KeyCorp (KEY) 20 Jan 222021 Q4 Earnings call transcript

Good morning and welcome to KeyCorp's Fourth Quarter 2021 Earnings Conference Call.

As a reminder, this conference is being recorded. I would now like to turn the conference over to the Chairman and CEO, Chris Gorman. Please go ahead.

Thank you for joining us for KeyCorp's fourth quarter 2021 earnings conference call.

call Mark Don Officer. Midkiff, the Financial our on and Officer; our me today Kimble, are Chief Joining Chief Risk Slide find and will X, on On disclosure forward-looking our non-GAAP statement measures. financial you presentation our of segment the call. covers as well materials It our as question-and-answer comments and now am Slide X. I to moving This a year. a to reported morning, finish we strong record

the quarter, our or year. the for fourth earnings $X.XX For $X.XX per share were

would like performance Before to some results, we discuss our year. our perspective for I the quarterly on provide

deliver commitments our to progress make targets. of time start each years. past continue operating In operating in toward we Importantly, positive nine eighth on I'll and long-term for generated XXXX, our the we the leverage with leverage. positive

year. delivered in which with also record X% year-over-year of Importantly, year, record the investment net from levels net a income. prior level both up record billion, clients revenue banking leverage this expect we raised year, our of generate fees. level We up last over positive was growth to in income revenue operating a Pre-provision for and interest We record achieved non-interest resulting XXXX. $XXX again XX% in capital

business Banking for growing rate a XX% consistent, has sustainable Key, growth decade. growth over compound engine annual last been at the Investment Our

growth XXXX. We expect another year of in

Our year. pipelines at than remain last strong and this time are higher

to continue take We share in verticals. our industry seven

further position, XXXX. our XXXX, of competitive and sub-verticals, financing In expect growth and renewables our strong population very have affordable add including have order by also senior targeted in In to positions in XX% increased We enhance some leading continued we we housing. bankers bankers. we to

grew expand a pace strong client our momentum and in we We net households new at to saw record We existing relationships. continue our consumer also business.

our Xx the rate in growth western strongest footprint. part franchise over last year. the which franchise of were came grew Consumer XX% of rest households loans at Western our up from our of the XXXX Our in

our strong new XX. growth XX% with households also younger of under clients; seeing We very are are

We generated benefit two growth from ending originations engines, these and consumer record businesses Laurel billion a year to in Road Combined, the continue $XX XX/XX/XX. consumer mortgage. for

invest future growth. to We also order continue to support in

consumer addition bankers, our digital our for Laurel and a in Road our improved we make footprint. national, These segment. of affinity targeted In and coming investments of investments to growth, client meaningful outside digital XX-state In of Doctors accelerated experience. footprint is enhanced launched analytics. high-quality very our the growing have have XXXX, our the for our to new number expanded traditional which continued bank, XX% business client from nationally efficiency we

a that acquired Strategies, maintaining to a historically our percentage AQN an of low firm. Credit at our as strong discipline. And acquired digital also year, We levels. model most relentless net loans charge-offs leading provides payments BXB-focused a average focus platform onboarding seamless experience. we and remains risk throughout consumer-focused quality a integrated remained the analytics on Foundational is XUP, recently, as

and clients position will while to perform our cycles. all through the to risk has well company continue our support which profile to We continue moderate business will maintaining

while XX% position, repurchases. share dividends capital shareholders. we capital net XXXX, continuing In of strong to our maintained returned of and to shareholders have to we Finally, form the income return in our our

am and I business. thank our very are commitment to for stakeholders. want and delivering in our all growing to am our our our confident in dedication clients We for our committed to of accomplishments I serving value I of XXXX. teammates future. proud their

positioned deliver on commitments. We are our to

more the provide it to Don Now, on our for quarter over details the results for XXXX. I'll and outlook to turn Don?

now Chris. X. on Thanks, Slide I'm

from common last up continuing XX% was operations per share, from fourth For the quarter, net year. income $X.XX

record performance from metrics. well as as businesses continued Our strong credit many results reflect our of

the fourth delivered we operating positive year. both for and full leverage Importantly, quarter the

for the and revenue year-over-year non-interest record full achieved income. growth interest net quarter We income We fourth and in also year. both had both

I other was return for quarter the cover will presentation. equity the common items on later on tangible Our XX.X%. in this my slide

to the less were than billion, quarter as of year a for down $XX.X forgiveness. and Turning PPP the The X% average down the clients take from from period X. both the ago X% quarter. help in loan loans prior of decline decrease we periods Slide was Average driver in balances, advantage

