Q3 2023 Synovus Financial Corp Earnings Call

Speaker 1: The.

Yeah.

[music].

Yeah.

Speaker 2: Good morning and welcome to Snovus third quarter, 2023.

Good morning, and welcome to say this third quarter 2023 earnings call.

Speaker 2: All participants will be in a listen only mode and should you need assistance please signal a conference specialist by pressing star 0.

Ooh line, all participants will be in a listen only mode and should you need assistance. Please signal a conference specialist by pressing star Dubai.

Speaker 2: After today's presentation there will be an opportunity to ask questions.

After today's presentation there'll be an opportunity to ask questions.

Speaker 2: And if you would like to do so, please press star, then one on your telephone keypad.

And if you would like to do so please press Star then one on your telephone keypad.

Do you enjoy your question. Please press Star then two.

Speaker 2: Please note this event is being recorded and I will now turn the call over to Jennifer Denver, Head of Investor Relations. Please call the call.

Please note. This event is being recorded and I will now turn the call over to Jennifer Denver head of Investor Relations. Please go ahead.

Speaker 3: Thank you and good morning. During today's call, we will reference the slides and press release that are available within the investor relations section of our website, Cenovus.com. Chairman, CEO , and President Kevin Blair will begin the call. He will be followed by Jamie Gregory, Chief Financial Officer, and they will be available to answer your questions at the end of the call.

Thank you and good morning during today's call, we will reference the slides and press release that are available within the Investor Relations section of our web site Synovus Dot Com Chairman CEO and President Kevin Blair will begin the call. He will be followed by Jamie Gregory Chief Financial Officer, and they will be available to answer your questions at the end of the call.

Speaker 3: Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website.

Our comments include forward looking statements. These statements are subject to risks and uncertainties and the actual results could vary materially. We list. These factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website.

Speaker 3: Do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law.

We do not assume any obligation to update any forward looking statements because of new information early developments or otherwise, except as may be required by law during.

Speaker 3: During the call we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix to our presentation. And now Kevin Blair will...

During the call we will reference non-GAAP financial measures related to the company's performance you may see the reconciliation of these measures in the appendix to our presentation and now Kevin Blair will provide an overview of the quarter.

Speaker 4: Thank you, Jennifer. Good morning, everyone, and thank you for joining us for our third quarter 2023 earnings call. Over the past three months, Synovus has taken several actions to better position the bank for a more challenging, higher for longer interest rate environment, while continuing to build and expand our diversified business model in order to deliver long term sustainable growth.

Thank you Jennifer good morning, everyone and thank you for joining us for our third quarter 2023 earnings call over.

Over the past three months Synovus has taken several actions to better position the bank for a more challenging higher for longer interest rate environment, while continuing to build and expand our diversified business model in order to deliver long term sustainable growth.

Speaker 4: As previously announced, we completed two loan sale transactions during the third quarter, which strengthened the balance sheet and freed up capital for the bank to make more profitable, relationship-oriented loans. The proceeds from the third-party indirect auto and medical office building loan sales allowed us to reduce our level of wholesale funding while accelerating the path to our greater than 10% CET1 target.

As previously announced we completed two loan sale transactions during the third quarter, which strengthened the balance sheet and freed up capital for the bank to make more profitable relationship oriented loans. The proceeds from the third party indirect auto and medical office building loan sales allowed us to reduce our level of wholesale funds.

While accelerating the path to our greater than 10% CET one target.

Speaker 4: Also, on September 30th, we further simplified our business mix by selling our asset management firm, Globalt, to its management team. The divestiture will be immaterial to earnings and allow the bank to reallocate capital to higher-returning, fee-income lines of business while continuing to meet our wealth clients' needs.

Also on September 30th we further simplified our business mix by selling our asset management firm globally to its management team the divestiture will be immaterial to earnings and allow the bank to reallocate capital to higher returning fee income lines of business, while continuing to meet our wealth clients needs. We believe global.

Speaker 4: We believe Go-Walt has a bright future as an independent investment advisor, enabled to explore a wide range of additional partners and potential client relationships.

It has a bright future as an independent investment adviser enabled to explore a wide range of additional partners and potential client relationships.

Speaker 4: To that end, we are in discussions to continue and expand our long-standing held-for-sale partnership with GreenSky. Given our ongoing discussions, any potential revenue benefits are not currently included in our 2023 guidance.

To that end, we are in discussions to continue and expand our long standing held for sale partnership with Green Sky given our ongoing discussions any potential revenue benefits are not currently included in our 2023 guidance there will be more details forthcoming over the next two to three months.

Operator: All line all participants will be in a listen only mode and should you need assistance please signal a conference specialist by pressing star zero. After today's presentation, there will be an opportunity to ask questions. And if you would like to do so, please press star then one on your telephone keypad. She was all your question please press star then two.

Speaker 4: There will be more details forthcoming over the next two to three months.

Speaker 4: We are navigating the short-term headwinds presented by higher interest rates, by making the tough decisions around business mix, balance sheet optimization, and operating expenses, all of which will generate better financial performance in the quarters and years to come.

We are navigating the short term headwinds presented by higher interest rates by making the tough decisions around business mix balance sheet optimization and operating expenses, all of which will generate better financial performance in the quarters and years to come.

Jennifer Demba: Please note this event is being recorded and I will now turn the call over to Jennifer Demba, Head of Investor Relations. Please go ahead. Thank you and good morning. During today's call, we will reference the slides and press release that are available within the Investor Relations section of our website, sonovus.com.

Speaker 4: Now let's move to slide three for the quarterly financial highlights. Sonovus reported third quarter diluted EPS of 60 cents and adjusted EPS of 84 cents.

Now, let's move to slide three for the quarterly financial highlights Synovus reported third quarter diluted EPS of <unk> 60 in adjusted EPS of <unk> 84.

Speaker 4: There were year-over-year and link quarter revenue and PPR headwinds as a result of continued higher deposit cost leading to further but more moderate net interest margin contraction.

There were year over year and linked quarter revenue and <unk> headwinds as a result of continued higher deposit costs, leading to further but more moderate net interest margin contraction.

Kevin Blair: Chairman CEO and president Kevin Blair will begin the call. He will be followed by Jamie Gregory, Chief Financial Officer, and they will be available to answer your questions the end of the call. Our comments included forward looking statements. These statements are subject to risks and uncertainties and the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website.

Speaker 4: As expected, loan growth outside the medical office building sale was less than 1% in the third quarter. This core loan growth was primarily a tribute to multi-family construction draws, while middle market commercial, corporate and investment banking and specialty lines activity contributed to C&I loan growth.

As expected loan growth outside the medical office building sale was less than 1% in the third quarter. This core loan growth was primarily attributable to multifamily construction draws while middle market commercial corporate and investment banking and specialty lines activity contributed to C&I loan growth.

Kevin Blair: We do not assume any obligation to update any forward looking statements because of new information, early developments or otherwise, except as may be required by law. During the call, we will reference non-gap financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix for our presentation.

Speaker 4: There continues to be an increase emphasis on stronger returns and more deposit relationship base lending, which is translated into higher yields on new production.

There continues to be an increased emphasis on stronger returns and more deposit relationship based lending, which has translated into higher yields on new production.

Speaker 4: Core deposits increase 1% or $432 million from the second quarter. Importantly, the shift from consumer money market accounts to higher rate time deposits slowed during the third quarter.

Core deposits increased 1% or $432 million from the second quarter importantly, the shift from consumer money market accounts to higher rate time deposits slowed during the third quarter noninterest.

Kevin Blair: And now Kevin Blair will provide an overview of the quarter. Thank you, Jennifer. Good morning, everyone.

Speaker 4: Non-intersparing deposits decline less than in the first and second quarter, but clients continue to use their excess operating in personal funds.

Noninterest bearing deposits declined less than in the first and second quarter, but clients continue to use their excess operating and personal funds.

Kevin Blair: And thank you for joining us for our third quarter, 2023 earnings call. Over the past three months, sonovus has taken several actions to better position the bank for a more challenging, higher-for-longer interest rate environment while continuing to build and expand our diversified business model in order to deliver long-term sustainable growth. As previously announced, we completed two loan cell transactions during the third quarter, which strengthened the balance sheet and freed up capital for the bank to make more profitable relationship-oriented loans.

Speaker 4: Net interest margin contraction was not as significant as expected due to modestly better asset yield and funding cost. Also, our deposit generation strategies are demonstrating continued success as production remains strong with third quarter levels approximately 70% higher compared to the same period in 2022.

Net interest margin contraction was not as significant as expected due to modestly better asset yields and funding cost also our deposit generation strategies are demonstrating continued success as production remained strong with third quarter levels, approximately 70% higher compared to the same period in 2022.

Given the pressures on the margin our operating expense discipline was quite evident as adjusted noninterest expense increased 2% from the second quarter and rose just 4% from the prior year.

Speaker 4: Given the pressures on the margin are operating expense discipline was quite evident as a just that non-interest expense increased 2% from the second quarter and rose just 4% from the prior year. Cost containment remains a very high priority. In fact, we expect adjusted non-interest expense should be relatively flat year over year in 2024 as we implement more cost reduction initiatives in a variety of areas.

Kevin Blair: The proceeds from the third party indirect auto and medical office building loan sales allowed us to reduce our level of wholesale funding while accelerating the path to our greater than 10% CET-1 target. Also, on September 30th, we further simplified our business mix by selling our asset management firm, Global, to its management team. The divestiture will be immaterial to earnings and allow the bank to reallocate capital to higher-returning fee-income lines of business while continuing to meet our wealth clients needs.

Cost containment remains a very high priority in fact, we expect adjusted noninterest expense should be relatively flat year over year in 2024, as we implement more cost reduction initiatives and a variety of areas.

Speaker 4: As expected, credit costs increased as we continue to move off historically low levels. However, excluding the third quarter of loan sales, net charge also remained manageable at 40 basis points, which includes a 21 basis point impact from a commercial industrial credit discussed in our recent AK filing. Along with other banks in the syndicate, we are in the process of evaluating and assessing all avenues of recovery to include legal recourse related to that specific transaction.

As expected credit costs increased as we continue to move off historically low levels. However, excluding the third quarter loan sales net charge offs remain manageable at 40 basis points, which includes a 21 basis point impact from our commercial industrial credit discussed in our recent 8-K filings along with other bank.

Kevin Blair: We believe Global has a bright future as an independent investment advisor, enabled to explore a wide range of additional partners and potential client relationships. To that end, we are in discussions to continue and expand our long-standing held-for-cell partnership with Greens Guy. Given our ongoing discussions, any potential revenue benefits are not currently included in our 2023 guidance. There will be more details forthcoming over the next two to three months.

And the syndicate, we are in the process of evaluating and assessing all avenues of recovery to include legal recourse related to that specific transaction.

Speaker 4: Finally, we continue to focus on maintaining a strong capital position as we navigate through a more volatile economic environment. And with our CET-1 position ending the quarter at 10.13%, we are now slightly above our targeted capital levels. Over the near term, we expect to continue to preserve capital and excess of our target levels given the continued amount of economic uncertainty.

Finally, we continue to focus on maintaining a strong capital position as we navigate through a more volatile economic environment and with our CET one position ending the quarter at 10, one 3%. We are now slightly above our targeted capital levels over the near term, we expect to continue to preserve capital in excess of our <unk>.

Kevin Blair: We are navigating the short-term headwinds presented by higher interest rates by making the tough decisions around business mix, balance sheet optimization, and operating expenses, all of which will generate better financial performance in the quarters and years to come. Now let's move to slide three for the quarterly financial highlights. Synovus reported third quarter diluted EPS of 60 cents and adjusted EPS of 84 cents. There were year-to-year in link quarter revenue and PPR headwinds as a result of continued higher deposit costs leading to further but more moderate net interest margin contraction.

<unk> levels, given the continued amount of economic uncertainty.

Speaker 4: Now I'll turn it over to Jamie to cover the third quarter results in greater detail. Jamie?

Now I'll turn it over to Jamie to cover the third quarter results in greater detail Jamie.

Thank you Kevin.

Speaker 4: As you can see on slide four, total loan balances ended at third quarter at $44 billion, reflecting a sequential decline of $674 million or 2%. This includes the impact of the sale of the $1.2 billion medical office loan.

As you can see on slide four total loan balances ended the third quarter at $44 billion.

Reflecting a sequential decline of $674 million or 2%.

This includes the impact of the sale of the $1 2 billion.

Medical office loan portfolio.

Speaker 4: Similar to recent quarters, CRE growth was a function of draws related to existing multifamily commitments and low levels of pay-offs.

Kevin Blair: As expected loan growth outside the medical office building sale was less than 1% in the third quarter. This core loan growth was primarily attributable to multifamily construction draws while middle market commercial, corporate and investment banking and specialty lines activity contributed to CNI loan growth. There continues to be an increase emphasis on stronger returns and more deposit relationship base lending which is translated into higher yields on new production. Core deposits increase 1% or $432 million from the second quarter.

Similar to recent quarters.

Our growth was a function of draws related to existing multifamily commitments and low levels of payoffs.

Speaker 4: On the CN Highside, middle market commercial lending and corporate investment banking contributed to growth.

On the C&I side middle market commercial lending and corporate and investment banking contributed to growth.

Our new loan fundings remain focused on customers with more broad based deposit and fee income relationships.

Speaker 4: Our new loan funding is remained focused on customers with more broad base to posit and fee income relations.

Speaker 4: At the same time, we are rationalizing growth in credit only lending areas and have a lower return profile or don't meet our strategic relationship objectives.

At the same time, we are rationalizing growth in credit only lending areas that have a lower return profile or don't meet our strategic relationship objectives.

Speaker 4: Our balance sheet optimization efforts should continue over the near term, and loan and court of positive growth should be relatively balanced.

Our balance sheet optimization efforts should continue over the near term and loan and core deposit growth should be relatively balanced.

Kevin Blair: Importantly the shift from consumer money market accounts to higher rate time deposits slowed during the third quarter. Non-interest bearing deposits decline less than in the first and second quarter but clients continue to use their excess operating in personal funds. Net interest margin contraction was not as significant as expected due to modestly better asset yield and funding cost. Also our deposit generation strategies are demonstrating continued success as production remains strong with third quarter levels approximately 70% higher compared to the same period in 2022.

Speaker 4: No further meaningful loan portfolio sales are being contemplated over the foreseeable

No further meaningful loan portfolio sales are being contemplated over the foreseeable future.

Speaker 4: Turning to slide five, core deposit balances grew $432 million, or 1% sequentially during the third quarter, given by a 23% increase in time deposits, which was partially all set by a 4% decline in non-intersparing deposits.

Turning to slide five core deposit balances grew $432 million or 1% sequentially. During the third quarter driven by a 23% increase in time deposits, which was partially offset by a 4% decline in noninterest bearing deposits importantly, we leveraged our improved liquidity position to.

Speaker 4: Importantly, we leveraged our improved liquidity position to reduce wholesale funding by $1.6 billion, which improved our wholesale funding ratio by 240 base.

Reduce wholesale funding by $1 6 billion.

Which improved our wholesale funding ratio of about 240 basis points, while public funds declined $146 million or 2%.

Kevin Blair: Given the pressures on the margin are operating expense discipline was quite evident as adjusted non-interest expense increased 2% from the second quarter and rose just 4% from the prior year. Cost containment remains a very high priority in fact we expect adjusted non-interest expense should be relatively flat year over year in 2024 as we implement more cost reduction initiatives in a variety of areas. As expected credit cost increased as we continue to move off historically low levels however excluding the third quarter loan sales net charge also remain manageable at 40 basis points which includes a 21 basis point impact from a commercial industrial credit discussed in our recent AK filing along with other banks in the syndicate we're in the process of evaluating and assessing all avenues of recovery to include legal recourse related to that specific transaction.

Speaker 4: public funds declined $146 million for

Speaker 4: The non-intersparing deposit decline is a byproduct of deployment of excess funds and continue pressures from the higher rate and birth.

The noninterest bearing deposits decline as a byproduct of deployment of excess funds and continued pressures from the higher rate environment.

Speaker 4: This is a slower decline than we experienced during the first and second course.

This is a slower decline than we experienced during the first and second quarter.

Speaker 4: There was also a moderation in the decline in money market accounts during the quarter, as the shift from money market accounts to CD slows.

There was also a moderation in the decline in money market accounts during the quarter as the shift from money market accounts to Cds slowed.

Speaker 4: We expect to experience some cordopilot growth during the remainder of the year.

We expect to experience some core deposit growth during the remainder of the year.

Speaker 4: Reporting this growth or seasonal tailwind, along with our targeted deposit gathering F.

Supporting this growth are seasonal tailwind along with our targeted deposit gathering efforts.

As we look to deposit rates, our average cost of deposits increased 36 basis points in the third quarter to $2, three 1%, which was the slower rate of increase than in the second quarter and equates to a cycle to date total deposit beta of 42% through the third quarter.

Speaker 4: As we look to deposit rates, our average calls to deposit increased 36 basis points in the third quarter to 2.31 percent, which was a slower rate of increase in the second quarter, and equates to a psycho-todate total deposit beta of 42 percent through the third quarter.

Speaker 4: From the month of June to the month of September , total deposit costs were up 29.

From the month of June to the month of September total deposit costs were up 29 basis points.

Kevin Blair: Finally we continue to focus on maintaining a strong capital position as we navigate through a more volatile economic environment and with our CET one position ending the quarter at 10.13% we are now slightly above our target capital levels over the near term we expect to continue to preserve capital and excess of our target levels given the continued amount of economic uncertainty.

Speaker 4: Our deposit calls and betas were impacted by the pricing lags on core interest bearing deposits, as well as the decline in non-intersparing deposits. Our expectations for through the cycle total deposit betas are now slightly reduced to 46 to 47% at year.

Our deposit costs and betas were impacted by the pricing lag on core interest bearing deposits as well as the decline in noninterest bearing deposits are expectations for through the cycle total deposit betas are now slightly reduced to 46% to 47% at year end.

Speaker 4: Now moving to 5.67. Net interesting come was $443 million in the third quarter, down 7% versus a year ago, and a decline of 3% from the second quarter, which is slightly better than our previously disclosed expectation.

Now moving to slide six and seven net interest income was $443 million in the third quarter down 7% versus a year ago and a decline of 3% from the second quarter, which was slightly better than our previously disclosed expectations.

Jamie Gregory: Now I'll turn it over to Jamie to cover the third quarter results in greater detail Jamie. Thank you Kevin as you can see on slide 4 total loan balances ended the third quarter at $44 billion reflecting a sequential decline of $674 million or 2%. This includes the impact of the sale of the $1.2 billion medical office loan portfolio. Similar to recent quarters CRE growth was a function of draws related to existing multifamily commitments and low levels of payoffs.

NIM compression moderated during the third quarter down nine basis points from the prior quarter versus a 23 basis points sequential decline in the second quarter.

Speaker 4: Now I'm compression moderated during the third quarter, down nine basis points from the prior quarter, versus 23 basis points to quintal decline in the second.

Speaker 4: The asset side of our balance sheet continued to benefit from higher rates, though higher deposit pricing and further remixing within our NIB deposit portfolio offset those.

The asset side of our balance sheet continued to benefit from higher rates, though higher deposit pricing and further remixing within our deposit portfolio offset those gains.

Speaker 4: As we look forward, we expect the fourth quarter NEM to decline in a similar amount as a third quarter, followed by a relatively stable margin in the first quarter. That is expected to be followed by expansion. As fixed trade asset repricing is more than enough to overcome the gradually reducing headwinds of deposit repricing and negative deposit mixing.

