Q1 2024 Synovus Financial Corp Earnings Call

April 18, 2024

Please signal a conference specialist by pressing the star key followed by zero after today's presentation there will.

<unk> be an opportunity to ask questions to ask questions. Please you May press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I will now turn the call over to you Jennifer Dunbar 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 web site Synovus Dot Com, Kevin Blair Chairman, President and Chief Executive Officer will begin the call. He will be followed by Jamie Gregory Chief Financial Officer, and we will be available to answer your questions at the end of the call.

Operator: Good morning and welcome to the Synovus First Quarter 2024 Endings Call. All participants will be in listen-only mode.

Good morning, and welcome to the Synovus first quarter 2024 earnings call all participants will be in listen only mode. She any assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there won't be enough.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask questions, please, you may press star then one on your touchtone phone.

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Our comments include forward looking statements. These statements are subject to risks and uncertainties and 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, we do not assume any obligation to update any forward looking statements because of new information.

Tuna to you to ask questions to ask questions. Please you May press Star then one on your Touchtone phone. She was drawing a question. Please press Star then two please note. This event is being recorded.

Operator: To withdraw your question, please press star then T. Please note this event is being recorded. I will now turn the call over to Jennifer Demba, Head of Investment Relations.

I'll now turn the call over to you Jennifer Dunbar head of Investor Relations. Please go ahead.

Early developments or otherwise, except as may be required by law. 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.

Jennifer Haskew Demba: Thank you and good morning. During today's call, we will reference the slides and press release that are available in the investor relations section of our website, synovus.com. Kevin Blair, Chairman, President, and Chief Executive Officer, will begin the call. He will be followed by Jamie Gregory, Chief Financial Officer, and we will be available to answer your questions at the end of the call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially.

Jennifer Haskew Demba: 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 Dotcom, Kevin Blair Chairman, President and Chief Executive Officer will begin the call. He will be followed by Jamie Gregory Chief Financial Officer, and we will be available to answer your questions.

Thank you Jennifer good morning, everyone and thank you for joining us for our first quarter 2024 earnings call.

Jennifer Haskew Demba: At the end of the call.

Our fourth quarter results demonstrate tangible progress on the strategic priorities that we've outlined for you over the last several quarters.

Jennifer Haskew Demba: Our comments include forward looking statements. These statements are subject to risks and uncertainties and 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, we do not assume any obligation to update any forward looking statements because of new information.

<unk> produced steady loan growth in key commercial categories, such as middle market, corporate and investment banking and specialty C&I as well as continued rationalization and loan portfolios, where we have less meaningful deposit or fee relationships, we generated core deposit growth in a seasonally weaker quarter and are seeing improving trends in noninterest.

Jennifer Haskew Demba: 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. 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-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. Thank you, Jennifer. Good morning, everyone.

Jennifer Haskew Demba: Early developments or otherwise, except as may be required by law. 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.

Just bearing deposit day management as well as continued contraction in higher cost broker deposits.

Core noninterest revenue categories continue to grow on a year over year basis, while operating expense control remains discipline with investments in key areas, continuing while keeping total expenses roughly flat.

Kevin S. Blair: Thank you Jennifer good morning, everyone and thank you for joining us for our first quarter 2024 earnings call.

Kevin S. Blair: And thank you for joining us for our first quarter 2024 earnings call. Our first quarter results demonstrate tangible progress on the strategic priorities that we have outlined for you over the last several quarters. Synovus produced steady loan growth in key commercial categories such as middle market, corporate and investment banking, and specialty CNI, as well as continued rationalization in loan portfolios where we have less meaningful deposit or fee relationships. We generated core deposit growth in a seasonally weaker quarter and are seeing improving trends in non-interest bearing deposit diminishment, as well as continued contraction in higher cost broker deposits.

Kevin S. Blair: Our fourth quarter results demonstrate tangible progress on the strategic priorities that we've outlined for you over the last several quarters.

Our quarterly loan losses remained stable and our balance sheet continues to strengthen with further improvement in key safety and soundness metrics highlighted by lower wholesale funding and higher capital ratios.

Kevin S. Blair: This produced steady loan growth in key commercial categories, such as middle market, corporate and investment banking and specialty C&I as well as continued rationalization and loan portfolios, where we have less meaningful deposit or fee relationships, we generated core deposit growth in a seasonally weaker quarter and are seeing improving trends in noninterest.

Our financial success is a direct result of how well we are meeting the needs and expectations of our clients through trusted advice and valued service in that regard synovus and our talented team members continue to be nationally recognized for service excellence. We are extremely proud to report that Synovus recently received 25 Greenwich Awards for our <unk>.

Kevin S. Blair: Just bearing deposit diminishment as well as continued contraction in higher cost broker deposits.

Kevin S. Blair: Core non-interest revenue categories continue to grow on a year-over-year basis while operating expense control remains disciplined, with investments in key areas continuing while keeping total expenses roughly flat. Our quarterly loan losses remain stable, and our balance sheet continues to strengthen with further improvement in key safety and soundness metrics, highlighted by lower wholesale funding and higher capital ratios. Our financial success is a direct result of how well we are meeting the needs and expectations of our clients through trusted advice and valued service. In that regard, Synovus and our talented team members continue to be nationally recognized for service excellence.

Kevin S. Blair: Core noninterest revenue categories continue to grow on a year over year basis, while operating expense control remains discipline with investments in key areas, continuing while keeping total expenses roughly flat.

'twenty three performance, serving small businesses and middle market clients. We earned the fourth highest number of total awards among the over 500 banks that were evaluated we also continued to perform very well against our south eastern peers in the recently released J D Power survey for consumer client satisfaction and trust.

Our grow the bank initiatives continued to gain traction in the first quarter as we finalized our new Green Sky program expanded our middle market banker team built our largest CIB pipeline to date generated over 50, new relationships from our business owner well strategy grew wealth AUM by 12% year over year.

Kevin S. Blair: We are extremely proud to report that Synovus recently received 25 Greenwich Awards for our 2023 performance, serving small businesses and middle market clients. We earned the fourth highest number of total awards among the over 500 banks that were evaluated. We also continue to perform very well against our southeastern peers in the recently released J.D. Power Survey for consumer client satisfaction and trust. Our Grow the Bank initiative continued to gain traction in the first quarter as we finalized our new Green Sky program, expanded our middle market banker team, built our largest CIB pipeline to date, generated over 50 new relationships from our business owner wealth strategy, grew wealth AUM by 12% year over year, added a new commodities hedging capability, and expanded existing relationships with approximately 75% of our treasury sales to existing clients.

Added a new commodities hedging capability and expanded existing relationships with approximately 75% of our treasury sales to existing clients.

Kevin S. Blair: 'twenty three performance, serving small businesses and middle market clients. We earned the fourth highest number of total awards among the over 500 banks that were evaluated we also continued to perform very well against our south eastern peers and the recently released J D Power survey for consumer client satisfaction and trust.

Speaking of our Treasury and payment solutions team. We are excited to introduce a differentiated new solution called accelerate pay which alleviates administrative burdens faced by accounts payable staff and seamlessly integrates into existing workflows, providing an immediate return on investment for our clients. We launched this new capability earlier this month and the <unk>.

Kevin S. Blair: Our grow the bank initiative continued to gain traction in the first quarter as we finalized our new Green Sky program expanded our middle market banker team built our largest CIB pipeline to date generated over 50, new relationships from our business owner wealth strategy grew wealth AUM by 12% year over year.

Pipeline has been building steadily since the announcement.

Lastly, we have a long successful track record in community banking this quarter, our community bank generated core deposit growth of almost $350 million and our consumer bank produced growth of approximately $300 million are.

Kevin S. Blair: Added a new commodities hedging capability and expanded existing relationships with approximately 75% of our treasury sales to existing clients.

Our long standing well positioned core businesses continued to drive growth through a value relationship approach, allowing us to invest in new sources of revenue and future growth.