Forgiveness this billion. $X.X quarter was

$X estate we portfolios and in portfolio quarter. adjust commercial the and for PPP, prior core quarter. prior well as year impact as approximately commercial quarter average as or industrial both basis growth billion our our X% as on core of up prior versus over ending If the of indirect up loans on Importantly, saw we $X.X books were well auto last the billion sale from of the the an and real X%

time or reflect billion The by both compared the billion and year to side, for Slide billion $XXX consumer to these balances. by Combined, quarter and X. partially commercial of totaled linked growth X% quarter. originated growth mortgage. Road up consumer in deposits the XXXX, we On strong and from on continued or and businesses was Continuing period momentum Average quarter The the continue quarter. up billion $X driven consumer see and the to decline of XX% high-quality this Laurel $XX deposits. fourth loans offset prior expected ago year-ago $X in comparisons

points. cost at six deposits remained of basis Our unchanged interest-bearing

have consumer continue of We deposit a mix. to core total deposits deposit the stable for accounting XX% strong, with approximately base

quarter. the the equivalent of Slide for net billion to to ago income billion compared quarter billion interest XXXX Turning was $X.XXX Taxable $X.XXX for year X. $X.XXX a fourth prior and

mix. for also we the as elevated continue favorable interest and inflows fixed and as Year-over-year rate well in higher of asset net net income X.XX% the net lower for portfolio net excess XXXX. portfolio our our interest X.XX% year quarter-over-quarter, past the by by liability both benefit impact levels by and which The margin investing asset X.X% a last investment included $XXX of received These the additional interest margin We've liquidity, the interest of of have Today, position. Also, average rate we margin period for fourth in about offset the position. loan reflects the the the yields portfolio. to if interest to repricing as year. auto earning rates our compared same margin be benefit XXXX our appendix was quarter. billion prior points. of to the exit three quarter current largely levels net of impacted net last indirect interest income basis were a impact Our impacted million quarter of been also and our experience of our from liquidity, would of areas swap swap investment the the $XX interest current on detail reinvested potential in of exceed interest actually portfolio of Couple the liquidity deposit and the market was

placement $XXX for million the Compared largely Non-interest period on We to million. the year million non-interest full income Moving million and both and the was ago for quarter Slide in third which quarter to driven year. reached was XX%. quarter all-time $XXX period, the and high quarter. record increased reported $XXX year for compared $XXX the fourth an fees income banking for ago non-interest X. The to by debt investment income of XXXX increase

million income third year-over-year. quarter income higher sale lower balance margins. the by servicing fees fees mortgage billion for non-interest the I'm gain Other now which primarily quarter a payments servicing was drivers quarter. $XX and was were billion commercial and million to banking notable income, offsetting other increased year sheet Partially $XX and mortgage Non-interest again reflecting and the $X.XX $XXX million, in placement on growth million compared on XX. this fees increased lower debt driven card by record commercial retention to Compared decrease prior quarter, the lower respectively. cards million, billion this driven and $XX Slide in mortgage prepaid fourth and Additionally, by increased Offsetting fees. $X.XXX $X.XXX last was $XX consumer investment expense revenues.

incentives growth. well made investments levels record as as our drive generation related revenue higher production-related expense Our future the to we've to reflect

direct investments. reflect Our expense in number levels XXXX a of

And our including marketing. and our Digital we adding new Laurel mentioned, We rollout team invested of we in acquisitions National are the from and of the incentives. production-related correlated capability, costs levels invested increased and well bankers. Chris digital As These AQN of personnel investments to XX% XUP. in higher the including and analytics strengthened team, increasing Road the as our in hiring an senior Bank as

we non-personnel On computer increase side, saw professional the processing and business and services expense fees, an marketing. in

quality to continues to expectations. Slide outperform Overall moving credit XX. Now

eight quarter, net charge-offs average million $XX historic the loans. or basis points fourth remained were lows and For of at

million this of overall of continued quarter. Our were credit our or million. strong loan basis as $XXX XX production. losses $XXX million loans a from reflects as well $X or decline outlook This period-end credit provision prior our the Non-performing XX% loans, the was economy and for for points quarter measures

We XX. shareholders. support to quarter Slide of return to our and capital and fourth to capacity with on ratio ended to Tier provides sufficient Equity our customers X.X%. borrowing our X% range X.X%, continue targeted Now This of their with X needs to with the us Common

share reflected this in The Importantly, final our additional in quarter we repurchases count shareholders of disclosed capital executed. was accelerated settlement continue market to were return our our repurchase No accordance with our capital to open program quarter. priorities. last share

