Associated Banc-Corp (ASB) 24 Oct 242024 Q3 Earnings call transcript

Good afternoon, everyone, and welcome to Associated Bancorp's Third Quarter 2024 Earnings Conference Call. My name is Paul, and I will be your operator today. [Operator Instructions] Copies of the slides that will be referenced during today's call are available on the company's website at investor.associatedbank.com.

As a reminder, this conference call is being recorded.

As outlined on Slide 1, during the course of the discussion today, management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements.

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

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

herein These reference. incorporated by factors are

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

Following for the today's given will presentation, be Q&A session. instructions

to At go remarks. over the Please conference Harmening, sir. for this like to opening time, ahead, I turn President would Andy and CEO,

our Chief resiliency at update Wisconsin the and a our stability updates slowing economy. in Ahern. afternoon, Officer, earnings states there, are the macro joined third . At many credit. quarter did and below in to Well, on and I'm home, trends, indicating then Unemployment third closer But a And also our and national footprint. average. is our see income and bring Andy and by an I'll our Derek a once of of to other provide variety from capital will off again signs sharing to will points on data U.S. Midwestern of from Pat level, and the X.X% the Midwestern statement continue few good Credit quarter provide Meyer; everyone, some welcome I'm highlights by the Harmening, quarter. start margin, Pat CFO, Derek call. we

issues commercial largely inflation. base and chain and strong, able manage through supply elevated clients super prime to has remained Our way their prime and have rates, been consumer our

stable stability tandem trends this translated approach markets that quarter. again and with asset has credit, serve strong in conservative to our to quality We

of execution on emerge we're And to our enabled start now stay also company. the has squarely seeing us it several our strategic Importantly, to focused tailwinds plan. across

a that anyone in the have just fintech. now or we side, value consumer a up well against commercial stacks the proposition that's bank industry, a whether On about

few banking a make for past when manage want. to we've their the it building digital our modernized the years, and customer completely where out platform customers by easier experience Over to transformed money they

what and favorite customer grow a but deployed new like in continue the enhancements, We've deepen enhancements we to affluent our segment. to going of have make with Early we've customer program business, mass monitoring, need Grayson, side the strategically credit are to Pay, we product markets relationships important and on growing. to We're already we launched the consumer

also on our highest right the and per first our We're for customers. satisfaction net with importantly, the XXXX, scores we've growing banking on we're track believe household record. promoter and base deposit In customer customers. seen in time so higher years mobile a these and new We do attracting balances

On markets. the momentum producers to by growth strong continue in key build side, adding commercial we

year, leaders and we're XX Following Phil on overall and over add past progressing such by Levens Reigelman of Neil RMs the commercial XXXX. as Michael addition our the experienced to early plan Trier, several business

Brown, title Earlier will be specialty Bank, solutions us who years vertical deposit-centric by joins This this an where HOA of new from payment vertical announced fintechs. expert, a the and the XX and career. focused such and of U.S. industry management week, his deposit spent industries, we on property he as led past launch Rick escrow,

our are financial initiatives already impacting X organic results. Our Phase

in growth and growth. customer $XXX core third Here growth nearly in signs encouraging quarter, and million customer loan C&I saw earnings the in core deposit of progress with over we core million $XXX growth -- solid

prior said, of that On X% grew the in third we or in share. quarter, period they relative Slide positioned from diluted the to X. but the $X.XX beyond above over this condition. ourselves Core the and walk typically seasonal by beginning highlights I'd last GAAP quarter, inflows posted impact some to like through of both also the a per our the X% to grew an by from same customer improving incremental scenario year. see have deposits macroeconomic a low-growth basis, demonstrating on initiatives year. outperform additional With we We of of time market financial EPS

our enabled funding us quarter. by also balances This during core deposit to down the X% wholesale growth has work

profitability portfolio. efforts book. side other led our by growth the loans balance make emerging in loan enhance by diversifying by the our profile our production order of X%, C&I grew we've and to Total sheet, progress our on On steady continued to over

to income statement. Shifting the

Our a an in of expansion yields net NII during decrease balance with and increase combined a the sheet million in margin and $X basis asset drove a costs in liability X quarter. growth interest slight increase point our

in $X growth slightly continued management while Total increase our on growth the income, expense level noninterest for the a our decreased but to million million were ratio led revenues efficiency we executing diligently continue boosted to noninterest expense Our in our by wealth $XXX increased strategy quarter, as fees. throughout year. also by manage

has enabled capital On accrete throughout to our the stability the profitability and the us expansion front, year. core of capital profile

foundational in and our basis Underpinning QX, results entire the end of point CETX our solid managing X.XX% again on XXXX. QX. we finished our is strategy XX credit saw in increase discipline a at Here from risk,

in our decreased our million by increased We During meaningfully. the $XX and charge-offs nonaccruals another a basis point. quarter, added ACL provision and net