Kevin S. Blair: Speaking of our Treasury and Payment Solutions team, we are excited to introduce a differentiated new solution called AcceleratePay, which alleviates the administrative burdens faced by accounts payable staff and seamlessly integrates into existing workflows, providing an immediate return on investment for our clients. We launched this new capability earlier this month, and the pipeline has been building steadily since the announcement.

Kevin S. Blair: Speaking of our Treasury and payment solutions team. We are excited to introduce a differentiated new solution called accelerate pay which alleviates administrative burdens faced by accounts payable staff and seamlessly integrates into existing workflows, providing an immediate return on investment for our clients. We launched this new capability earlier this month and the <unk>.

Now, let's move to slide three for the quarterly financial highlights Synovus reported first quarter 2024 diluted EPS of <unk> 78.

And adjusted EPS of <unk> 79.

However, a $13 million incremental FDIC special assessment reduced our reported and adjusted first quarter EPS by <unk> <unk>, following a $51 million or 26% EPS impact from the initial special assessment in the prior quarter.

Kevin S. Blair: Pipeline has been building steadily since the announcement.

Kevin S. Blair: Lastly, we have a long successful track record in community banking. This quarter, our community bank generated core deposit growth of almost $350 million, and our consumer bank produced growth of approximately $300 million. Our longstanding, well-positioned core businesses continue to drive growth through a value relationship approach, allowing us to invest in new sources of revenue and future growth. Now, let's move to slide three for the quarterly financial highlights. Synovus reported first quarter 2024 diluted EPS of 78 cents and adjusted EPS of 79 cents.

Kevin S. Blair: Lastly, we have a long successful track record in community banking this quarter, our community bank generated core deposit growth of almost $350 million and our consumer bank produced growth of approximately $300 million.

As previously mentioned, we generated healthy and consistent loan growth in our high priority commercial business lines, including middle market, corporate and investment banking and specialty lending with these categories up 11% annualized however period end loan growth was flat in the first quarter due to flatline utilization commercial real.

Kevin S. Blair: Our long standing well positioned core businesses continued to drive growth through a value relationship approach, allowing us to invest in new sources of revenue and future growth.

Kevin S. Blair: Now, let's move to slide three for the quarterly financial highlights Synovus reported first quarter 2024 diluted EPS of <unk> 78.

Estate in senior housing Paydowns, and payoffs and strategic loan portfolio rationalization efforts.

Kevin S. Blair: And adjusted EPS of <unk> 79.

Despite seasonal headwinds our core deposits grew modestly in the first quarter. The team remains highly focused on accelerating core funding generation through sales activities and product expansion, which led to an increase in deposit production of roughly $300 million versus the fourth quarter and at a rate that was approximately eight basis points lower.

Kevin S. Blair: However, a 13 million dollar incremental FDIC special assessment reduced our reported and adjusted first quarter EPS by seven cents, following a 51 million dollar, or 26 cent, EPS impact from the initial special assessment in the prior quarter. As previously mentioned, we generated healthy and consistent loan growth in our high-priority commercial business lines, including middle market, corporate, and investment banking, and specialty lending, with these categories up 11% annualized. However, period-end loan growth was flat in the first quarter due to flatline utilization, commercial real estate and senior housing paydowns and payoffs, and strategic loan portfolio rationalization efforts.

Kevin S. Blair: However, a $13 million incremental FDIC special assessment reduced our reported and adjusted first quarter EPS by <unk>, following a $51 million or 26% EPS impact from the initial special assessment in the prior quarter.

Kevin S. Blair: As previously mentioned, we generated healthy and consistent loan growth in our high priority commercial business lines, including middle market, corporate and investment banking and specialty lending with these categories up 11% annualized however period end loan growth was flat in the first quarter due to flat line utilization commercial real.

January's noninterest bearing deposit decline was impacted by seasonality, but deposit flows improve throughout the course of the quarter with a $299 million increase in the month of March given the strength of our core deposit growth, we reduced broker deposits for the third consecutive quarter.

Kevin S. Blair: Estate in senior housing Paydowns, and payoffs and strategic loan portfolio rationalization efforts.

Looking at noninterest revenue, we experienced year over year growth in key categories, including Treasury and payment solutions and our commercial sponsorship lines of business. However, total adjusted noninterest revenue declined modestly from a year ago, primarily driven by lower service charges and wealth management income as a result of the 2023.

Kevin S. Blair: Despite seasonal headwinds, our core deposits grew modestly in the first quarter. The team remains highly focused on accelerating core funding generation through sales activities and product expansion, which led to an increase in deposit production of roughly $300 million versus the fourth quarter and at a rate that was approximately eight basis points lower. January's non-interest-bearing deposit decline was impacted by seasonality, but deposit flows improved throughout the course of the quarter with a $299 million increase in the month of March.

Kevin S. Blair: Despite seasonal headwinds our core deposits grew modestly in the first quarter. The team remains highly focused on accelerating core funding generation through sales activities and product expansion, which led to an increase in deposit production of roughly $300 million versus the fourth quarter and at a rate that was approximately eight basis points lower.

Consumer checking modifications and third quarter 2023 global divestiture.

Also capital markets income was lower relative to more elevated levels experienced in the first quarter of 'twenty three given the strong correlation to loan production.

Kevin S. Blair: January's noninterest bearing deposit decline was impacted by seasonality, but deposit flows improve throughout the course of the quarter with a $299 million increase in the month of March given the strength of our core deposit growth, we reduced broker deposits for the third consecutive quarter.

2023 cost initiatives as well as ongoing diligence has led to flattish overall core expense growth year over year, while maintaining a level of strategic investments that position synovus well from a competitive standpoint in order to drive long term shareholder value.

Kevin S. Blair: Given the strength of our core deposit growth, we reduced broker deposits for the third consecutive quarter. Looking at non-interest revenue, we experienced year-over-year growth in key categories, including treasury and payment solutions and our commercial sponsorship lines of business. However, total adjusted non-interest revenue declined modestly from a year ago, primarily driven by lower service charges and wealth management income as a result of the 2023 consumer checking modifications and third quarter 2023 global divestiture.

Kevin S. Blair: Looking at noninterest revenue, we experienced year over year growth in key categories, including Treasury and payment solutions and our commercial sponsorship lines of business. However, total adjusted noninterest revenue declined modestly from a year ago, primarily driven by lower service charges and wealth management income as a result of the 2023.

On the asset quality front credit losses were stable with previous quarters. Lastly, given continued economic uncertainty we further bolstered our common equity tier one ratio in the first quarter through solid earnings accretion and balance sheet management, while completing a measured amount of opportunistic share repurchases.

Kevin S. Blair: Consumer checking modifications and third quarter 2023 global divestiture.

Kevin S. Blair: Also, capital markets income was lower relative to more elevated levels experienced in the first quarter of 23, given the strong correlation to loan production. 2023 cost initiatives as well as ongoing diligence have led to flattish overall core expense growth year over year while maintaining a level of strategic investments that position Synovus well from a competitive standpoint in order to drive long-term shareholder value. On the asset quality front, credit losses were stable with previous quarters.

Common equity tier one levels are the highest in over eight years and currently sits in the upper half of our stated range of 10 to 10, 5% now I'll turn it over to Jamie to cover the first quarter results in greater detail Jamie.

Kevin S. Blair: Also capital markets income was lower relative to more elevated levels experienced in the first quarter of 2003, given the strong correlation to loan production.

Kevin S. Blair: 2023 cost initiatives as well as ongoing diligence has led to flattish overall core expense growth year over year, while maintaining a level of strategic investments that position synovus well from a competitive standpoint in order to drive long term shareholder value.

Thank you Kevin as.

As you can see on slide four total loan balances were essentially stable on a linked quarter basis as expected our loan growth was muted as key strategic business line saw growth, which was offset by balance sheet optimization efforts and transaction related declines.