Slide dividend are dividend now increase at per of outlook. Board which fourth share. and our On full results full guidance XXXX Additionally, $X.XXX our our the XX is relative year to shown our on a slide. quarter is common Directors XXXX year The approved of places X% ranges

ranges which single in leverage of operating loans a midpoints Importantly, basis. year of up Chris' positive reported delivering be our on using comments XXXX. digits another by the guidance Average support low will

up sale loans the low digits. and impact the will PPP be auto of business, indirect our average double of Excluding

growth primarily which from income should fees be expected forgiveness, lower digits. continued earning interest is offset be expect relatively up in average stable, loan low We single balances. Net by average PPP growth assets, reflecting in to deposits

last a prepaid single reflecting three down for revenue the Our related reported basis, in have guidance lower the a one results which increases be to On non-interest our on year. programs. rate not impact XXXX, income card would December of with support the meaningful assumes in government low digits, would

our prepaid would relatively income be non-interest Excluding card, stable.

the be We to related expenses adjusting again, expected cards, expect reduction prepaid stable. relatively non-interest digits, in expenses expense low be would to single once for down

to XX expect of the XX the to in basis net year, we range For points. be charge-offs

Given for our later move expect credit tax higher our trends, rate guidance we below in year and would range lower loss to approximately And the rates XX%. the early GAAP year. our in the strong modestly to remain is

our shown of targets the remain Finally, slide the which at long-term are bottom unchanged.

to on which Overall, deliver Operator? returns. turn drive and to good and risk and commitments it by improving grow to portion to of was productivity the ability our back expect will We the strong these targets efficiency of our a on maintaining call and make to to our a in instructions profile a confident quarter moderate that, continue the progress on With finish stakeholders. for call. and operator the now all I'll remain we our Q&A over the year

John Instructions] the [Operator question with come Our from ISI. line Pancari first will Evercore of

open. is line Your

Good morning.

John. morning, Good

see to XXXX. growth your as know some a you terms -- more upside? the loan to balances we of going of drivers if that average expect came elaborate side, growth you the or then next wanted is loan think And a see I Where the most the related that, outlook point the of for are single-digit you you main to loan average above end-of-period biggest model pointed I momentum balances in year? could bit Where the do in that you're on little in good to seeing growth for jumping-off building? loan

John. Sure,

which our of the So is in couple lot it, since Xx basically last the of look expectations. we've that as a around of consumer years, at the exceeded XXXX. we've Laurel mortgage you Road course, which of built And strength benefit loan had both engines up in has

the and forward, both we side are. for you're continue growth third look where the rates total and from is, As little to going we you're of see the the I third X% the you to indirect bit And commercial leading just loan quarter, I about fourth let's growth talk quarter auto. a adjusted And think the second utilization see of going to PPP quarter all, back growth. each of in those first what had if to quarters the think the look quarter

XX%. historic at utilization we Right been up Every have billion. Our we're go $X that percent rates is now, mid-XXs.

-- a a build to bottom inventory XX get on the of people of also of my unmet learned this which second remarks. real one of obviously, into. think really tremendous that source in -- of in some have of the a in I time. have probably prior. need a health long that And can will country. notion our an just outsized not think We is on degree cost that's in real housing also this And at other areas our quarter. lot So of technology. consolidation once even greater we scale energy that going environment, focus called than And a than is end flowing loan to amount just our growth. drivers they growth. I Other you product, they mentioned utilization, lesson on quarter, certainly basis a there's example, renewable On it's the of there's for there, were that's generate our that going speak. couple points. there's is in view inflationary about we really Then we my have And have targeted had approach, focus on the on And so because capital a care, to people One inventory, which affordable that, lot up

if our is guidance backlogs pretty our think logical. you think So and about our I about trajectory, current think you

again, add forward. Yes, to XX% growth Chris, the bankers. that really bankers things they're I benefit of helping from we're drive year senior two this seeing for a adding to lot and going are, about adding us senior only that commercial talked We would

it caution balances, quarter. excited thing includes continue is And would about $X.X that benefit PPP balances. you of only so billion worth that. the at look then, $X.X past of from And if still billion be there I forgiveness We saw to the this about that period-end the

and And going growth of and about excited so that smaller the But smaller will become the a part forward. optimistic still overall pie.

around coming And in and just then markets for guys, given great. potential capital Okay, there that how is been common if has a question that -- get business is solid revenue. separately, cliff or the your you question ID we the a

us color know look give you how I us just just the you capital you in you're can should prepared give that how bit about thinking So run bit year solid remarks if you more a another of on XXXX, but As we you expect of can think a in markets about revenues? little indicated rate? little at your terms

Sure.

of a is So this business growth annual that XX%. decade, had a compound for last the rate we've

growing. a it's of And that good a record business so has track

trading our I think it's important don't we investment to note that revenue. in banking line, this any have line,

some just one as the any extreme that we our We to trading, we revenues. line, So liquidity customers. of our might for our provide expect of trade don't of from part banking one, But volatility it within investment see to don't business. have those have certainly,

are, gives today me year are stronger than other that The comfort thing were ago. our obviously, a they backlogs

mentioned, on bankers customers. the as out We Don have more talking just more street, to

investments. integrated. In that We've addition successfully we've to that, other made bought we've boutiques

that that groups hired said have I also bankers time under I've We thought platform long that was a leveraged. on are was of it the for that platform. a