to disciplined, understand curve our portfolio we risk can by in remain always, better a consistent of by and so geography. we both segment As committed credit ahead to ratings staying approach loan risk the taking

continue closely. will asset quality to monitor We

We've build 'XX, X we've steadily length X. our strategic at executing the initiatives. Phase foundational talked in to Shifting by plan. Phase hard from the Slide our outcomes And momentum to on worked X here about of

completed. been work sit already we of the October, As has here much in product consumer

that deepen and product attract, to relationships. position to customer Specifically, experience out retain roll enhance updates and continued consumer we've us and customer service quarterly the

that can the you manage added in their see see points the it branch line, set make pain in we've where of can we've the and for regardless money to You experience. tools are. they easier where front customers it improve And addressed in that to call product

large enhancements in community But urban make still to is the compete We in going we whether centers the fact with a marketplace, enables regular banks or to street, forward. that anyone even us plan now be the proposition that just have about value down fintechs. the banks the the

on hire company, track growth for and remain progress and continued RMs the to commercial of we've side to support commercial our also where We business on make on growth strategy. amplify plans to XX the our

target To XX since impact net new far this expect thus as by The build of last expect impact throughout our next year. is September the and we've year, to early of we grow beginning emerge a our date, across added footprint financial we to hit pipelines. hires XX and our and settle XXXX to in of in RM of our RMs results, respective their XX

end $X.X cumulative remain we of with of cumulative we million, together, growth of by Taken the commercial balances expect on X% deposit household and incremental $XXX track an XXXX. incremental annual billion of Phase continue growth loan X, to

the been, we of We where story. added X and as that give visual we've where to are our more snapshot Slide metrics where X These going a we're a drive are company.

satisfied. satisfaction are Associated J.D. seeing highest for more satisfaction customers First, April, we're back Power scores by net in being in the After named on mobile customer we've ever Bank. at #X promoter seen now banking our record

deposit it. and a positive Secondly, top to and flipped drive negative commercial to long year's finally, to trend add This XXXX. And we've our household taken we're over talent up growth to time. sets us deepen relationships team. continuing in

trajectory growth, it full to us banking and also positions sharing past, January. more specifics this TM. As look and to around We XXXX forward with other loan feel in services we've relationships but outlook deepen us drive said about our the good in like deposits sets up to our

the Slide quarter, balance Total growth loan our sheet and again quarter, beginning by that, to look I'd our sheet with by to our We conservative once to this while verticals. grew $XXX retaining for highlight credit. continue million was balance and X a With third like auto approach on the the during C&I trends loans period-end portfolio. remixing led few

offset we during as partial QX. decreased construction by quarter $XXX elevated CRE this a the million loans saw extended into As to trend growth, an payoff

that mortgage our decreased of emphasizes improved our to selective from relationships, saw continued quarter diversification continue also to our book seek deliver resi we've prior we returns. consumer growth slightly to the banking quality profiles and full We broader Across portfolio, as loan the side diversify credit portfolio.

X% the With land we lower this in to expect to in growth continue range end total of loan to at of our XXXX. original mind, X%

to growth X. Slide XXXX. out trend we in in And has the to ramp half in that back deposit We of second here as just mentioned up expected expected. QX, July, played Moving

added of million over core During X% deposits, the $XXX quarter, customer relative QX. increase to we a

While importantly, already And our the primary we most this holders growth of that X-month short, CD. majority was of customers. the funneling kept vast CDs, it through customer production driver our CD are of

by the checking us core us visible such customer -- deepening to to prior down inflow and advances. deepening enabled as has CD years, DDA from risen wholesale of also interest-bearing primary our FHLB active funding checking growth of XX% thanks work the a being but X%, significantly relationship the relationship September. account holders driver decrease efforts deposit such categories, during had Those mass initiatives. our affluent. other with as a quarter. during in The in through percentage This deposits quarter in are

lower over attract our remain original our customer core ability relationships the X% in expect deepen time. customer to quality and And continue growth We of range. to XXXX to X% end deposit confident finish at to deposit we growth

it trends. pass walk to With capital through that, to and income I'll statement Derek the

overall auto by quarter rate loan asset basis driven the I'll yield the end quarter, resi on the Andy. liability our all start C&I, and discussing higher by inch major at yield largely in including by in these Despite of and trends points asset point trends, yields we increased basis saw Slide cut CRE, asset X.XX%. here during the our Thanks, XX X. categories, X to earning tail QX.

