's the deploy look I and that there more logic more But any under given here, including and almost ratio obviously, back to you just of once in you're kind like aggressively? really of here you're level capital, scenario, is circling just So get a than any from you'd need we look we it macro

a great It's Yes. question.

expand to minute a on that. take me Let

you know, key a higher capital driving is As here from focus.

inclusive CETX, third primary to fully quarter, transitioned And the on within adjusted range have at metric XX%. X% between is CETX of We company AOCI. our basis, we're to of the for in X% the that managing operating

that that's so that the XX%, up want And ratio to X% between X% operating and key goal. of range drive we and into

way, we'll also on have that I new final get we Basel [indiscernible] And trajectory By presumably any question I the be do there, being significant coming time. think. the able By time reassess clarity the where the the time confidence environment to the about III regulatory have we by over to other to the expect macro requirements get in out there, capital that, we'll of the able earlier. lending environment. and where implications is to we

run to seen but past within in hard have so And [indiscernible] model, and capital opportunity more longer to normalized to a longer-term where range that go. distribution want we But through we've once rate move back get that elevated sort it. the get exactly is to range, will of support levels we we into loan that growth expectation and my of

in our exactly RWA estimate was in working if roughly on X% Basel proposal, around increase the on the III modeling hypothesis as adopted tack it just current proposed I'll just and was based as was proposal until and represent that in phase-in the [indiscernible] proposed be written. that schedule Again wouldn't part phased XX that is we as about bps XXXX. CETX of XXXX, of

get [indiscernible] so from front ahead 'XX of to growth out an of And loan us perspective. you foot just starts in and move get is this quickly far forward really accelerated beyond and time part allow on of that, so our

then drivers? a pay rates the we put And squeeze on quickly silly we was should in how [indiscernible], then think just maybe the some fix go of kind Or gains in the do negative of the other and go side? mark-to-market if question, when Got it's that it. modeling is rates the and mark-to-market helpful. but up impact just That way, about it

I'll Let and [indiscernible] is me question. on following the expand just that,

the protect those capital Just purchased substantive of against them, was the really points instruments scenarios. basis were XXX they to money. When we out strategy roughly up-rate of

point as maybe X/X to to and securities to be XXX X XX% much designed risk forward really protect those scenarios. value to would in about of as You of XXX substance they shock about of basis months got the life XX

earlier the we in on think premium. of quarter. in We the lot spent them added the million we And third that -- see put in a quarter. to we second $XX I roughly portfolio early --

QX, small scenarios. at our very the What if gain view, were in you end million but $XX a March $XX in of in far now, shock $XX pretty very a That's get strike So gain you tell gain insurance gain. a to is quarter. a We fourth policy million the benefit seen another of million I'll quarter, in right thus you cumulative in those the saw gains. of significant for see QX. them to we've

the The for to see If that term. answer in Rates them. is critical The key would how you yes, to in fall, maintain. you rise, thoughts [indiscernible] them. a near continue us rates a is see is insurance gain in policy

time, out to expire versus them, money. hold I so And If they and that of unused over them. continue the the would we in would expect name

to outlook will You a rate on focus point, with see we the that protection closed gain interest dynamic back negative largely for in this and as strong run watch again, out, At pretty cash fee primary deminimus insurance they if continuing capital. outlay through a be a policy. income through really

detail. the for makes Thanks Okay. sense. That

Our question the from Jefferies. of Ken Usdin, next is line

there. bit Steve, obviously, were have really business, wanted good about of incremental and ask auto been to peers -- you and very that has a on business, guys of to softening little business have a your and lot that ask from now demand it's of you away I lot a yield. historically But this you notice strong a pulled generally talked up, originations I your know I out did

you've of to show as the you that's if all kind growth do reengaging able at have there an of those deposit think through Just set how engines, and wondering especially been one you stability? as -- opportunity potential

auto great has Ken, question. us. very, well And very for performed

a in its at environment the past, a to and we a relatively as it's be look more. and It's -- And widened, we've it's in as confidence bit spreads it's short short -- cyclical have do a duration. this roughly when to product rate we clarifies. attractive X-year We'll asset. have We average spreads credit a are chosen very interest dynamic the

So at we we'll looking counter lot, go like as a closely and 'XX. to 'XX certainly be something class and we we cyclically. And it like will asset that be this