The middle as pyramid number lot do of you're expand opportunity businesses obviously, the you market down of to bank, that go other a targets when gives kind the of a us geometrically. thing

their of really there's repeat a just potential it's a calling so to lot affordable for out And on. a because renewables there's there like of the we've have, lot areas customers whether business. I part of housing, us that as picked customers or we normal mentioned, And do be issuers

So we have a lot of business. repeat

we think any I growth us mentioned the about think to year help way -- magnitude? of the level you about any about know you the expect And growth this way us Okay. line? in but help that to think how should

No.

we we're off spite on maintain continue focused that in in coming growth a it is of business making to sure we think grew of where I year by really what XX%.

Got it.

Okay. Chris. Thanks,

Thank you.

And comes line of question Sandler. Siefers from next the line open. Scott Our Piper with is your

guys. morning, the Thanks Good for questions. taking

Thanks, Scott.

personally, strength such thought particularly was I than I just would in banking to, the the expectation can you're side I guess, XXXX the you in investment guiding have ongoing little in light a sort cost hoping line. what for maybe expense Don, more of pressure unpack a the little? of maybe on guidance

So sort how you're of and costs. see maybe takes overall sort lid you and on puts that the just a of keeping

to income from be also that we the do comments on down and expect I'd the to in the as mentioned activity. prepaid reduction about expected expenses be We bit happy that, expenses in fee the little million fourth nice come we from a fee income decline activity that for year-over-year a card did down. that both the change should see in coming quarter. And and $XX

we're leases our have lease leases. we that, similar operating that going leases with issue operating going certain from capital a to to addition area In reclassify into on

so can And that income a a than you and but smaller expenses. out-of-fee see reclassification

parts level quarter many clearly plan exceeded will would that are going And wouldn't would declines of in so a have of incentives which how compared performance an And in in and artificially categories plan. it where here into include quarter had and that then, XXXX. up programs we we we of fees XXXX compared on finished And levels high other our expect is we in those. based to the incentives of XXXX our reduction our to have the that And some had both fourth XXXX to our XXXX. then professional expect

year-over-year And so would compared had in to we expect what down to incentives be XXXX. we

foundation additional as that is income as to to realized. the quarter, a expenses million that this piece there additional some made expectations fourth result we'll And revenue say hopefully, or performance and was drive again should exceeds that charitable as we Now both fee and there but we'll have back some in next of see last year, third well. I'd far like I and our as performance year that outsized the highlight contributions $XX

coming lower expense there. a And other should we see so through little

of to those that merit invest the top you salaries would in see merit because X% market Now And the on mentioned our will go bankers up see probably increases just increases. will and XX% And part year-over-year. be will Historically, year. and higher. X% that to expectation is X% continuing that investments pressures we we we And at see this range. the of that, grew increases merit of senior others, in we

that that another expectations computer go overall. linked And see nice in expenses of have a to last and the would we did we will see growth and of piece processing increase continue growth bit will item XXXX. expect Our year-over-year that in quarter again be little year up one-line to

And so swirled if of a is low bit how you being kind our down to mesh together low single around and of all single -- down that guidance digits. you little get

And so a but it's know more color hopefully, little I messy a there. helps provide that bit little

it appreciate That's and thoughts. Yes, the perfect, does. I

Thank you.

will line is to go RBC. your we open. of Gerard Next, the with Cassidy line And

Good Chris. morning, Good morning, Don.

morning, Good Gerard.

of investment Can transactions guys the the on think referenced? color for of Are low-income types us give give you with are us talked you that are? the you these loans you XX% I housing mortgages Investment Can area? color leveraged loans some business? on share clients. banking Banking those or what part about about about you can that retaining that they they Chris, out us you some of put

would retaining any to it XX-year Fannie, in that sheet. be we distributing And other the investment-grade wouldn't balance Gerard. end range, those of to for nonrecourse on our we Freddie, instances, the debt. And FHA/HUD, wide We be a would spectrum. distributing ranges be It's debt from obviously,

balance it's on really of our and what our for what So we distribute. we kind criteria hold sheet

the think a having risk of And our And have name. on they better are than we again, with client's what moderate we balance there's places there moderate the as risk as we our one markets and appetite, just keeping sheet. foremost, now, in risk clients can serve interest. a open in is profile and best First our are we certainly when about, other where other thing then not lot any is are start --

think of we kind it. about how that's So

are how the And an give about you need comments funding? business. Investment constantly in can estimate your much of Banking business of a said in question those to industries is -- much something your earlier us that How repeatable you

for issuers In ours. to unusual year, any to it's given of not X/X our customers be of half repeat

by low businesses, helping and if the as the developer question, your so certain these -- you're built projects income business placing and them low then the And putting in example, is same around certain affordable, in a in income housing, in providing in for real which of do your it. financing we're estate that to is business permanent

or guys was as you job the crisis image start see as like so we year. then because from about it normalization some say, follow-up yes, The see a the in maybe more your okay, just guys you half camp you I and that remains referenced well you modeling second really longer first this credit on and there the the Key financial it's can strong much done Is been think half a intuitive, Don, what feel of unusually really the trends And in it good is and year strong? and very this in cannot changing question, to of of other be recessions. sustained way credit consensus in that have

