Associated Banc-Corp (ASB) 21 Jul 222022 Q2 Earnings call transcript

Good afternoon, everyone, and welcome to Associated Banc Corp's Second Quarter 2022 Earnings Conference Call. My name is Alex, and I will be your operator today. At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session at the end of this conference. Copies of the slides that will be referenced during today's call are available on the company's website at investor.associatedbanc.com.

conference being this reminder, a call recorded. is As

during of statements the outlined forward-looking constitute, on today, course one, slide statements. similar or make As discussion the management expectations, beliefs projections, that may

materially differ such any could results statements. actual from results projected forward-looking anticipated the in or Associated's

recent results today in information detailed most is factors SEC of on SEC website actual readily Risk subsequent important materially Factors from Associated's could cause factors by available XX-K Additional differ that the the filings. section incorporated the are Associated's reference. concerning and to Form information discussed the These herein

For page a conference GAAP call, non-GAAP of financial release XX slide and measures this financial to refer to the pages XX the press reconciliation the of the please XX tables. in to measures and mentioned of financial presentation

Following go sir. and be instructions time, Andy would for like session. over question-and-answer for turn CEO will opening Harmening, I the ahead, to At the Please conference this to President today's presentation given remarks.

margins, up welcome quarter my will statement full Chief Chris Well, our Pat I’m I'd start strategic here and by update Niles, initiatives. quick trends on will good update then Chris to year From Credit an afternoon, and And follow everyone, our Pat today walk for by income sharing update on highlights Chief the upon funding I'm our there, a things to our Harmening, capital. Ahern, providing on our to and with through trends. an Andy reflected Officer. quarter Officer; joined first and call. Financial like earnings second off and

Banc’s management. strategic a growth announced credit and we expense forward fall, focused last strong plan, Associated build on of digital foundation So new

systems and driving into more operating strategic to time. the positive well our efficiently ROCI our execution already core Our and our serve over we transforming is customers are phase leverage, improving significant plan

lending. grow for calls plan to us middle-market Our

small-business As grown existing middle you'll and core and significantly our market relationships. see, we deepen

adding now verticals by for finance. classes asset-based lending our us these expand calls And and and for growth. to calls higher us digital plan lending, are platforms, yielding the equipment driving our capabilities of Our quarter. we auto three plan rolled customers me finance asset digital later be to assets these updates first shift and to mortar out expect be clear. But to dollars this brick investment to our from and let All of

While we're us are come got to investments also digital the growth to with to excited sticking see these life, and we committed foundational principles in that here.

Our management. and to disciplined expense credit approach

the and full track growth, Taken value a quarters improving on with more job, of the stakeholders. together, and impressed that the a team we're convinced even leverage positive operating after higher quality four our on continued revenue more I'm for deliver to

most turning the to the quarter. Now in recent current environment

see remain the Minnesota. we've our to levels over year, near While the in continue here of has all-time Unemployment markets in lows at strength. macroeconomic past environment shifted signs Wisconsin and

remain proving customers in business households our outlooks their and consumer upbeat financially Our resilient. core are

By in June commercial as that the to side, customers to at ramp quarter. reverted [Technical levels up activity On pre-pandemic and we improving through activity continue spring expand. our line line upward commercial and back utilization trends and Difficulty] grow the utilization to hinted continue

RMs our also point initiatives that and growing But steady our contributed while selective their work to our expansion by On of of complemented home and autos. of initiative equity put households purchased continued trends and homes, loan These consumer an as in we resilience a activity front, seen verticals point improvements our having our accomplished indication and in testament we a We our deposits balances. the to All the this markets. stability steady to purchase quarters saw while to additions deposit company's one new customers impact. strongest importantly, credit. it's history. as growth are see of and further And this clear the keeping