Kevin S. Blair: Lastly, given continued economic uncertainty, we further bolstered our common equity tier one ratio in the first quarter through solid earnings accretion and balance sheet management while completing a measured amount of opportunistic share repurchases. Common Equity Tier 1 levels are the highest in over eight years and currently sit in the upper half of our stated range of 10 to 10.5 percent. Now I'll turn it over to Jamie to cover the first quarter results in greater detail.

Consistent with our focus on core client relationships growth in middle market commercial CIB and specialty lines was $287 million during the first quarter.

There is increased strength in the commercial real estate and senior housing market.

Kevin S. Blair: Common equity tier one levels are the highest in over eight years and currently sits in the upper half of our stated range of 10 to 10, 5% now I'll turn it over to Jamie to cover the first quarter results in greater detail Jamie. Thank.

Evidenced by higher levels of transaction activity over the last two quarters due to property sales and refinancings.

We expect this increased transaction activity to result in declines in these portfolios throughout 2024.

Andrew Jamie Gregory: Thank you, Kevin. As you can see on slide 4, total loan balances were essentially stable on a linked quarter basis. As expected, our loan growth was muted as key strategic business lines saw growth, which was offset by balance sheet optimization efforts and transaction-related declines. Consistent with our focus on core client relationships, growth in middle market commercial, CIB, and specialty lines was $287 million during the first quarter. There is increased strength in the commercial real estate and senior housing markets, as evidenced by higher levels of transaction activity over the last two quarters due to property sales and refinancing. We expect this increased transaction activity to result in declines in these portfolios throughout 2024. We also continue to strategically reduce our non-relationship syndicated lending and third-party consumer loan portfolios in the first quarter.

Andrew Jamie Gregory: Thank you Kevin.

Andrew Jamie Gregory: As you can see on slide four total loan balances were essentially stable on a linked quarter basis as expected our loan growth was muted as key strategic business lines saw growth, which was offset by balance sheet optimization efforts and transaction related declines.

We also continue to strategically reduce our non relationship syndicated lending and third party consumer loan portfolios in the first quarter.

Further positioning our balance sheet for core client growth.

Consistent with our overall balance sheet strategy, we continue to prioritize clients with meaningful deposit noninterest revenue relationships are rationalizing growth in credit only lending areas such as syndicated lending and third party consumer lending that have a lower return profile or don't meet our strategic relationship objectives.

Andrew Jamie Gregory: Consistent with our focus on core client relationships growth in middle market commercial CIB and specialty lines was $287 million during the first quarter.

Andrew Jamie Gregory: There is increased strength in the commercial real estate and senior housing markets as evidenced by higher levels of transaction activity over the last two quarters due to property sales and refinancings.

Our organic balance sheet optimization efforts will continue as we focus on balanced loan and core deposit growth.

Andrew Jamie Gregory: We expect this increased transaction activity to result in declines in these portfolios throughout 2024.

Turning to slide five core deposit balances grew $165 million sequentially during the first quarter.

Andrew Jamie Gregory: We also continue to strategically reduce our non relationship syndicated lending and third party consumer loan portfolios in the first quarter.

The community Bank in the consumer bank saw strong growth, while seasonality contributed to a decline in deposits in the wholesale bank.

Andrew Jamie Gregory: Further positioning our balance sheet for core client growth. Consistent with our overall balance sheet strategy, we continue to prioritize clients with meaningful deposit and non-interest revenue relationships. While rationalizing growth in credit-only lending areas, such as syndicated lending and third-party consumer lending, that have a lower return profile or don't meet our strategic relationship objectives. Our organic balance sheet optimization efforts will continue as we focus on balanced loan and core deposit growth. Turning to slide 5, core deposit balances grew $165 million sequentially during the first quarter. The community bank and the consumer bank saw strong growth, while seasonality contributed to a decline in deposits in the wholesale bank.

Andrew Jamie Gregory: They're positioning our balance sheet for core client growth.

As we look to the remainder of the year grow from the wholesale bank and continued execution within our consumer and community segments showed support core deposit growth within our previously stated guidance range.

Andrew Jamie Gregory: Consistent with our overall balance sheet strategy, we continue to prioritize clients with meaningful deposit noninterest revenue relationships.

Andrew Jamie Gregory: <unk> growth in credit only lending areas, such as syndicated lending and third party consumer lending that have a lower return profile or don't meet our strategic relationship objectives.

Client demand for time deposits remained elevated during the first quarter.

This growth combined with the continued remixing of noninterest bearing deposits push total deposit costs higher during the quarter.

Andrew Jamie Gregory: Our organic balance sheet optimization efforts will continue as we focus on balanced loan and core deposit growth.

We're encouraged by trends in non interest bearing deposits as the $601 million decline in January followed by significantly less contraction in February and $299 million of growth in March.

Andrew Jamie Gregory: Turning to slide five core deposit balances grew $165 million sequentially during the first quarter.

Andrew Jamie Gregory: The community Bank in the consumer bank saw strong growth, while seasonality contributed to a decline in deposits in the wholesale bank.

Broker deposits declined $324 million or 5% from the fourth quarter, which was the third consecutive quarter of contraction.

Andrew Jamie Gregory: As we look to the remainder of the year, growth from the wholesale bank and continued execution within our consumer and community segments should support core deposit growth within our previously stated guidance range. Client demand for time deposits remained elevated during the first quarter. This growth, combined with the continued remixing of non-insuring deposits, pushed total deposit costs higher during the quarter. However, we are encouraged by trends in non-spreading deposits, as the $601 million decline in January was followed by significantly less contraction in February and $299 million of growth in March.

Andrew Jamie Gregory: As we look to the remainder of the year grow from the wholesale bank and continued execution within our consumer and community segments showed support core deposit growth within our previously stated guidance range.

We expect further declines in broker deposits in the coming quarters as we look at funding cost the aforementioned trends resulted in our total cost of deposits, increasing by 17 basis points to 267% in the first quarter.

Andrew Jamie Gregory: Client demand for time deposits remained elevated during the first quarter.

Andrew Jamie Gregory: This growth combined with the continued remixing of noninterest bearing deposits push total deposit costs higher during the quarter.

For the month of March total deposit cost was 267% versus 253% in December.

Andrew Jamie Gregory: We are encouraged by trends in noninterest bearing deposits as the $601 million decline in January followed by significantly less contraction in February and $299 million of growth in March.

Our cycle to date total deposit beta in March was 49% versus 46% in December.

Moving to slide six net interest income was $419 million in the first quarter, which represented a decline of 4% from the fourth quarter.

Andrew Jamie Gregory: Broker deposits declined $324 million, or 5%, from the fourth quarter, which was the third consecutive quarter of contraction. We expect further declines in broker deposits in the coming quarters. As we look at funding costs, the aforementioned trends resulted in our total cost of deposits increasing by 17 basis points to 2.67% in the first quarter. For the month of March, total deposit costs were 2.67% vs. 2.53% in December.

Broker deposits declined $324 million or 5% from the fourth quarter, which was the third consecutive quarter of contraction.

Primary factors contributing to this decline included a lower day, count, which impacted spread revenue by approximately $4 million a.

Andrew Jamie Gregory: We expect further declines in broker deposits in the coming quarters as we look at funding cost the aforementioned trends resulted in our total cost of deposits, increasing by 17 basis points to 267% in the first quarter.

A modest decline in loan balances and earning assets and further cost increases within our core interest bearing deposit portfolio.

Deposit mix also impacted our margin for the quarter. So as we mentioned trends later in the first quarter were somewhat more constructive than the averages for the quarter.

Andrew Jamie Gregory: For the month of March total deposit cost was 267% versus 253% in December.

Andrew Jamie Gregory: Our cycle-to-date total deposit beta in March was 49%, versus 46% in December. Moving to slide six, net interest income was $419 million in the first quarter, which represented a decline of 4% from the fourth quarter. The primary factors contributing to this decline included a lower day count, which impacted spread revenue by approximately $4 million, a modest decline in loan balances and earning assets, and further cost increases within our core interest-bearing deposit portfolio.