I'll much starting consumer down. well. from provided. has all of think see wind more little about me, the programs it, to actually you those benefited that's color we're some To more been there intuitive. Mark as so stimulus And the But to provide if bit ask a stimulus it's

you're criticized, normal so record normal. any that? see to just I and non-performing would Delinquency don't things see Mark, would are horizon consumer classified, levels And the to sometimes closer revert expect would start that it's But the just more thought that add performance the all-time gut anytime some to to anything that positive. lows tell so say, back which look don't you start Commercial, the to so, trends to as And at sustainable term. levels. to I what's turn on happened to that see to for see we return suggest have would some start loans, soon. if been of going it's being to you similar you going on charge-off long consumer portfolio would and have

well, I pulled general more to back. summed Don. a the classified, just bottom of stimulus moderate Yes. up think and No, it And get improvements, to they'll those as level NPL, you are the all you criticized, programs begin

stimulus though are that waning our clearly even we interesting, there's What's at for programs as look billion deposits greater about are book, the than consumers $X our of pre-pandemic.

So of a the there's lot in sure. still cash for system,

you, Got it. Thank gentlemen.

Gerard. Thanks,

Thank you.

from Our the of Wedbush Peter Winter line next question open. with comes Securities. And your is line

morning. I impact Good XXXX wanted just net to maybe about if swap income I quantify income? ask could Don, was income, the wondering, versus both interest and and the on you in the 'XX PPP

can. Sure,

each as that the to million. realized far quarter the $XX and fourth PPP about As fee income we've that we've talked was loans is quarter the what

combined the $XX year, million little the on of had on top so the XXXX. income normal $XXX over And And a throughout of million. loans was then in fee PPP income interest we that,

between and of think gets we million income that XXXX cut $XXX million about actually so XXXX. And by $XXX

so clearly that for us. And is a headwind

of to income that rates net being if consistent we're kind have so And of growth mid-single-digit year-over-year, in been be showing relatively would stable. interest we reporting what as would opposed

that the far As I my don't top off impact as as the the of swaps, XXXX. for head have far as

higher the are. than what we've is from of that seeing today call this I received think total important on and fixed a we're that portfolio at actually the thing what bit, -- or rates market swap are little hit the rates

the go rate what it. XXX because have far loans. expect rate flow far Peter, seeing as reason do beyond variable depends impact hesitate as or some to our that we swap swap what in four to loans the our received for And rates rate a swaps below down to replace those swap that as we're help fixed for three And words, that, on or essentially only fixed the and the or we swaps current up convert as book is that, at other all of to come that market I so would the is year and rates as because is be assumptions would rate

just so of income remarks, hikes you not every to impact just December, quantify And net you're assuming much Okay. prepared point one an rates. XX-basis mentioned betas? in and you for of being what interest Don, rate the rate Could three the hike impact. and in regarding deposit for them

the be about can. net impact XX Sure, basis would interest points of to $XX million $XX additional income. Each for million year full

Our assumption our liability lower would deposit deposit we're in show our on a asset much first management right now moves outlook. assuming a that's of beta. in about model the XX% rate But couple beta

LIBOR, tied And and deposits on the are now some side rates. to our of more commercial administrative SOFR changes in others consumer the are

and quickly So to expect of a bit up would flexibility move XX% there moves how beta show little as we'll overtime. have rates move far we a it of in then to as but those lower beta the couple first

appreciate I it. Don. Thanks, Great.

you. Thank

Erika comes And your is of Our next open. the line from with Najarian line question UBS.

on sensitivity. points each $XX morning. to there's telling include wanted and therefore, million good question, to to clarify follow-up to net basis for million I in interest does on hikes that I just income Peter's rate the wanted million is -- in Hi, Don, XX% $XX this going be, reality, few should to first us million? theory, you're a than be $XX XX beta $XX what higher

$XX to range; I that but impact the to initially, that there $XX that commercial million Erika, floors loans more expect early increases million for have correct. a of will that a be some lift have that's above rate are than would few would agree negative X

given can to plans of the like? the in your future? NII for Got rate XXXX, for versus through to goes And what And you swaps are expectations -- the what a have debate in terms your swaps What more of replace -- $XX maturing sensitivity of remind capturing protect maturity tightening replacing it. profile billion the us the you looks in the that cycle A/LM swaps?