Looking COVID our in Ukraine, risks, inflation remaining positioned we're in them war the ahead, economy. strong feel and remains in and The China, no of credit. there customer is services base without well we continued marks pose products denying they expanding that all but lockdowns that and with question significant to supply very is on there variety support chain strategy disruptions, an

the Our and our are of year. credit, the we back with me that With that, liquidity optimism look customers stems let in outlook our slide touch markets core on and two. from as growing capital on outlined few with the are fact comfortable core we our to a highlights half

growth, normalizing increased XX% business loan initiatives reflected resilient up a revenues robust plus the of ramp and drove just credit deposits Our and held rates, and trends. common quarter rising Through X% second generally a another trends, pre-provision in expanding margins, stable This of results XX% combination were equity. year-over-year, improvement significant year-over-year. to of while returns tangible our pre-tax income expenses on our quarter

throughout our dynamic credit improving see to continue portfolios. also We

net had of we for fact, charge-offs point X basis quarter. than less In the

factors with also asset We situations provision. these asset to significant loan quarter. zero in levels saw net improving several declines us Together, absorb non-accrual allowed credit the quarter's this and throughout non-performing resolved loan growth

me color some three. more Shifting give slide around let our dynamics. Now, loan commercial to

balances. in line our As driver clearly has a in move the the past halfway utilization we XXXX, point been of uptick

originations, line balances our has line On general commercial fueled been past by activity strongly new the more levels. total And side, quarter. pre-pandemic and verticals, expansion uptick, is PPP reverted now have new in off grown our than growth over average the left CRE utilization historical commercial by to run offset from

Turning to slide four.

side, every seen The hand side While the on right on to commercial we chart vertical. also growth. shows growth this diversified report we're pleased nearly in are the pleased with we've rebound the

added and loan impact targets we as reflecting balances commercial While slide strategic the we have full-year initiatives. of our consumer, real significant higher we strength five. the we Based see, for growth diversifying And and are robust growth franchise on trends led our on the revising the our of discussed, quarter, just also broad-based the general portfolios. estate you can in commercial specialized

strength expect year the Given our commercial we warehouse outlook our the with will -- balances. billion of end mortgage book. our the moderation and approximately the PPP portfolio run-off remaining expected markets, $XX of core end now year expect the in to loan in we of run-off This includes outstanding be approximately continued further now

continue million to the to set ability in We that new team's new remain teams drive for progress confident balances with books. verticals our the target both and add high-quality end We hit the year. we've equipment to $XXX combined finance in of ABL a our

at end Taken together, we to book approximately billion. commercial our year expect the $XX.X total

Lending. to Now turning Consumer

high diversify our sacrificing loan that ability is team to targets. this This while makes We help continue fit us on book. decades hit quality balances to a be And without from relatively a impressed they've new team's drive in Associated, with our doing year-end variety auto confident for been to this of for the we're a risk our mindset on economic we're great and quality. team perspective track and environments cultural to

to continue to [resin] through also stable the mortgage from relatively the year. of expect remain balances end (ph) We

plan the summarize, to customers quarter disciplined we the second So of our by growth of the execution and saw investments. resilience and strategic the was core our in driven

diversified strong $XX to year and quarter the deliver and upon. stated on million performed ago, trend would to in set PTPP Our show income. stretch level remain the across track that environment. sand leverage in slide the risk our baseline drew high of A lending pursue On a upon income current quarter results in us quality of PTPP approve consistently on line to optionality was five a we need without each throughout -- of credit we positive the remainder we six, that XXXX. a provide business lines that aware has improve above subsequent operating we

Niles, Chief little over hand more funding, Financial Officer I'm going statement So trends on revenue Chris for pause and let detail our a to to me quarter. there. the income our to it provide Chris?

Andy. Thanks,

that on recognize That's deposit sheet. reducing low we and base, cost growth on years we've than access fund asset our having is sources. balance ever, the side funding why reliance we -- seven, as slide while recent grow meaningful our taken deposits cost look wholesale taken core to the other customer to important to a core to customer more steps sources of particularly in Turning funding we've higher

sit from a we rate much were here cycle we've better than position where in this XXXX. As funding we started today,

hold core deposit wholesale our approximately macro XX% have resilient. expect customers funding to to total We of volatility, recent Despite funding forward. remained going

and While year-end. and net by to And the stable, seen we quarter expect several consumer of first versus reflecting see last the typically would deposit in balances half outflows our actually calendar has we've segment prior consistent business the over quarters. growth remained mix commercial deposit the year, modest

well below in low-cost franchise deposit with a categories growth has consistent resulted medians. peer costs Our in deposit

of forward. a going uptick profile, we our rate in our manage Since increased to ability same a our of well Slide the sensitivity highlights of over costs asset positioned significant the betas feel and asset year, we've our to Year-to-date, points cycle. Given eight in yields deposit we've quarter period. XX yields most of seen average funding average control rising Fed in earning have last roughly our by XX% fourth asset average the funds on increase earning or categories. basis seen the