Andrew Jamie Gregory: Our cycle to date total deposit beta in March was 49% versus 46% in December.

Net interest margin ended the quarter at 3.04 personnel, a sequential decline of seven basis points as the benefits of higher rates on newer production fixed rate asset repricing and the partial securities repositioning in the fourth quarter were more than offset by the core deposit mix trends and deposit cost increase.

Moving to slide six net interest income was $419 million from the first quarter, which represented a decline of 4% from the fourth quarter.

Andrew Jamie Gregory: The primary factors contributing to this decline included a lower day, count, which impacted spread revenue by approximately $4 million a modest decline in loan balances.

As we look forward to the second quarter, we expect relative stability in the net interest margin.

Slide seven shows total reported noninterest revenue of $119 million in the first quarter.

Andrew Jamie Gregory: And earning assets and further cost increases within our core interest bearing deposit portfolio.

Andrew Jamie Gregory: Deposit mix also impacted our margin for the quarter, though, as we mentioned, trends later in the first quarter were somewhat more constructive than the averages for the quarter. Net interest margin ended the quarter at 3.04 percent, a sequential decline of seven basis points, as the benefits of higher rates on newer production, fixed rate asset repricing, and the partial securities repositioning in the fourth quarter were more than offset by the core deposit mix trends and deposit costs.

Adjusted noninterest revenue was $117 million and declined $10 million or 8% from the previous quarter and was down $1 million or 1% year over year.

Andrew Jamie Gregory: Deposit mix also impacted our margin for the quarter, though as we mentioned trends later in the first quarter were somewhat more constructive than the averages for the quarter.

Andrew Jamie Gregory: Net interest margin ended the quarter at three 4% a sequential decline of seven basis points as the benefits of higher rates on newer production fixed rate asset repricing and the partial securities repositioning in the fourth quarter were more than offset by the core deposit mix trends and deposit cost increase.

On a sequential basis commercial sponsorship income declined by $5 million, primarily related to a decline in back book related Green Sky.

We expect relatively stable quarterly commercial sponsorship fees for the remainder of the year.

<unk> revenue was also elevated in the fourth quarter impacting the quarter over quarter comparison. These.

Andrew Jamie Gregory: As we look forward to the second quarter, we expect relative stability in the net interest margin. Slide 7 shows total reported non-interest revenue of $119 million in the first quarter. Adjusted non-interest revenue was $117 million and declined $10 million or 8% from the previous quarter and was down $1 million or 1% year-over-year. On a sequential basis, commercial sponsorship income declined by $5 million, primarily related to a decline in back book related green skies.

Andrew Jamie Gregory: As we look forward to the second quarter, we expect relative stability in the net interest margin.

These declines were partially offset by higher mortgage wealth management and capital markets fees.

Slide seven shows total reported noninterest revenue of $119 million in the first quarter.

When looking at the year ago quarter core banking fees increased 5% driven by treasury and payment solutions fee growth of approximately 8% as well as the impact of our second quarter 2023 Coiffe investment.

Andrew Jamie Gregory: Adjusted noninterest revenue was $117 million and declined $10 million or 8% from the previous quarter and was down $1 million or 1% year over year.

Also other noninterest revenue increased sharply year over year, primarily from the expanded green Sky relationship.

Andrew Jamie Gregory: On a sequential basis.

Andrew Jamie Gregory: Cheryl sponsorship income declined by $5 million, primarily related to a decline in back book related Green Sky fees.

These <unk> were offset as a result of the consumer checking modifications implemented last year.

Andrew Jamie Gregory: We expect relatively stable quarterly commercial sponsorship fees for the remainder of the year. Foley revenue was also elevated in the fourth quarter, impacting the quarter-over-quarter comparison. These declines were partially offset by higher mortgage, wealth management, and capital markets fees. When looking at the year-ago quarter, core banking fees increased 5%, driven by Treasury and Payment Solutions fee growth of approximately 8%, as well as the impact of our second quarter 2023 QualPay investment.

We expect relatively stable quarterly commercial sponsorship fees for the remainder of the year.

Also wealth management income was down year over year due to the global divestiture in the third quarter of 2023.

Andrew Jamie Gregory: <unk> revenue was also elevated in the fourth quarter impacting the quarter over quarter comparison. These.

Despite a slower first quarter for capital markets related income, we expect capital markets growth in 2024 led by our middle market and CIB business lines.

Andrew Jamie Gregory: These declines were partially offset by higher mortgage wealth management and capital markets fees.

Andrew Jamie Gregory: When looking at the year ago quarter core banking fees increased 5% driven by treasury and payment solutions fee growth of approximately 8% as well as the impact of our second quarter 2023 Coiffe investment.

We continue to invest in core noninterest 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.

Andrew Jamie Gregory: Also, other non-interest revenue increased sharply year-over-year, primarily from the expanded green sky relationship. However, these tailwinds were offset as a result of the consumer checking modifications implemented last year. Also, wealth management income was down year over year due to the global divestiture in the third quarter of 2023.

Andrew Jamie Gregory: Also other noninterest revenue increased sharply year over year, primarily from the expanded green Sky relationship.

Moving to expense slide eight highlights our operating cost discipline.

Andrew Jamie Gregory: These tail winds were offset as a result of the consumer checking modifications implemented last year.

Reported and adjusted noninterest expense was impacted by a $13 million incremental FDIC special assessment.

Andrew Jamie Gregory: Also wealth management income was down year over year due to the global divestiture in the third quarter of 2023.

The total impact of the two special assessments was $64 million, including the initial $51 million recognized in the fourth quarter.

Andrew Jamie Gregory: Despite a slower first quarter for capital markets-related income, we expect capital markets growth in 2024, led by our middle market and CIB business lines. We continue to invest in core non-interest 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. Moving to expense, Slide 8 highlights our operating costs. reported and adjusted non-interest expense was impacted by a $13 million incremental FDIC special assessment. The total impact of the two special assessments was $64 million, including the initial $51 million recognized in the fourth quarter.

Andrew Jamie Gregory: Despite a slower first quarter for capital markets related income, we expect capital markets growth in 2024 led by our middle market and CIB business lines.

Reported noninterest expense was $323 million.

And adjusted noninterest expense of $319 million was down $34 million or 10% from the prior quarter.

Andrew Jamie Gregory: We continue to invest in core noninterest 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.

Adjusted noninterest expense increased $14 million or 5% year over year, which was almost entirely driven by the $13 million incremental FDIC special assessment incurred in the first quarter.

Andrew Jamie Gregory: Moving to expense slide eight highlights our operating cost discipline.

Employment expense was down 1% year over year benefited by our head count reductions made over the past three quarters.

Andrew Jamie Gregory: Reported and adjusted noninterest expense was impacted by a $13 million incremental FDIC special assessment.

Seasonally higher employment expense inflated noninterest expense by approximately $11 million in the first quarter, which impacted earnings by an estimated six zones.

Andrew Jamie Gregory: The total impact of the two special assessments was $64 million <unk>.

Andrew Jamie Gregory: Including the initial $51 million recognized in the fourth quarter.

Andrew Jamie Gregory: Reported non-interest expense was $323 million, and adjusted non-interest expense of $319 million was down $34 million or 10% from the prior quarter. Adjusted non-interest expense increased $14 million or 5% year-over-year, which was almost entirely driven by the $13 million incremental FDIC special assessment incurred in the first quarter. Employment expense was down 1% year over year, benefiting from our headcount reductions made over the past three quarters.

Andrew Jamie Gregory: Reported noninterest expense was $323 million and adjusted noninterest expense of $319 million was down $34 million or 10% from the prior quarter.

Importantly, we will remain proactive with disciplined expense management and this revenue challenged environment. As a result, adjusted noninterest expense should be relatively flat in 2024, excluding the FDIC special assessment imposed in the fourth quarter 2023, and the first quarter 2024.