Sure.

As far years. a the swaps, have they X.X as duration of

that an And asset that target show a how position. by look showing where so To appendix, a asset point, year. first $X take billion sensitivity we actually time X.XX and our that that our there's right about that deposit of asset-sensitive if want to now, for to all the perspective about sensitivity we look X% we're at the assumption earlier the in with beta, of the the beta that XX% we see increases at point from we're We mature points. X-percentage XXXX decline a in billion positioned was $XX maturities, every

And there impact that. a from is so real

are would We more with the outlook consistent rates the be. to where more and getting are our getting where point attractive

comfortable we this to And to so over growth to would of we if reassess year, more swaps more with our outlook. swap this might as we the maturities we've assuming at forward in much swaps how that for not we how expecting any to be look we'll much continue beyond with add the curve the realize been time book now, we're replacing we're just booking. roll able additional that that loan But and and right point have that the and at in

Got last if for could Chris. one it. sneak And I one

way camps: feel idiosyncrasies. specific that expense there season, in to are line outlook, clearly, two are those the the bottom letting the are are your investing Key like CEOs rate Chris, hikes. So rate that this explained The fall Don I earnings hikes those during and

leverage about pay Your and loan how and in and the and rate clear and that going do year positive to take therefore, positive back hikes, keep more positive words, operating you Or you you allow noise Key? widens to we like rate other we you strategy the to further line operating can rate a PPP hikes the we increased without drop leverage client those as growth invest? get to activity. of think actually as franchise about at should operating good that invest is leverage stable loud opportunity In and But you feel are into for cycle? bottom think

It's are hiring really people. Erika. today existing but investing. we're in the And generate that successfully XXXX positive that latter, in we assumes operating that out said investing and we're people. We're leverage there our We will we out

know, of acquisitions. As a niche you we've lot made

continue to lot there. a flow of We see

unique a our continue achieve platform. we it. we team. -- We really think invest positive clearly we'll and we under invest think it's in We it's leveraged leverage So have will but to will in operating

we made million to PPP the and program our at numbers that billion. $XXX that in are PPNR there the $X.X Chris have that reemphasize think about XXXX Just for point of headwinds

that So that's without of the adjusted PPP to forgiveness. core a PPNR or increase our meaningful impact

so think had in we have and invest to have XXXX expect extremely to nice leverage and a growth continue strong to And an I XXXX would operating positive would in and that beyond. the trajectory continuing we're for

Thank you.

you. Thank

of Deutsche Our line from line And your is O'Connor come question open. will next the Bank. Matt with

and industry fees less what than You year this But reliant the the of of be you guys revenues your us give overdraft what update of your forward, a fund's or out impact strategy on changes some in an maybe some given non-sufficient looking and there peers. maybe your could are years? on on the going is couple would

Matt. Sure,

So right. you're

bank. as For But starting us, it's of a not a -- basis, on is it's what most relative important a relationship kind we're important. at is

us our that accounts fees proposition we are hassle-free. with checking no is what to overdraft it XX% are our call is And by attractive account. can't and very all a prospects. very, of of monthly we And it's clients. in continue our on that absolutely existing changes important also a is our series we a And to customers have there's market obviously, will there to sort definition, so we sure Currently, to where you our and customers value that as I Having weeks, said both where the the value last in making a, say, basis. great proposition couple of that been reassess and a are that, for of

us in 'XX? the just then guidance? you And in any changes are those assuming what totaled And fees Okay. remind

in at think we're I if made us haven't over just going -- for we fees assessing were X.X% and any those you model XXXX, look in we're out. they yet overdraft come as where changes to So formal our

but in And a there interest nets you then quick just migrates take missed impact? about do separately, Don, clarification the the mentioned fees both impacting out -- is we it it of And Or Okay. and on costs just costs. essentially income then and out? fees and those question. maybe change leasing accounting a I the net

our bit. would certain wouldn't that, by in be for you line that going them little lease leases removed included there operating have forward. will leases but those two a currently as items, we That capital decline considered completely that are see Well, accounts be

expense that And and correct. million decline would to from you going so $XX that. difference $XX net lease lease income operating that's you income; would see through And operating year-over-year by million net both see the interest the

Okay. Thank you.

you. Thank

line And of the your go Next, with Mike we'll open. is line Fargo Mayo Wells Securities. to

negative bankers. lot question hiring me and pressure; Wage guess a have question; let the a you're positive do negative Hey, first. I of I

you what You're and What assuming and part seeing expense in seeing are technology your up as wages guidance? you are of go outside.