On X the higher the interest-bearing reliance quarter. points but during basis cost liability funding by to deposits ticked decrease side, wholesale on up costs in deposit enabled us growth

interest-bearing total such, our As liabilities decreased cost to of X.XX%.

basis X The for X.XX% net the a interest out point to just margin, netted us expansion trends Slide X. to at landing quarterly Moving quarter. our in described I

$X quarter, a latest growth same $X of NII increase deposit prior for in at between came million our and ago. Our an representing a on we expect for to growth, from quarter drive expectations $XXX X% year balance income sheet the XXXX. in and and the interest action, Fed betas Based now million from increase million net period X%

to taken loans This we've X, On and our in our and super provide falling dampen color on fixed-rate we the steps late rate Slide began additional adding to process a books. we auto when prime environment. for asset some started sensitivity proactive prime prepare XXXX

the portfolio As of has grown September billion. to XX, $X.X

While that we've attractive to bank, yield with become along as these been than risk balances we don't come auto at risk less mortgages. an extension prepayment clear the intend or all known

addition, books portfolio in in we risk. began protect XXXX to fixed our layering a to swaps received rate In of downside against

September CDs maintained balances such and finally, funding approximately been shorter-term durations as XX, As mix, And of we've of funding we our funding. for thoughtful $X.XX notional contractual emphasizing wholesale about billion. sources

$XX billion we is set X total. less, mature QX, XX% to the of obligations over which in had of about or year As in

We more our balance goal were representing neutral which ramp going is modeling as X.X% impact put we Taken in X% modestly our sheet this the from have much impact asset-sensitive in position NII with to -- a together, QX XXX scenario has a QX, a of reduced actions about our forward. XXXX. down maintain to of these position

We've XX. continued XX% our Slide target to our manage book range. securities to Shifting XX% within to

to repositioning On rates, combined our last securities total than both of combined QX, and securities we average completed a increased XX% securities late as the With slightly these the investment year, basis, same assets. the XX points a represent our of rising and basis year dollar yield benefit the positions now compared on positions book ago. higher cash is period with

provide Over million at we the a we to the income target XX, came XXXX, income update total $XX to represents noninterest an X% remainder QX. On on of QX. assets between through investments of Total continue XX% during quarter, from noninterest to We in which increase XX%. Slide

in than year-to-date to a income basis, XXXX. roughly higher On continues track noninterest million $X

decreases growth Here trends by in QX wealth BOLI primarily million was in fees, were were This $X up growth capital offset smaller partially million over the management and the third which in charges, compared quarter, period. markets. which by mortgage service were to same driven banking

income as our million. durability feel X% of noninterest year a compared $XXX to we full of XXXX growth continue the environment income in noninterest adjusted to We encouraged finish as challenged expect to negative a our to range continue such, and in X% by base of to

Moving to Slide XX.

quarter, has driven our at X.XX%. quarters assets decreased primarily adjusted legal, in We disciplined dollars costs. the those to our approach by support our was ongoing $X million the uptick noninterest investments to our XX.X%, dollar million with in continues ratio Despite to assessment to continue be in during to growth total to up thoughtful, quarter compared expense we focus. maintaining make a foundational but invest quarter, average and $XXX FDIC the to noninterest professional expenses, prior initiatives, third actually and of efficiency line expense where increases prior In ratio remained the

to These With mind, million. now metrics this in full adjusted X% organic growth while of of check outlook. expenses our investing growth XXXX of $XXX keeping commitment we are expense noninterest in of year We between our XXXX, off in expect our strategy. total a and base in our X% expense lowered reflection

expense excludes reminder, of assessment the special the first net of and FDIC additional $X an XXXX this outlook Harmening quarters X a in million million special in booked As FDIC $XX booked XXXX. expense assessment

by X.XX% now ratio at repositioning increase recovery our of of our quarter, of we XXXX. about After steadily in basis result increased represented last XXXX by falling capital at benefit. the of well net in key again -- highest sheet of and TCE in balance Slide as denominator. driven AOCI our climbed saw posted as net growth was CETX currently profitability, This in the board saw QX. the both CETX the restructure improved sits On QX. TCE a is across and target X.XX% partially during once a increase our We within XXXX since the and QX. The as throughout year, recovery has XX, basis AOCI CETX ranges of QX our remain offset here point we XX finishing asset ratio XX ratio X.XX%. ratios QX points this

we the continue XXXX. conditions, market TCE current in X.XX% expect X.XX% Given of to in remain range to to

We frame. over credit also Ahern, the remain to update Chief the I'll now our of to hand Credit an it same expect on time quality. range to X% Pat CETX in to XX% over Officer, provide

high baseline The our credit portion Thanks, an forward-looking Slide with for Derek. with consistent labor forecast utilized contains a positive start baseline our update the deceleration I'd market assumptions. on additional baseline despite like rates, GDP resilient We allowance to forecast XX. forecast growth Moody's of slower The Moody's the inflation. rate remains August cooling CECL hikes, but continued no XXXX economy environment. the interest rate and