Andrew Jamie Gregory: Adjusted noninterest expense increased $14 million or 5% year over year, which was almost entirely driven by the $13 million incremental FDIC special assessment incurred in the first quarter.

Moving to slides nine and 10 on credit quality.

Our allowance for credit losses ended the first quarter at $546 million or one 6% up from $537 million or 124% in the fourth quarter.

Andrew Jamie Gregory: Employment expense was down 1% year over year benefited by our head count reductions made over the past three quarters.

Andrew Jamie Gregory: Seasonally higher employment expense and plated non-interest expense by approximately $11 million in the first quarter, which impacted earnings by an estimated six cents. Importantly, we will remain proactive with discipline and expense management in this revenue-challenged environment. As a result, adjusted non-interest expense should be relatively flat in 2024, excluding the FDIC special assessments imposed in the fourth quarter of 2023 and the first quarter of 2024. Moving to slides 9 and 10, on credit quality. Our allowance for credit losses ended the first quarter at $546 million, or 1.26%, up from $537 million, or 1.24%, in the fourth quarter.

Andrew Jamie Gregory: Seasonally higher employment expense inflated noninterest expense by approximately $11 million in the first quarter, which impacted earnings by an estimated six zones.

Consistent with the prior quarters, we continue to raise the allowance to reflect asset valuations credit migration trends and a heavier weighting toward downside economic scenarios.

Andrew Jamie Gregory: Importantly, we will remain proactive with disciplined expense management and this revenue challenged environment. As a result, adjusted noninterest expense should be relatively flat in 2024, excluding the FDIC special assessment imposed in the fourth quarter of 2023, and the first quarter 2024.

Net charge offs in the first quarter were $44 million or <unk> 41 basis points compared to 38 basis points in the fourth quarter and 40 basis points in the third quarter, which excluded the loan sales.

The nonperforming loan ratio increased to eight 1%.

Loans as credit metrics migrate from historically low levels.

Andrew Jamie Gregory: Moving to slides nine and 10 on credit quality.

Total criticized and classified credits rose slightly but remain at very manageable levels.

Andrew Jamie Gregory: Our allowance for credit losses ended the first quarter at $546 million or one 6% up from $537 million or 124% in the fourth quarter.

First quarter net charge offs and credit metrics were impacted by one particular commercial and industrial credit, which accounted for 17 basis points of net charge offs and is expected to be resolved later this month.

Andrew Jamie Gregory: Consistent with the prior quarters, we continue to raise the allowance to reflect asset valuations credit migration trends and a heavier weighting toward downside economic scenarios net charge offs in the first quarter were $44 million or 41 basis points compared to 38 basis points in the fourth quarter and 40 basis points in the third quarter.

Andrew Jamie Gregory: Consistent with the prior quarters, we continue to raise the allowance to reflect asset valuations, credit migration trends, and a heavier weighting toward downside economics. Net charge-offs in the first quarter were $44 million, or 41 basis points, compared to 38 basis points in the fourth quarter and 40 basis points in the third quarter, which excluded the loan sale. The non-performing loan ratio increased to 0.81% of loans as credit metrics migrate from historically low levels.

We have a high degree of confidence in the strength and quality of our loan portfolio and we will continue to reduce our non relationship credits and manage the portfolio with a heightened level of diligence in this more uncertain macroeconomic environment.

As seen on slide 11.

Andrew Jamie Gregory: Which excluded the loan sales.

Our capital position continued to increase in the first quarter.

Andrew Jamie Gregory: The nonperforming loan ratio increased to eight 1%.

With the preliminary common equity tier one ratio, reaching 10, 38% and with total risk based capital now at 13, 31%.

Loans as credit metrics migrate from historically low levels.

Andrew Jamie Gregory: Total criticized and classified credits rose slightly but remain at very manageable levels.

<unk> earnings supported capital accretion in the first quarter.

Additionally, our efforts to rationalize growth within certain segments, resulting in a modest decline in risk weighted assets, which further supported the increase in our capital ratios.

Andrew Jamie Gregory: First quarter net charge offs and credit metrics were impacted by one particular commercial and industrial credit, which accounted for 17 basis points of net charge offs and is expected to be resolved later this month.

Andrew Jamie Gregory: Total criticized and classified credits rose slightly, but remain at very manageable levels. First quarter net charge-offs and credit metrics were impacted by one particular commercial and industrial credit, which accounted for 17 basis points of net charge-offs and is expected to be resolved later this month. We have a high degree of confidence in the strength and quality of our loan portfolio, and we will continue to reduce our non-relationship credits and manage the portfolio with a heightened level of diligence in this more uncertain macroeconomic environment.

Against this backdrop, we executed about $30 million of common stock repurchases in the first quarter, which equates to approximately six basis points of capital.

Andrew Jamie Gregory: We have a high degree of confidence in the strength and quality of our loan portfolio and we will continue to reduce our non relationship credits and manage the portfolio with a heightened level of diligence in this more uncertain macroeconomic environment.

We will continue to target a CET one ratio within a range of 10.0% and 10, 5% and aim to maintain a robust capital position against what remains an uncertain macroeconomic environment.

Andrew Jamie Gregory: As seen on slide 11.

Andrew Jamie Gregory: Our capital position continued to increase in the first quarter.

Andrew Jamie Gregory: With the preliminary common equity tier one ratio, reaching 10, 38% and with total risk based capital now at 13, 31% retained earnings supported capital accretion in the first quarter.

Looking into the second quarter, we would note that our risk weighted asset optimization is currently underway that is expected to result in a subset of our loan portfolio being eligible for our reduced risk weighting when.

Andrew Jamie Gregory: As seen on slide 11, our capital position continued to increase in the first quarter, with a preliminary common equity tier one ratio reaching 10.38% and total risk-based capital now at 13.31%. Retained earnings supported capital accretion in the first quarter. Additionally, our efforts to rationalize growth within certain segments resulted in a modest decline in risk-weighted assets, which further supported the increase in our capital ratio. Against this backdrop, we executed about $30 million of common stock repurchases in the first quarter, which equates to approximately six basis points of capital.

Andrew Jamie Gregory: Additionally, our efforts to rationalize growth within certain segments, resulting in a modest decline in risk weighted assets, which further supported the increase in our capital ratios.

When completed this should support our capital ratios and provide flexibility for incremental capital deployment.

This incremental capital deployment is contingent upon the analysis and documentation of the eligibility certain loan portfolios for reduced risk weightings, we will share further details on the results of this exercise over the near term.

Andrew Jamie Gregory: Against this backdrop, we executed about $30 million of common stock repurchases in the first quarter, which equates to approximately six basis points of capital.

Andrew Jamie Gregory: We will continue to target a CET one ratio within a range of 10.0% and 10, 5% and aim to maintain a robust capital position against what remains an uncertain macroeconomic environment.

On April one we reclassified $3 4 billion of our securities portfolio from available for sale to held to maturity.

This reclassification will reduce the interest rate sensitivity within a OCI and thus the variability of our tangible common equity ratio I'll now turn it back to Kevin to discuss our 2020 for guidance.

Andrew Jamie Gregory: Looking into the second quarter, we would note that our risk weighted asset optimization is currently underway that is expected to result in a subset of our loan portfolio being eligible for reduced risk weighting.

Thank you Jamie I will now continue with our updated fundamental guidance for the remainder of 2024.

Andrew Jamie Gregory: We will continue to target a CET1 ratio within a range of 10.0% and 10.5% and aim to maintain a robust capital position against what remains an uncertain macroeconomic environment. Looking into the second quarter, we would note that a risk-weighted asset optimization is currently underway that is expected to result in a subset of our loan portfolio being eligible for a reduced risk weighting. When completed, this should support our capital ratios and provide flexibility for incremental capital deployment. This incremental capital deployment is contingent upon the analysis and documentation of the eligibility of certain loan portfolios for reduced risk weightings.