Jamie Gregory: On the CN Highside, middle market commercial lending, and corporate investment banking contributed to growth. Our new loan fundings remain focused on customers with more broad base deposit and fee income relationships. At the same time, we are rationalizing growth and credit only lending areas that have a lower return profile or don't meet our strategic relationship objectives. Our balance sheet optimization efforts should continue over the near term, and loan and court deposit growth should be relatively balanced.

As we look forward, we expect the fourth quarter NIM to decline in a similar amount as the third quarter, followed by a relatively stable margin in the first quarter that is expected to be followed by expansion as fixed rate asset repricing is more than enough to overcome the gradually reducing headwinds of deposit repricing and negative deposit mix.

Shift.

Speaker 4: The graph on slide seven outlines the estimated marginal benefit to our NAM relative to our 3.11% NAM and the third quarter of 2023, attributable to fixed rate repricing for the asset and liability categories listed there. This assumes rates remain constant with the September 30th levels at a 5.5% Fed Fund and around 4.5%.

The graph on slide seven outlines the estimated marginal benefit to our NIM relative to our $3 one 1% now in the third quarter of 2023 attributable to fixed rate repricing for the asset and liability categories listed there. This assumes rates remain constant with the September 30th levels at a five 5% Fed fund.

Jamie Gregory: No further meaningful loan portfolio sales are being contemplated over the foreseeable future. Turning to slide five, core deposit balances grew $432 million, or 1% sequentially during the third quarter, given by a 23% increase in time deposits, which was partially all set by a 4% decline in non-intersparing deposits. Importantly, we leveraged our improved liquidity position to reduce wholesale funding by $1.6 billion which improved our wholesale funding ratio by 240 basis points, while public funds declined $146 million for 2%.

And around four 5% on the 10 year.

Slide eight shows total reported noninterest revenue of $107 million.

Speaker 4: Slide 8 shows total reported non-issue revenue of 107 million dollars.

Speaker 4: The adjusted non-interest revenue was $106 million, down $4 million from the previous quarter, and up $1 million a year over year.

Adjusted noninterest revenue was $106 million down $4 million from the previous quarter and up $1 million year over year.

Speaker 4: The variance in quarter and quarter fee income was due to a combination effect.

The variance in quarter on quarter fee income was due to a combination of factors.

Speaker 4: There was a change to the NSFOD program in July , which impacted non-interesting come by approximately one and a half million dollars, and is now almost fully reflected in the income as of quarter-end.

There was a change to the NSF O D program in July , which impacted noninterest income by approximately $1 $5 million and is now almost fully reflected in fee income as of quarter end.

Jamie Gregory: The non-intersparing deposit decline is a byproduct of deployment of excess funds and continued pressures from the higher rate environment. This is a slower decline than we experienced during the first and second quarter. There was also a moderation in the decline in money market accounts during the quarter, as the shift from money market accounts to CD slowed. We expect to experience some core deposit growth during the remainder of the year, supporting this growth or seasonal tailwinds along with our targeted deposit gathering efforts.

Speaker 4: Core Fiencom has also been impacted by a soft mortgage lending market and more muted capital market tech.

Core fee income has also been impacted by a soft mortgage lending market and more muted capital markets activity. However, the relative stability of fee income over time highlights the diversity of our revenue streams, many of which are insulated from the impacts of the volatile rate environment.

Speaker 4: However, the relative stability of the income over time highlights the diversity of our revenue.

Speaker 4: Many of which are insulated from the impacts of the volatile rate ember.

Speaker 4: We continue to invest in core non-insurvenous streams that deepen client relationships, such as treasury and payment solutions, capital markets, and wealth management, which have demonstrated healthy growth over the past.

We continue to invest in core noninterest revenue streams that deepen client relationships.

As treasury and payment solutions capital markets, and wealth management, which have demonstrated healthy growth over the past few years.

Jamie Gregory: As we look to deposit rates, our average calls to deposit increased 36 basis points in the third quarter to 2.31%, which was a slower rate of increase in the second quarter, and equates to a cycle-to-date total deposit beta of 42% through the third quarter. From the month of June to the month of September, total deposit calls were up 29 basis points. Our deposit calls and betas were impacted by the pricing lags on core interest-bearing deposits, as well as the decline in non-intersparing deposits. Our expectations for through the cycle total deposit betas are now slightly reduced to 46% to 47% at year end.

Speaker 4: We also continue to simplify and optimize our business mix during the third quarter.

We also continue to simplify and optimize our business mix during the third quarter.

Speaker 4: The sale of asset management firm Global to its management team on September 30th led to a $1.9 million non-recurring gain during the third quarter and should result in approximately $10 million per year reduction in fee income and $8 million reduction in non-intersex months.

The sale of asset management firm global to its management team on September 30th led to a $1 9 million nonrecurring gain during the third quarter and should result in approximately $10 million per year reduction in fee income and $8 million reduction in noninterest expense.

Moving to expenses.

Slide nine highlights our operating cost discipline.

Speaker 4: reported non-intersex ban to us 354 million dollars.

Reported noninterest expense was $354 million.

Speaker 4: adjusted non-intersex expense of $306 million was up $5 million or 2% from the prior quarter and $12 million from the previous year representing a 4%

Jamie Gregory: Now moving to slide 6 and 7, net interest income was $443 million in the third quarter, down 7% versus a year ago, and a decline of 3% from the second quarter, which is slightly better than our previously disclosed expectations. NEM compression moderated during the third quarter, down 9 basis points from the prior quarter, versus 23 basis points to quintal decline in the second quarter. The asset side of our balance sheet continued to benefit from higher rates, though higher deposit pricing and further remixing within our NIB deposit portfolio offset those gains.

Noninterest expense of $306 million was up $5 million or 2% from the prior quarter and $12 million from the previous year, representing a 4% increase.

Speaker 4: personnel expenses were flat sequentially benefited by our headcount reductions during the second and third quarter.

Personnel expenses were flat sequentially benefited by our head count reductions during the second and third quarters.

Speaker 4: Reported non-interested expenses were impacted by an $18 million voluntary early retirement charge and a 31 million dollar loss from loan sales during the quarter.

Reported noninterest expenses were impacted by an $18 million voluntary early retirement charge and a $31 million loss from loan sales during the quarter.

Speaker 4: A $47 million special FDF assessment should be incurred in the fourth.

A $47 million special.

Special FDIC assessments should be incurred in the fourth quarter.

Jamie Gregory: As we look forward, we expect the fourth quarter NEM to decline in a similar amount as the third quarter, followed by a relatively stable margin in the first quarter. That is expected to be followed by expansion, as fixed rate asset repricing is more than enough to overcome the gradually reducing headwinds of deposit repricing and negative deposit makeshift. The graph on slide 7 outlines the estimated marginal benefit to our NEM relative to our 3.11% NEM in the third quarter of 2023, attributable to fixed rate repricing for the asset and liability categories listed there. This assumes rates remain constant with the September 30th levels at a 5.5% Fed funds and around 4.5%, of the Ten Year.

Speaker 4: Importantly, we will remain quite proactive with this one expense management and this revenue challenged environment. We implemented reductions in a voluntary earlier time and program in the second and third quarters, which supported a nearly 4% company-wide reduction in headgown.

Importantly, we will remain quite proactive with disciplined expense management and this revenue challenged environment we have.

Implemented reductions in a voluntary early retirement program in the second and third quarters, which supported a nearly 4% companywide reduction in head count.

Speaker 4: In addition, as Kevin mentioned, we have several expense rationalization initiatives in various areas underway which should keep our adjusted non-interested expenses relatively flat year-by-year in 2024.

In addition, as Kevin mentioned, we have several expense rationalization initiatives in various areas underway, which should keep our adjusted noninterest expenses relatively flat year over year end 2024.

Speaker 4: There will be more underlying details of these initiatives discussed at forthcoming industry conferences during the fourth quarter. Moving to slide to the left.

There will be more underlying details of these initiatives discussed at forthcoming industry conferences during the fourth quarter.

Moving to slides 11, and 12 on credit quality.

Speaker 4: As expected, credit losses have risen over the past two quarters, primarily from A bone was pressed to test though,eneca will identify Halal and his

As expected credit losses have risen over the past two quarters, primarily from idiosyncratic charge offs.

Jamie Gregory: Slide 8 shows total reported non-insured revenue of $107 million. Adjusted non-insured revenue was $106 million, down $4 million from the previous quarter, and up $1 million year-over-year. The variance in quarter-on-quarter fee income was due to a combination of factors. There was a change to the NSFOD program in July, which impacted non-insured income by approximately one-and-a-half million dollars, and is now almost fully reflected in fee income as of quarter-on. Core fee income has also been impacted by a sophomore-age lending market and more muted capital market activity.

Speaker 4: The three basis point increase in $6 million growth and our allowance for credit losses primarily reflects loan migration trends and an uncertain economic environment.

The three basis point increase and $6 million growth in our allowance for credit losses, primarily reflects loan migration trends and an uncertain economic environment.

Speaker 4: Excluding the medical office building loan sale, Net Charge-Ales were 40 basis points compared to our 30-40 basis point guidance for the second half of this year.

Excluding the medical office building loan sale net charge offs were 40 basis points compared to our 30 to 40 basis point guidance for the second half of this year.

Speaker 4: approximately 50% of third quarter charge-alls, excluding the medical office building loan sale, were attributable to a previously-discorded shared national CNI credit, totaling 23 million dollars.

Approximately 50% of third quarter charge offs, excluding the medical office building loan sale.

Were attributable to our previously disclosed shared national C&I credit totaling $23 million.

Speaker 4: Non-performing loans increase modestly to 0.64% as credit metrics migrate from historically low levels. Total criticized and classified credits rose slightly, but are still a manageable 3.4% of total...

Non performing loans increased modestly to six 4% as credit metrics migrate from historically low levels total criticized and classified credits rose slightly but are still a manageable three 4% of total loans.

Jamie Gregory: However, the relative stability of fee income over time highlights the diversity of our revenue streams, many of which are insulated from the impacts of the volatile rate environment. We continue to invest in core non-insured revenue streams that deepen client relationships, such as treasury and payment solutions, capital markets, and wealth management, which have demonstrated healthy growth over the past few years. We also continue to simplify and optimize our business mix during the third quarter.

Speaker 4: We expect net charge all staffers loans to be 30 to 40 base points in the fourth.

We expect net charge offs to average loans to be 30 to 40 basis points in the fourth quarter. We continue to have a high degree of confidence in the strength and quality of our loan portfolio.

Speaker 4: We continue to have a high degree of confidence and strength and quality of our loans.

Speaker 4: We will continue to apply our conservative underwriting practices and advanced marketing analytics to new loan originations and portfolio monitoring.

We will continue to apply our conservative underwriting practices and advanced marketing analytics to new loan originations and portfolio monitoring and management.

Jamie Gregory: The sale of asset management firm Global to its management team on September 30th led to a $1.9 million non-recurring gain during the third quarter and should result in approximately $10 million per year reduction in fee income and $8 million reduction in non-intersex expenses.

Speaker 4: As seen on slide 13, our capital position continued to increase in the third quarter. With the Common Equity Tier 1 ratio reaching 10.13% and with total risk-based capital now at 13.1.

As seen on slide 13, our capital position continued to increase in the third quarter with a common equity tier one ratio, reaching 10.13% and with total risk based capital now at 13, 1% 2%.

Speaker 4: retained earnings and strategic transactions supported 27 basis points of capital accretion in third quarter. In addition, the proceeds from the third quarter, third party in direct auto and medical office building loan sales, allowed us to reduce our level of wholesale funding and total commercial real estate exposure.

Retained earnings and strategic transactions supported 27 basis points of capital accretion in the third quarter.

Jamie Gregory: Moving to expenses. Slide 9 highlights our operating cost discipline. Reported non-intersex expense was $354 million. Adjusted non-intersex expense of $306 million was up $5 million or 2% from the prior quarter and $12 million from the previous year representing a 4% increase. Personal expenses were flat sequentially benefited by our headcount reductions during the second and third quarters. Reported non-intersex expenses were impacted by an $18 million voluntary early retirement charge and a $31 million loss from loan sales during the quarter.

In addition, the proceeds from the third quarter third party indirect auto and medical office building loan sales allowed us to reduce our level of wholesale funding and total commercial real estate exposure.

Speaker 4: Even though Sonobis has achieved its greater than 10% CT1 target, we will continue to preserve our capital over the near term, given there's still a fair amount of macroeconomic uncertainty.

Even though synovus has achieved its greater than 10% CET one target we will continue to preserve our capital over the near term given there is still a fair amount of macroeconomic uncertainty. Moreover, there should be more limited capital accretion in the fourth quarter as a result of the expected $47 million FDIC special assessment.

Speaker 4: Moreover, there should be more limited capital accretion in the fourth quarter as a result of the expected $47 million FDSC specialist.

Of course, we will regularly reassess the economic environment and consider if any opportunistic capital management may be appropriate in the future.

Speaker 4: Of course, we will regularly reassess the economic environment and consider if any opportunistic capital management may be appropriate in the future. I'll now turn it back.

Jamie Gregory: A $47 million special FDS assessment should be incurred in the fourth quarter. Importantly, we will remain quite proactive with discipline and expense management in this revenue challenged environment. We implemented reductions in a voluntary early retirement program in the second and third quarters which supported a nearly 4% company-wide reduction in headcount. In addition, as Kevin mentioned, we have several expense rationalization initiatives in various areas underway which should keep our adjusted non-intersex expenses relatively flat year-over-year in 2024. There will be more underlying details that these initiatives discussed at forthcoming industry conferences during the fourth quarter.

Now I'll turn it back to Kevin to discuss our guidance.

Speaker 5: Thank you, Jamie. I'll now continue with our updated fundamental guidance for the remainder of 2023. Lone growth is still expected to be zero to 2% for the 2023 year. We expect fourth quarter loan production to be at similar levels to third quarter, which remains muted versus 2022. Growth in the current quarter should be fueled by continued success in middle market and corporate investment banking, as well as drawls on construction lines.

Jamie I'll now continue with our updated fundamental guidance for the remainder of 2023.

Loan growth is still expected to be zero to 2% for the 2023 year, we expect fourth quarter loan production to be at similar levels to third quarter, which remains muted versus 2022.

Growth in the current quarter should be fueled by continued success in middle market and corporate and investment banking as well as draws on construction lines.

Speaker 5: We maintain our expectations for court deposit growth of 1 to 3% as the company strives to balance loan and court deposit growth and will be aided by the previously mentioned seasonal tailwinds and new funding growth initiatives.

We maintain our expectations for core deposit growth of 1% to 3% as the company strives to balance loan and core deposit growth and we will be aided by the previously mentioned seasonal tailwind and new funding growth initiatives.

Jamie Gregory: Moving to slide to 11 and 12 on credit quality. As expected, credit losses have risen over the past two quarters, primarily from idiosyncratic charge-offs. The three basis point increase in $6 million growth and our allowance for credit losses primarily reflects loan migration trends and an uncertain economic environment. Excluding the medical office building loan sale, net charge-offs were 40 basis points compared to our 30 to 40 basis point guidance for the second half of this year. Approximately 50% of third quarter charge-offs, excluding the medical office building loan sale, were attributable to a previously disclosed shared national CNI credit totaling 23 million dollars.

The revenue growth outlook for 2023 is 1% to 2%, which assumes a fed funds rate of five 5% that holds through the end of the year deposit betas are now expected to reach 46% to 47% by year end versus 42% in the third quarter.

Speaker 5: The revenue growth outlook for 2023 is 1-2%, which assumes a Fed funds rate of 5.5% that holds through the end of the year. Deposit betas are now expected to reach 46-47% by year end versus 42% in the third quarter.

Speaker 5: We have lowered our adjusted expense growth expectations to approximately 4% to 5% in 2023 versus previous expectations of 4% to 6%.

We have lowered our adjusted expense growth expectations to approximately 4% to 5% in 2023 versus previous expectations of 4% to 6%.

Speaker 5: Please note that the non-intersex expense guidance does not reflect the impact of the upcoming $47 million at the I.C. Special Assessment expected to be incurred in the fourth quarter.

Please note that the noninterest expense guidance does not reflect the impact of the upcoming $47 million FDIC special assessment expected to be incurred in the fourth quarter.

Jamie Gregory: Collars. Non-performing loans increase modestly to 0.64% as credit metrics migrate from historically low levels. Total criticized and classified credits rose slightly, but are still a manageable 3.4% of total loans. We expect net charge-all established loans to be 30 to 40 base points in the fourth quarter. We continue to have a high degree of confidence and strength and quality of our loan portfolio. We will continue to apply our conservative underwriting practices and advanced marketing analytics to new loan originations and portfolio monitoring and management.

Speaker 5: While the environment has resulted in strategic shifts and priorities, we remain confident in our growth strategies and we continue to remain diligent in expense management. Over the course of the year, we have reduced our guidance range as we have implemented various expense initiatives.

While the environment has resulted in strategic shifts and priorities, we remain confident in our growth strategies and we continue to remain diligent expense management over the course of the year, we have reduced our guidance range as we have implemented various expense initiatives.

Speaker 5: Moving to capital, we are now at our target CET-1 level. At this time, we think it is prudent to maintain that target and continue to build capital over the near term, given there is still a fair amount of uncertainty in the macroeconomic empire.

Moving to capital we are now at our target CET one level at this time, we think it is prudent to maintain that target and continue to build capital over the near term given there is still a fair amount of uncertainty in the macroeconomic environment we.

Jamie Gregory: As seen on slide 13, our capital position continued to increase in the third quarter. With the Common Equity Tier 1 ratio reaching 10.13% and with total risk-based capital now at 13.12%. Retained earnings and strategic transactions supported 27 base points of capital accretion in third quarter. In addition, the proceeds from the third quarter, third-party indirect auto and medical office-building loan sales allowed us to reduce our level of wholesale funding and total commercial real estate exposure.

Speaker 5: We still anticipate the tax rate should approximate 22% in 2023, supported by recent federal tax invests.

We still anticipate the tax rate should approximate 22% in 2023 supported by recent federal tax investments.

Speaker 5: At Sonovus, we are focused on execution and closing out 2023 in a strong fashion. We remain optimistic that through the actions we have taken, we are better positioned to overcome the short-term headwinds and to strengthen the Banks Foundation for a return to growth as we proceed through 2024. And now, operator, let's open the call for Q&A.

Synovus, we are focused on execution and closing out 2023, and a strong fashion, we remain optimistic that through the actions. We have taken we are better positioned to overcome the short term headwinds and to strengthen the bank's foundation for a return to growth as we proceed through 2024 and now operator, let's open the call.

For Q&A.

Jamie Gregory: Even though Synovus has achieved its greater than 10% CT1 target, we will continue to preserve our capital over the near term, given there's still a fair amount of macroeconomic uncertainty. Moreover, there should be more limited capital accretion in the fourth quarter as a result of the expected $47 million FDSC special assessment. Of course, we will regularly reassess the economic environment and consider if any opportunistic capital management may be appropriate in the future.

Speaker 2: Thank you. We will now begin the question and answer session. To ask the question, you may press star than one on your touch phone. If you are using a speaker phone, please click up your hand set before pressing the keys. To answer your question, please...

Thank you we will now begin the question and answer session.

To ask a question you May Press Star then one on your touch from if you are using a speakerphone. Please pick up your handset before pressing the keys.

Your question. Please press Star then Keith.

And at this time, please limit yourself to one question and one follow up.

Speaker 2: In the interactive time, please limit yourself to one question and one follow up.

At this time, we will pull us mainland Kennedy to assemble Alberta.