participate to with positioned increases. fundamentally are assets rate Our further

that costs sensitivity benefit ability costs profile. in net move that rates points NIM On and highlights rapidly expansion basis structural the between more the to Fed from moderately as rate rising this derived increasing and structural that higher funds. level increased in roughly interest profile. comes the capture the related asset rise, is liability margin costs have funding the asset yields side, widening of average XX% liability core Slide This only growth income our is of from in reflects earning year-to-date nine our X asset gap interest and to sensitive or by lag environments. resulting This liability

with a expansion month XX $XX provided quarter. in to revenue points interest sensitivity the X.X% net in our in basis, NII lift quarterly asset in the growth from growth -- the to structural basis expanded of Our consistent dollar structural a million average. June, On X.XX% our month in sensitive asset March margin of for of

factors us several give we've we're Moving on of to positioned XX, that the for that cycle confidence laid ahead. slide well out the

First, boosts cumulative were within will XX% last sensitive cycle. reprice second is or portfolio which of more commercial reset quarter, gap. today as demonstrated during repricing asset our Roughly year, we Associated into one-year our the heading the than the

and better were position today place Fed of FOMC core from half we half basis XXXX an FOMC mentioned, of Based low-cost two-thirds and potentially work we rates on deposits. that profile. we're small of are we're basis to relationships business million. the assumptions expect sensitive full benefits $XXX throughout into as than on also a to like to additional granular improve this later deposit expectations, last XX building July head to cycle have we grown increasing asset Since line, our meeting to to our strength household now to the our the This a year XX from confident back income less of in the footprint. more low contributed by short-term reflects year. previously base year. cost our mix growth peers. to we deposits from would each meeting at funding now loan our and We as total our in points relative emphasis raise also at this Associated customer This net Second, operating and highlight that interest exceed the liabilities. has than sticky, our remaining We points highly a stable, we structurally Bottom expect than these

we've Turning trends. to highlighted some non-interest XX, income slide

third banking year. anticipated beginning income quarter. a and headwind increases on prior quarter new that to the in reductions partially the growth for fee fee-based moderate card-based modest the net see based and same expect fees. QX, NSF industry, and saw last OD actually in In other be the period remind implementation versus announced the a management fee continues I'll While we revenues offset quarter to the mortgage changes we income you of last fees the wealth we in

translate rates expect account fees slightly higher We move to also higher lower, ECRs. into commercial deposit as

for full to expectation $XXX further million of banking the also total most expense revenue rising recent XXXX. With as -- continue we half of we confident income moderating noninterest mortgage non-interest year. remain Nonetheless, guidance through continued and guidance in and in back the rates, non-interest expect between $XXX year the seeing income we move our

slide on to Moving XX.

increase efficiency year-over-year quarter with This came Second improve. at by in revenues X% in million. expenses to a $XXX our higher guidance. Driven consistent ratio controlled continues expenses, represents expenses, and prior our

full growth and initiatives technology, we to full for to to within keeping in year in come people are now between stated below XXXX of prior As tightening million $XXX our I expense scale our expense but expect $XXX the in year. million, is and back previously, revenue non-interest growth. up guidance range. remain to which all We expense consideration, committed investments continue Taking our

capital, slide capital the supported we levels the the we end as the we will to profitability range, and X.X% on our growth XX, Moving managed TCE during will our year grow towards quarter. Nonetheless, lower given we customer of end year-end expect in range. enhanced fully through to loan X.XX% trends,

We CETX X.XX% also the between will and end expect year X.XX%.

Officer, turn over update Pat Now it Credit let Ahern an to our on me provide credit. to Chief

with The Moody's shown consistent XXXX minimal baseline our rate actions like May update baseline trends I'd an start Chris. assumes CECL looking fed remains utilized our assumptions. Thanks, forecast the slide allowance as on recent fairly for increasing to We've by forecast impact. and and COVID providing Moody's on XX. forward

quarters reserve a X net point the than net charge-offs provision we releases, QX five posted quarter. in with Following of of consecutive for net less basis zero

by ACLL from million. improvements June additions prior fully Our economic at the growth for offset credit declining factors releases $XX and other with million, flat NPAs approximately XX loan at and quarter totaling was $XXX from