Okay. locking Great. Zach, this through terms in just you trees in just thinking Can what activity swaps And around to forward? us of at and looking just quarter's and you of a little bit going then the book future walk regards kind last decision of as thing, the portfolios. stands about moved with you're any on some terminations your anticipated here it

you I benefited capital during prior the strategies. will that capital scenarios rate had [indiscernible] I'd the there. X against absolutely. a question saw, rigorous that, we like and did want focused options, potential pretty against moving a as is and on NIM very rates the downgrade and this against key tell always scenarios. in And strong it's projecting us that discussion in anticipating Absolutely, active is to a upgrade data quarter And analysis you to of dynamic that the clearly, Protecting weekly do. and protect process and that add around higher you did are and fact fix so swap pay we

the bets, benefits come opportunity will to here 'XX, we hedging that, we're opportunity certainly I the can to has the the sensitivity, and much through clearly, well to as into revenue but 'XX, what view as seeing is in is. the with lagging still downward big that carry our incremental more less it I 'XX, significant long end continues longer manner term, curve in be protect think increasing. as upfront and a interesting is if as asset the is it steepened efficient streams very increase relates has downgrade would at base to up no over and say want what's negative But has we that come those opportunities hedging the it, take environment see it to optimize

would optimization, it's I of say. In an the meantime, more

are rates opportunity, hedging the of that if that to we give You shorter we out downgrade in that be attractive year We continues as option the us next mainly [indiscernible] a do throughout it's less This which QX be I for more saw now. of efficient for us downgrade the entered of hedging structures. there'll [indiscernible] increased longer by exit some go shaped the the to received capacity know some fixed just was duration, into would I collars, swaps the way future. structures part And as in QX. and suspect curve

the putting just a put that forward together all NII your in you Can the on Okay. better way net And there and book of can? that kind it getting is of just of help if or us you of like going swaps kind context, in terms worse? impact is of

question. That's Yes. great a

for roughly in to 'XX swaps a I swaps roughly XX we've overall the got XX QX coming XX through seeing today, based expect do I a on drag into zooming [indiscernible] just the XXXX bps that portfolio in the drag second, we're in was NIM. to point XX of of So basis in from QX, expect be

into in the by half to bps, As XXXX, forecast. I particularly reduce [indiscernible], noted about the I X by one of year when the in fall earlier expect starts that the second of questions curve to the this

Yes.

range can. a support this to that's of NIM call answer to in years we it So the question. And best the way probably it really to your goal is just type for

Najarian Erika UBS. of line the from is with question next Our

Thank you. My questions have been and answered. asked

RBC My the Jon from Arfstrom line Markets. is next Capital question of with

you you on fine want need it outlook send feel and Rich you to feel think to how provision? feels about provision credit, but us mean what's or us reserves. the for want I'm to and on I build you like you curious message Brendan, the if reserves

Yes.

start where X points. up just of are by kind We in with basis the me bumped Let we quarter.

that provision. further up any similar we from a reevaluate most got we'll X% would weakening, Our extent real fairly be it. economy from a million, I builds was increase. on some we've the particularly you went from we might that around. go the be that dollar to dollar It of see mean, we specific But the But it's would would to around goes here I nominal the what the here, commercial in give uncertainty $XX coverage guidance depend moving see third there. going put don't ratio, and imagine to the given coverage we estate standpoint, around just where things ratio. into we We the nearly that quarter, Where

is and feel of bringing that But good where economic over XXX the we range outlook this side really in the other And time. get as now. starts the good right general, ratio a improve, reserve we about down back to to coverage into [indiscernible]

it at the now. look we quarter, we'll XXX but every and good Jon, right feel -- So about

in just but call, for the Late Steve, a picture bigger Okay. you. question

a it bigger that -- for of good for higher a is Is XX? the for I and headwinds? message we my guide and and on for the quarter. I the But guide when are just the you and 'XX, fourth you're just being Or all near-term kind some my NII of what's think saw that push of the had pulled the lower here I to bit guess little quarter You pessimistic But focusing some expense investment back and understand going year expenses is, for question then revenue -- that. optimism you picture bigger expenses NII a too not growth? and of

'XX. improving about net income talked interest also at and Zach NIM

that the medium further normal a more data terms 'XX 'XX, into position 'XX. go I some businesses, as as that well in things managed for of think we're of said, will we nature. We're our be capabilities for plans going of accelerating really investing additional do some that's term, is in of negative So have We'll a a expenses and our like to multiyear level. even think not processes of to forward. better outlook that number new We're us that growth. comes in talent position with back I and the We'll the don't outlook company. to And some 'XX as in a growth in

play OpEx in is this think company the being to and that we position we're position. us So intentional,

credit. And you capital adjusted on cetera. we and We've there the are things confident coming The commercial growing advantage. That's that as and as got really are both this launched opened moments, up those. ] is we saw growth SBA a exceptional. our good an period [ think we those in when time, We deposit of play of to moments put in around is and do in on et take continues. one basis. Liquidity Air were lending, who and XXXX to year intend We bank to those a number of out gross