Speaker 2: at the time who pulled momentarily to assemble our voice.

Kevin Blair: I'll now turn it back to Kevin to discuss our guidance. Thank you, Jamie. I'll now continue with our updated fundamental guidance for the remainder of 2023. Loan growth is still expected to be 0% to 2% for the 2023 year. We expect fourth quarter loan production to be at similar levels to third quarter, which remains muted versus 2022. Growth in the current quarter should be fueled by continued success in middle market and corporate investment banking, as well as draws on construction lines.

Okay.

Speaker 2: The first question we have comes from Ibrahim Pumwala of Bank of America.

The first question we have comes.

Comes from.

Ebrahim Tijuana.

Thank you Rebecca.

Hey, good morning.

Good morning.

Speaker 6: Many questions given on credit quality. So I appreciate that there's a hit from one credit in the third quarter, but just looking at criticized loans and the 3.4, I'm not sure if that's in impacted by that or not. But just talk to us around your sense of where credit is headed.

Maybe question, Kevin on credit quality, so appreciate that.

Hits are one in the third quarter, but just looking at criticized loans.

<unk> four I am not sure if that's impacted by that or not.

Kevin Blair: We maintain our expectations for court deposit growth of 1% to 3%, as the company strives to balance loan and court deposit growth and will be aided by the previously mentioned seasonal tailwinds and new funding growth initiatives. The revenue growth outlook for 2023 is 1-2%, which assumes a Fed funds rate of 5.5% that holds through the end of the year. Deposit betas are now expected to reach 46-47% by year end versus 42% in the third quarter. We have lowered our adjusted expense growth expectations to approximately 4-5% in 2023 versus previous expectations of 4-6%.

Just talk to us around your sense of where that is headed.

Speaker 6: We'll spend a decade talking about just the cleanup that has happened in the castle and then under you on the credit quality side, full GFC. So even a sense of one way you think credit is headed from a macro perspective over the next 12 months and then within your loan book, where are you seeing stress? Like what should we expect from the outside in terms of potential lumpiness and credit costs over the coming quarters? Thank you.

As part of a decade talking about just the cleanup that has happened in the castle and then under U on the credit quality side or Dfc So central.

Central one way you would think that it is headed from a macro perspective over the next 12 months and then within your loan book, where are you seeing SaaS like what should we expect from the outside in terms of potential lumpiness in credit costs over the coming quarters. Thank you.

Speaker 5: So you bring in a lot of questions in that one question, but let me take it from the start, and I'll let Bob add in some comments around credit. But...

So ebrahim, there's there's a lot of questions in that one question, but let me let me take it from the start and I'll, let Bob add in some comments around credit but.

Kevin Blair: Please note that the non-interest expense guidance does not reflect the impact of the upcoming $47 million FDIC special assessment expected to be incurred in the fourth quarter. While the environment has resulted in strategic shifts and priorities, we remain confident in our growth strategies, and we continue to remain diligent in expense management. Over the course of the year, we have reduced our guidance range as we have implemented various expense initiatives. Moving to capital, we are now at our target CET-1 level.

Speaker 5: You know, we've been talking for some time about normalization and moderation of credit cost. And that comes off, as you know, some of the lowest levels of credit cost and metrics that we've seen in many, many years. And what you're seeing this quarter was we've talked a lot about and publicly disclosed as one large credit that charged off, which was ascendicated.

We've been talking for some time about normalization in moderation of credit cost and that comes off as you know some of the lowest levels of credit.

<unk> and metrics that we've seen in many many years and what Youre seeing this quarter was we've talked a lot about and publicly disclosed as one large credit that charged off which was a syndicated credit.

And even with that credit we're still within the guidance that we provided during the second quarter, where we.

Speaker 5: We're still within the guidance that we provided during the second quarter, where we noted 30 to 40 basis points in the second half of the year. So although credit is moderating, we believe that it's still very manageable. It's within the ranges that we had anticipated. And I'll be honest with you, that large transaction, the loss content and that was not fully considered when we gave that guidance. So that tells you that in general, our credit calls came in a little less than what we would have anticipated. So it's manageable. We still believe that the second half of the year will be 30 to 40 basis points, excluding the loan sales. Yes, there's been some increases in NPL.

Kevin Blair: At this time, we think it is prudent to maintain that target and continue to build capital over the near term, given there is still a fair amount of uncertainty in the macroeconomic Department. We still anticipate the tax rate should approximate 22% in 2023 supported by recent federal tax investments. At Synovus, we are focused on execution and closing out 2023 in a strong fashion.

Noted, 30% to 40 basis points in the second half of the year. So.

Although credit is moderating we believe that it is still very manageable. It's within the ranges that we had anticipated and I'll be honest with you the that large transaction the loss content in that was not fully considered when we gave that guidance. So that tells you that in general our credit cost came in a little less than what we would've anticipated so.

It's manageable, we still believe that the second half of the year will be 30% to 40 basis points. Excluding the loan sales. Yes. There has been some increases in npls and criticized and classified but I think that comes with the territory as you see in this environment.

Kevin Blair: We remain optimistic that through the actions we have taken, we are better positioned to overcome the short-term headwinds and to strengthen the bank's foundation for a return to growth as we proceed through 2024.

Speaker 5: Yes, there's been some increases in NPLs and criticizing classified, but I think that comes with the territory as you see in this environment Many of our clients are having their margins compressed by the recessionary and inflationary

Operator: And now, operator, let's open the call for Q&A. Thank you. We will now begin the question and answer session. To ask the question, you may press star than one on your touch phone. If you are using a speaker phone, please pick up your hands at the full pressing the keys. To answer your question, please them press star than two. In the interest of time, please limit yourself to one question and one follow-up.

Many of our clients are having their margins compressed by the recessionary and inflationary.

Speaker 5: efforts that are numbers that are happening and that results in things being downgraded but it's again it's all within a manageable range and when you look at it for the full year we still think we're going to come in between that 25 and 30 basis point so for all the discussions that we're talking about net charge offs there's really just a modest increase over what we've seen in in in previous years and Bob what what was you add to that

Efforts that are numbers that are happening and that results in things being downgraded, but it's again, it's all within a manageable range and when you look at it for the full year, we still think we're going to come in between that 25% and 30 basis points. So for all the discussions that we're talking about net charge offs. There is really just a modest increase over what.

Operator: At this time, we'll pause momentarily to assemble our voices.

We've seen in previous years, and Bob what would you add to that yes, Ebrahim hi, its Bob I wouldn't add much other than to say, we just it's just general normalization.

Speaker 5: Yeah, Abraham, hey, it's Bob. I wouldn't add much other than to say, we just, it's just general normalization, particularly in our corporate businesses, that recall that we have about 60% of our balance sheet is made up of wholesale corporate businesses.

Ebrahim Poonawala: The first question we have comes from Ebrahim Poonawala of Bank of America. Good morning. Good morning, Ebrahim. Many questions given on credit quality. So, I appreciate that there's a hit from one credit in the third quarter, but just looking at criticized loans and the 3.4, I'm not sure if that's impacted by that or not, but just talk to us around your sense of where credit is headed. We'll spend a decade talking about just the cleanup that has happened in the castle and then under you on the credit quality side, Pulse GFC.

Particularly in our corporate businesses that recall that we have about 60% of our balance sheet. As is made up of wholesale corporate businesses for years. Those those numbers were extremely low so as they move back into sort of a normal territory as it relates to credit costs, you've kind of kind of pushes your number in that 30% to 40 point.

Speaker 5: For years, those numbers were extremely low. So as they move back into sort of normal territory, as it relates to credit costs, you kind of pushes your number in that 30- to 40 point range as Kevin said. I think that's a reasonable expectation for us.

Range as Kevin said, I think thats, a reasonable expectation for us.

Speaker 5: you know, overall stress is in some of these portfolios, but nothing that we don't feel like is managed.

Overall stress is in some of these portfolios, but nothing that we don't feel like is manageable.

Speaker 6: noted and I guess maybe one for you Jamie around give us a sense of deposit pricing as we move into next year just competitively what are you seeing in the market are things getting easier or are they as as competitive as they were earlier in the summer and maybe if you can talk to just the asset side of the balance sheet around potential offsets with some of the fixed management battle the go about this? Then we move on to essentially a few hours after shooting.

And I guess, maybe one for you Jamie.

Give us a sense of deposit pricing as we move into next year just competitively what are you seeing in the market are things getting easier.

Ebrahim Poonawala: So, given the sense of one way you think credit is headed from a macro perspective over the next 12 months. And then within your loan book, where are you seeing stress? Like, what should we expect from the outside in terms of potential lumpiness on credit costs over the coming quarters? Thank you.

As competitive as they were earlier in the summer and maybe if you can talk to just the asset side of the balance sheet around potential offsets.

Some of the fixed rate loan.

Assets repricing.

Kevin Blair: So, Ebrahim, there's a lot of questions in that one question, but let me take it from the start. And I'll let Bob add in some comments around credit. But, you know, we've been talking for some time about normalization and moderation of credit costs. And that comes off, as you know, some of the lowest levels of credit, cost and metrics that we've seen in many, many years. And what you're seeing this quarter was we've talked a lot about and publicly disclosed as one large credit that charged off, which was a syndicated credit.

Speaker 4: Ibrahim, I think you're the champion of multiple questions. One, let me make sure, hopefully I'll answer them all on this, but I'll start with...

Ebrahim I think here that you are the champions of multiple questions Juan Let me make sure I hopefully I hope I'll answer them all on this but I'll start with <unk>.

Speaker 4: deposit production and what are we seeing there? If you look at the rate of deposits, the going on production quarter on quarter, we were up 12 basis points. Quarter on quarter, right around 370, was the cost of deposit production in third quarter.

Production and what are we seeing there if you look at the rate of deposits the ongoing.

Going on production quarter on quarter, we were up 12 basis points.

Quarter on quarter right around $3 70 was the cost of deposit production in third quarter.

Speaker 4: And what's included in that is a little more than 20 basis points increase in the cost of CD production.

And what's included in that is a little more than 20 basis points increase in the cost of CD production. So that's around four 7%, but the rate pressure on Cds has been a little bit reduced recently in the month of September .

Kevin Blair: And even with that credit, we're still within the guidance that we provided during the second quarter, where we noted 30 to 40 basis points in the second half of the year. So, although credit is moderating, we believe that it's still very manageable. It's within the ranges that we had anticipated. And I'll be honest with you, that large transaction, the lost content, and that was not fully considered when we gave that guidance.

Speaker 4: So that's around 4.7%. But the rate pressure on CDs has been a little bit reduced recently in the month of September . So we feel good about that. And then on other intersparing deposits, we saw MMA production come down about 11 basis points quarter on quarter. We saw now production down almost approximately 75 basis points quarter on quarter. So we feel good about the trends of deposit production within our intersparing product.

So we feel good about that and then on other interest bearing deposits. We saw MMA production come down about 11 basis points quarter on quarter. We saw now production down almost approximately 75 basis points quarter on quarter. So we feel good about the trends of deposit production within our interest bearing.

Kevin Blair: So, that tells you that in general our credit costs came in a little less than what we would have anticipated. So, it's manageable. We still believe that the second half of the year will be 30 to 40 basis points, excluding the loan sales. Yes, there's been some increases in NPLs and criticizing classified. But I think that comes with the territory. As you see in this environment, many of our clients are having their margins compressed by the recessionary and inflationary efforts that are numbers that are happening.

Kevin Blair: And that results in things being downgraded. But it's again, it's all within a manageable range. And when you look at it for the full year, we still think we're going to come in between that 25 and 30 basis points. So, for all the discussions that we're talking about in that charge-offs, there's really just a modest increase over what we've seen in previous years. Bob, what was you add to that? Yeah, you bring me a spot.

Speaker 4: you know, mix will be an impact that going forward. So all in, I would say the deposit production cost increases in the fourth quarter will probably be similar to what we saw in the third quarter. But for overall, the

<unk> mix.

Mix will be.

Impact that going forward. So all in I would tell you that deposit production cost increases in the fourth quarter will probably be similar to what we saw in the third quarter.

But for overall deposit cost.

Speaker 4: You know, we gave our guidance of 46 to 47% through the cycle beta. So we expect continued increases in the fourth quarter.

We gave our guidance of 46% to 47% through the cycle beta. So we expect continued increases in the fourth quarter and that actually has a little bit less to do with production. Then it has to do with repricing in the existing book.

Speaker 4: and that actually has a little bit less to do with production than I have to do with repricing in the existing book and I would point to the table we put on page seven of the earnings deck with the fixed rate repricing what you see below the line there is the impact of CD repricing and

I'd point to the table, we put on page seven of the earnings deck with the fixed rate repricing, what you see below the line. There is the impact of CD repricing in the fourth quarter. It has a decent sized impact of CD maturities. So we have a little more than $2 billion in Cds that mature in the fourth quarter the ray.

Speaker 4: The fourth quarter has a decent sized impact of CD maturity. So we have a little more than two billion in CDs that mature in the fourth quarter. The rate on those today is about $3.75. And so we will have a headwind to deposit calls in the fourth quarter as those reprise to kind of the normal going on production rate.

Kevin Blair: I wouldn't add much other than to say, it's just general normalization, particularly in our corporate businesses that recall that we have about 60 percent of our balance sheet is made up of wholesale corporate businesses. And for years, those numbers were extremely low. So as they move back into sort of normal territory, as it relates to credit costs, you kind of kind of pushes your number in that 30 to 40 point range, as Kevin said. I think that's a reasonable expectation for us. And you know, overall stress is in some of these portfolios, but nothing that we don't feel like is me in it.

Get on those today is about $3 75, and so we will have a headwind to deposit cost in the fourth quarter as those reprice to kind of the normal going on production rate. We do expect further declines in non interest bearing deposits in the fourth quarter and so we think that the net result of <unk>.

Speaker 4: We do expect further declines and non-expering deposits in the fourth quarter.

Speaker 4: And so, you know, we think that the net result of all that is you get to that 46 to 47%.

All of that is you get to that 46% to 47% through the cycle beta for the month of December .

Speaker 4: through the cycle beta for the month of December and the positive call in the year in the mid-upper 25.

And deposit cost in the year in the mid to upper <unk>.

Ebrahim Poonawala: No, I guess maybe one for you, Jamie, around give us a sense of deposit pricing as we move into next year, just competitively. What are you seeing in the market are things getting easier or are they as competitive as they were earlier in the summer and maybe if you can talk to just the asset side of the balance sheet around potential offsets with some of the fixed rate low assets. Thank you.

Speaker 4: And you asked about the asset side of the balance sheet. Would you remind me, was that the rate on the asset side?

And you asked about the asset side of the balance sheet will you remind me was that the rate on the asset side.

Speaker 7: Yeah, I was just wondering in terms of the shown the repising that we're going to see and the magnitude of that next year. That would be enough.

Yes, I was just wondering in terms of the churn.

I think that youre going to see in the magnitude of that next year.

It could be.

Please go ahead.

Okay.

Good luck.

Speaker 4: Yeah, so as we look at looking forward next year, so we'll have a few things happen first

Yes, so as we look at looking forward next year, we will have a few things happen first.

Jamie Gregory: Ebrahim, I think you're the champion of multiple questions. Let me make sure hopefully I'll answer them all on this, but I'll start with deposit production and what are we seeing there? If you look at the rate of deposits, the going on production quarter on quarter, we were up 12 basis points, quarter on quarter, right around 370, what's the cost of deposit production and third quarter and what's included in that is a little more than 20 basis points increase in the cost of CD production.

Jamie Gregory: So that's around 4.7%. But the rate pressure on CDs has been a little bit reduced recently in the month of September, so we feel good about that. And then on other interest bearing deposits, we saw MMA production come down about 11 basis points, quarter on quarter, we saw now production down almost approximately 75 basis points, quarter on quarter. So we feel good about the trends of deposit production within our interest bearing products.

Speaker 4: you know, going back to the liability side, we think that the public calls.

Going back to the liability side, we think that deposit cost total deposit costs will peak and our flatline starting in early 2024, but then you start to see the benefit of the.

Speaker 4: Total deposit calls will peak in or flatline starting in early 2024.

Speaker 4: But then you start to see the benefit of the fixed rate asset repricing. And you can see that on that same chart with the fixed rate assets. And you see how that impact just grows as you go through the year. So we expect the margin to decline in the fourth quarter, be relatively stable in the first quarter.

The fixed rate asset repricing and you can see that on that same chart with the fixed rate assets and you see how that impact just grows as you go through the year. So we expect the margin to decline in the fourth quarter to be relatively stable in the first quarter and then because of the impact of the CD repricing is a couple million dollars.

Speaker 4: And then because the impact of CD repricing is a couple million dollars incrementally each quarter when you go through 2024.

Incrementally each quarter when you go through 2024.

Speaker 4: That will be easily overwhelmed by the benefits of the commercial, fix rate commercial loan repricing, securities portfolio, hedge runoff and residential mortgage repricing. And you can see that in the chart that is pretty powerful as you go through 2024 as a nice tailwind to both NII and the margin. Thank you so much.

That will be easily overwhelmed by the benefits.

The commercial at fixed rate commercial loan repricing securities portfolio has run off and residential mortgage repricing and you can see that in the chart that is pretty powerful as you go through 2024 is a nice tailwind to both NII and the margin.

Thank you so much.

Jamie Gregory: Mix will be an impact that going forward. So all in, I would say the deposit production cost increases in the fourth quarter will probably be similar to what we saw in the third quarter. But for overall deposit cost, we gave our guidance of 46 to 47% through the cycle beta. So we expect continued increases in the fourth quarter. And that actually has a little bit less to do with production than it has to do with repricing in the existing book.

Thank you.

Hi, Steven.

Speaker 8: Alex, for for us, you may proceed with your question when you're ready. Hey, good morning, everybody. Good morning.

And it has opened up.

You May proceed with your question.

Hey, good morning, everybody.

Good morning morning.

So I wanted to start on the ability to generate positive operating leverage in 2024.

On the expense side, Kevin You said you plan to hold adjusted expense is pretty flat in 2024. So hope it first you give a little color on that.

Speaker 9: so I hope at first you give a little color on that. And then I also want to talk about the revenue.

And then I also wanted to talk about the revenue opportunity and at this juncture do you see 2024 as an opportunity to show very modest operating leverage you think it could be more substantial.

Jamie Gregory: And I would point to the table we put on page seven of the earnings deck with the fixed rate repricing what you see below the line there is the impact of CD repricing and the fourth quarter has a decent sized impact of CD maturity. So we have a little more than two billion in CDs that mature in the fourth quarter, the rate on those today is about 375. And so we will have a headwind to deposit cost in the fourth quarter as those repriced to kind of the normal going on production rate.

Speaker 9: And at this juncture, do you see 2024 is an opportunity to show very modest operating leverage?

Start there.

Speaker 4: Yeah, let me kick this off as we look longer term. Well, first, I'll speak to our communication strategy for the fourth quarter. So the next...

Yeah, Steve Let me kick this off as we look longer term well first I'll speak to our communication strategy part of the fourth quarter. So in the next six weeks will be out with a couple of different presentations. We have today, where we're speaking to the third quarter and the fourth quarter and then we will be presenting it at Bab or will give me.

Speaker 4: Six weeks will be out with a couple of different presentations. We have today's where we're speaking to the third quarter and the fourth quarter, and then we'll be presenting it at BAB or we'll give more of a strategic update in including some of the details of our expense initiatives. And then we have the Goldman Sachs Conference in early December , where we will give more details of our financial outlook a longer term.

More of a strategic update and including some of the details of.