Our quarter. reserves during loans to to from the ratio declined X.X% of X.X%

assets Turning quarterly portfolio. a to slide strong in with remained improvement loans credit XX, Overall, the the and trends. positive health metrics nonperforming we of of highlight indicator as continued our non-accrual credit

the business to XX%. lending loans As that a note, were has point. highlight billion XX% XX. X compared under delinquencies, non-accrual equates $XX by more quarter spent which also loans would bolstering which a leading and than book of just basis non-performing points than We Associated. of across loans, assets basis decreased Shifting entire problem our QX, currently foundation decreased to commercial are less total by million at decade QX, book in while our to of $X non-accrual indicator X We end. potential credit Of slide

and we've diversified year-to-date, on see, our in note, in of year-over said, a sensitizing management, expanding built core focus concerns. on our are you charge-off with As -- the zero both the growth and our balanced engagement that familiar. discipline we labor to a can relationships, underwriting with quarter we rising about down and With -year. we segments in which total fully was the elevated portfolio are investing signs and Of customer one-third a as our as The non-accruals interest is reflect to strong growing with warning a that few are driven culture our in very aware name economy inflation, well and second net economic disruption remain bank stringent rates, quality. supply chain cost is by

to now loan adjust Going other provision Andy With grades, to reflect to to and closing credit share some of indications volumes to forward, changes conditions, I economic quality. that, will expect risk it we thoughts. back hand

for updated XXXX. Thanks, our Pat. guidance we recap slide XX, On full-year

half growth outlook quality result. about bullish we and loan our remain as of over year a we First, are the updating the back

loan expect commercial now billion in year $X.X we full of growth Specifically, approximately XXXX. total

expect now We FOMC basis year this remaining a growth of meeting continue full at and approximately $X.X anticipate this a We XX point auto month's XX meeting finance year. basis point increase increase at FOMC each to billion.

income our million. net As interest expect such, full-year we to exceed $XXX XXXX

and million now $XXX expect income between of expect to full to million $X.XX of total year. income interest non-interest $XXX total and billion. taken continue net together, And fee exceed we the We combined income for the

in our non-interest between of a $XXX expect expect we as we're XXXX. we non-interest we result, committed expense discipline, and between remain and expense now expense $XXX -- tight million million Lastly, to in guidance now

our while I Meyer forward to Chris Product Q&A, call before on excellent to joining we that August. to looking From marks beginning Bryan the us move on leadership executive Niles team. addition experienced new has quarterly this joined to Associated we as be retires. he to at here, positive last look want two a earlier Since joining Marketing week acknowledge will Chief company foundation. of officially tremendously in our Officer, us the CFO as build an our had of strong Derek put call has this position Associated we're and in and Carson our new the earnings Chris impact leaders Before XXXX, as

creation. the believe our to bolster will digital transition the I've are as As growth and generate on real stakeholders up we year. And strategy come. are deposits on it stated ability from term, half making transformation. execute previously, our Brian our headwinds especially CFO that, to forward deepen This current our I for the momentum years performance our our relationships, position will the of in and in for in strength, now Adding a path the executing the Associated our confident despite Derek time. near the to in positive looked value in at first let's I'm we we drive and team given strategy to of strong further macro questions. deliver And With open

will time the Thank question session. At comes Jared line of you. question. we this [Operator first conducting with Fargo. proceed your Our Please Instructions] a Shaw from with be question-and-answer Wells

guess, is you've from? second the Timur good year, you higher this through is where to going that Hi, verticals look filling quarter on from pace But as the you the ahead coming of loan forward an talk were pulled number? saw at growth within loan that I pretty think some of majority growth. optimistic Jared. was and growth? optimistic Was for the half incremental rates was anything industries maybe trying to And get loan that afternoon. Andy, be of the what This been by we the know for potential quite in you of exceptional. there Braziler surprised I of

thank for the you question. Yeah. Well,

we wouldn't that surprised. say, were I'd say I First,

I'd as had So every [indiscernible] had of diversification growth. say, we we

So in single we had growth category. almost every

did utilization. commercial look, little tailwind the year. expect get we don't As We that a in we on on the usage half of tailwind line second

You in take It very on quarter you we standpoint be little now we drive the forecast, ability still it. can that's have selective where starts growth, see whether our or nothing try where to to just to nice second we from and multiply that economy our options but to expect an grow a bit, value. dampen

assets we and So assets grow that estate I credit as commercial as occurred. the transition your still did, across real some RM our or frankly, get transition very good -- And were feel to box non-performing we some the ratings, about loan you or what growth into able some board. quality when we and not took expand

you're the the then are future of of continue supplement kind second that kind into year in there will deposits on of looking to the as growth, to gap? FHLBs growth? Or coming And Okay. loan bridge to online or visibility fund initiatives incremental leaning half you