. The point basis risk a our reflection guidance, profiles. quarter by Our business increase into largely in period at lending. risk The finish from uptick an same of with at X this increased X.XX%. our in reserve adherence and ago a million but decrease representing our QX. is by of in loans reflected to an do ACLL indication stress points these stemmed year in another million, $XXX bank We and as from that criticized shifts significant credits QX time basis it in $X increase partially the the by to view definition the of CRE offset in in Altogether, CRE loan commercial increased is credit during shift this from not rating acknowledging does feel X a ACL. to some rather, migration quarter ratio loss credit stable prior not a to

maintain quality in QX a loans of last line, downtick XX. continued at down $XX front classified historical the criticized quarter. degree Slide Further the the After the theme high continued is increased and million of within loan confidence with from credit a bank-wide performance solid total of averages. our of are quarter. in line core total to of prior reflective At pipeline, delinquencies recent portfolio. the changes in trends the third with metric quarter, during the and We quality normalization portfolio Credit the Moving trends. landed

within at is As rather profile not portfolio, noted reflection increase it to rating majority do credits but of risk shifts our risk indication of we driven Again, this acknowledges this loans a which increase migration in not shift significant guidance, the credit is an loss was CRE of the of this feel specific earlier, by in that a of does a represent adherence definition time. but the

a CRE dives our continue and We in the shift systemic portfolio don't see portfolio. deep ongoing

noted resolution see in the downgrades. we fact, near-term of many In

balances the quarter saw to nonaccrual million. second decreased we $XXX Within consecutive bucket, for the specifically,

of We continue within steady pace to credits. resolution a see these stress

charge-offs quarters. $XX provision, which quarter lowest represented the Finally, booked net in numbers we've the million $XX in seen during of we million in both the and several past

net to points basis XX Our charge-off ratio decreased X.XX%. by

bank. Taken us system through together, down quarters. Overall, specific of handful our necessarily continue seen date credit confidence normalized these credits level not in metrics that comfortable broader of what we've activity rating of to we've a issues future and is sign a the the we the outside give situations, and migrating coming across seen of remain to

a Going pressures current underwriting few cost concerns. remain credit reflects in inflation to forward, economic macro stressors and economy diligent on to ongoing ensure we the labor name monitoring just

on In ongoing of effect including attention continue elevated interest portfolio, to addition, bank-wide. maintain rate we rates interest specific analysis the the to sensitivity

to will of risk volumes future any conditions, reflect quality. expect rates, loan changes provision continue indications economic We credit adjustments to other and

control a based emphasis portfolio in markets. our as metrics exposure of rent a developers Slide portfolio environments. key In industrial portfolio, predominantly with with Office have Midwest of on that not nonurban CRE A York towards weighted is an on focused total and in our Class the New CRE CRE built market. City provided of we bank. loans we've X/X any Midwest now we XX. portfolio, are refresh stable building represent loans Finally, properties. a and on And just X.X% within real well-known do partnering estate We to our in properties multifamily

having We or those XXXX, continue extensions to of of and prevailing place, and CRE office whether refinance, take remainder a the approach be XXXX in with the sale majority already for maturing into for proactive qualifying to that credits standards. underwriting strategies

markets we that, our With remarks. will closely. we in, in, feel the pass operate and continue While it positioned in I our approach all this to Andy closing business portfolios of back we given well model now for monitor to will

Thanks, Pat. of credit in I'll with points presentation We've improved to loan our range on wrap the balance returns. -- continued relationships, We X% up full land a continue total loan growth and in to key couple we lower to sheet. by expect to at to seek selective mind, reiterating XXXX. emphasizes banking quality the starting that Slide from deliver of diversification profiles X% our growth end this original With XX. of

original remain deepen work to XXXX our resulting We're customer continue foundational satisfaction across been We -- growth areas and and expect relationships in to to confident customer deposit pleased as end with core with the the ability X% our retain the finish growth range. lower such deliver and at we've the to seen momentum customer core attract, that's customer we deposit and done growth. to bank X% of household in our growth.

balance most we've rate adjusted recent betas forecast deposit growth, our sheet On environment. statement, for the income and

in in XXXX negative interest continue expect between income the we our income of growth now to adjusted of of continue by a and challenged relative our we account, We to noninterest base. net positive X% -- X% to feel Taking XXXX. encouraged XXXX X% expect durability these environment for income growth to and noninterest factors X% into

excluding to And growth special to for D company. lowered FDIC a our expenses noninterest of remains of With expense our webcast. our this disciplined impact after % foundational we've XXXX finally, approach in mind, focus outlook X%to in the

You queue. question.[Operator the question if start, you'd from the for open may queue. from With that remove like let's Instructions] to up it your

One For please pressing poll participants moment necessary pick may the we arches. speaker handset using to while before be equipment their and questions. for up

Daniel Tamayo from is James? Raymond question with first Our

Maybe how think you. forward. on everybody. Thank first, afternoon, margin we go as just Good the we might about

there, that, Just -- that funding . Slide shows that do that opportunities you kind funding maturities think especially of opportunities curious some have just a what the of might on you like? pickup the X you rate look X-year on table the on show

Yes.