Jamie Gregory: We do expect further declines and non-exparing deposits in the fourth quarter. And so, you know, we think that the net result of all that is you get to that 46 to 47% through the cycle beta for the month of December and deposit cost in the year in the mid to upper 250.

Our expense initiatives and then we have the Goldman Sachs Conference in early December .

December where we will give more details of our financial outlook longer term.

Speaker 4: But when you look at where we are right now in expenses, so...

But when you when you look at where we are right now in expenses. So.

Speaker 4: In the very near term, we expect expenses to be down in the fourth quarter versus third quarter. We had a range of 302 to 306 on the just expenses. And then as we said, we expect, just expenses to be relatively stable in 2024. Of course, we're excluding the FDAC one-time assessment that we expect to come in the fourth quarter.

In the very near term, we expect expenses to be down in the fourth quarter versus the third quarter. We had a range of 302 to 306 on adjusted expenses and then as we said we expect adjusted expenses to be relatively stable in 2024 of course, we're excluding the FDIC onetime assessment that we expect to come.

Jamie Gregory: And you asked about the asset side balance. Will you remind me was that the rate on the asset side? Yeah, I was just wondering in terms of the shown repricing that we're going to see in the magnitude of that next year, that could be enough. Yeah, so as we look at looking forward next year, so we'll have a few things happen. First, you know, going back to the liability side, we think the total deposit cost will peak in or flat lines starting in early 2024, but then you start to see the benefit of the fixed rate asset reprising.

In the fourth quarter.

Speaker 4: We have a lot of different initiatives behind that flat expense guidance.

We have a lot of different initiatives.

Behind that flat expense guidance.

Speaker 4: And really what's exciting to us is a lot of it just improves how we go to market. Embedded in that expense outlook is still spending for growth to grow our core client base. So what you'll see from us is you'll see in our businesses that drive core relationship growth, you'll still see spending to grow. And so that's embedded in our strategy and we'll speak more to that in a couple weeks up in Boston.

And really what's exciting to us is a lot of it just improves how we go to market.

Bedded in that expense outlook is still spending for growth to grow our core client base. So what youll see from us as youll see in our businesses that drive.

Jamie Gregory: And you can see that on that same chart with the fixed rate assets and you see how that impact just grows as you go through the year. So we expect the margin to decline in the fourth quarter, be relatively stable in the first quarter, and then because the impact of CD reprising is a couple million dollars incrementally each quarter when you go through 2024, that will be easily overwhelmed by the benefits of the fixed rate commercial loan reprising, securities portfolio, hedge runoff, and residential mortgaged reprising. And you can see that in the chart that is pretty powerful as you go through 2024 as a nice tailwind to both NII and the margin.

Core relationship growth.

You'll still see spending to grow and so that's embedded in our strategy and we will speak more to that in a couple of weeks up in Boston and so we.

Speaker 4: We feel good about that outlook, but when you think about positive offering leverage for the calendar year 2024, it's challenging. Because the first half of 2023 had such strong revenue growth that the exit run rate on revenue is just simply lower than it was at the entry to 2023.

We feel good about that outlook, but when you think about positive operating leverage for the calendar year 2024, it's challenging because the first half of 2023 had such strong revenue growth that the exit run rate on revenue is just simply lower than it was at the entry to 2023.

Speaker 4: but when you look at quarterly increases and it goes back to Eberheen's question just a minute ago, the NII tailwinds because of fixed rate repricing and where yields are today.

But when you look at quarterly increases and it goes back to Ebrahim <unk> question, just a minute ago, the NII tailwind because of fixed rate repricing and where yields are today is very powerful and so while we may not have positive operating leverage for calendar year 2024.

Ebrahim Poonawala: Thank you so much. Bye.

Speaker 9: is very powerful. And so while we may not have positive offering leverage for calendar year 2024, if you're comparing quarter on quarter year every year, it gets pretty powerful as you go through calendar year 2024. The issue is simply just looking at calendar year 24 versus calendar year 23. Got it. That's helpful. And then maybe just.

Operator: Thank you.

Steven Alexopoulos: You now have Steven, Alex, for this, you may proceed with your question. Hey, good morning, everybody. Good morning.

If you are comparing quarter on quarter year over year. It gets pretty powerful as you go through calendar year 2024. The issue is simply you're just looking at calendar year 'twenty four versus calendar year 'twenty three.

Steven Alexopoulos: So I want to start on the ability to generate positive operating leverage in 2024. On the expense side, Kevin, you said you plan to hold adjusted expenses pretty flat in 2024. So hope at first you give a little color on that. And then I also want to talk about the revenue opportunity. And at this juncture, do you see 2024 as an opportunity show very modest operating leverage? You think it could be more substantial? It will start there.

Got it.

Paul.

And then maybe just one other one so on the noninterest bearing deposits are down fairly sharply again peers are seeing the pace of outflows of be fairly materially.

How close are you to seeing a bottom and when you talk about your expectation for NIM to stabilize <unk> and then expand.

What's the underlying assumption of where noninterest bearing deposits are thanks.

Kevin Blair: Yeah, let me kick this off as we look longer term. Well, first, I'll speak to our communication strategy for the fourth quarter. So the next six weeks will be out with a couple of different presentations. We have today's where we're speaking to the third quarter and the fourth quarter, and then we'll be presenting it at BAB or we'll give more of a strategic update in including some of the details of our expense initiatives.

Our outlook for Niv to total remains the same as we said in July and so we expect to end the year around 25% noninterest bearing to total deposits and embedded in that would be a decline in the fourth quarter somewhere around $400 million in AB deposits we.

Speaker 4: Our outlook for NIB to total remains the same as we said in July . And so we expect in the year, around 25%, not as varying to total deposits. And embedded in that would be a decline in the fourth quarter, somewhere around $400 million in NIB deposits.

Speaker 4: We do believe that that rate of decline will slow significantly as we look out into 2024. And again, we'll give more details on the longer term outlook in early December . But we do believe that that will slow. And that's due to both environmental impacts as well as strategic impacts with our businesses that were continuing to grow like treasury and payment solutions.

We do believe that that rate of decline will slow significantly as we look out into 2024 and again, we will give more details on the longer term outlook in early December but we do believe that that will slow and thats due to.

Kevin Blair: And then we have the Goldman Sachs Conference in early December, where we will give more details of our financial outlook, a longer term. But when you look at where we are right now in expenses. So in the very near term, we expect expenses to be down in the fourth quarter versus third quarter. We had a range of 302 to 306 on the just expenses. And then as we said, we expect the just expenses to be relatively stable in 2024.

Both environmental impacts as well as strategic impacts with our businesses that we're continuing to grow like treasury and payment solutions.

Okay.

Perfect. Thanks for taking my questions.

Thanks.

Your next question comes from Michael <unk> from Raymond James.

Speaker 2: next question comes from Michael Rose from Raymond James.

Kevin Blair: Of course, we're excluding the FDFC one-time assessment that we expect to come in the fourth quarter. We have a lot of different initiatives behind that flat expense guidance. And really what's exciting to us is a lot of it just improves how we go to market and embedded in that expense outlook is still spending for growth to grow our core client base. So what you'll see from us is you'll see in our businesses that drive core relationship growth, you'll still see spending to grow.

Speaker 10: Hey, good morning guys, thanks for taking my questions. Maybe just a broader step back question for you, Kevin. Obviously, a lot has happened since the investor day, earlier last year. Can you just give us an update on some of your initiatives whether it be massed or the commercial real estate initiative and just broadly?

Hey, good morning, guys. Thanks for.

For taking my questions.

Maybe just a broader step back question for you Kevin.

Obviously, a lot has happened since the Investor day.

Earlier last year can.

Can you just give us an update on some of your initiatives whether it be mastered.

Commercial real estate initiative.

Just just broadly.

Where you think you stand in some of those efforts and kind of maybe some of the areas that might require some additional kind of investment from here. Obviously the targets that you laid out back then I think they're going to be tough to achieve in this interest rate environment, but just wanted to get a sense for where you think you are and what the opportunities are as we move forward. Thanks.

Speaker 10: you know, where you think you stand in some of those efforts and kind of maybe some of the areas that I require some additional kind of investment from you. Obviously the targets that you'll laid out back then, I think, are going to be tough to achieve in this interest rate environment, but just wanted to get a sense for where you think you are and what the opportunities are as we move forward.

Kevin Blair: And so that's embedded in our strategy and we'll speak more to that in a couple weeks up in Boston. And so we feel good about that outlook. But when you think about positive operating leverage for the calendar year 2024, it's challenging because the first half of 2023 had such strong revenue growth that the exit run rate on revenue is just simply lower than it was at the entry to 2023. But when you look at quarterly increases and it goes back to Ebrahim's question just a minute ago, the NII tailwinds, because of fixed rate repricing and where yields are today, is very powerful and so while we may not have positive offering leverage for calendar year 2024, if you're comparing quarter or quarter year every year, it gets pretty powerful as you go through calendar year 2024. The issue is simply just looking at calendar year 2024 versus calendar year 23. Got it. That's helpful.

Speaker 5: Yeah, Michael, it's a great question. And I think part of the answer is that with this sort of environment where you're seeing margin contraction, you're seeing questions around credit, it kind of massed some of the success that we've had in some of the underlying initiatives. And that's not just with our new initiatives. It also stands to talk about some of our core businesses that continue to see improvements in productivity, deepening of wallet share, things like that. But...

Yeah, Michael It's a great question and I think part of the part of the answer is that with this sort of environment, where you're seeing margin contraction you are seeing questions around credit kind of mask. Some of the success that we've had in some of the underlying initiatives and thats not just with our new initiatives. It also stands to talk about some of our core businesses that continue to.

See improvements in productivity deepening the wallet share things like that but as it relates to our targets I would just tell you as we've said in the past when we did that forecast for our three year top quartile performance. Obviously, we did it under a different interest rate environment. Our goal is to continue to focus on generating top quartile performance.

Speaker 5: As it relates to our targets, I would just tell you as we've said in the past, when we did that forecast for our three-year top-quartile performance, obviously we did it under a different interest rate environment. Our goal is to continue to focus on generating top-quartile performance.

Speaker 5: and those numbers may be different, but relatively speaking, outperforming that of our competitors. But when it gets into some of the initiatives, you have something like a-

And those numbers may be different but relatively speaking outperforming that of our competitors, but when it gets into some of the initiatives you have something like a mast when we talk about our banking as a service platform one of the things that we set out from the beginning was we wanted to prove our hypothesis that this was a solution that would be well.

Speaker 5: When we talk about our banking as a service platform, you know, one of the things that we set out from the beginning was we wanted to prove a hypothesis that this was a solution that would be well received by independent software vendors and partners. As I said on last call, I think we're proving that hypothesis.

Steven Alexopoulos: But that may be just one other one, so on the not just sparing deposits, there's down fairly sharply again. Piers are seeing the pace of outflows of eight fairly materially. How close are you to seeing a bottom when you talk about your expectation for nip to stabilize one Q and then expand? What's the underlying assumption of where not just sparing deposits are? Thanks. Our our outlook for nibi to total remains the same as we said in July, and so we expect in the year around 25% not as sparing to total deposits, and embedded in that would be a decline in the fourth quarter somewhere around $4 million in nibi deposits.

Received by independent software vendors and partners as I said on last call I think we're proving that hypothesis pretty clearly and that we've already onboard at nine <unk> and payment partners onto the platform today the spend off the payment facilitation portion of that is approaching $500 million.

Speaker 5: pretty clearly in that we've already onboarded nine ISVs and payment partners onto the platform. Today the spend off the payment facilitation portion of that is approaching $500 million.

Speaker 5: And we have additional 45 partners in the pipeline evaluating the software and going through the contractual phase. Those 45 partners would represent about $13 billion in payment volume. So it shows that there's a great deal of interest in the mass solution. The second part of that objective was ensuring that we have the right type of products to be able to fully offer the capabilities that the end users would desire. Today we have payment facilitation and a banking suite of products that include checking in a debit card. But we just announced this week we signed a strategic partnership with Centenium, which will provide additional APAR capabilities to the end users. So as we entered this we have just a minimum viable product. We're expanding that into additional solution.

And we have additional 45 partners in the pipeline evaluating the software and going through the contractual phase those 45 partners would represent about $13 billion in payment volume. So it shows that theres a great deal of interest in the mass solution. The second part of that objective was <unk>.

Steven Alexopoulos: We do believe that that rate of decline will flow significantly as we look out into 2024 and again we'll give more details on on the longer term outlook in early December, but we do believe that that will slow and that's due to both environmental impacts as well as strategic impacts with our businesses that we're continuing to grow like treasury and payment solutions. Okay, perfect thanks for taking my questions. Thanks.

During that we had the right type of products to be able to fully offer.

The capabilities that the end users would desire today, we have payment facilitation and a banking suite of products that include checking in a debit card, but we just announced this week, we signed a strategic partnership with <unk>, which will provide additional AP AR capabilities to the end users. So as we entered this we have just the minimum <unk>.

Michael Rose: Your next question comes from Michael Rose from Raymond James. You may listen. Hey, good morning guys. Thanks for taking my questions. Maybe just a broader step back question for you, Kevin. Obviously, a lot has happened since the investor day earlier last year. Can you just give us an update on, you know, some of your initiatives, whether it be master, you know, the commercial real estate initiative and, you know, just just broadly.

Product, we're expanding that into additional solutions. The third leg of the stool is we have to assess whether the utilization and the adoption by the end users will generate a great deal of revenue and that's the part of this equation that it's still too early to tell but based on the demand that we have from the software providers, we remain very optimistic.

Speaker 5: The third leg of the stool is...

Michael Rose: You know, where you think you stand in in some of those efforts and kind of maybe some of the areas that I require some additional kind of investment from you. Obviously, the targets that you laid out back then, I think are going to be tough to achieve in this interest rate environment, but just wanted to get a sense for where you think you are and what the opportunities are as we move forward.

<unk> as to the viability of this solution and we're actually expanding it into a banking only solution, where some folks actually don't need the payment facilitation. They just want the banking services and that's about 40% of the pipeline. We have today I think it's also important to note we're not betting the bank on this initiative, we've spent about $9 million in expenses year to date.

So it's a measured investment for us.

Speaker 5: C-I-B, corporate investment banking. We have about 27 FTEs. We're up to 20 clients.

Corporate investment banking, we have about 27 ftes were up to 20 clients that we've been able to onboard we have almost $500 million in outstandings and $3 million in revenue year to date from a from a capital market standpoint. So that is progressing we continue to get traction and that's just going to take time to continue to build but it is <unk>.

Speaker 5: that we've been able to onboard. We have almost 500 million dollars in outstanding, some three million dollars in revenue year to date from a capital market standpoint. So that is progressing. We continue to get traction, and that's just gonna take time to continue to build, but it is exceeding our expectations from a P&L impact at this point. Again, we've spent about eight million dollars year to date. So we're not betting the farm on any one of these initiatives. It's really the combination of many. And the third one I'll just mention is analytic.

Michael Rose: Yeah, Michael, it's a great question and I think part of the part of the answer is that with this sort of environment where you're seeing margin contraction, you're seeing questions around credit, it kind of mass some of the success that we've had in some of the underlying initiatives and that's not just with our new initiatives. It also stands to talk about some of our core businesses that continue to see improvements in productivity, deepening of wallets, share, things like that.

Speaker 5: $3 million in revenue year-to-date from a capital market standpoint. So that is progressing. We continue to get traction, and that's just going to take time to continue to build, but it is exceeding our expectations from a P&L impact at this point. Again, we've spent about $8 million year-to-date. So we're not betting the farm on any one of these initiatives. It's really the combination of many. And the third one I'll just mention is analytics. We've talked a lot about analytics and the importance at providing proactive advice to our clients, and the commercial and consumer side. We're fully up and operational with our consumer platform. And year-to-date, we've booked about $10 million.

<unk> our expectations from a.

P&L impact at this point again, we've spent about $8 million year to date. So we're not betting the farm on any one of these initiatives. It's really the combination of many and the third one I'll. Just mentioned is analytics, we've talked a lot about analytics and the importance at providing proactive advice to our clients both on the commercial and consumer side, we're fully up and <unk>.

Michael Rose: But as it relates to our targets, I would just tell you as we've said in the past, when we did that forecast for our three year top core top performance, obviously we did it under a different interest rate environment. Our goal is to continue to focus on generating top core top performance and those numbers may be different, but relatively speaking outperforming that of our competitors. But when it gets into some of the initiatives, something like a mast, when we talk about our banking as a service platform, one of the things that we set out from the beginning was we wanted to prove hypothesis that this was a solution that would be well received by independent software vendors and partners.

Operational with our consumer platform.

Year to date, we booked about $10 million in incremental revenue just from some of the leads and insights that that solution has provided us and that's just starting to scratch the surface. So some of the big initiatives that we rolled out.

Michael Rose: As I said in last call, I think we're proving that hypothesis pretty clearly in that we've already onboarded nine ISVs and payment partners onto the platform. Today, the spend off the payment facilitation portion of that is approaching $500 million. And we have additional 45 partners in the pipeline evaluating the software and going through the contractual phase. Those 45 partners would represent about $13 billion in payment volume. So it shows that there's a great deal of interest in the mass solution.

Speaker 5: In February , an investor day or a head of schedule, again, small numbers in the grand scheme of things. But as I said then, I'll say again today, it's really not about the P&L impact today. It's about the impact two and three years down the road where it's going to create new sources of revenue that we haven't had. And let me just, I'm answering this long winded, but let me add in one new one. And I referenced this in the prepared remarks. But we're currently in discussions with green sky and and the private equity firms that are acquiring the green sky platform from gold men.

And February Investor Day are ahead of schedule again small numbers in the Grand scheme of things, but as I said, then I will say again today, it's really not about the P&L impact today its about the impact two and three years down the road, where its going to create new sources of revenue that we haven't had and let me just.

Answering this long winded, but let me add in one new one.

I referenced this in the prepared remarks, but we're currently in discussions with Green Sky and the private equity firms that are acquiring the green sky platform from Goldman.

Speaker 5: Our discussions around a sponsorship program that would allow us to continue to support their origination and distribution of production with a balance sheet light, liquidity neutral solution. And as a reminder, I know you know this Michael, we've been in a business with Green Sky on a health or cell arrangement since 2020. That continued with Goldman after the acquisition, but it was only on a small portion of their originations, which this quarter created only about $1 million in revenue.

Our discussions around our sponsorship program.

That would allow us to continue to support their origination and distribution of production with a balance sheet light.

Liquidity neutral solution.

As a reminder, I know you know this Michael we've been in business with Green Sky on a held for sale arrangement. Since 2020 that continued with Goldman after the acquisition, but it was only on a small portion of their originations, which this quarter created only about $1 million in revenue. The new program that we're contemplating is not built into our 'twenty three guidance.

Michael Rose: The second part of that objective was ensuring that we had the right type of products to be able to fully offer the capabilities that the end users would desire. Today, we have payment facilitation and a banking suite of products that include checking and a debit card. But we just announced this week. We signed a strategic partnership with titanium, which will provide additional APAR capabilities to the end users. So as we entered this, we have just a minimum viable product.

Speaker 5: The new program that we're contemplating is not built into our 23 guidance and would have a much broader program across all of the production and we'll be very excited about sharing specifics about that banking as a service program and the financial benefits in the coming months.

And would have a much broader program across all of the production will be very excited about sharing specifics about that banking as a service program in <unk>.