Yeah.

the expect With the we we deposit that able of be vis-a-vis growth. our largely growth to second expect year, to that in the half fund

vertical to a We for from business treasury acquisition the management our RMs. to acquisition deposit management having on to initiatives that year the a to on account mass commercial RMs having opening, having working launching have focus we've on to our banking of half digital focused been our in our the number liquidity RMs last affluent on of had HSA in work or deposit focused

cycle. sorry, about to demonstrated we our in I'm we've on ability We've initiatives the able we well. than trajectory loan good different network six ability demonstrated we'll and of where wholesale initiative loan the XX% reliant that So that of on execute Right deposit the on deposit be ago say have had on through able initiatives pretty on our growth. I XX% to expecting deposits. structurally as XXXX the being about coming now deposits reliance loan we're growth, time do execute luxury this -- versus that But being to rate a years will increase those we feel on

about borrow funding have core feel to from but drive path very beta. FHLB, deposit meeting the the our with do we ability that to we're to good the intent the we is and on, So, continue

strong line achieve you feel year beta deposit mix to As for through quarter this XX% right in like our and is we're forecast we to can that. a coming see had we with XX% and the the

quarter the tax expect we April we an a held we would quarter. second through down highlight those Timur, the to then would generally And and saw step been we reason happened, as also later collection the would deposits lose funding we September the governments seasonally year That's and though the we Seasonally for that taxes see basically season. into this to cycle balances also normally in from That a well. to won't third expect through net and move tailwind in March uptick municipal benefit year. the for of a and no towards and believe see historically property the we as have us

incremental that color. some Thank And cost actually that that some added it any increased, while declined. Just on, color looking be lastly dynamic? that's that there duration would the good the Can then just taken cost in was me, of for Okay, at on appreciate. was borrowing of Was balances you decline there? you. that talk wholesale like through looks

on we have a little one. we Chris, color you -- a color little take that that. Yeah, don’t why do have

Sure.

we exit our we with into to term more Federal advances, Bank were penalty, Home move as a are those prepayment So of two to the did advances, no there things. Loan funding able some no in those moved profile. fee and restructure up general, Specific rates advantageous

that of total of in sort our also which we wholesale senior see flowing retirement to now you'll funding and a the positive is costs. the as of had total obviously notes, funds through Second, cost

quarter. And you. luck thank Great, Chris good your retirement. in Nice

Thank you. Appreciate it.

proceed with Please question. question comes Piper Siefers the of your Our line Scott with next from Sandler.

Hey guys, good afternoon.

a kind funding to revisit of wanted bit. Just

there mean no significantly question, profile, I funding it’s the better. is So,

guess such towards sort materially. to deposits ratios. the deposit You one strong higher outstripping guys that's loan you're of getting have I loan of growth

we'll imagine kind what like deposit So, loan fairly target? of get to soon. you there do I’d ratio

that probably fund what's just thoughts? your And sort loan but will to down understanding the the a overall temper loan strong growth? growth hear thereafter, curious to bit, of plan So

Yeah.

want Chris, this, if jump in. So start I'll you to

XX.X% deposit ending multiple going So, is core loan quarter deposits. the our that be track expectation around able to XX%, that to ratio, we're areas in have to we

a So like that have keep have on we between possible is but clear do. to execution treasury path that there for base. me your on XX% clarity and say, When I strategy. for hope not This we management. liquidity more and for I a affluent short-term management, as the is expect some is ability largely, the to customer as I've you we XX% time deposits affluent commercial mass to some the initiatives get a we are when do -- know launched and third just wholesale which There got mass loan number If that, be see that we funding, will the going us would that get our from you under-penetrated numbers we that in customers.

to So I significant is that available have there clear dollars a pretty us. indication

will gain a on year on business new the opening on we to as of ramp and end of quarter of first year, side and resources into we only quarter. work year-end the HSA in digital first the up quarter. towards starts the that added We've fourth opening, will momentum account the account Our the things, the that go

balances to continue we'll there. get So

But it a dampens. growth, mean the as in very was the the stay next quarter first deposit in the we the quarter next in half second for first some in So, quite fourth to and continue dampens I'd while XX% a year say, of below it which we'd I year also range, in been for working half of of and quarter, like kick year. at the on good little think initiatives bit time back us. a we've to quarter, the loan will

only the our some and factors period and ratio peak I to to to would has look thing loan the earnings drove decks, been our historically investor used fourth our quarter the ratio. a deposit add back that at loan seasonal usually And is is, you second to quarter we if deposit our highlight Scott, low. prior that of deck

an to deposits would And we those reasonably and we contribute aren't they so -- no swing of way to seasonal that going do, will have profile there. usually the that some improving