Andrew Jamie Gregory: When completed this should support our capital ratios and provide flexibility for incremental capital deployment.

Based on first quarter experience in our existing pipelines period end loan growth is still expected to be zero to 3% in 2024 growth should be supported by the continued success in middle market, corporate and investment banking and specialty lines offset by rationalization and non relationship credits and commercial real estate and senior housing pay.

Andrew Jamie Gregory: This incremental capital deployment is contingent upon the analysis and documentation of the eligibility of certain loan portfolios for reduced risk weightings, we will share further details on the results of this exercise over the near term.

Andrew Jamie Gregory: Finally on April one, we reclassified $3 4 billion of our securities portfolio from available for sale to held to maturity.

Off and pay down activity.

Our current forecast for core deposits indicates growth within a 2% to 6% range for the year aided by seasonal tailwind as the year progresses, and new core funding growth initiatives with the last <unk> rate increase now having occurred roughly nine months ago. We believe deposit costs are in the process of stabilizing and with some residual up.

Andrew Jamie Gregory: This reclassification will reduce the interest rate sensitivity within a OCI and thus the variability of our tangible common equity ratio I'll now turn it back to Kevin to discuss our 2020 for guidance.

Kevin S. Blair: Thank you, Jamie and I will now continue with our updated fundamental guidance for the remainder of 2024.

<unk> pressure remaining into the second quarter should result in a peak total deposit beta for the cycle between 49% and 50%.

Kevin S. Blair: Based on first quarter experience in our existing pipelines period end loan growth is still expected to be zero to 3% in 2024 growth should be supported by the continued success in middle market, corporate and investment banking and specialty lines offset by rationalization and non relationship credits and commercial real estate and senior housing.

This forecast for deposit cost our current outlook points to the revenue growth at the low end of our negative 3% to 1% range largely impacted by the continued deposit remixing that we and the industry are experiencing our forecast is based upon a stable interest rate environment and does not include any potential benefits from the.

Andrew Jamie Gregory: We will share further details on the results of this exercise over the near term. Finally, on April 1st, we reclassified $3.4 billion of our securities portfolio from available for sale to held to maturity. This reclassification will reduce the interest rate sensitivity within AOCI and thus the variability of our tangible common equity ratio. I'll now turn it back to Kevin to discuss our 2024 guidance. Thank you, Jamie.

Kevin S. Blair: Off and pay down activity.

Kevin S. Blair: Our current forecast for core deposits indicates growth within a 2% to 6% range for the year aided by seasonal tailwind as the year progresses, and new core funding growth initiatives with the last <unk> rate increase now having occurred roughly nine months ago. We believe deposit costs are in the process of stabilizing and with some residual up.

<unk> risk weighted asset optimization exercise.

Net interest income should improve in the second half of this year.

Fixed rate asset repricing overcomes deposit repricing and Remixing.

Noninterest revenue should experience growth this year as pipelines for capital markets related fees remained strong we continue to execute on our core growth in treasury and payment solutions and the new Green Sky forward flow program continues to build our adjusted noninterest expense growth guidance is unchanged after adjusting for the impact of the first quarter EFT.

Kevin S. Blair: I'll now continue with our updated fundamental guidance for the remainder of 2024. Based on first-quarter experience in our existing pipelines, period-end loan growth is still expected to be 0 to 3% in 2024. Growth should be supported by the continued success in middle market, corporate, and investment banking, and specialty lines, offset by rationalization in non-relationship credits and commercial real estate and senior housing payoff and paydown activity. Our current forecast for core deposits indicates growth within a 2 to 6 percent range for the year, aided by seasonal tailwinds as the year progresses and new core funding growth initiatives.

Kevin S. Blair: Word pressure remaining into the second quarter should result in a peak total deposit beta for the cycle between 49% and 50%.

Kevin S. Blair: Under this forecast for deposit cost our current outlook points to the revenue growth at the low end of our negative 3% to 1% range largely impacted by the continued deposit remixing that we and the industry are experiencing our forecast is based upon a stable interest rate environment and does not include any potential benefits from the on.

The IC special assessment, excluding the special assessments in the fourth quarter of 2003 in first quarter of 'twenty four we anticipate our adjusted noninterest expense will be relatively stable this year.

We continue to closely monitor and manage our loan portfolio to uncover any credit deterioration or systemic themes across industry and geography, we expect the first half of the year net charge offs to continue to be relatively stable at approximately 40 basis points given current credit migration trends, assuming a relatively <unk>.

Kevin S. Blair: <unk> risk weighted asset optimization exercise.

Kevin S. Blair: Net interest income should improve in the second half of this year as fixed rate asset repricing overcomes deposit repricing and remixing.

Kevin S. Blair: With the last FOMC rate increase now having occurred roughly nine months ago, we believe deposit costs are in the process of stabilizing and, with some residual upward pressure remaining into the second quarter, should result in a peak total deposit beta for the cycle between 49 and 50 percent. Under this forecast for deposit cost, our current outlook points to revenue growth at the low end of our negative 3 to 1 percent range, largely impacted by the continued deposit remixing that we and the industry are experiencing. Our forecast is based on a stable interest rate environment and does not include any potential benefits from the ongoing risk-weighted asset optimization exercise.

Kevin S. Blair: Noninterest revenues should experience growth this year as pipelines for capital markets related fees remained strong we continue to execute on our core growth in treasury and payment solutions and the new Green Sky forward flow program continues to build our adjusted noninterest expense growth guidance is unchanged after adjusting for the impact of the first quarter EFT.

Stable economic environment, and considering the impact of certain large individual losses, we expect net charge offs to be flat to down in the second half of the year.

Moving to the tax rate, our current forecast points to the upper half of our 21% to 22% range. Finally, our common equity tier one ratio is at the high end of our targeted range of 10 to 10, 5% and we will remain opportunistic with measured amounts of share repurchases to manage capital levels prudent capital management remains.

Kevin S. Blair: The IC special assessment, excluding the special assessments in the fourth quarter of 'twenty three in first quarter of 2004, we anticipate our adjusted noninterest expense will be relatively stable this year.

Kevin S. Blair: We continue to closely monitor and manage our loan portfolio to uncover any credit deterioration or systemic themes across industry and geography, we expect the first half of the year net charge offs to continue to be relatively stable at approximately 40 basis points given current credit migration trends, assuming a relatively <unk>.

Our top priority to ensure we have strong and liquid balance sheet for all economic environments.

Kevin S. Blair: Net interest income should improve in the second half of this year as fixed-rate asset repricing overcomes deposit repricing and remixing. Non-interest revenues should experience growth this year as pipelines for capital markets-related fees remain strong. We continue to execute on our core growth in treasury and payment solutions, and the new Green Sky Forward Flow program continues to build. Our adjusted non-interest expense growth guidance is unchanged after adjusting for the impact of the first quarter FDIC special assessment.

The actions we have taken over the past several quarters synovus is well positioned to meet the needs of our clients while operating from a position of strength amid this evolving economic landscape. We are focused on growing the bank through the expansion of relationships in the delivery of new sources of revenue all while improving returns and building an even more risk resilient bank.

Kevin S. Blair: Stable economic environment, and considering the impact of certain large individual losses, we expect net charge offs to be flat to down in the second half of the year.

Kevin S. Blair: Moving to the tax rate, our current forecast points to the upper half of our 21% to 22% range. Finally, our common equity tier one ratio is at the high end of our targeted range of 10 to 10, 5% and we will remain opportunistic with measured amounts of share repurchases to manage capital levels prudent capital management remains our.

And now operator. This concludes our prepared remarks, let's open the call for questions.

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

You asked a question you May Press Star then one on your Touchtone phone.