our X, in I getting we or couple contractual put I'll is ability up will the of a those contained pretty slow So like increase really where X Page be obligations you inverted jumps we're And to trouble if year been to I of less. lot X is we on take margin pressured about a be work think When rate that wanted mean, you jump would little an up would a see would on we feel X we think I things clearly. quickly. show out, a a have steady. more that with things year purpose. you see happen. or there -- feedback. believing have funding to And say and anybody big then not that get curve. rate

with to the been short. remain we've so fact And able

are that essentially duration. renewing, plus And even those then far. XXX plus it in that pull have we're up points side, in When CD retention so up basis fact the picking and X we're XX% on customer getting CDs we on months billion are $X.X the doesn't those

year. So There we the risk. manage we feel like that interest are come the lot factors downward a during rate into can that of

also next nice done I guidance in ready Page Derek has sensitive, us we We a for the would on less given haven't but set for say very to And which job us thing ourselves other up is X. way is year, for be making a asset that. that

an execution think see Derek the couple it in that then comes of up we kind that playing when managed field, steadily with team years, we're you with now industry asset of can purposely we and very had even were rode line strategies. his gotten here, sensitive, down down a and over very to and we I and back where much And of

where you And be looks stand looks here it provided lender where on jump X kind next of to It update hirings the the good there's then as quarter an pretty with or maybe where fully opportunities but the now. in a those of where those of like of X for in in kind that hirings, you like the it'd leg from where terms of baked stand a final might you lending and from think stand curious you lenders up. you -- terms end . in perspective

Yes.

-- gave is beginning we look what forecast our What's we for XX%. interesting called some at the share XX% we could we performance up close increased XX% out greater -- So about put above past track over stats but probability to would and pipelines haven't RMs up, be. I in explicitly pipeline Maybe we that is year. the than we're when

people say XX%, some above wishful thinking. below might that. that's Now --

make see great XX% certainty, the those -- above we from XX%. to early already relationship hiring We having . hire -- full pretty out by by people. And it. have there, so it's ago a likely money you you're up make is get If close to don't a going them deals. money get book pipeline year We That and people.

at in front. the closing XX% the above seeing rate a is is So that of probability what to similar right very the now, category we're growing hiring

us. So that's that's pretty to impactful

those solicitations, people in October. that also expire. expire X had no have We have hired We

as now have I November. company years top ago. our -- to joined ability right I in been We since confident have expire X.X as talent, this X attract I'm

to to takes bring X able at in talent somebody RMs. XX hit quite really over It and X where X we're to net the we months position team stride. get going to I confident up So their a are typically for entire the team about be net, the next months feel

the expect I are We're they're can talented, pipelines sticking and good. year. folks that -- impact from the already up quite what a get an at the folks we rate because throughout bringing is upside these believe hired we their So we've we with

which long gone to question, people little hiring certainty. phase from now seeing of it's So a has quarter, answer saw gone In the that to a second a to growth. but we we've pipeline past this we've a bit is short

on XXXX. We expect marketplace continue growth a modest will that, through that even

Our next Piper question is Sandler. from with Siefers Scott

able hoping fourth loan you the of might I was the quarter. be in discuss outlook growth the Andy, complexion kind to for of

on at comments it to a than third I this the it quarter. year, touch touched stronger think just from least the need about you we a onboarding or generated be of but looks with portion personnel in earlier it like

curious saying just sidelines, come borrow sort et spend customers you if moment a the will get on are to maybe So of where And will that them off appetite your from? make broadly, about can more what cetera.

lot a of a X if I asked by, you here that every goes Well, team. [indiscernible] Yes. for quarter in another I'm that got question. X you quarter the about commercial say folks -- is what would months, think ramp-up are that the in

to and concerned to a when won't able gives yield loans be financed. bit I confidence. been at really $XXX, bring -- and are Derek, the auto bringing we that in mean, people of last a it Derek we're believe, get in We've of I me able piece was that FICO quite So month, nice I

the with into really been of we're but the won't accelerate that we're steadily growing that rest also the the quality -- But portfolio that. going key We year. customer, pleased So those drivers. have of

us, For construction it's get their the on projects. estate some people have commercial completed when healthy side, payoffs to of real

category. I as in see and the a for down thing bank that actually So for that the borrower. we're good

rates bit However, a little high. that longer-term stayed

fewer we that did yield in that, third a That's like fourth payoffs. curve may are now little that the the looks stay So uncertain. quarter. seeing to But it the could those in if get quarter payoffs lead see we high, not the a also we and we

of where people, And then finally, do bring people in have you some when situation exit. new you lot you a have

exit. closely what to the with so say, credits and And willing look we portfolio are we at exits,

if had And feel okay now. thought few second and a we quarter. right they third exited were in the so we that credits We pretty clean

we X the had volume payoff either. we would that quarters in the so we And think that don't prior have

and a book the commercial that's that [indiscernible]. decrease in end now lower where you pretty think -- a we have. with we we So order seasoned the to But range in stayed we've steady steady marry gone payoffs. And group instead we've of a