Perfect. Okay. Thanks.

believe funding strongly forecasted. we that wholesale we can with even we But the hold margins

you. just it's of trajectory Okay, things, growth going still NII as perfect. the Thank of the become to do be than through mean continue little naturally if I here go, we asset sort great [indiscernible]rip sensitive some the to then, less guess, And I remainder you a year. loan

trying to rate Just will as like a sense into get sensitivity the go for we what year? look next profile

based lending. the that you can Yeah. very work the asset whether larger our we're things that on really And auto be see sensitive. way is, the like be That's rate on one finance, of asset up are we But has that that we initiatives have will be to lending, fixed benefit. that side, the equipment whether that

expect is getting potential a have point that XXXX. for that advantage to in we and a asset as of peak decrease a peak we sensitivity in So, some dampening rates, at interest there in we're rates reach a as taking

sort reliance in of up less this over mortgage are we're that of laddering laddering assets on to we if as fixed portfolio. here quarters. internally beneficiary have been moving We've market historical laddering. been think portfolio our I higher the cycle rate in the has that higher. going cycle the those play And traditional as our Scott, of than asset it sometimes have to bond couple into prepayment benefit, rate discussed the part sensitive next be And classes the turns the we'll

And very thank for best right, much wishes. color. Chris, you perfect. the All Okay, guys again,

you. Thank

Thanks, Scott.

question. Our the next comes with from line question proceed of KBW. Chris with Please your McGratty

but we're question, we've rate means. I XX know think I Chris, in Maybe the what Thanks. assumptions. asked a different each all Great. we've in got past moving chunks,

trying Just see the incremental yours? than could is bit if forecast What our a little benefit different to be? rate

Yeah.

million roughly above increment forecast. our per $X for as month said, point basis XX So it's we've each

or extent we're So but at in. of plus, the had following the July per $XXX here one remaining meetings that's rate an baked XX each for extra they're because increase. because end be of the baked month million $X the calling XX it July. you would XXX in That's into in was million XX XX, that meeting, being it period here the subsequent a at And

Andy remind ROA, for timing? Can how you, momentum of initiatives. lot then just maybe on a picture just got that, thinking And Thanks. but Okay. lot targets, a efficiency, obviously, rates us about long-term dictate one ROE, of levels question, and a you bigger Thanks. you're the the you've

over got So we’ve a jump June, month I'll of margin towards Initially in. driving the I we we're million $XXX the think million. maybe $XXX near said In the term.

like So be a fully XX% pretty The driving XX.X%. we'd that ratio came that said also efficiency ratio. towards We've at we're efficiency to to equivalent XX% be hitting going goal here tax in soon. feels

we And feel targeted we're direction ratio this ROTCE at mid-teens in that right just consistent we've XX% XX% efficiency a came at in the one. with adjusted over consistent our that on And is basis. finally would moving move. on we like And So say I again quarter.

So feel confident level. the that on to trajectory get I pretty right mid-teens a to we're

Chris. Perfect. Thanks,

the at softball by now one $XXX with $XXX million on the one of the that -- I on Chris thought, million. takes margin forecast

again. Thanks

you. Thank

Raymond with comes line question. your question from next Daniel Our of James. Tamayo with Please proceed the

impact you to the Obviously, loan the just in of hike? margin I rate relative guess, on what that impact second everybody. to the tremendous because the but mix of you on clarification are Hey, good the kind a of deployment. first, out the going was the quarter, strip had cash quarter the afternoon excess in shift of was the just growth

that the it, had I a using May million more saw again obviously think XX% to $X per and the we previously we than month The about million we roughly action. per month. and that June in guided benefit, way think $X

those the sort outperformance. was of other was rates. a the drove good month you stacked the for balance of if bumps, can the I sheet yes, each the $X of of you rate of from sort growth out from So on other that. for think it portion utilization the are of top the part cash is But, the and part a residual But solve million back and factor balance which