Okay.

ask it, Steve, it's So and asked to but I good. know it or XXXX, you're. that's pessimistic for if getting just question, to -- I sounds okay, you're I that just I'm had needed optimistic like

We beyond. beyond, are And and optimistic about 'XX Jon.

right. right. All All

final is the of Alexopoulos Our from question with line JPMorgan. Steven

to the step-up all And absorb understand agnostic level commentary growth environment be a better more I you going that's XXXX to the heard on what that the tied to spend I to still past [indiscernible]? is, or require going expense XXXX, I guess expenses. the of hour Steve for revenue to to [indiscernible] for is seeing in higher something a on you is

in to we 'XX we're in the be place beyond. a So growth and will that company expect gearing manage dynamic

Silicon investments even into we're very We we in button position and a different -- in principally manage want with in accelerating better outpost move pushing make information data, have March management to saw We're right? a We things board that at data, scale an activity also certain Valley, around lot are unique We data access and that wants company, TCF. and better multiyear better to together. quickly. of XXXX, it's so

and have half the can we stronger not we've we've that be, forward since been to them speed with be multiyear pull that as as about which would -- processes automated portfolio we're to the as managing AFS change. risk going on But hedging seen at been 'XX. of like So position us a given company market things our our you've to journey. even We're

and also bolster then number and I recent we think advantage to and other further to revenue adjustments aggregate investments areas making to that more a data said in will lessons low moderate Silicon would that this will investments, the position so episode, a our learned policies real-time and others of resulted has addition we Valley treasury in outbid basis. appetite to take And most of risk of us some in out effectively the prove and us manage company these on in area our in

it story? a and XXXX Or beyond the a of investment? Is will pace this XXXX is And story? step that

overall see and as this we we'll of like of trying for beyond beyond, electional growth. part, this environment and trying I we back view an position 'XX in this bank But -- an pull said, did the forward take 'XX 'XX is in Zach advantage normalized. to we're that think to and to a [indiscernible]. was into as what about things we Again, be and more the

it's opportunistic of and like partially need that sounds in sounds right? partially you to It it Well, invest systems, portion like this too?

choice. We had That's accelerating. multiyear plans that were

could last one I ask If question.

want But right, you billion crossing don't don't well, billion, today. asked had can recently you So [indiscernible] organically, do see $XXX to was XXX. you you this cross [indiscernible] I to about with scale do $XXX proposed really if know you How Or good coming. in to asset think just boost need potentially at give and this spot you comes? you what changes these size level? Do think this you're guys a

to We're own in do appetite. this We the to things We we've the maintain them management. past. We'll to the continue risk moderate going at future. in done risk well aggregate low-risk

the is not think only of size business determinant. the I the

core. to us attributes variety certain the for awareness in business of continue that over Part in let very regional important. giving model commercial selectively time to strategy brand a us is other the be and bank, itself grow the and of markets then think I our consumer invested very, deep businesses. we've And is

A year. to and a these customer of give specialty base. expect to term, guidance capabilities and finance and for that talent distribution more businesses on and national that us that beyond capabilities asset last payment number businesses acquisition the pride in side, equipment space banking The on things which of the investment Our we've added are by in the year. nature, finance. that. position to that's we alluded about to to of And the in But that. next we near all start for [indiscernible] in continue and we're additional X% be you to going our We've all talking that complemented

taking for Thanks Okay. my questions.

Thank you.

Okay.

[indiscernible] joining today. year. I last well on for the we're just one from has into want just terrific So benefited us and this a got Rich, Rich We've call. more you as to grateful And been the at end leader. us you compliment experiences. heard Rich time greatly their a position you've year, of mean retirement the I

you much. very thank So

through We're environment. this we third capital from quality, we're such supported leased In credit closing, by as these to efforts what ratios colleagues dynamically results and we're bank robust about manage strong improving believe consistent with for positioned XX,XXX very deliver pleased liquidity is bearing results. quarter times across the with we the and as well

on pull year's the focused We are shareholder And we're collectively, outlined driving to team, our we're come. We're this reminder, top that performance. We're a and back. consistent the to colleagues, executives we shareholder in market do a aligned, and last and they're going strong to on driving you know feel executing value. we're we continue that paying Investor all years XX operators very strategy as Board our disciplined optimistic Day, we're our and this a

your have So support in interest thank a great and for Huntington, and you day.

this gentlemen, Ladies conclude and will conference. today's

your your lines at for you participation. Thank disconnect this may time. You