Would you step then pulls in its sort Perfect. you shift of of be comments does and rating through? increase onetime can Or feels How -- Pat, the take in And sort your the kind it regarding a quarters that a there. because of their loans? way -- that spend Okay. risk there do to like would criticized kind pushes of in maybe, couple of your . was just expanding a second on work work? up?

stepping very customer noted, worked normal some these think confident issues. be many systematic stuff we've with and circled or as in term, that the course address are on migration in within select that remain quarter could I we stuff, a and out nothing working next handful . of book, of some concerned credits Well, not credits, continued like with CRE we relationships up are there it's And so of see kind lot they more we're shift long-term of not focus portfolio. of -- there's upgrades a business big of These these the are those overly continue think of relationships. of said, that we're more short to us the are things, -- of to kind a or kind and And for there. are kind these to portfolio-wide. point going I business I'll those And on are that years we've I how course are normal we These the seeing. sponsors

is question Jared from Our next Barclays. with Shaw

think growth seeing from a auto great that just the out there. credit the had the been you million rate sort ratio? little what's of maybe earlier. to keep and range keeping million but than the little Or that good what than dynamic growth to you to would yields back going that -- you you side, earlier I year, lower just lower causing from indicated auto to capital sort better has Is it $XXX in build a of growth What's $XXX there? Maybe trying metrics called you

don't prime, It's it be the said want Jared. This not -- prime and capital fit and not to is we're to we want thanks to of rest want our per And ratio. to sure a we don't outstandings se. keeping we category the want super auto It's we've question, Yes. be our in book, make -- said be a your into to and range. where the that for bank want we aggressive we we

little For of bit it growth, we slower want we've to outpace the a rest us, seen the portfolio. as don't

to the credit a in we're is deals -- nice don't FICO. FICO yield down a don't risk dip business. won't. with want down balanced the on very We putting to However, that good on want in scorecard, dip We very XXX and a we

expand the And network with. area is this that demand get little business. overall growth to we so now could in we -- like the ramp up And the for that's were we right commercial us up. at. dealers the portfolio. gone in to haven't a like pace a of that when We it. we're the for where bit, make pivot we're to focus dealing we We like study And frankly, trying business our done We has dealers our down aggressively that want that running

we've on that haven't as sales felt we softening -- that books. press auto overall, put seen on in we something put to additional So the the to need some volume

portfolio, the looking roll-on and sort on us yield And cash expectation on of Okay. I like? All year the roll-off next over right. Derek, the securities mean, flow you can remind what's yield what securities? is from And just of coming then the

So putting probably million. basis to off what's a off. $XXX going it points. as XX still that was, what's we in on million rolling probably but is it's large have The XX on back and rolls not quarter as about $XXX differential We're

in We a still held of portion good that's They're rolling off. aren't more have investment. and that our long-term to maturity those more muni

for but to X -- we or or pickup still X basis So quarter quarters, we get . the X book. X the a total going next points think you're in

the of so? I next is business thinking maybe with into positive me, and should looking the we or over guess, not Okay. expenses is looking end go in these the the expense for should hires? pulling you out finally And of year outlook we sort think leverage, back longer-term be at year, but attainable new guidance maybe 'XX, All just into bringing right. 'XX, on we for the operating still and investment the of trajectory the How as something growth about but out just then going

take that Let me one.

but operating So of -- the January, because until you expense of really said revenue regards will things I say is expenses, rate. leverage And XXXX it And a few impacted few and a with with things in for it's there. you by started course, and share revenue. to we don't but positive part guidance

think up on we staying when of piece we ourselves set the first we've that, deposits. think so And about by short

that I'm customer have growth sustainable leads sustainable. What year, need we drive deposit order high is that into really growth we in, happy to is And momentum that's do revenue, deposit and and categories growth. when have with with we satisfaction is in going momentum that to next in you particularly that customer that know growth.

really into year. that I good So heading about feel next

that book commercial rightsizing deposit side on done the that. a a of have we We rightsized we're businesses, couple

we expectation head going outperform into my as our into XXXX, versus is market to peers So that.

growth bank combination of a to then, And in on leaders satisfaction, with mix we attract customer I pretty look, side anyone investment really really good with and at good are that the getting a and solid we XX that energy a additional the we commercial people don't And that lot had people. then the new that growth was of folks team leading good we're base spent have of consumer see adding already on that quality. deposit RMs customer on that XX. has

to up I good find be And outperform. we're indicators those so that lead to set

leverage, those operating curve to And the I love know to what which those, the to see. that the cut know get there's deposit call to of a We they say what what that like one are have would cut. lower And -- loans don't loan that. will And and of don't could that understand impact stuff happens at rates this yield to the likely impact be scenario. what are at do on resi impacts, on We the positive we they're we generic no amortization not rate, in we time. at just pace, that rate Now knows know that.