Sure.

you at they're over teammates, couple We, what entry-level their else, back years go are if look a like on starting wage XX%. seeing up they So wages was, background in, five and of our what geography are do, depending pressure. everybody And things. what their you

even real That's wage and Those around areas. technology. and analytics seeing valuable over recruiting be been those very certain there's where -- and employees One that. would Also, areas that's and more we're obviously there's So five years. teammates there's certain in we've wage are pressure. areas

you it's our business mid-cycle. And well of in junior So others and there. see bankers increases then gave sort Banking inflation documented, pretty Investment we

seen planning that it. of that's merit budgeting typically And Mike. would overall X% we from kind we've year, perspective, X% So year. think this coming every we where to would X% have We're increases for an

lower, have said know still CEOs comps, goes you're higher business normalizing player -- investment unpunished. that only People XXXX you're last then Record to should said that so good year. markets you have saying it deed and go results. guide And year, No record impossible markets higher. grew heard yet and this for far the ran positive I Okay. question. banking, I've the capital

with need out don't confidence? there you yourself gives that to that extra put you Now specific What forecast.

Yes.

-- looking of We have So for the the it's I that trade -- it. trading this that of fact in things. benefit item earlier, first the just and all, at doesn't any a you're mentioned few line It's our customers' liquidity.

lot customers. that we business the senior the and unique have deal places mentioned platform. number have notion and the about we repeat XX% of good to underleveraged platform that grew have the And business technology sectors continue this that we targeted momentum We spite at I backlogs. the subsectors well. of business continue as year. in like a of to year-over-year. there's We built mentioned, you care know, we're mean hire no of bankers I looking add of and to our and We, team around good last I guarantees of are out, capital, I'm the growing as economy fact of up the scale health a certain feel Mike, a on need our as feel but I by couple you Obviously, our in about our as really that, I teammates. point XX%

you. right, All thank

Thank you.

Thank you.

line go we'll And the to Ebrahim Next of Poonawala of America. line Bank is your open. with

Good morning.

morning. Good

just, guess one around on XX. Slide on follow-up I rate Don, question sensitivity

assuming us terms that and $XX numbers color remixing on you $XX of securities. outlined $XX and to the Just that. earlier, some short-term loans? of assets you You billion of cash the cash are longer-dated some million into $X out give in back provided what perspective about, In you've billion the billion you're maybe normalize, And that and on assuming are leave us things in also, $X what about talked outflows? Chris, of past, terms or in consumers as deposit a could deposits in I give think, million,

Okay.

were of loan this demand the of outpace really point come liquidity growth. balances use expect that that from deposit redeployment our of balances loan we the that as forward that billion thinking biggest liquidity that for we as from far excess XXXX, $XX As will far that as will

that use position a in that that. will still up be XXXX, after so excess of liquidity And in some strong

plus additional billion about have a $X would billion reinvesting growth. billion Our $X.X us quarter, quarter of a is $X assumptions another the runoff to which

doesn't significant any at so bond market have And into redeployment liquidity of all. that excess it the

but continue -- go fine-tune something year. that's to evaluate So as we the we'll and throughout

what we longer assumption I deposit will some inventory expected. pace will in some do that cash company the year-over-year -- commercial at we we over in they've achieved our invest start cash But have and than be at and a come be buildup in like guiding that the what few time of tell are support retained growth the and been to have our put customers have as would years, you deposits what to On it's time, would that do of our we've in last that than deposit but point growth work to slower some think other use well. growth will still honest to the point balances as stronger at to seen. far their things always start consumer we as and to believe we as wrong have than we've the and expected some in opportunities

question That's helpful. growth. just And separate guess loan I a on

You guidance. talked the some of utilization your about C&I informing rates

can You acquisition footprint. also terms has provide color the is big acquisition you're translating seeing household what rest of loan the that the franchise of into Any household actually growth? Coast you How the and talked revenue about West in been on in Xx, that?

in doctors Sure. and goes we by that targeted that loans lot scale, growth -- And side a lot Well, back on of West, frankly XX% point for the grew the one mentioned mortgages consumer our in around I was the XXXX. was data this that dentists. a of to

should growth is Got within forward? where going tied medical we of it. is And consumer to see that that sort vertical

areas. other think of for in on the one growing growth on demographics much the the -- But and markets. just West, us, I really the making is demographics of the our I West than parts the was That's focused in it's stronger are franchise we're just growing point important

households West. XXXX about Xx opportunity And the Xx. in in terms we the And in of there households, so grew is

where could acquisitions? All these just opportunities XUP, in, AQN if on are out sneak you're areas it kind more really focused of right. like of are I particular And how to any there? comes one, many there And when

of over into It's there space as a a we're lot a unusual investor, deals pretty So the fintech see as ecosystem. we've partner well an for tied a XX the opportunities. been Because decade, are or to not for us XX involved month. in

opportunities. So there are a lot of

very pain are of a how fintechs ourselves customers? does good taking And help lot particular our set. a point at out first always screen with one for us Our client this distinguish certain is

that's we look kind at of so And how it.

lot XUP focused exclusively consumer fintechs franchise. first the In the be acquired one made The our thing there'll commercial we've think side. I that's on us for really investments of So is interesting on a past, opportunities. is we've the that of

you'll So I forward, consumer think but of the side. see the at going invest commercial not side continue on to the expense us

you. That's helpful. Thank

Thank you.