growth guidance in The half guidance. the is on second terms then assumes from up year expense of question a kind last And annualized of of ramp in Okay. my the the year. back

should fourth annualized XXXX that or base we XXXX? we the entering freely just you kind better in once quarter the fourth expense how to fourth quarters in growth If about past Thanks. growth the do get at number flow or curious a the of think Just it? think into quarter look should is way

baseline you our overall we're refer prior to to We've where we expenses over try going horizon be going XXXX, forward year, our is growth XXXX about that in X% that zone. expected delivered the disciplined keep would X% we well. that back said and to expense investor presentations this I as

nine have are we that overall still come the we've technology expense see got amortizing but So line and that is growth roll we're to months third the our last with in we've going hit and effect. to here put ramp year will and it that to start I up, year. through because next base. service way given quarters. going part in working our be online we're We And hiring That's been going and that to a to be going to range has play a and say we're expense into long-term number it come And initiatives is full working into it going guidance. our for in you ramping that to that, the the through, think of been will would on up fourth a

people. invest continue technology, to even how bump we that we we're we'll the disciplined So about growth. will be continue and revenues growing invest but to Those faster, numbers, in in

regards had spend with we we're what to only said revenue. driving And we’d if is, that expense money before

exceeding hitting and targets revenue And are so, them. we the

try environment. do a to try it's and single the cuts strategic change margin now, the is to the combination to to accelerated growth to in into that make ourselves as the year is, we'll back there rate due though, there we I course, redeploy we both position change we expense industry, say will look acknowledge what we've we'll said What at fourth in every marketplace quarter Of would that do when is a and business. a

look have the that estate the producing So action into we as initiatives and groups will the the took fourth put that whatever can technology look what we is a back on asset revenue think quarter, year, across as last and at we we we and company. less we producing in real support

looking appreciate color. was I I you. terrific. right, exactly All what that That's for. Thank

Daniel. Thanks,

line McEvoy comes from Terry your questions. Our proceed next of the question with with Stephens. Please

good Hi, morning everyone. Good afternoon.

Good afternoon, Terry.

the the dig into back Maybe to first question, just expenses.

to equipment finance teams week. [indiscernible] hire team continue new You last

you commercial just team run quarter as clear, or opportunistically to the off will run expense the and growth fourth rate, you think will there to And to kind that add do teams. rate continue out fourth so, be those the build capture that guess of continue building, be quarter lenders I

and as confidence puts a build that still with year X% we've long said. of feel we're that the next range. in I that range to lot continue but forecast for feel the There like that is expense, be in term still we our I takes number

been we've to able So build. steadily

we've One are would I managers? And you bringing number a of and our had talent, success up. of the managers' in getting of say we've what that to is, own the been other asked questions committed lot same productivity growing that to relationship relationship is,

we in selective so, we who be will in. bring And

we would rate to them. mid-term we in our We RM a run out if to hire talented pressure we need bring don't XX because is -- feel there have to at a XX I targets. will the be hit there that

beginning. a that approach the we position sure on we pressure around where have that and stay add in we the stated make we're from where no the now targets expense But we those discipline is there decide adding. can and within So

any you've you? disruption could possibly the maybe talent window which or you. share? for markets strategy on to follow as comment terms any Thank whether to your important what capitalize And that then are And of of gained And in in Milwaukee, a able given been is, on market you two up, customers? Chicago or

-- every relationship regional and we've managers new major been almost been names. in gotten We've -- national to add bank able we've We've from gotten our footprint.

new So to take Group come advantage that well. in the answer folks producing. in And is yes. started I believe brought in names of and some we've bringing have our able we as and immediately that is existing been

feel good in bringing relationships. about our and footprint in the I very core franchise So

the So take to Minneapolis, been players throughout the is, very answer folks yes. of [indiscernible] able footprint. added now Milwaukee the added feel people disruption, Chicago. in in we've [indiscernible] but we've We've we've We and of optimistic some added our I like feel advantage Northeast Wisconsin,

is, think at And were business look we're that's and where franchise. we most, loan we Minneapolis do operate, we commercial we that and Terry, where to thing portfolio and When that think the Chicago the the be, Illinois want I’d the we the exactly quarter-over-quarter our sub-markets list. little the commercial add of about banking where top we the add at only commercial basically think diversification speaks the that specific I when Wisconsin, about growth uptick and where Milwaukee, banking That's pack. exactly led saw to to we across seeing of the

Great. Thanks, Chris.

miss We those these after you will calls years. all on all

asking question. the supplement thought definitely at read to Look before your release. me You the press

help. that Thank point out. are all to You you. And quick appreciate always I the

You stuff, can still read that Terry.