final that, that question. So through in this we're we operating impact as Jared, That's Obviously, be that up and tracking is that. think set rate. probably going unknown discussing into That's team think, to I a of for quarter off we what it. things biggest we're get a a better But on other feel the know leverage going go we mind. what that's into we'll my position could you to the answer of key lot every rattle our go because positive indicator

well expense tactics we as will set actually revenue management wrapped we're we've relatively up. I in And year, you, already just we So a standpoint. we've think -- XXXX. every have our into tell up expense going from single

on line So piece of point. this we're at that down to ready the business

Arfstrom question RBC next with Our is from Jon Markets. Capital

seen the think that on Jared's few [indiscernible] . should last securities we've way follow-up expect like Is One portfolio about we the growth the quarters? to size, in it? on question,, right modest

Yes. right That's .

just be understand a but . that of troughed? an going a and to kind talked we outlook about higher, what you there Help little I quarter. maybe bit deposits, bit little us on maybe have? Noninterest-bearing expect Is them what's last that

but ago, to on the grew continue going nominal a the we're we'd to it than probably that on we maybe Yes, dollar the quarters thought level in growth X little grow it to I we while it's think finished think faster this into going and a of rest it of less next $XXX million this quarter, bit amount. closing year, saw quarter, $XXX We it's we the the book -- were million is year. stabilized thought think we

the I said a year. of see as at year I it but So think as was to smaller -- end last going like percent to industry the see and I a don't the before, as earnings is risk . percent a it think I've noninterest-bearing, of

growth if on customer that's X% X%, a of bank that at I say, We you And we're to expect. X enjoy And base we comparatively, past. growing X.X from by is to the household to growing base, what checking what we able kind customer about year the their been that's year. expect for we X.X% would way, at in through X next minus think haven't which went X% forecasting this to

balances. . plays positive when and a accounts role So -- you that noninterest-bearing think about

likely Safe you I around the of income is that net seeing. tougher. interest Okay. is at interest just on this on like is play feels net it the to guide. kind the know a what And numbers, income when at the interest then little But margin net with X% is bottom -- troughing. income X% to you're say based a bit point it

Yes.

for quarter, year I think scenarios year, think was look about it at and Second we think, as to -- start that for this we last next trough. our

match to One you, telling something build earlier from any continue loan on this that's guys reserves? Or But slowly the going All if there -- you I here? answered more, can, right. the need on something Okay. question to thoughts is you criticized. to provision just understand I Pat. growth Is and charge-offs?

I loan right I any our watch are movements. to obviously think factor. think reserves growth is we're pretty where think solid But now. I a And with continue we'll

that, right we about at look . but reserves now. we'll pretty the So good feel

next question with Terry Stephens McEvoy Our from Inc. is

strategy Maybe think more non-CD And the . offensive tracking do if see down that announcement how How following last and we more rate changed you bank on I a deposit because products. could come? associate month's start, as has to deposit beta of going And is rates offense. how of do your forward? Fed being playing then I asked an

touch on to Do [indiscernible]? that, you want

Yes.

because rates been aggressively. as what's an during -- We so the everybody at pleasing, industry, softer think it initially, the pretty I quarter. be dropped we've might of loan -- least growth So seen,

X.X% down from do banks to already to I the to down similar think us see allowed our week be specials again. took I seems next in to X%, that that other So rate And doing. what we're that. those We moving

So been that's positive. a

about going Normally, industry think on quick, bit that from pretty cut all Again, you next see are probably deposits into before quarter mean way total rates base down deposits. that interest-bearing, we've think room XX% which the XX%, lag would moving we shared that first this XX% standpoint. the December. year, If be dropping. next start after on I see looking the -- which first through us gives at we a the quite before, this the XX% rate that's same . to I

loans for we've Perfect. was And Pat. How connected that reserve CRE . the a into construction substandard read to that the of X.XX%. follow-up talked the at couple in And migration times. all then up into to should much is increase a we about

Yes. to looking CRE office that's -- it then And playing always in the sure we're out due always, part, migration. make still markets. we're book to many at that was In as

make sure we've got . the enough So future, for combination just we want of it's to but cushion both. there a

up good one The fees, something any rate. on there that. maybe a in like market's strong. that show Great. given that, estate $XX Then or quarter? Are of management that been can . any run is million The fees quick wealth onetime

driver with a hit business. just tip been to That's it. pleased the really I'm The Look, We're that. good. No. the wealth has been starting of Yes. our market iceberg with of

at seen that not that a we've before. rate we're However, seeing into referrals

when to when so you private strategy logically create your wealth, into to starting you customer a happen. mass start that's upstreams that affluent base, And grow

get you there In then has partnership and have to and add XX business been addition to net that, all when owners the spectacular. XX. you Those commercial to RMs

future. the step business. a refer so in really seeing the had some going but bank point we're in the into our to We've -- starting We're in investments [indiscernible] with good commercial going That in bank. meantime, here was nice that there. trend future. step in X. performance frankly, they're financial at there. We've And investments into We've And to X. had our had consumer

with Braziler from Timur Our is next Wells Fargo. question

base. within you kind point Starting funding give for fund shift the were to of formulate that deposits as you with wholesale some XX of us some on with Can the help where mix changes incremental of costs starting time September proxy the coming to the us the sort the XQ? at on, saw

quarter. -- sure I a funding calculated. mean that [indiscernible] I estimate cost spot have you don't not [indiscernible] -- I'm