Michael Rose: We're expanding that into additional solutions. The third leg of the stool is we have to assess whether the utilization and the adoption by the end users will generate a great deal of revenue. And that's the part of this equation that it's still too early to tell. But based on the demand that we have from the software providers, we remain very optimistic as to the viability of the solution. And we're actually expanding it into a banking only solution where some folks actually don't need the payment facilitation.

And the financial benefits in the coming months.

Speaker 10: Kevin, that's great color. And maybe just kind of followed up to that. I, Jamie, I understand that the positive operating level is going to be pretty challenged next year, but just given this forthcoming arrangement with Green Sky, I think third party loans are down to about.

Kevin that's great color and maybe just kind of followed up to that Jamie I understand that the positive operating leverage is going to be pretty challenged next year, but just given this forthcoming arrangement with with Green Sky I think third party loans are down to about one 8% of total.

Speaker 10: 1.8% of total. Should we expect a higher level of balance sheet growth as we think about next year, obviously zero to 2%. Given this quarter's production seems a little bit light. It seems like they have some momentum. Just wanted to get a sense. I know it's early. If we could expect more robust balance sheet growth as you move into next year. Thanks.

Michael Rose: And they just want the banking services. And that's about 40% of the pipeline we have today. I think it's also important to note, we're not betting the bank on this initiative. We spent about $9 million in expenses year to date. And so it's a measured investment for us. CIB corporate investment banking, we have about 27 FTEs, we're up to 20 clients that we've been able to onboard. We have almost $500 million in outstandings and $3 million in revenue year to date from a capital market standpoint.

Should we expect a higher level of balance sheet growth as.

As we think about next year, obviously zero to 2% given this quarters production seems a little bit light. It seems like you have some momentum just wanted to get a sense I know it's early.

If we could expect a more robust balance sheet growth as you move into next year.

Yes, Michael as we look further out and again, we'll give more detailed outlook here in about six weeks, but as we look further out we do expect balanced loan and deposit growth and what Youll see there is you'll see that our core client businesses will continue to grow and our objectives there to grow.

Speaker 4: Yeah, Michael, as we look further out, and again, we'll give more detail to how it'll look here in about six weeks, but as we look further out, we do expect balance, loan, and deposit growth.

Speaker 4: And what you'll see there is you'll see that our core client businesses will continue to grow and our objective there to grow faster than the market.

Michael Rose: So that is progressing. We continue to get traction and that's just going to take time to continue to build. But it is exceeding our expectations from a P&L impact at this point. Again, we've spent about $8 million here today. So we're not betting the farm on any one of these initiatives. It's really the combination of many. And the third one I'll just mention is analytics. We talked a lot about analytics and the importance at providing proactive advice to our clients, both on the commercial and consumer side.

<unk> faster than the market, we believe that we have a right to win we believe we can take share and so that's our objective and our core client businesses, but you may see some other businesses that remain flat or even decline on the margin that are noncore and non non core multi product.

Speaker 4: We believe that we have a right to win. We believe we can take share and so that's our objective in our core client businesses But you may see some other businesses that remain flat or even Declined on the margin that are non-core and non non-core multi-product Clients and so you'll see a little bit of a mix there over the next few quarters as we go forward

Our clients and so you'll see a little bit of a mix there over the next few quarters as we go forward.

Michael Rose: We're fully up an operational with our consumer platform. And year to date, we booked about $10 million in incremental revenue just from some of the leads and insights that that solution has provided us. And that's just starting to scratch the surface. So some of the big initiatives that we rolled out in February, an investor day are ahead of schedule. Again, small numbers in the grand scheme of things. But as I said then, I'll say again today, it's really not about the P&L impact today.

Great. Thanks for taking my questions.

Thank you Michael.

We now have Brady gailey of <unk>.

Speaker 2: We now have Grazy Galee's OKBW. You may proceed.

Christina.

Hey, Thanks, good morning, guys.

Good morning Brady.

Speaker 11: You have common athletes here a lot of over 10% now. And as I think about the future, you know, it's probably not gonna be a lot of growth. You're still making good money. So that ratio is still gonna creep higher. And you know, the stock is sitting here barely on top of 10, who'll book value. Do you think that sometime in 2024 it makes sense to consider re-engaging in the share repurchase program?

So you have common equity tier one of over 10% now.

Michael Rose: It's about the impact two and three years down the road where it's going to create new sources of revenue that we haven't had. And let me just, I'm answering this long winded, but let me add in one new one. And I referenced this in the prepared remarks, but we're currently in discussions with green sky and the private equity firms that are acquiring the green sky platform from Goldman. Our discussions around a sponsorship program.

As I think about the future.

It's probably not going to be a lot of growth you are still making good money. So that ratio is still going to creep higher.

The stock is sitting here barely on top of tangible book value do you think that sometime in 2024. It makes sense to consider re engaging in the share repurchase program.

Brady.

Speaker 4: Brady, first as you're well aware, we've been in capital accumulation mode now for about six quarters. And we've achieved those objectives that we raised a while back to get above 10% to your point. So now we are in capital management mode. So our priority in that is just what has always been the past is deploying that capital.

Michael Rose: That would allow us to continue to support their origination and distribution of production with a balance sheet light, liquidity, neutral solution. And as a reminder, I know you know this, Michael, we've been in a business with green sky on a health or sell arrangement since 2020. That continued with Goldman after the acquisition, but it was only on a small portion of their originations, which this quarter created only about a million dollars in revenue.

First as you are well aware, we have been in capital accumulation mode now for about six quarters.

We've achieved those objectives that we raised a while back to get above 10% to your point. So now we are in capital management mode. So our priority and that is just what its always been in the past is deploying that capital to clients, but beyond that we will manage our capital ratios as appropriate including the use of.

Speaker 4: clients, but beyond that, we will manage our capillaries as appropriate, including the use of Sherry Purchase. And right now, we believe two things are important for that discussion. First, in the fourth quarter, if you assume that we have that FDIC fee, we do not expect to accrete a lot of capital in the fourth quarter.

Michael Rose: The new program that we're contemplating is not built into our 23 guidance and would have a much broader program across all of the production. And we'll be very excited about sharing specifics about that banking as a service program and the financial benefits in the coming months. Kevin, that's great color, and maybe just kind of followed up to that. Jamie, I understand that the positive operating level is going to be pretty challenged next year, but just given this forthcoming arrangement with Green Sky, I think third party loans are down to about 1.8% of total, you know, should we expect a higher level of balance, she growth, as we think about next year, obviously zero to 2%, given this quarter's production seems a little bit light.

Share repurchases and right now we believe two things are important for that discussion first in the fourth quarter. If you assume that we have that FDIC fee.

Do not expect to accrete a lot of capital in the fourth quarter second we believe there is still a lot of economic uncertainty so.

Speaker 4: Second, we believe there's still a lot of economic uncertainty. So...

Speaker 4: You know where we are right now, we're gonna sit on the sideline likely here in the fourth quarter.

Where we are right now we're going to sit on the sideline likely here in the fourth quarter, but in 2024 will be balanced like you've seen with us in the past when we've been in capital management mode prioritizing client and then secondarily you'd likely see us with share repurchases.

Speaker 4: But in 2024, we'll be balanced like you've seen with us in the past. We've been in capital management mode, prioritizing clients, and then secondarily, you'd likely see us with sherry purses.

Speaker 11: All right, that's helpful. And then my second question is just on the path of the NIM, like I understand, down a little bit more in 4Q, and then stable, and then you're starting to see some expansion, especially in the back half of the year. I mean, if I look at that slide seven, where you suggest 23 basis points of NIM expansion, I know that's only looking at like the fixed rate piece of it. So is there any way to look at the entire company and GAD?

Alright, that's helpful. And then my second question is just on the path of the NIM I can understand that.

Michael Rose: It seems like they have some momentum, just wanted to get a sense, I know it's early, you know, if we could expect more robust balance sheet growth as you move into next year. Thanks. Yeah, Michael, as we look further out, and again we'll give more detail to outlook here in about six weeks, but as we look further out, we do expect balance loan and deposit growth. And what you'll see there is you'll see that our core client businesses will continue to grow and our objective is there to grow faster than the market.

A little bit more in <unk> than stable and then youre starting to see some expansion, especially in the back half of the year I mean, if I look at the slide seven where you suggest 23 basis points of NIM experienced I know thats only looking at like the fixed rate piece of it. So is there any way to look at the entire company and gauge what the.

Speaker 11: you know what the possible mimic expansion could be after we reach this you know 3% bottom.

Possible NIM expansion could be after we reach this 3% bottom.

Speaker 4: Well, let me for today's purposes, let's go through what is not on that six straight chart. And so first, what that does not include would be any makeshift and deposit.

Well, let me <unk>.

Michael Rose: We believe that we have a right to win, we believe we can take share. And so that's our objective in our core client businesses, but you may see some other businesses that remain flat or even decline on the margin that are non core and non core multi product clients. And so you'll see a little bit of a mix there over the next few quarters as we go forward. Great. Thanks for taking my questions. Thank you, Michael.

For todays purposes, but let's go through what is not on that fixed rate chart and so first what that does not in <unk>.

<unk> would be any mix shift in deposits.

Speaker 4: you know, between non-insparing and intersparing or even within products that are within intersparing.

Between noninterest bearing and interest bearing or even within products that are within interest bearing <unk>.

Speaker 4: It doesn't include the headwind of deposit production costs. And as I mentioned, production for us was around 370 in the third quarter, which is clearly higher than our total deposit cost.

Does it include the headwind of deposit production costs and as I mentioned production for US was around $3 70 in the third quarter, which is clearly higher than our.

Total deposit cost.

Speaker 4: It would not include any deposit product rate increases. And so all of our guidance is a flat rate forward look. And so we're not really expecting any material product rate increases. But if they were to happen, it would not include that.

It would not include any deposit product rate increases and so all of our guidance is a flat rate.

Grazie Gayle: We now have Grazie Gayle, the KBW, who may proceed. Hey, thanks. Good morning, guys. Good morning, Grazie. Great. So you have common equity, a lot of over 10% now. And as I think about the future, you know, it's probably not going to be a lot of growth. You're still making good money. So that ratio is still going to creep higher. And you know, the stock is sitting here barely on top of 10. He'll book value.

Forward look and so we're not really expecting any material product.

Product rate increases, but if they if they were to happen. It would not include that and then it also doesn't include the impact of loan spreads and I want to point to something there because loan spreads have been a really good story for US we've had six consecutive quarters were floating rate loan spreads to index have widened.

Speaker 4: and then it also doesn't include the impact of loan spreads and and i want to point to something there because loan spreads have been a really good story for us we've had six consecutive quarters where floating rate loan spreads to index have widen

Kevin Blair: Do you think that sometime in 2024, it makes sense to consider re-engaging in the share repurchase program? Great. First, as you're well aware, we've been in capital accumulation mode now for about six quarters. And we've achieved those objectives that we raised a while back to get above 10% to your point. So now we are in capital management mode. So our priority in that is just what has always been the past is deploying that capital to clients.

Speaker 4: And so we believe that we're getting paid for the risk we're putting on the balance sheet. We believe it's creative to capital. And so that's a good trend there. So those four things are not included in that.

And so we believe that we're getting paid for the risk we're putting on the balance sheet. We believe it's accretive to capital and so that's a good trend there. So those four things are not included in that now because the first three or negative. So it's likely that that those are a little bit more headwinds. They are tailwind to what you see on the fixed rate repricing.

Speaker 4: Now, because the first three were negative, I mean, it's likely that those are a little bit more headwinds, they are tailwinds to what you see on the fixed rate repricing.

Speaker 4: But the trend should have a somewhere shape as what you see on that chart.

But the trend should have a similar shape as what you see on that chart.

Alright Thats helpful. Thanks, Jamie.

Kevin Blair: But beyond that, we will manage our capital ratios as appropriate, including the use of cherry purchases. And right now, we believe two things are important for that discussion. First, in the fourth quarter, if you assume that we have that FDIC fee, we do not expect to accrete a lot of capital in the fourth quarter. Second, we believe there's still a lot of economic uncertainty. So, you know, where we are right now, we're going to sit on the sideline likely here in the fourth quarter. But in 2024, we will be balanced like you've seen with us in the past. We've been in capital management mode, prioritizing clients. And then secondarily, you'd likely see us with cherry purchases. All right, that's helpful.

Speaker 2: We now have Christopher Marineric of Gen A Montgomery.

We now have Christopher Merrimack of Janney Montgomery Scott.

Speaker 12: Thanks. Good morning. I'll have a question for Bob on the kind of combined snake portfolio and club and purchase business. Where do you want that to go as next year comes in the focus? It's more about kind of where you think that will land in the future.

Thanks, Good morning, I had a question for Bob on the kind of combined snack portfolio in club and purchase business, where do you want that to go as next year comes into focus it's more about kind of where you think that will land in the future.

Speaker 13: Yeah, hey, Chris, thanks for the question. Right now, we're at around 10% of our total loans is our SNCC book, and that's what would be defined as sort of the official SNCC definition. We also have another two or three percent will over a billion dollars in what I would call sort of club syndicated deals more of a regional level. So you kind of take those two together, we're sitting around 13%, 10% of that being sort of true SNCC.

Yeah, Hey, Chris Thanks for the question right right now we are at around 10% of our total loans as our Snick book and that's that's what would be defined as sort of the official snack definition. We also have another.

Two years to 3% a little over $1 billion in what I would call sort of club syndicated deals more of a regional level. So you kind of take those two together, we're sitting around 13% or 10% of that being sort of true snacks.

Grazie Gayle: And then my second question is just on the path of the name, like I understand, down a little bit more in 4Q and then stable. And then you're starting to see some expansion, especially in the back half of the year. I mean, if I look at that slide seven, you know, where you suggest 23 basis points of them expansion. I know that's only looking at like the fixed rate piece of it. So, is there any way to look at the entire company and gauge, you know, what the possible name expansion could be after we reach this, you know, 3% bottom.

Speaker 13: Up that number, we're agenting around 500 million of that. So for what that's worth, I think that's good fee business force, et cetera.

That number where agents being around 500 $500 million of that so.

That's work, we think thats good fee business force et cetera.

Speaker 13: I think we're comfortable in this range in terms of percentage and relative to concentration limits. We kind of like that 10 to 12% range. We're sort of there. I think that's our expectation is we kind of manage the business.

I think we're comfortable in this range in terms of percentage in relative to concentration limits. We we kind of like that 10 to 10% to 12% range. We're sort of there I think that's our expectation as we kind of manage the business.

Speaker 13: Going forward we've been in this space a long time obviously it can it can bite you occasionally as you saw but But nonetheless we think we've got a really good group of bankers running that business very focused on You know opportunities that that book can present us and there are some And we feel like we'll just be more strategic there But in terms of balances I think we're kind of where we need to be And we'll stay in that range as we look ahead and if not slightly decline, but certainly in that range

Going forward, we have been in this space a long time, obviously it can it can bite you occasionally as you saw but.

Jamie Gregory: Well, let me, for today's purposes, let's go through what is not on that fixed rate chart. And so first, what that does not include would be any makeshift and deposits, you know, between non-esparing and inter-sparing, or even within products that are, within inter-sparing. It doesn't include the headwind of deposit production cost, and as I mentioned, production for us was around 370 in the third quarter, which is clearly higher than our total deposit cost.

But nonetheless, we think we've got a really good group of bankers running that business very focused on opportunities that can present us and there are some.

We feel like we will just be more strategic there, but in terms of balances I think were kind of where we need to be and we'll stay in that range as we look ahead.

Not slightly decline, but certainly in that range.

Speaker 12: Great, that's helpful. Thank you for that. And then Kevin, just a quick question. The doctor and DDA players from masks. Are you seeing any of those now? Or is that still going to be kind of, you know, fourth quarter in 2024?

Great. That's helpful. Thank you for that and then Kevin just a quick question about sort of DDA flows from mass are you seeing any of those now or is that still going to be kind of fourth quarter in 2024.

Jamie Gregory: It would not include any deposit product rate increases. And so all of our guidance is a flat rate forward look. And so we're not really expecting any material product rate increases. But if they were to happen, it would not include that. And then it also doesn't include the impact of loan spreads. And I want to point to something there because loan spreads have been a really good story for us. We've had six consecutive quarters where floating rate loan spreads to index have widened.

Speaker 13: we're starting to see some deposit flows there's still in material at this point because the you know with the with the uh... five hundred million dollar payment transactions are referenced that that money moves pretty quickly so uh... the deposit story in the revenue that will come with it will make about three million dollars in in revenue in mass this year so it's still in the infancy stage

We're starting to see some deposit flows theres still immaterial at this point because with the with the $500 million of payment transactions I referenced that that money moves pretty quickly. So the deposit story and the revenue that will come with it we will make about $3 million in revenue in mass. This year. So it is still in the infancy.

Stage Chris.

Speaker 12: Great, but a year from now we can probably talk more definitely the way about progress there.

Great, but a year from now we can probably talk more definitively about progress there.

Jamie Gregory: And so we believe that we're getting paid for the risk we're putting on the balance sheet. We believe it's creative to capital. And so that's a good trend there. So those four things are not included in that. Now, because the first three were negative, I mean, it's likely that those are a little bit more headwinds. They are tailwinds to what you see on the fixed rate repricing. But the trend should have a similar shape as what you see on that chart. All right. That's helpful.

Speaker 13: Yeah, I think as you as you see the payment facilitation business pickup and I think it's important to know with that business we've been

Thank you, yes, I think as you see the payment facilitation business pick up and I think it's important to note with that business we have been.

Jamie Gregory: Thanks, Jamie.

Speaker 13: intentional about slowly onboarding clients. That's why we talk about only having nine on the platform and

Intentional about slowly onboarding clients. That's why we talk about only have nine on the platform and 40 plus in the waiting room, just because we want to make sure that we get the product right and to your point once we start onboarding. Some of these new relationships, we've talked about getting a $5 billion of $1 billion in deposits just from the payment facilitation business in it.

Speaker 13: 40 plus in the waiting room just because we want to make sure that we get the product right into your point once we start onboarding

Speaker 13: some of these new relationships we talked about getting a half a billion to a billion dollars in deposits just from the payment facilitation business and if we expand it into the banking only side there's obviously a lot more in deposits that are at play there as well

We expand it into the banking only side, there's obviously a lot more in deposits that are at play there as well.

Christopher Marinac: We now have Christopher, my wife of Jenny Montgomery. Thanks. Good morning.

Bob Derrick: I had a question for Bob on the kind of combined snake portfolio and club and purchase business. Where do you want that to go as next year comes in the focus? It's more about kind of where you think that will land in the future. Yeah. Hey, Chris. Thanks for the question. Right now, we're at around 10% of our total loans is our snake book. And that's that's what would be defined as sort of the official, you know, snake definition.

Great. Thank you very much for all the information that today and last night too.

Speaker 12: Great, thank you very much for all the information that today and last night too.

Okay. Thank you.

We now have bonding King I'm curious securities. Please go ahead when you're ready.

Speaker 2: We now have found in King's of Jewish Security. Please go ahead when you're ready.

Hey, good morning.

Bob Derrick: We also have another two or three percent, a little over a billion dollars in what I would call sort of club syndicated deals more of a regional level. So you kind of take those two together. We're sitting around 13% 10% of that being sort of true snakes of that number. We're agenting around 500, 500 million of that. So for what that's worth, I we think that's good fee business for us, et cetera.

Good morning, Brian .

So Jamie I wanted to take another angle at expectation for NIM expansion.

Speaker 14: So Jamie, I wanted to take another angle at the expectation for an expansion in the back half of next year. And you're already laid out your assumptions, but could you just know how you think about it? Just lay out kind of what you think the biggest risk is to back since it being pushed out or maybe not being realized according to your...