Thank you.

Stephens. McEvoy with question is next Our of Terry And line from open. your comes the line

Hi, good morning.

Good Terry. morning,

if that based could fourth wondering on just the step-up about Don, question the Maybe, quarter typically seasonality help first in some of earlier see? was and maybe call some you this comments of or can the you. on expenses I maybe think you for quarter a us

there. expect Sure. see We would to some normal seasonality

quarter that The as to be first areas of so a the a many the to revenues revenue tends of but the quarter be day is components. well. fewer lower lot of the Capital drives and for spot kind low markets-related first tend on in revenues count

incentives nicely high revenues. see to incentive quarter And to would so as well fourth with the compared calculations to that, we you total the expect down a correlation for have because coming

some show areas lease should in that because of nonrecurring see other the some including also of the will the professional also. of declines fees, quarter expense op in expense of would items expense in some some fourth other I've the expect categories, type us start the that hit to and declines of there we phase categories before, mentioned Some the to

down billion $X consumer think for good then channel as originations is about bit? the continue grow rate follow-up, a XXXX, Laurel mortgage if I can And a consumer a loan comes quarterly run and to as Road

things there's on of So a there. couple going

a let's consumer in year. spite what student $X all billion of payment about federal obviously about They holiday business, Road. was originations had think of Laurel our you loan with As start

demand I actually, So pent-up there. there's a think little

originations about As half year. you come We're our this We think billion half $XX refi. terms about in of that mortgage purchase will of had business, down volume.

interest of our We forecast to obviously, refi take I based both will but expect on off rise. expect exceed rather rates, in the we MBA continue and share for And purchase would drop significantly. to numbers those to would

Great. Thank you, both.

you. Thank

you. Thank

with of line Ken comes Our next from Usdin open. the is Jefferies. question And line your

quick Thanks. guys. of morning, A couple ones. Good

originations bank You mentioned that year that the XX%. of commercial full was retention investment

had XX%. bit little You a than doing more been

presuming that fourth I'm origination keep was growth actually So lower percentage? that potential is good number you just checking driver good outlook 'XX? the looks a did quarter, for still the a organic the your in that while in And

sometimes And a won't it's really we'll question. we best hold there -- the Yes, client's goes be hold we good where back any some it, times interest. it. will of It to actually in a financing, what's will piece a of

our function them So fluctuation suits clients just is really taking market us there a any that best. to of you'll the see we think

got it. Okay,

move. can that So

you still running a at talk bit you're about Okay. Don, can forward? going securities how versus off buying little what's looks what front today book and that book/back

$X.X me, that fourth X% up -- XXX runoff securities and the on XXX excuse about to or actually the had we moved quarter, yield In billion. X.X% Last of north a had to of It's end of year, bought of XXX But XXX. we roughly the today. quarter, Sure. around

getting rollover to the we're the that point portfolio investment of as far of as So well. breakeven as

zone you live. to your Okay, around capital, on at X.X%, want great. where you're one, last And that's right just

talk us think So buyback you after RWA return how and growth can to versus about you the dividend? about capital

I priorities Sure. there. our And you think hit on

to support to growth. organic The first continue is

We strong have strong seen growth. forecasting for continuation the loan of growth and loan

that. support to capital additional require will that so And

and dividend XX% overall target our increase XX% share and to to that support position. in manage of to is $X.XXX kind somewhere the quarter share you that, continue And buybacks to Second capital then a payout a range. to we after fourth very did still strong

you're not many loans back be growing growing say, loans going X% buying when double-digit to as at, shares you're you're X% rates, to If at probably as range.

that will have but the what years year. it capital the so as use been And might excess probably we previous that have of the slower view be over throughout appropriate generation than that still an

very Okay. Thank you much.

you. Thank

any And closing to Thank back questions. for turn we with I'd have comments. over further it like speakers no to the you. that

our for Again, call today. you thank participating in

our Thank can any Relations concludes our have them questions, you Investor you remarks. If direct to This you. follow-up team, XXX-XXX-XXXX.

for call Teleconference conference AT&T And ladies does your Service. you. your for Executive and for you gentlemen, Thank conclude participation and that Thank using today.

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