Kevin S. Blair: Excluding the special assessments in the fourth quarter of 23 and first quarter of 24, we anticipate our adjusted non-interest expense will be relatively stable this year. We continue to closely monitor and manage our loan portfolio to uncover any credit deterioration or systemic themes across industry and geography. We expect the first half of the year net charge-offs to continue to be relatively stable at approximately 40 basis points. Given current credit migration trends, assuming a relatively stable economic environment, and considering the impact of certain large individual losses, we expect net charge-offs to be flat to down in the second half of the year.

You're using a speaker phone please pick up your handset before pressing to Keith you withdraw your question. Please.

Kevin S. Blair: Top priority to ensure we have strong and liquid balance sheet for all economic environments through.

In the interest of time, please limit yourself to one question and one follow up at this time, we will pause from Intel.

Kevin S. Blair: Through the actions we have taken over the past several quarters synovus is well positioned to meet the needs of our clients while operating from a position of strength amid this evolving economic landscape. We are focused on growing the bank through the expansion of relationships in the delivery of new sources of revenue all while improving returns and building an even more risk resilient bank.

<unk> San Barbara.

Yes first question is from the line of John Armstrong from RBC capital markets.

Hey, good morning.

Speaker Change: And now operator. This concludes our prepared remarks, let's open the call for questions.

Good morning, Good morning, John.

Okay.

Kevin.

I can try to get you off script, a little bit if I can.

Stock's off a little bit this morning, I would say, it's been a battleground in terms of feedback.

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

Speaker Change: Asked a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing to Keith.

I think the core looks okay to me, maybe soft and a couple of areas.

Kevin S. Blair: Moving to the tax rate, our current forecast points to the upper half of our 21% to 22% range. Finally, our common equity tier one ratio is at the high end of our targeted range of 10 to 10.5%, and we will remain opportunistic with measured amounts of share repurchases to manage capital levels. Prudent capital management remains our top priority to ensure we have a strong and liquid balance sheet for all economic environments.

And others some positive trends also emerging but curious how you see it maybe a chance to defend your stock a little bit how do you see the puts and takes of the quarter, where do you think you need to do better what do you think is going well just curious on your thoughts to start start the call.

Speaker Change: Your question. Please press Star then teeth in the interest of time, please limit yourself to one question and one follow up at this time, we will pause momentarily to assemble our roster.

John look I love the question because I think that's what's on my mind.

Yes first question is from the line of John Armstrong from RBC capital markets.

You look at a lot of the information we provided today it really comes down to two areas margin and credit.

When you look at our expenses when you look at fee income I think we continue to meet and exceed our expectations. There. So let's dig in a little bit first on margin.

John Armstrong: Hey, good morning.

John Armstrong: Good morning, Good morning, John.

Operator: Through the actions we have taken over the past several quarters, Synovus is well-positioned to meet the needs of our clients while operating from a position of strength amid this evolving economic landscape. We are focused on growing the bank through the expansion of relationships and the delivery of new sources of revenue, all while improving returns and building an even more risk-resilient bank. And now, operator, this concludes our prepared remarks. Let's open the call for questions. Thank you. We'll now begin the question and answer section. To ask a question, you may press the star, then one on your touch-tone phone.

John Armstrong: Alright.

John Armstrong: Kevin.

John Armstrong: I can try to get you off script, a little bit if I can.

We're all seven basis points this quarter and that is largely a function of deposits.

Stock's off a little bit this morning, I would say, it's been a battleground in terms of feedback.

And that was higher than what we had modeled so when you look at what caused it was fairly evenly split between our noninterest bearing declines are interest bearing non maturity deposit cost increases and a little more CD remixing and I don't want to get into the weeds around each of those because we could spend the rest of the call, but I expect those those.

John Armstrong: I think the core looks okay to me maybe soft on a couple of areas.

Kevin S. Blair: And others some positive trends also emerging but curious how you see it maybe a chance to defend your stock a little bit how do you see the puts and takes of the quarter, where do you think you need to do better what do you think is growing well just curious on your thoughts to start start the call.

Trends to improve.

And as we look at some of the things that we've already done as well as some of the trends that we've seen this quarter, which would include some positive trends around DDA I think those headwinds on the margins will abate and as Jamie said in the prepared remarks, we would expect this quarter to be flat and then as Youll hear later there are some things that we have in place.

Kevin S. Blair: John look I love the question because I think that's what's on my mind you'd look at a lot of the information we provided today it really comes down to two areas margin and credit.

Operator: If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. In the interest of time, please limit yourselves to one question and one follow-up. At this time, we'll pause momentarily to assemble our rough draft. The first question is from the line of Jon Arfstrom from RBC Capital Markets. Good morning. Good morning, Jon.

Kevin S. Blair: Because when you look at our expenses and you look at fee income I think we continue to meet and exceed our expectations. There. So let's dig in a little bit first on margin. We're all seven basis points. This quarter and that is largely a function of deposits and that was higher than what we had modeled so when you look at what caused it was fairly evenly split between our noninterest.

Both from the fixed asset repricing, but also some of these trends changing that will allow us to expand our margin by 10 to 15 basis points by year end getting us right back to the $3 20 that we shared back in January and that obviously assumes flat rates that does not include any impact of.

Jon Glenn Arfstrom: Hey, Kevin, if I can try to get you off the script a little bit, if I can. Stocks off a little bit this morning, I would say it's been a battleground in terms of feedback. And I think the core looks okay to me, maybe soft in a couple areas, fine, and others, some positive trends also emerging. But curious how you see it, maybe a chance to defend your stock a little bit. How do you see the puts and takes for the quarter? Where do you think you need to do better?

Kevin S. Blair: Just bearing declines are interest bearing non maturity deposit cost increases and a little more CD remixing and I don't want to get into the weeds around each of those because we could spend the rest of the call, but I expect those those trends to improve.

Are any of the potential use of any capital that we would realize as part of this risk weighted asset optimization exercise so.

Kevin S. Blair: As we look at some of the things that we've already done as well as some of the trends that we've seen this quarter, which would include some positive trends around DDA I think those headwinds on the margins will abate and as Jamie said in the prepared remarks, we would expect this quarter to be flat and then as Youll hear later there are some things that we have in place.

<unk> was down more contracts than we thought I think we have a path to expansion and one that's very similar to what we talked about back in January now under the credit front we.

Kevin S. Blair: What do you think is going well? Just curious about your thoughts to start the call. Yeah, Jon, look, I love the question because I think that's what's on my mind.

We had stable net charge offs this quarter, including one very large credit that has since been resolved and that credit.

Kevin S. Blair: If you look at a lot of the information we provided today, it really comes down to two areas, margin and credit. Because when you look at our expenses and you look at fee income, I think we continue to meet and exceed our expectations there. So let's dig in a little bit first on margin. We're off seven basis points this quarter, and that is largely a function of deposits. And that was higher than what we had modeled.

Kevin S. Blair: Both from the fixed asset repricing, but also some of these trends changing that will allow us to expand our margin by 10 to 15 basis points by year end getting us right back to the $3 20 that we shared back in January and that obviously assumes flat rates that does not include any impact.

Impacted our credit metrics this quarter 17 basis points of our charge offs and it also represented 18 basis points of our increase in Npls, having resolve this credit. This month that will ultimately result in a commensurate decline in npls, meaning that without that credit Npls would have.

Kevin S. Blair: So when you look at what caused it, it was fairly evenly split between our non-interest bearing declines, our interest bearing non-maturity deposit cost increases, and a little more CD. And I don't want to get into the weeds around each of those, because we could spend the rest of the call, but I expect those trends to improve. And as we look at some of the things that we've already done, as well as some of the trends that we've seen this quarter, which would include some positive trends around DDA, I think those headwinds on margins will abate. And, as Jamie said in his prepared remarks, we would expect this quarter to be flat.

Kevin S. Blair: Of any of the potential use of any capital that we would realize as part of this risk weighted asset optimization exercise so.

<unk> declined this quarter.