Back half of next year.

<unk> already laid out your assumptions, but could you just how youre thinking about it.

Lay out kind of what you think the biggest risk is to that seems to be a.

Pushed out or maybe not being realized.

According to your current expectations.

Speaker 4: I think the biggest risk when you think about the margin out.

I think the biggest risk when you think about.

The margin out there well I would say first as fed policy and so if you have big moves either on either side of fed policy with their balance sheet.

Speaker 4: Well, I would say first is fed policy. And so if you have big moves, either on either side of fed policy with their balance sheet, if they were to...

Bob Derrick: I think we're comfortable in this range in terms of percentage and relative to concentration limits. We we kind of like that 10 to 10 to 12% range. We're sort of there. I think that's our expectation is we kind of manage the business going forward. We've been in this space a long time. Obviously, it can it can bite you occasionally as you saw. But but nonetheless, we think we've got a really good group of bankers running that business very focused on, you know, opportunities that that book can present us.

If they were to drop down the RP significantly and take a lot of liquidity out of the system I think that could be challenging for the banking industry. But then also if they were to start easing in the second half of next year. The same lag that benefited the industry on the way up would be a headwind and so if you're if.

Speaker 4: draw down the RRP significantly and take a lot of liquidity out of the system. I think that could be challenging for the banking industry.

Speaker 4: But then also, if they were to start easing in the second half of next year, the same lag that benefited the industry on the way up would be a headwind. And so if you're just simply looking at the margin at the end of next year.

You're just simply looking at the margin at the end of next year.

Bob Derrick: And there are some and we feel like we'll just be more strategic there. But in terms of balances, I think we're kind of where we need to be and we'll stay in that range as we look ahead. It's not slightly decline, but certainly in that range. James. Great, that's helpful. Thank you for that.

Speaker 4: If you assume that the Fed starts easing in the second half or third quarter of next year, then that will be a head.

If you assume that the fed starts easing in the second half of the third quarter of next year, then that will be a headwind now I would argue it's a temporary headwind because of the lag and as we've said before we believe that our sensitivity to the front end of the curve and an easing cycle is relatively flat.

Speaker 4: Now, I would argue it's a temporary headwind because it's the lag. And as we've said before, we believe that our sensitivity to the front end of the curve in an easing cycle is relatively flat.

Kevin Blair: And then, Kevin, just a quick question about certain DDA flows from masks. Are you seeing any of those now? Or is that still going to be kind of, you know, fourth quarter in 2024? We're starting to see some deposit flows. They're still immaterial at this point, because the, you know, with the $500 million of payment transactions, I referenced that that money moves pretty quickly. So the deposit story and the revenue that will come with it will make about $3 million in revenue and mass this year.

Speaker 4: So we would not expect that in itself to be, to contract the margin, but the lag would definitely be impactful whenever that happened. So, fed policy is a risk, and then I would say just general deposit mixed shifts are a risk.

So we would not expect that in itself to be to contract in the margin, but the lag would definitely be impactful whenever that happens. So that policy is a risk and then I would say just general deposit mix shifts our rail skin.

Speaker 4: You know, we're pleased with the trend of the slowing decline and NIV in the third quarter. We expect the decline to slow again in the fourth quarter and then slow again into 2024. But that's how I would point to those as some of the risks to that outlook.

As with the trend of the slowing decline in niv in the third quarter, we expect the decline to slow again in the fourth quarter and then slow again end of 2024.

Kevin Blair: So it's still in the infancy stage, Chris. Great, but a year from now, we can probably talk more definitively about progress there. Thank you for that. Yeah, I think as you see the payment facilitation business pickup, and I think it's important to note with that business, we've been intentional about slowly onboarding clients. That's why we talk about only having nine on the platform and 40 plus in the waiting room, just because we want to make sure that we get the product right into your point.

But I would point to those as some of the risks to that to that outlook.

Okay.

Speaker 14: Very helpful. And then I'll follow up to your commentary on loan spreads and how that could impact the loan growth profile of the bank. You also mentioned that you expect to grow faster in the market. And you would think I just with higher loan spreads maybe that would slow down growth theoretically, but could just help us square away those ideas.

Very helpful.

Then a follow up to your commentary on the.

Loan spreads.

And how that could impact the loan growth for.

The Bank you also mentioned that you expect to grow faster than the market and you would think I guess with higher loan spreads and maybe that would slow down growth.

Kevin Blair: Once we start onboarding some of these new relationships, we've talked about getting a half a billion to a billion dollars in deposits just from the payment facilitation business. And if we expand it into the banking only side, there's obviously a lot more in deposits that are at play there as well.

Youre radically but could you just help us square away.

Items.

Speaker 13: Well, I'll take that. I think those two are not necessarily correlated in that. What we're doing today in the marketplace is we're just being more selective at where we want to lend capital. And that allows us with the competition pulling back a little bit, allows us to pull up our pricing. And as Jamie mentioned, when you look at the variable rate spread over index, we're up 80 basis points year-to-year.

Well Brendan I'll take that I think those two are not necessarily correlated and that what we're doing today in the marketplace is we're just being more selective at where we want to lend capital and that allows us with the competition pulling back a little bit allows us to pull up our pricing and as Jamie mentioned.

Kevin Blair: Great. Thank you very much for all the information about today and last night too. Thank you.

When you look at the variable rate spread over index were up 80 basis points year over year, when when we look into the future and a lot of the loan growth will be based on where demand goes we've talked a lot about production was off about 9% this quarter over last quarter pipelines are relatively flat.

Brandon King: We now have found in Kansas of tourist security. Please go ahead when you're ready.

Speaker 13: When we look into the future and a lot of the loan growth will be based on where demand goes. We've talked a lot about production, was off about 9%, this quarter over last quarter, pipelines are relatively flat right now.

Brandon King: Good morning. Good morning, Brandon. So Jamie, I wanted to take another angle at the expectation for an expansion in the back half of next year, and you're already laid out your assumptions. But could you just know how you think about it? Just lay out what you think the biggest risk is to that person being pushed out or maybe not being realized according to your current expectations. I think the biggest risk when you think about the margin out there, well, I would say first is fed policy.

<unk> right now.

The economic impact to demand will determine kind of how fast we grow loans and as Jamie mentioned earlier, we will also want to correlate that back to the similar level of growth, we'll see on deposits, but we're optimistic about is our ability to continue to grow our C&I loans through our CIB organization through middle market and through some of our specialty.

Brandon King: And so if you have big moves either on either side of fed policy with their balance sheet, if they were to drop down the RRP significantly and take a lot of liquidity out the system, I think that could be challenging for the banking industry. But then also if they were to start easing in the second half of next year, the same lag that benefited the industry on the way up would be a headwind.

Speaker 15: through our CIB organization through middle market and through some of our specialty areas. Maybe the one question mark and wild card for 2024 will be what happens with the pay off pay down activity and CRE. As you know, we haven't seen a very constructive marketplace there given where cap rates and interest rates have moved and so we haven't had a lot of payoffs and pay downs. So our production next year in CRE, it may be hard to keep up with some of the pay off pay downs that have been delayed through this cycle. But we're just as bullish on the areas that we can grow. And as you note it, our goal is to continue to exceed the rate of growth of the underlying economy. That is very helpful, Collar. Thanks for taking my questions. Thank you.

Areas, maybe the one question Mark and wildcard for 2024 will be what happens with the payoff paydown activity in CRE as you know we haven't seen a very constructive marketplace, there given where cap rates and interest rates have moved and so we haven't had a lot of payoffs and paydowns. So our production next year in CRE.

It may be hard to keep up with some of the payoff and paydowns that had been delayed through this cycle, but.

We're just as bullish on the areas that we can grow and as you noted our goal is to continue to exceed the rate of growth of the underlying economy.

Speaker 13: bullish on the areas that we can grow. And as you noted, our goal is to continue to exceed the rate of growth of the underlying economy.

Brandon King: And so if you're just simply looking at the margin at the end of next year, if you assume that the fed starts easing in the second half or third quarter of next year, then that will be a headwind. Now, I would argue it's a temporary headwind because it's the lag. And as we've said before, we believe that our sensitivity to the front end of the curve in an easing cycle is relatively flat.

That is very helpful color. Thanks for taking my questions.

Thank you.

Thank you.

Hi, Kevin.

Davidson your.

Your line is open.

Brandon King: So we would not expect that in itself to contract the margin, but the lag would definitely be impactful whenever that happens. So fed policy is a risk. And then I would say just general deposit mix shifts are a risk. And we're pleased with the trend of the slowing decline. And then I be in the third quarter, we expect the decline to slow again in the fourth quarter and then slow again into 2024.

Hey, good morning, everyone.

Just a quick question on <unk>.

The bond portfolio. Some banks have pulled the trigger on restructuring is that something that is on the table or would you focus more on just.

Doing what <unk> been doing using the cash flows to.

Help fund loan growth, where perhaps pay down.

Wholesale borrowings.

Speaker 4: you know cabinet we look at the the bond portfolio we would consider restructuring i don't think it would be incredibly significant i mean you think about the capital we have the we call access capital of the net ten thirteen you know that there's limitations to what how we would use uh... that capital and how much we would use on something like a boundary structuring but

Kevin as we look at the bond portfolio, we would consider a restructuring I don't think it would be in <unk>.

Brandon King: But I would point to those as some of the risks to that outlook. Okay. Very helpful. And then a follow up to your commentary on the loan spreads and how it could impact the loan growth profile of the bank. You also mentioned that you expect to grow faster in the market. And you would think I guess with high loan spreads maybe that would slow down growth theoretically, but could just help us square away those items.

Credibly significant I mean, you think about the capital we have the we call excess capital of being at.

10 13.

There's limitations to what how we would use that capital and how much we would use on something like a bond restructuring but.

Speaker 4: I think somewhere to what you've heard from others in the industry, if there's a restructuring that makes sense and you get a two-year payback, two-and-a-half-year payback or something like that, it could be something that we entertain. But at this point today, we don't have any intention to do that, but it's something that we do look at from downtown.

Brandon King: Well, Brandon, I'll take that out. I think those two are not necessarily correlated in that. What we're doing today in the marketplace is we're just being more selective at where we want to lend capital. And that allows us with the competition pulling back a little bit. It allows us to pull up our pricing. And as Jamie mentioned, when you look at the variable rate spread over index, we're up 80 basis points every year.

I think similar to what you've heard from others in the industry. If there is a restructuring that makes sense and you get a two year payback, two and a half year payback or something like that it could be it could be something that we entertain but at this point today, we don't have any intention to do that but it's something that we do look at from top down.

Yes.

Speaker 16: Great, thanks. And one quick follow up on the sail on the global that you mentioned that about streamlining.

Okay.

Thanks, and one quick follow ups on the sale on the global you mentioned that.

About streamlining.

Your.

I forget the exact wording you used but about streamlining and so I'm just wondering if you can add a little more color on was it competing with.

Speaker 16: Forget the exact wording you used, but about streamlining. And so I'm just wondering if you can add a little more color on, on was it competing with some other, you know, the banks more.

Brandon King: When we look into the future and a lot of the loan growth will be based on where demand goes. You know, we've talked a lot about production was off about 9%. This quarter of our last quarter pipelines are relatively flat right now. The economic impact to demand will determine kind of how fast we grow loans. And as Jamie mentioned earlier, we also want to correlate that back to the similar level of growth we'll see on deposits.

Some other.

The banks more.

Larger wealth management platform or what was it about it that that made you want to streamline with that sale.

Speaker 16: larger and wealth management platform or what was it about it that made you want to streamline with that sale?

Speaker 13: Kevin, I think we said simplification of our business model. And it's really, it's a money management firm that we've owned for some time. And so it didn't really compete. It actually served as an investment vehicle for our financial advisors to place money. They largely do ETF funds.

Yes, Kevin.

We said simplification of our business model and its really its a money management firm that we've owned for some time and so it didn't really competed actually served as an investment vehicle for our financial advisers to place money. They largely do ETF funds and as you know and that sort of business. We will continue to use them and partner with them as we look to move on.

Brandon King: But what we're optimistic about is our ability to continue to grow CNI loans through our CIB organization through middle market and through some of our specialty areas. Maybe the one question mark and wild card for 2024 will be what happens with the pay off pay down activity and CRE. As you know, we haven't seen a very constructive marketplace there given where cap rates and interest rates have moved. And so we haven't had a lot of pay off and pay down.

Speaker 13: And as you know, in that sort of business, we'll continue to use them and partner with them as we look to move our client assets center management into the best products for the optimizing their returns, but it's a high efficiency business. We believe that we can take the operating expense from that and

Brandon King: So our production next year in CRE, it may be hard to keep up with some of the pay off and pay down that have been delayed through this cycle. But we're just as bullish on the areas that we can grow. And as you noted, our goal is to continue to exceed the rate of growth of the underlying economy. That is a very helpful color based on my questions.

Our our clients' assets under management into the best products for the optimizing their returns, but it's a high efficiency business and we believe that we can take the operating expense from that and put it back into either the front end of the wealth of origination so the financial advisors or the private wealth advisors.

Steven Scouten: Thank you.

Speaker 13: put it back into either the front end of the wealth origination so the financial advisors or the private wealth advisors or we can put it in other businesses and earn more from an efficiency standpoint so it's really about taking operating expenses and redeploying those into businesses that have higher returns.

Or we can put it in other businesses and her and earn more from an efficiency standpoint. So it's really about taking operating expenses and redeploying those into businesses that have higher returns.

Great makes makes perfect sense. Thank you thanks, Kevin Thanks, Jay.

Speaker 16: Great, makes perfect sense. Thank you. Thanks, Kevin. Thanks, Shane.

We now have the next question from Tim <unk> of Wells Fargo.

Speaker 2: We now have the next question from Timur, Bezier of Wells Fargo.

Kevin Schitzen: You now have Kevin Schitzen and the DA Davidson.

Yeah.

Hi, good morning.

Speaker 17: Hi, good morning. I want to circle back.

Kevin Blair: Good morning, everyone. Just a quick question on the bond portfolio. Some banks have pulled the trigger on restructuring. Is that something that is on the table or would you focus more on just, you know, doing what you've been doing using the cash flows to help fund loan growth or perhaps pay down wholesale bonds? Thanks. You know, Kevin, as we look at the bond portfolio, we would consider restructuring. I don't think it would be incredibly significant.

I wanted to circle back.

Speaker 17: I wanted to circle back to your commentary about NII and MIM and an easing-fed cycle. Appreciate the color on a lagging deposit base. I'm just wondering, given the fixed rate repricing schedule versus variable rate loans, that would go down a little bit more quickly.

Wanted to circle back to your commentary about NII and NIM in an easing cycle I appreciate the color on a lagging deposit base I'm, just wondering given the fixed rate repricing schedule versus variable rate loans.

Go down a little bit more quickly.

Speaker 17: Is that an offsetting element or could we actually see some nin compression over the first couple of quarters following a flat evening?

Is that an offsetting element or could we actually see some NIM compression over the first couple of quarters following.

Kevin Blair: I mean, you think about the capital we have that we call access capital of being at 10, 13, you know, there's limitations to how we would use that capital and how much we would use on something like a bond restructuring. But I think somewhere to what you've heard from others in the industry, if there's a restructuring that makes sense and you get a two-year payback or something like that, it could be something that we entertain. But at this point today, we don't have any intention to do that, but it's something that we do look at from downtown.

Slight easing.

And in that.

And in that scenario.

Speaker 4: It depends on the timing. I would have to thank through, but I mean, you think about the immediacy of loan reprising. We have a little more than 60% of our loans are floating rate that would reprise immediately. And then the deposits would lag. So you may, you know, about 20% of our deposits.

It depends on the timing.

I would have to think through but.

I mean, you think about the immediacy of loan repricing, we have a little more than 60% of our loans are floating rate that would reprice immediately and then the deposits with lag.

About 20 about 20% of our deposits.

What also reprice.

Speaker 4: Immediately, I mean, there, there, you could think of them as index based, even if they're not all directly index based.

Mediately I mean, they're there you could think of them as index based even if theyre not all.

Kevin Blair: Great, thanks. And one quick follow-ups on the sale on the global that you mentioned that about streamlining your, forget the exact wording you used, but about streamlining. And so I'm just wondering if you can add a little more color on was it competing with some other, you know, the banks more larger wealth management platform or what was it about it that made you want to stream one with that sale? Thanks. You know, Kevin, it's, I think we said simplification of our business model.

Directly index based it it would likely lead to a decline in the margin for those periods for those early.

Speaker 4: It would likely lead to a decline in the margin for those periods, for those early fetties.

<unk> time period, now that being said this fixed rate repricing. This chart doesn't just it wouldnt just end in the fourth quarter 24, like we displayed here that continues for multiple years, because you think about those exposures, especially when you look at residential mortgages you look at the securities portfolio we.

Speaker 4: time periods now that being said this picture repricing this chart doesn't just it wouldn't just end in the fourth quarter twenty four like we displayed here that continues for multiple years because you think about those exposures especially when you look at residential mortgages you look at the securities portfolio we continue to benefit incrementally way beyond this and so this time period so this

<unk> to benefit incrementally way beyond death, and so this time periods. So this benefit will be we will overcome that headwind of that.

Kevin Blair: And it's really, it's a money management firm that we've owned for some time. And so it didn't really compete. It actually served as an investment vehicle for our financial advisors to place money. They largely do ETF funds. And, and as you know, in that sort of business, we'll continue to use them and partner with them as we look to move our, our client assets center management into the best products for the optimizing their returns.

Speaker 4: benefit will be, you know, overcome the headwind of that lag headwind when the fat does start to ease. That'll be a temporary issue. And so we have a long-term benefit from fixated price.

Lag headwind when the fed does start to ease that'll be a temporary issue and so we have a long term benefit from fixed rate repricing and at some point. If you do assume deferred to next move his knees there will be a headwind for a couple of quarters.

Speaker 4: And at some point, if you do assume the next move is knees, there will be a headwind per...

Speaker 17: Okay, that makes sense. And then just looking at the timing of some of the loan sales and other, you know, PPNR activities over the last couple of quarters, maybe just talk through the cadence on NII over the next quarter or two. Does that cadence follow margin or is there something within the timing of recent sales that maybe we see NII performance?

Okay that makes sense and then just looking at the timing of some of the loan sales in the other.

Kevin Blair: But it's a high efficiency business. And we believe that we can take the operating expense from that and put it back into either the, the front end of the wealth origination. So the, the financial advisors or the private wealth advisors, or we can put it in other businesses and her and earn more from an efficiency standpoint. So it's really about taking operating expenses and redeploying those into businesses that have higher returns.

P PNR activities over the last couple of quarters, maybe just talk through the cadence on NII over the next quarter or two does that cadence follow margin or is there something within the timing of recent sales that maybe we see NII performance, a little bit better than what they expect.

Speaker 17: a little bit better than what the expected margin performance would be, at least in the next quarter.

Kevin Blair: Great. Makes, makes perfect sense. Thank you. Thanks, Kevin.

Our margin performance will be at least in the next quarter.

Speaker 4: It will trend along with the margin. So you'll see a decline in the fourth quarter and then flat in the first quarter. And then you'll see NII growing with the combination of loan growth as well as margin expansions you go through 24.

It will trend along with the margin so you'll see a decline in the fourth quarter.

And then flat in the first quarter and then you'll see NII growing with the combination of loan growth.

Jamie Gregory: Thanks, I wanted to circle back, I wanted to circle back to your commentary about NII and MIM and an easing Fed cycle. Appreciate the color on a lagging deposit base. I'm just wondering given the fixed rate repricing schedule versus variable rate loans that would, you know, go down a little bit more quickly.