Okay.

bit even maybe can So did there's a just movement -- of side. to on the to the on lot a there's a I just thought more that lot detail get we of what movement little as liability that maybe in [indiscernible] below brought the deposit I Was XQ a . at CDs XQ the within dynamic, base. rate were just pricing the how the on? CDs Or rate? where [indiscernible]? does guess

pricing you all we Yes. the throughout quarter. changed saw I it, mean,

a X. So at November you took down -- them now to CD few at to then them on most our for weeks of had at up rates we XXX, and We right were X%. X end, were they're above specials that we're at our took them the and taking

been it's of in had book in market on dynamic CD So it had terms you handles the X about from very And standpoint. then all we half production. that the brokered and those,

same flat grew the was the quarters exactly our see rate but put quarter-over-quarter was it, X together. it you when we the book, CD So --

set You'll an at [indiscernible] see both on ADP X tables Page was that that quarters of out, the basis. we on

and NII asset on liability that pressures out And And the I it just months. the of . just in given XX I'm wondering sensitivity the confidence is But to XQ next maybe the some lag come able where the in NII get asset being near-term a side? looking you step grow at of might has in guide, that that extend fourth reduced guess up Okay. then sensitivity over when I the quarter. kind imply been the asset

Yes.

this -- the products, loans the the both sheet then I our we quarter loan driven trough resi customer growth versus deposits that versus growth in growth, of profitability funding. And the gives the core confidence. improved overall runoff, what deposit the is balance C&I us wholesale I the the is strategies. that growth mean think was confidence is what our and this in think that second And fact by year by NII that biggest the and

sheet wouldn't vis-a-vis because to I think didn't just balance support have would be C&I market growth a for if have take the outlook that talking say we about. share plan share to we're it NII harder us you to market and enough strategy, weren't our taking

first another then And way Got maybe it. of asking question. my

expectation is way time magnitude for of beta kind down in around the interest-bearing on the line? and as And what it thoughts sits then XQ? any Just data

for don't -- a have quarterly we you. date No, I don't

and guidance to and full to of I of a think I be how this that can points add expect answered been which XX%. question the basis year, our next the next basis to yet year, you I cut, that, deposit in would XXX we XX August the beta assumed December where cuts out would have would what rate cut beta best . of get points looking I first finish between before have before year,

question is Chris next with McGratty Our from KBW.

I the for assumptions help guess, on down your us Loan side? you data can loan betas, just the on betas, asset

Yes.

it's one. a don't the on easiest mix. So to that's it's much one, and that depend and as changed we see the gets Q, disclose, -- new the I lot I you'll last -- since in do because thing going is the to think it think in

a Our book loan matures -- mature or reprice either [indiscernible] it year. either or of reprices within

our you against that to is in take swaps, have That If about take the billion -- down loans. $X.XX would the XX% reprice $X.X that billion a we year XX%. about of at

So that some you opportunity. offers

on in the And assets, those you think terms of securities of earning yields. you of that if book expect top then

trickle call to mentioned earlier year. the in up think I throughout the I

beta liability So take talked that or beta can total below overall asset beta your about. deposit I the

in depend a standpoint aggressiveness next us better And at deposit think this we will -- opportunity I just on year. that, the is growth as year, end people because competitive And next for for the on end be gives the the slower why we that things is to probably margin will path that's challenge year deposit think going there think to is right little are us You than deposits. -- but largely be that the pricing. industry how the bit a don't expand from of higher

generating have advantage more by where We still relationship C&I growth have the share the because strategy loan market of our hiring own we managers.

just portfolio? guess floating . The book, maybe housekeeping. us Okay. remind that what's the And be anything -- to aware also seasonality securities in a then I That's really helpful. deposits, fixed of? on QX can you on

fixed. seasonality of there a is Almost in us in that's little bit so FHLBs securities. to fixed. the on all deposits terms of There's little treat a then There's -- I as of strong. And it sometimes, for the bit that tends all largely be but

the I additional also. we itself, in back last at . with expect were particularly look of initiatives repeat half that you strong to the year, If place.

no are questions this time. further There at

look really everyone's the talking soon. interest questions. you Well, appreciate forward to we We to in

you If and have following to out, free question reach Associated a quarter, next now feel and we between appreciate your Banc.

today's This concludes conference.

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