Yeah.

again. Thanks course, Of definitely.

Thanks.

Thank you.

with next Arfstrom your proceed question. Jon from with Our Please comes Markets. RBC question Capital

Good afternoon. thanks. Hey,

Jon. afternoon, Good

for we're to just for Question going do you we're have on Once ask Pat. going to to for [indiscernible]. Derek to work Chris, the on but you us, go wait

at We all. about haven't talked credit

an I in your built on little and can and qualitative you bit think have that of of for in assumptions. in what clean, you economic there it's factors reserving, arrow some terms up slide so because but XX talk about there a your is

And blind we think is what in forward. of about is a to capture we not to that we factors there that tried I some Well, build that uncertainty. We're that talked looking acknowledge to wanted lot just unknowns there and creating in macroeconomic the marketplace. and obviously the are that

there continued think we're what to capture rates. is toward now, that. recession that inflation, clearly is wanted say all interest things concerns being be but and raised right there wouldn't issues nothing. rising doing or any chain, I risk now, overarching we potential point to able there's These I supply are

remind knock seen us then built being on Can not it yields of you not a just of you just you pricing down flattish. That one and of seeing other I of stress, I'm risk touch on but one had any terms my pricing And looks what of some auto. really not was on kind in on Okay. curious to rise bit you're expect And do in management questions little auto? on critical, the question factors but there?

then To Jon I core relatively just And, that. got your rates factors slide of Yes, expect think yes, I and I'll some FICO rise as to Pat, broadly there. and LTV be tight pricing. jump that we've have in comment, pricing We around factors factors would XX overall rise. on think discipline has the credit seen

year. it higher So I back let through to would credit. the back move as turn see expect to the drift me half we that of But for Pat

trends in the not think of marketplace. reacting with. we're and seeing from to lending in but may going what's I new we're deal or also of not We've we're risk that on valuation only in we're to dealerships the Yeah, what may We're standpoint, a working of processes place be too, happening. terms monitoring what got watching constantly management applications lot that with internal customers a

scorecards we've what's us internal kind that and that monitoring of give in on got constantly there going lot leading we're a indicators marketplace. of So of

bought Andy, back had Jon, if you is -- actually the that information, we already. remember, actually was with this -- scorecard with data we customer customer balanced legacy tested that we a -- so this information the tested

and we're XX% So using you, that, it with information matter a tell of I'd to build prime XX% we're go And super-prime, wasn't the models. us super-prime. just forward our

more. somebody question, for the and of kind that Kind him grow squeeze if then your new to you and I Okay, -- got it. try set company? like Andy one can goals in product but Bryan, what of And officer. non-financial would with as about you charging just you Thanks. What to talked a one you are marketing continue

Yeah, question. great

we did I He that the on somebody and digital Analytics, is consumer on he work has Data understanding the in on via Bryan the a customer side growth strength he of much and know led well is, and of success differentiation the bank. what also sales product. the So, driving customer insights pretty

when you where going that's to doing that awareness industry But when particular. people the that side, the of understanding think that the matters the commercial building and side business. think had he So think in about on matters side of business product what a digitally, is on me switch you you also on about to consumer about the marketing the

liquidity even And and ability you the our management about CFO, who each the and and excited to they how together. understand the has combination how and capture individually liquidity excited to with FP&A, expertise one work probably them very so I'm work marry more on about to and when of customers with ability drive really new I'm

I it. S&L I at you're kind you best appreciate that. got and looking your do you're retiring. wonder I'm I luck. I of of luck. age and what But I'm Okay, am, Chris, and doing just than and wish the younger here -- I best wrong of

Okay.

Jon. appreciate that. you, I Thank

the and of over Ladies question-and Harmening the answer-session. you. we closing reached call President now CEO, to turn have end Thank Andrew I the and back remarks. will gentlemen, for

the wanted and continued We Well, participation or interest forward Banc. in say up to to available come Associated answer information very released. questions that to story and tomorrow might and are you. to look I follow-up tonight thank continuing the you any Thank everyone's for we just

this at disconnect your This concludes participation lines and wonderful today's you conference for a have time. your and day. you Thank may