As well as margin expansion as you go through 'twenty four.

Okay.

Great. Thanks for the color.

We now have 30 questions of UBS.

Speaker 2: We now have Brody Preston of UBS.

Hey, good morning, everyone.

Good morning, Brian .

Jamie.

Jamie Gregory: Is that, is that an offsetting element or could we actually see some in compression over the first couple of quarters following a Fed easing? In that, in that scenario, it depends on the timing. I would have to thank through, but I mean, about the immediacy of loan repricing, we have a little more than 60% of our loans are floating rate that would repriced immediately. And then the deposits would lag. And so you may, you know, about 20, about 20% of our deposits would also repriced immediately.

Speaker 12: Jamie, I think I've got it, but I just wanted to put a finer point on the guidance with the revenues. The guide kind of implies that we step down a bit more than I would have expected in the fourth quarter. Just with the name commentary and some of the fees. Is there something that I'm missing because I think it implies like about a $25 million step down in operating revenues?

I think I've got it but I just wanted to put a finer point on.

On the on the guidance with the revenues.

The guide kind of implies we stepped down a bit more than I would've expected in the fourth quarter, just with the NIM commentary and some of the fees.

Jamie Gregory: I mean, there, there, you could think of them as index based, even if they're not all directly index based. It, it would likely do a decline in the margin for those periods, for those early Fed eas time periods.

Is there something that I'm missing because I think it implies about a $25 million step down in operating revenues.

Speaker 4: So, Brody, I think that what you're looking at there is really in V revenue. So we had V revenue of $106 million in the third quarter, and that included 2.5 million of global revenue.

So brody.

Think that what you are looking at there is really in fee revenue and so we had fee revenue of $106 million in the third quarter and that included $2 5 million of global revenue.

Speaker 4: So when you adjust for that, our fee revenue in the third quarter was around 103 to 104. And so looking forward to the fourth quarter, there will be an incremental headwind in NIR from on the retail side because of deposit fees. But we expect to overcome that headwind and we expect to be flat to slightly up from the 103 to 104 in the fourth quarter.

So when you adjust for that our fee revenue in the third quarter was around 103 to 104 and so.

Looking forward to the fourth quarter.

Will be an incremental headwind in NAR.

Jamie Gregory: Now, that being said, this fixed rate repricing, this chart doesn't just, it wouldn't just end in the fourth quarter, 24 like we displayed here. That continues for multiple years because you think about those exposures, especially when you look at residential mortgages, you look at this time period. So this benefit will be, you know, will overcome the headwind of that lag headwind when the Fed does start to ease. That'll be a temporary issue. And so we have a long-term benefit from fixed rate repricing. And at some point, if you do assume the Fed's next move as an ease, there will be a headwind for a couple quarters.

From on the retail side because of deposit fees, but we expect to overcome that headwind and we expect to be flat to slightly up from the 103 to 104 in the fourth quarter and then on NII.

Speaker 4: And then on NII, as we mentioned, we fight the margin to decline in a similar amount as what you saw in the third quarter, but then you also have the impact, the full quarter impact of the sale of the medical office.

As we mentioned, we expect the margin to decline and a similar amount as what you saw in the third quarter. But then you also have the impact of full quarter impact of the sale of the medical office portfolio.

Got it okay, and just to clarify on the revenue component Jami I think if I was reading this slide correctly.

Speaker 12: Got it, okay. And just to clarify on the revenue component, Jamie, I think if I was reading the slide correctly,

But the expectation around the beta is like more of like a spot in December kind of expectation for the data and not the average for the quarter correct.

Speaker 12: that the expectation around the beta is like more of like a spot in December kind of expectation for the beta and not the average for the quarter correct.

That's correct if the month of December .

Jamie Gregory: Okay, that makes sense. And then just looking at the timing of some of the loan sales and other you know, PPR activities over the last couple of quarters, maybe just talk through the cadence on NII over the next quarter or two. Does that cadence follow margin or is there something within the timing of recent sales that maybe we see NII performance a little bit better than what the expected margin performance would be at least in the next quarter?

Okay cool.

Speaker 12: Can I swallow them Bob's, what Bob said in the Snick's real quick, Bob did you, did you happen to have what percent of that, that Snick portfolio you guys will lead under a winner?

Can I just follow up on Bob's.

Offsetting this next real quick Bob.

Did you happen to have what percent of the snick portfolio you guys have the lead underwriter on.

Yes, Brody on the SNCC portfolio, it's about 500 million so of that $4 3 billion.

Speaker 13: Yeah, Brody, on the snake portfolio, it's about 500 million. So of that 4.3 billion, we're the agent on about 500 million.

Hey, Jerome about $500 million.

Speaker 12: Thank you for that. And then I did just have a couple last quick ones. Bob, do you have any of the ACL on the office portfolio?

Okay. Thank you for that and then I just have a couple last quick ones Bob.

Do you happen to have the ACR the ACL on the on the office portfolio.

Jamie Gregory: It will trend along with the margin. So you'll see a decline in the fourth quarter and then flat in the first quarter and then you'll see NII growing with the combination of loan growth as well as margin expansions you go through 24.

Brady Preston: Great. Thanks for the color.

Speaker 13: Yeah, we don't, we don't, I'll let Jamie follow what was new party, but from a allowance perspective, we don't disclose by...

Yes, we don't we don't I'll, let Jamie follow what wouldn't have already but from our allowance perspective, we don't disclose bi.

Speaker 13: asset class, we just generally speak in our CRE allowance in the 1.5% range in general, but then within that obviously the asset class is a broken down. But our office portfolio today could have size class by less than 10% in P.L.s. or

Asset class just generally speaking our CRE allowance.

The one 5% range in general, but then within that obviously the asset classes are broken down, but our office portfolio.

Today were criticized classifieds less than 10%.

Brady Preston: We now have Brady Preston of UBS. Good morning, everyone. Morning, bro.

Npls are.

Speaker 13: 1.5 so you know in the context of the size of that portfolio it's relatively stable now we're not you know we obviously see we have a watch list there we've been working that we've talked about that before but right now the performance is relatively stable and the allocation just follows the CRE allocate

One five.

The context of the size of that portfolio. It's relatively stable now we're not we obviously see we have watch list. There we've been working that we've talked about that before but right now the performance is relatively stable.

Jamie Gregory: Jamie, I think I've got it, but I just wanted to put a finer point on the guidance with the revenues. The guide kind of implies that we step down a bit more than I would have expected in the fourth quarter, just with the name commentary and some of the fees. Is there something that I'm missing because I think it implies like about a $25 million step down in operating revenues? So, Brody, I think that what you're looking at there is really in fee revenue.

The allocation just follows the CRE allocation.

Speaker 4: and Brody, you know, one thing about that portfolio, as Bob mentioned, we've seen no new net negative migration in the office portfolio in the third quarter. It continues to perform and the watch lists remains the same as we've discussed in July and before. And so that portfolio continues to kind of perform as we expected. When you think about the allowance and the categories,

Brody.

One thing about that portfolio as Bob mentioned, we've seen no new net negative migration.

The office portfolio in the third quarter. It continues to perform in the watch list remains the same as we discussed in July than before and so that portfolio continues to kind of perform as we expected when you think about the allowance and the categories.

Jamie Gregory: And so we had fee revenue of $106 million in the third quarter and that included $2.5 million of global revenue. So when you adjust for that, our fee revenue in the third quarter was around 103 to 104. And so looking forward to the fourth quarter, there will be an incremental headwind in NIR from on the retail side because of deposit fees. But we expect to overcome that headwind and we expect to be flat to slightly up from the 103 to 104 in the fourth quarter.

Speaker 4: any sort of migration obviously impacts the life of loan law assessment for for the portfolio but what we saw in the third quarter when we ran the allowance was

Any sort of migration, obviously impacts the life of loan loss estimate for the portfolio, but what we saw in the third quarter. When we ran the allowance was.

Speaker 4: The allowance to loan ratio within CRAE was relatively stable for the quarter, where we saw the increases was in CNI and small business. And so we feel good about what we can see in front of us. We believe it aligns with that 30 to 40 basis point charge off guide for the fourth quarter and we'll continue to give updates, you know, as we see, as we see, more clear outlook.

The allowance to loan ratio within CRE was relatively stable for the quarter, where we saw the increases was in C&I and small business and so we we feel good about what we can see in front of US. We believe it aligns with that 30 to 40 basis point charge off guide for the fourth quarter and will continue to give updates as we see as we see.

<unk>.

Jamie Gregory: And then on NII, as we mentioned, we expect the margin to decline in a similar amount as what you saw in the third quarter. But then you also have the impact, the full quarter impact of the sale of the medical office portfolio. Got it. Okay.

More clear outlook.

Got it and then just one last one Bob just on the senior housing portfolio.

Speaker 12: got it. And then just one last one Bob, just on the senior housing portfolio, you guys have built that into a pretty good business line for yourselves. And I think if I'm a member incorrectly, it's performed extremely well for you from a credit perspective.

You guys have built that into a pretty good business line for yourselves and I think if I'm remembering correctly, that's performed extremely well for you from a credit perspective.

Jamie Gregory: And just to clarify on the revenue component, Jamie, I think if I was reading the slide correctly, that the expectation around the beta is like more of like a spot in December kind of expectation for the beta and not the average for the quarter. That's correct. It's the month of December. Okay. Cool.

Speaker 12: versus some other banks that have maybe struggled a little bit just with that generic kind of category of senior housing. Could you even help us better understand that puts in takes around that portfolio and why yours kind of outperforms relative to some other banks that also have senior housing exposure?

Some other banks.

Maybe still a little.

Little bit just with the generic and the category of senior housing could you maybe help us better understand the puts and takes around that that portfolio why yours kind of outperformed relative to some other banks that also have senior housing exposure.

Broderick Preston: Can I follow up on Bob's quote? What Bob said on the Snick's real quick, Bob, did you, did you happen to have what percent of that? Snick portfolio, you guys will lead under it around. Yeah, Brody on the snake portfolio, it's about 500 million. So of that 4.3 billion, we're, we're the agent on about 500. Millie. Okay, thank you for that.

Yeah sure Brian . Thanks for the question just a couple of comments on it we've been in this business a long time, we have a very experienced team.

Speaker 13: Yes, your brother, thanks for the question. That just a couple of comments on it. We've been in this business a long time. We have a very experienced team.

Speaker 13: that manages this book, you write it's around $4 billion. We think about it today, it is certainly feeling some stress and there's no question about that as it relates to increased labor costs.

Manages this book Youre right its around $4 billion, we think about it today. It is certainly feeling some stress.

Theres no question about that as it relates to increased labor cost.

Speaker 13: Certainly the interest rates stay in higher here in the last six months or so continue to put some stress on it But the positives here are you know as an industry this You know this industry's continuing to see increased occupancy rates Most of our operators have them

Bob Derrick: And then I did just have a couple of last quick ones. Bob, do you have any of the ACL on the on the on the office portfolio? Yeah, we don't we don't I'll let Jamie follow up with new birdie, but from a allowance perspective, we don't disclose by asset class. We, you know, just generally speaking, our CRE allowance, you know, in the one and a half percent range in general, but then within that, obviously, the asset classes are broken down.

Certainly the interest rates stay in higher here in the last six months or so continue to put some stress on it but the positives here or as an industry. This.

This industry is continuing to see increased occupancy rates.

Most of our operators have implemented increased.

Speaker 13: increased rental rates. So the revenue top line.

Rental rates. So the revenue top line improvement is there is just not is going to take some time for it and overcome the rapid increase in cost as it specifically relates to our credit performance in this portfolio were sitting.

Speaker 13: improvement is there, it's just not, it's gonna take some time for it to overcome the rapid increase.

Speaker 13: and cost as it specifically relates to our credit performance in this portfolio. You know, we're sitting, you know, today at a, you know, criticized classified ratio around 10 percent. That number, you know, 10 to 15 percent. That number could drift a little higher. But-

Bob Derrick: But our office portfolio, you know, today, we're, you know, criticized class by the less than 10% NPLs are, you know, 1.5. So, you know, in the context of the size of that portfolio, it's relatively stable now. We're not, you know, we obviously see, we have a watch list there. We've been working that we've talked about that before. But right now, the performance is relatively stable and the allocation just follows the CRE allocation.

Today at a credit.

Criticized classified ratio around 10% that number 10% to 15% that number it could drift a little higher.

But overall, we put a couple of loans on non accrual this quarter that was the increase in our non accrual rate to 64 bps from 59.

Speaker 13: You know, overall, we put a couple of loans on non-accrual this quarter. That was the increase in our non-accrual rate to 64 Bips from 59. You know, but again, that was within our expectation. We think the lost content here in those few credits is very manageable, very low, and is certainly within our guidance. So overall, I think it's just client selection, long term in this business, Brody, and...

But again that was within our expectation we think the loss content here.

Bob Derrick: And Brody, you know, one thing about that portfolio is, as Bob mentioned, we've seen no new net negative migration in the office portfolio in the third quarter. It continues to perform and the watch list remains the same as we've discussed in July and before. And so that portfolio continues to kind of perform as we expected. When you think about the allowance and the categories, any sort of migration obviously impacts the life of loan law assessment for the portfolio.

Here in those few credits is very manageable very low and is certainly within our guidance. So.

Overall I think it's just client selection long term in this business Brody.

Speaker 13: You know, the way the portfolio is performing, the way we underwrite, again, there's some stress, but overall it's performing within our ex.

The way the portfolio is performing the way, we underwrite again, there's some stress, but overall, it's performing within our expectations and Brian I'd just add that when you look at this asset class everybody assumes all senior housing looks the same some more in memory care skilled nursing summer.

Speaker 5: and Brode Edge is bad. You look at this asset class, everybody assumes all senior housing looks the same. Some more in memory care, skilled nursing, some more private pay. I think the Bob's Point Client Selection here, dealing with long-term operators, more private pay, less skilled nursing has resulted in better overall performance. I think that's a big driver.

More private pay I think to Bob's point client selection here dealing with long term operators more private pay less skilled nursing or has resulted in better overall performance. So I think that's a big driver of that.

Bob Derrick: But what we saw in the third quarter when we ran the allowance was the allowance to loan ratio within CRE was relatively stable for the quarter, where we saw the increases was in CNI and small business. And so we, you know, we feel good about what we can see in front of us. We believe it aligns with that 30 to 40 basis point charge off guide for the fourth quarter. And we'll continue to give updates, you know, as we see, as we see, more clear outlook. Got it.

Awesome I appreciate the color guys. Thanks have a good day.

Speaker 2: I appreciate the color guys. Thanks. Have a good day. Sure. Thank you. We now have Steven, excuse him, the pipe.

Thank you.

We now have Stephen Scouten with.

Piper Sander you.

You May proceed with your question.

Hey, guys. Thanks for the time.

Bob Derrick: And then just one last one, Bob, just on the senior housing portfolio, you guys have built that into a pretty good business line for yourselves. And I think if I'm a member incorrectly, it's performed extremely well from a credit perspective versus some other banks that, you know, have maybe struggled a little bit just with that generic kind of category of senior housing. Could you maybe help us better understand the puts and takes around that portfolio and why yours kind of outperforms relative to some other banks that also have senior housing exposure?

I guess I wanted to think about maybe loss given default rates around credit and kind of how you think about the different buckets I think with that snick credit a lot of people were surprised just that.

Speaker 9: I guess I wanted to think about maybe loss given to fall rates around credit and kind of how you think about the different buckets I think, you know, with that smith credit, a lot of people were surprised just that

Speaker 9: the ability for that to have such severity. So I'm just kind of wondering how you think about that within the snake boat for maybe within other categories as you look at credit overall.

The ability for that to have such severity. So I'm just kind of wondering how you think about that within the snick book and maybe within other categories. As you look at credit overall.

Yeah.

Speaker 13: Yeah, Stephen, I make a couple of comments there. You know, obviously lost given default in that particular case was way outside of the norm. We do consider that.

Yes, David I'll make a couple of comments there obviously loss given default in that particular case was way outside of the norm. We do consider that to be an idiosyncratic event. Obviously, we spend a lot of time and have spent a lot of time dissecting that specific credit angle.

Speaker 13: to be an idiosyncratic event. Obviously we spend a lot of time and have spent a lot of time dissecting that specific credit and going back and looking at our processes and procedures, et cetera. Our conclusion from all of that work is that we still have good processes, our underwriting was sound, just a number of

Bob Derrick: Yeah, sure, Brody. Thanks for the question. That just a couple of comments on it. You know, we've been in this business a long time. We have a very experienced team that manages this book. You're right. It's around $4 billion. We think about it today. It is certainly feeling some stress. And there's no question about that as it relates to increased labor cost. Certainly the interest rates that stay in higher here in the last six months or so continue to put some stress on it.

And going back and looking at our processes and procedures et cetera. Our conclusion from all of that work is that we still have good processes. Our underwriting was sound just a number of.

Speaker 13: you know, events that took place in that credit that quite frankly all went the wrong way and all happened, you know, it over a period of time that...

Events that took place in that credit that quite frankly.

All went the wrong way and all happened.

For a period of time that.

Speaker 13: that just led to a very outsized and lost given to fault that would certainly not be normal for us.

That just led to a very outsized in loss given default that would certainly not be normal for us.

Bob Derrick: But the positives here are, you know, as an industry, this, you know, this industry's continuing to see increased occupancy rates. Most of our operators have implemented, you know, increased rental rates. So the revenue top line, you know, improvement is there. It's just not, it's going to take some time for it to overcome the rapid increase in cost. As it specifically relates to our credit performance in this portfolio, you know, we're sitting, you know, today at a, you know, criticized classified ratio, around 10%.

Speaker 13: From my perspective, generally speaking, though we look at leverage loans, we look at enterprise value based loans, we underwrite those, generally speaking, to get inside of the assets, the hard assets within a couple of years.

From my perspective, generally speaking, we look at leverage loans, we look at enterprise value based loans, we underwrite those generally speaking to get inside of the assets the hard assets within a couple of years.

Speaker 13: Those are the kind of, you know, when you think about loss given to fault on those on those loans, that's where you risk is, our general.

Those are the kind of when you think about loss given default on those on those large that's where your risk is our general.

Speaker 13: You know, underwriting guideline is to get the cash into the pay the loan down as quickly as we can. Not rely on that enterprise value for any period of time. Generally, we have third party valuations, et cetera, but to stay short with exposure to enterprise value, you know, leverage loans for us around $2 billion. We certainly manage it very closely and stay spot on without reporting. So.

Underwriting guideline is to is to get the cash into the pay the loan down as quickly as we can not rely on that enterprise value for any period of time generally we have third party valuations et cetera, but to stay short with exposure to enterprise value leverage loans for us around $2 billion, we certainly manage it very closely.

Bob Derrick: That number, you know, 10 to 15%. That number could drift a little higher. But, you know, overall, we put a couple of loans on non accrual this quarter. That was the increase in our non accrual rate to 64 bips from 59. But again, that was within our expectation. We think the loss content here in those few credits is very manageable, very low and is certainly within our guidance. So overall, I think it's just client selection, long term in this business, Brody, and, you know, the way the portfolio is performing the way we underwrite. Again, there's some stress, but overall, it's performing within our expectation.

Stay spot on with our reporting so.

Speaker 13: That's a little bit of rambling, but is that help on how we look at those types of credit?

That's a little bit of rambling, Stephen but does that help on on on how we look at those types of credits.

Speaker 18: Yeah, I think that helps, but I mean, generally, you don't really view that segment or maybe C&I more broadly as having...

Yes, I think that helps but I mean generally you don't you don't really view that segment or maybe.

More broadly is having.

Any.

Terrible risks from a severity perspective at this point relative to this area is that fair to say.

Speaker 18: terrible risk from a severity perspective at this point relative to Syria. Is that fair to say?

Bob Derrick: And Brody, I just add that, you know, when you look at this asset class, everybody assumes all senior housing looks the same. Some more in memory care, skilled nursing, some are more private pay. I think the Bob Swain client selection here, dealing with long term operators, more private pay, less skilled nursing, has resulted in better overall performance. So I think that's a big driver of.., of that. Awesome. I appreciate the color, guys. Thanks. Have a good day. Sure. Thank you.

Speaker 13: I think that's fair to say, yes. We certainly could ignore that business and not do it, but we've chosen to do it over time. We think electively we can make good returns there and manage to credit risk appropriately. And I think I just add to Bob's comment.

I think that's fair to say, yes, we certainly could could ignore that business and not do it but we've chosen to do it over time, we think selectively.

We can make.

Make good returns there and manage the credit risk appropriately and I think I'd just add to Bob's comment.

Speaker 5: Steve, when you think about where there's a higher loss given to fault in C&I, generally if you're doing small business unsecured, where we don't have a lot of exposure there. And then when we think about our C&I, we're doing investment grade credits and Bob's point, this credit that we're referencing here is an anomaly. We generally have...

Steve when you think about where theres a higher loss given default in C&I. It's generally if youre doing small business unsecured where we don't have a lot of exposure there and then when we think about our C&I, we're doing investment grade credits and Bob's point this credit that were referencing here.

Bob Derrick: We now have Steven Scouten, the pipe of sand, though. You may proceed with your question. Hey, guys. Thanks for the time. I guess I wanted to think about maybe loss given to fall rates around credit and kind of how you think about the different buckets. I think, you know, with that Smith credit, a lot of people were surprised just that the ability for that to have such severity. So I'm just kind of wondering how you think about that within the Smith book or maybe within other categories as you look at credit overall.

On an anomaly, we generally have primary sources of repayment secondary sources of repayment. Many of these loans are a recourse and so when you think about loss given default in the C&I business, they're generally low just based on the way that we underwrite those and when we talk about CRE and we're talking about having 50% ltvs or LTC.

Speaker 5: Primary sources of repayment, secondary sources of repayment, many of these loans are recourse.

Speaker 5: And so when you think about loss given to fall in the CNI business, they're generally low just based on the way that we underwrite those. And when we talk about CRE and we're talking about having 50% LTVs or LTCs, you know, similar scenario there where you feel like you have enough equity and cushions of protection.

<unk> similar scenario, there, where you feel like you have enough equity and cushions of protection that would keep the loss given defaults lower over there. So I think it would be.

Speaker 5: that would keep the loss given to faults lower over there. So I think it would be erroneous to assume that all SNCC have much higher loss given to faults based on this one credit.

Bob Derrick: Yes, Steven, I'll make a couple of comments there. You know, obviously loss given to fall in that particular case was way outside of the norm. We do consider that to be an idiosyncratic event. Obviously, we spend a lot of time and have spent a lot of time dissecting that specific credit and going back and looking at our processes and procedures, et cetera. Our conclusion from all of that work is that we still have good processes.

Erroneous to assume that all snacks have much higher loss given defaults based on this one credit.

Great very helpful. And then just my other question is you guys have talked about seeking out higher risk adjusted returns you've talked a bit about the spreads widening on floating rate credit.

Speaker 18: Great, very helpful. And then just my other question is, you guys have talked about seeking out higher risk adjusted returns. You've talked a bit about these spreads widening on floating rate credits.

Speaker 18: Would you pursue those endeavors? Where do you think that leads you from a segment perspective to be more active as we move into 24?

As you pursue those endeavors, where does where do you think that Lee from a segment perspective to be more active as we move into 'twenty four.

Bob Derrick: Our underwriting was sound. Just a number of, you know, events that took place in that credit that quite frankly all went the wrong way and all happened, you know, over a period of time that, you know, that just led to a very outsized and loss given to fall that would certainly not be normal for us. From our perspective, generally speaking, though, we look at leverage loans, we look at enterprise value based loans, we underwrite those, generally speaking, to get inside of the assets, the hard assets within a couple of years.

I missed that against what was that.

Speaker 18: Yeah, just kind of as you seek out higher risk adjusted returns, where does that lead you stagnant-wise? Where do you think much of your growth will come from as a result? I guess where are those returns?

Yes, just kind of as you seek out higher risk adjusted returns where does that where does that lead you segment wise, where do you think much of that growth will come from as a result.

Those returns.

Speaker 5: I think that's it. No, it's a great question. And it starts with, you know, if you're doing a loan only relationship, I would argue that it's hard to say that you're getting great returns unless you're taking a lot of risks. So we're not suggesting that. We're suggesting that where we're focused is on the businesses where we have the opportunity and the right to win by providing a full set of solutions, not just the lending piece. So we're getting cross-sell on the depository treasury side. We're getting personal relationships from the business owners. And so where you see that.

Hi.

No. It's a great question and it it starts with if youre doing a loan only relationship I would argue that it's hard to say that you are getting great returns unless you are taking a lot of risk. So we're not suggesting that we're suggesting that where were focus is on the businesses, where we have the opportunity and the right to win by providing a full set of solutions not just the.

Bob Derrick: Those are the kind of, you know, when you think about loss given to fall on those loans, that's where your risk is. Our general, you know, underwriting guideline is to get the cash into the, pay the loan down as quickly as we can, not rely on that enterprise value for any period of time. Generally, we have third party valuations, et cetera, but to stay short with exposure to enterprise value, leverage loans for us around $2 billion.

Lending piece, so we're getting cross sell on the depository Treasury side, we're getting personal relationships from the business owners, and so where you see that.

Speaker 5: Our middle market commercial today, we're doing very, very well with that. Our core commercial, kind of our community, commercial, our small business areas. And even in our corporate and investment banking unit, where we're going to market and industry verticals, we're able to bring capital markets and additional fee income and treasury and deposits, where it makes those return much higher. So we've talked in the past.

Our middle market commercial today, we're doing very very well that our core commercial kind of our community commercial or small business areas and even in our corporate and investment banking unit, where we're going to market and industry verticals, we're able to bring capital markets and additional fee income and treasury and deposits where it makes those were.

Bob Derrick: We certainly manage it very closely and stay spot on without reporting. So that's a little bit of rambling, Stephen, but is that help on how we look at those types of credits? Yeah, I think that helps, but I mean, it gets generally, you don't really view that segment, or maybe CNI more broadly as having any terrible risk from a severity perspective at this point relative to Syria. Is that fair to say?

Much higher so we've talked in the past.

Speaker 5: That that we've kind of doubled down in the commercial space. That's where we're winning market share But when you go to the consumer side we're focused on the massive fluent and in fluid segments where we believe that not only Advice matters, but we have a personal touch that allows us to get a greater share of wallet So that's where we're focused. It's relationship banking 101 So it doesn't sound real sexy, but it comes down to delivery and how we do that and that's

That we've kind of doubled down in the commercial space, that's where we're winning market share, but when you go to the consumer side, we're focused on the mass affluent and fluid segments, where we believe that not only advice matters, but we have a personal touch that allows us to get a greater share of wallet. So that's where we're focused its relationship banking 101.

Bob Derrick: I think that's fair to say, yes, you know, we certainly could ignore that business and not do it, but we've chosen to do it over time. We think, electively, we can make good returns there and manage the credit risk appropriately. And I think, you know, I just add to Bob's comment, Steve, when you think about where there's a higher loss given to fall on CNI, it's generally if you're doing small business, unsecured, where we don't have a lot of exposure there.

It doesn't sound real sexy, but it comes down to delivery and how we do that and Thats why we win things like J D power in Greenwich, because we do it really really well and let me let me follow up on the J D power in Greenwich because.

Speaker 4: Why we win things like JD Power and Grenage because we do it really really well. And let me follow up on the JD Power and Grenage because...

Speaker 4: A lot of this has to do with how do we fund that growth? And our success with our retail network, our success with our commercial banking, like deposit production. When you look at the third quarter deposit production, we're up about 70% year every year.

A lot of this has to do with how do we fund that growth and our success with our retail network our success with our commercial banking.

Bob Derrick: And then when we think about our CNI, we're doing investment grade credits. And Bob's point, this credit that we're referencing here is an anomaly. We generally have primary sources of repayment, secondary sources of repayment. Many of these loans are a recourse. And so when you think about loss given to fall in the CNI business, they're generally low, just based on the way that we underwrite those. And you know, when we talk about CRE and we're talking about having 50% LTVs or LTCs, you know, similar scenario there where you feel like you have enough equity and cushions of protection that would keep the loss given to fall to lower over there. So I think it would be erroneous to assume that all SNCC have much higher loss given to faults based on this one credit.

Deposit production when you look at the third quarter deposit production, we were up about 70% year over year.

Speaker 4: And then when you decompose that, it's clearly a lot of that comes from time deposits, from CD production. But even when you back that out, and when you look at intersparing non-maternity deposit production, so now an MMA deposit production, those together are up over 10% year-over-year.

And then when you decompose that because clearly a lot of that comes from time deposits from CD production, but even when you back that out and when you look at interest bearing non maturity deposit production. So now in MMA deposit production. Those together are up over 10% year over year. So that's a positive production trend is sustained.

Speaker 4: So that's a positive production trend that's sustained. And then in the third quarter, we saw a reduction in account diminishment. So on the consumer side.

And then in the third quarter, we saw a reduction in account diminishment, so on the consumer side.

Speaker 4: The diminishment we saw in the third quarter, relative to the second quarter, down almost 60%. On the commercial side, the same thing, down almost, approximately 55%.

The diminishment, we saw in the third quarter relative to the second quarter down almost 60% on the commercial side. The same thing down almost approximately 55% and this has been the big headwind year to date. So it's good to see the pressure reducing on this.

Bob Derrick: Great, very helpful. And then just my other question is, you know, you guys have talked about seeking out higher risk adjusted returns, you've talked a bit about these spreads widening on floating rate credits, as you pursue those endeavors, where do you think that leads you from a segment perspective to be more active as we move into 24? I missed that again. See what was that? Yeah, just kind of as you seek out higher risk adjusted returns, where does that lead you segment-wise?

Speaker 18: And this has been the big headwind near to date, so it's good to see the pressure reducing on this. Got it, that's great color. Thanks a lot for this.

Got it that's great color. Thanks, a lot for the time guys.

Thank you Steve.

Thanks.

Thank you Steven.

This concludes our question and answer session and I would like to turn the conference back over to the team Mr. Kevin <unk> for any closing remarks. Thank you.

Speaker 2: This concludes our question on the session, and I would like to turn the conference back over to Mr. Kevin Blair for any closing remarks. Thank you.

Bob Derrick: Where do you think, you know, much of your growth will come from as a result? I guess, where are those returns hiding here? No, it's a great question. And it starts with, you know, if you're doing a loan-only relationship, I would argue that it's hard to say that you're getting great returns unless you're taking a lot of risks. So we're not suggesting that. We're suggesting that where we're focused is on the businesses where we have the opportunity and the right to win by providing a full set of solutions, not just the lending piece.

Thank you as we close out today's call I want to thank everyone for their attendance and their interest in synovus. Despite a more challenging operating environment Synovus continues to demonstrate strength resilience and flexibility we've been proactive in executing on various initiatives to navigate the risks associated with the recent.

Speaker 18: Thank you. As we close out today's call, I want to thank everyone for their attendance and their interest in Sonovus. Despite a more challenging operating environment, Sonovus continues to demonstrate strength, resilience, and flexibility.

Speaker 5: We've been proactive in executing on various initiatives to navigate the risk associated with the recent interest rate and economic environment. Through our completed balance sheet optimization and business simplification strategies, we freed up capital, liquidity, and operating expenses to pursue higher returning opportunities.

Interest rate and economic environment through our complete it balance sheet optimization and business simplification strategies, we've freed up capital liquidity and operating expenses to pursue higher returning opportunities with rates expected to stay higher for longer fixed asset repricing should support our NIM trough in.

Bob Derrick: So we're getting cross-cell on the depository treasury side, we're getting personal relationships from the business owners. And so where you see that, our middle market commercial today, we're doing very, very well with that, our core commercial, kind of our community commercial, our small business areas. And even in our corporate investment banking unit where we're going to market and industry verticals, we're able to bring capital markets and additional fee income and treasury and deposits, where it makes those returns much higher.

Speaker 5: With rates expected to stay higher for longer, fixed asset repricing should support an M-TRAF in the fourth quarter and create a path to expansion in the second half of 24. Somewhat mask by the margin contraction, we're experiencing healthy, steady growth in areas like CIB, middle market, wealth management, and Treasury and payment solution.

The fourth quarter and create a path to expansion in the second half of 'twenty four somewhat masked by the margin contraction, we're experiencing healthy steady growth in areas like CIB middle market wealth management, and Treasury and payment solutions continued growth in our core businesses, coupled with traction on new sources of revenue 2024.

Speaker 13: Continued growth in our core businesses coupled with traction on new sources of revenue 2024 we look forward to Transform transitioning to a more from a more defensive posture into one of growth

Bob Derrick: So we've talked in the past that we've kind of doubled down in the commercial space. That's where we're winning market share. But when you go to the consumer side, we're focused on the mass affluent and affluent segments where we believe that not only advice matters, but we have a personal touch that allows us to get a greater share of wallet. So that's where we're focused. It's relationship banking 101. So it doesn't sound real sexy, but it comes down to delivery and how we do that.

We look forward to transform transfer transitioning to a more from a more defensive posture into one of growth. Most importantly, we continue to believe that our strong underwriting and monitoring and client selection as well as actions taken through the years to generate diversification and an economically vibrant south eastern footprint will result in manageable level.

Speaker 5: Most importantly, we continue to believe that our strong underwriting, monitoring, and client selection, as well as actions taken through the years to generate diversification and an economically vibrant, southeastern footprint will result in manageable levels of credit losses over this economic cycle.

<unk> of credit losses over this economic cycle Lastly, the company will continue to maintain a very strong liquidity and capital position to allow for flexibility and ongoing uncertainty. Thank you to our team members for your dedication and hard work each day synovus and our talented team members continue to be recognized nationally we were recently ranked.

Speaker 5: Lastly, the company will continue to maintain a very strong liquidity and capital position to allow for flexibility and ongoing uncertain.

Bob Derrick: And that's why we win things like JD Power and Greenwich because we do it really, really well. And let me follow up on the JD Power and Greenwich because a lot of this has to do with how do we fund that growth and our success with our retail network, our success with our commercial banking deposit production. When you look at the third quarter deposit production, we're up about 70% year-over-year. And then when you decompose that, because clearly a lot of that comes from time deposits from CD production.

Speaker 5: Thank you to our team members for your dedication and hard work each day. Sonovus and our talented team members continue to be recognized nationally. We are recently ranked fifth in bank directors, magazine, best US banks over $50 billion in assets analysis.

Fifth in Bank Director magazine, Best U S banks over $50 billion in assets analysis.

Speaker 5: I have a lot of optimism as certainty replaces uncertainty and we control what we can control. The outlook for NII is clearing up and we see a path to sustain repeatable balance sheet and revenue growth.

I have a lot of optimism as certainty replaces uncertainty and we control what we can control the outlook for NII is clearing up and we see a path to sustained repeatable balance sheet and revenue growth, but I want to conclude today's session with a message of hope hope for resolution healing and peace in the Middle East.

Bob Derrick: But even when you back that out, and when you look at intersparing non-maternity deposit production, so now and MMA deposit production, those together are up over 10% year-over-year. So that's a positive production trend that's sustained. And then in the third quarter, we saw a reduction in account diminishment. So on the consumer side, the diminishment we saw in the third quarter relative to the second quarter, down almost 60%. On the commercial side, the same thing, down almost approximately 55%.

Speaker 13: But I want to conclude today's session with a message of hope. Hope for resolution, healing, and peace in the Middle East.

Speaker 5: This situation is deeply concerning for many reasons, including the effect it has in the lives of many across our region, many of who are close friends and valued clients.

This situation is deeply concerning for many reasons, including the effect. It has on the lives of many across our region. Many of who are close friends and valued clients my thoughts and prayers are firmly with our Jewish community and others, who are in apparel and then my hope I hope to see signs of resolution and that will lead to true healing and long term.

Speaker 5: My thoughts and prayers are firmly with our Jewish community and others who are in peril. And in my hope, I hope to see signs of resolution and that will lead to true healing and long-term peace.

Bob Derrick: And this has been the big headwind year to date. So it's good to see the pressure reducing on this. Got it. That's great, Colin. Thanks a lot for the time, guys. Thank you, Steve. Thanks. Thank you, Stephen.

Peace with that operator that concludes our third quarter 2023 earnings call.

Speaker 5: With that operator, that concludes our third quarter of 2023 earnings call.

Operator: This concludes our question on the session.

Thank you all for joining this does conclude our conference call and you have a lovely rest of your day and you may now disconnect your lines.

Speaker 2: Please have a lovely rest of your day and you may now disconnect your line.

[music].

Speaker 1: St ST, ST ST.

Kevin Blair: And I would like to turn the conference back over to Mr. Kevin Blair for any closing remarks. Thank you. As we close out today's call, I want to thank everyone for their attendance and their interest in Synovus. Despite a more challenging operating environment, Synovus continues to demonstrate strength, resilience and flexibility. We've been proactive in executing on various initiatives to navigate the risk associated with the recent interest rate and economic environment. Through our completed balance sheet optimization and business simplification strategies, we freed up capital, liquidity and operating expenses to pursue higher returning opportunities.

Yeah.

Yes.

Yes.

Yes.

Yeah.

Yes.

Yeah.

Okay.

Yeah.

Kevin Blair: With rates expected to stay higher for longer, fixed asset rate repricings should support a NEM trough in the fourth quarter and create a path to expansion in the second half of 24. Somewhat mask by the margin contraction, we're experiencing healthy, steady growth in areas like CIB, middle market, wealth management and treasury and payment solutions. Continued growth in our core businesses coupled with traction on new sources of revenue, 2024, we look forward to transitioning from a more defensive posture into one of growth.

Kevin Blair: Most importantly, we continue to believe that our strong underwriting, monitoring and client selection as well as actions taken through the years to generate diversification and an economically vibrant, southeastern footprint will result in manageable levels of credit losses over this economic cycle. Lastly, the company will continue to maintain a very strong liquidity and capital position to allow for flexibility and ongoing uncertainty. Thank you to our team members for your dedication and hard work each day.

Kevin Blair: Sonovus and our talented team members continue to be recognized nationally. We are recently ranked fifth in bank directors, magazine, best US banks over $50 billion in assets analysis. I have a lot of optimism as certainty replaces uncertainty and we control what we can control. The outlook for NII is clearing up and we see a path to sustain repeatable balance sheet and revenue growth.

Kevin Blair: But I want to conclude today's session with a message of hope, hope for resolution, healing and peace in the Middle East. This situation is deeply concerning for many reasons, including the effect it has in the lives of many across our region, many of who are close friends and valued clients. My thoughts and prayers are firmly with our Jewish community and others who are in peril. And in my hope, I hope to see signs of resolution and that will lead to true healing and long-term peace. With that operator, that concludes our third quarter 2023 earnings call. Thank you all for joining. This does conclude our conference call. Please have a lovely rest of your day and you may now disconnect your line.

Operator: Thank you.