And maybe what's most important is what I just said there at the end, which was we expect our net charge offs to be flat to down in the second half of the year based upon our portfolio metrics and trends now some have probably question how can that be given some of the metrics well one of the things that we did this quarter, we initiated a deep dive through our entire <unk>.

Kevin S. Blair: Quarter was down more contracts than we thought I think we have a path to expansion and one that's very similar to what we talked about back in January now under the credit front.

Kevin S. Blair: Had stable net charge offs this quarter, including one very large credit that has since been resolved and that credit really impacted our credit metrics. This quarter 17 basis points of our charge offs and it also represented 18 basis points of our increase in Npls, having resolve this.

<unk> family portfolio very similar to what we did last year in office and similar to what we did with the hospitality industry back in Covid and that led to a downgrade of four credits, which total right around $96 million. So that deep dive represented 22 of the 25 basis point increase.

Kevin S. Blair: And then, as you'll hear later, there are some things that we have in place, both from the fixed asset repricing, but also some of these trends changing, that will allow us to expand our margin by 10 to 15 basis points by year end, getting us right back to the 320 that we shared back in January. And that obviously assumes flat rates. That does not include any impact of any potential use of any capital that we would realize as part of this risk-weighted asset optimization exercise.

Kevin S. Blair: Credit this month that will ultimately result in a commensurate decline in npls, meaning that without that credit Npls would have actually declined this quarter.

<unk> and our criticized and classified ratio.

Also on the provision front, given what we've seen on valuation and across all asset classes. This quarter. We added a qualitative adjustment to the allowance of just under $30 million to account for higher loss given default. If we were to see any sort of defaults on the CRE side.

Kevin S. Blair: And maybe what's most important is what I just said there at the end, which was we expect our net charge offs to be flat to down in the second half of the year based upon our portfolio metrics and trends now some have probably question how can that be given some of the metrics well one of the things that we did this quarter, we initiated a deep dive through our entire mulch.

Kevin S. Blair: So the quarter was down, more contraction than we thought. But I think we have a path to expansion, and one that's very similar to what we talked about back in January. Now on to the credit front, we had stable net charge-offs this quarter, including one very large credit that has since been resolved, and that credit really impacted our credit metrics this quarter, 17 basis points of our charge-offs, and it also represented 18 basis points of our increase in NPLs.

Without that adjustment our allowance would have actually declined quarter on quarter and I will just remind you that our CRE portfolio continues to perform very well, we have NPL ratio of 13 basis points and we only had $2 million of NPL inflows. This quarter. So when I look at everything in totality and I.

Kevin S. Blair: Family portfolio very similar to what we did last year in office and similar to what we did with the hospitality industry back in Covid and that led to a downgrade of four credits, which total right around $96 million. So that deep dive represented 22 of the 25 basis point increase.

Think about the two areas that probably had some softness to your point I look at the stability and improvement in those areas and when I couple that with our expense discipline and our increased forecast for fee income and then you add on top of that the potential to have incremental capital from our risk weighted asset optimization I feel like our <unk>.

Kevin S. Blair: <unk> and our criticized and classified ratio.

Kevin S. Blair: Having resolved this credit this month, that will ultimately result in a commensurate decline in NPLs, meaning that without that credit, NPLs would have actually declined this quarter. And maybe what's most important is what I just said at the end, which was we expect our net charge-offs to be flat to down in the second half of the year based upon our portfolio metrics and trends. Now, some may have probably wondered, how can that be given some of the metrics?

Kevin S. Blair: Also on the provision front, given what we've seen on valuation and across all asset classes. This quarter. We added a qualitative adjustment to the allowance of just under $30 million to account for higher loss given default. If we were to see any sort of defaults on the CRE side.

Opportunities in the forecast outweigh those of the risk.

Okay.

Those are the issues.

Kevin S. Blair: Without that adjustment our allowance would have actually declined quarter on quarter and I'll, just remind you that our CRE portfolio continues to perform very well, we have an NPL ratio of 13 basis points and we only had $2 million of NPL inflows. This quarter. So when I look at everything in totality and I.

Credit margin. So I appreciate that Kevin and then just a follow up quickly jayme for you Ken.

Kevin just mentioned it but what do you need to do.

Kevin S. Blair: Well, one of the things that we did this quarter was initiate a deep dive through our entire multifamily portfolio, very similar to what we did last year in office and similar to what we did with the hospitality industry back in COVID. And that led to a downgrade of four credits, which totaled right around $96 million. So that deep dive represented 22 of the 25 basis point increase in our credit size and classified ratio.

For the <unk> optimization efforts, who needs to blessing when could it happen and how much capital do you think it could free up thank you.

Yeah, John Thanks for the question.

Kevin S. Blair: About the two areas that probably had some softness to your point I look at the stability and improvement in those areas and when I couple that with our expense discipline and our increased forecast for fee income and then you add on top of that the potential to have incremental capital from our risk weighted asset optimization I feel like our.

Look you are aware, we've been working on improving our ROE.

Multiple years and.

Recently, we put a lot of effort into our view of what is consuming our risk weighted assets.

We've been looking at real estate line C&I unfunded commitments and general kind of return for every dollar of risk weighted assets that we put on the books.

Kevin S. Blair: Also, on the provision front, given what we've seen in valuation and across all asset classes this quarter, we added a qualitative adjustment to the allowance of just under $30 million to account for higher losses given default if we were to see any sort of defaults on the CRE side. Without that adjustment, our allowance would have actually declined quarter on quarter. And I'll just remind you that our CRE portfolio continues to perform very well. We have an NPL ratio of 13 basis points, and we only had $2 million of NPL inflows this quarter.

Kevin S. Blair: <unk> in the forecast outweigh those of the risk.

Some of these strategies affect our go to market strategy some of them affect.

Kevin S. Blair: Okay.

Kevin S. Blair: The issues, it's credit margin. So I appreciate that Kevin and then just to follow up quickly jayme for you.

What we do as far as our inorganic strategies like the sale of a business line that we did in 2023.

Speaker Change: Kevin just mentioned it but what do you need to do.

But the effort we're talking about today is around certain loan categories that could be eligible.

Jayme: For the <unk> optimization efforts, who needs to blessing when could it happen and how much capital do you think that could free up thank you.

We have reduced risk weighting, including mortgage government lending securitization exposures in multifamily term loans.

Kevin S. Blair: Yeah, John Thanks for the question.

The largest impact of this effort is coming from loans that qualify for reduced our TBA treatment within our lender finance portfolio, but in order to achieve that risk weighting.

Kevin S. Blair: Look you are aware, we've been working on improving our ROE.

Kevin S. Blair: For multiple years and recently, we put a lot of effort into our view of what is consuming our risk weighted assets.

Kevin S. Blair: So when I look at everything in totality, and I think about the two areas that probably had some softness to your point, I see the stability and improvement in those areas. And when I couple that with our expense discipline and our increased forecast for fee income, and then you add on top of that the potential to have incremental capital from our risk-weighted asset optimization, I feel like our opportunities in the forecast outweigh those of risk. Okay, good. Yeah, those are the issues. It's the credit margin. So I appreciate that, Kevin.

Down to 20% in many cases relative to the 100% risk weighting. We have today, we have to perform proper analysis and documentation in light of the regulatory capital requirement under the simplify supervisory formula approach and Unfortunately, we haven't completed that effort. So we cannot give specific details on the impact of <unk>.

Kevin S. Blair: We've been looking at real estate line C&I unfunded commitments and general kind of return for every dollar of risk weighted assets that we put on the books.

Kevin S. Blair: Some of these strategies affect our go to market strategy some of them affect.

Kevin S. Blair: What we do as far as our inorganic strategies like the sale of a business line that we did in 2023.

Capital ratios.

As we said in the prepared remarks as we show in the deck, we believe it can be meaningful.

Kevin S. Blair: But the effort we're talking about today is around certain loan categories that could be eligible.

Given what we've completed to date, we think the impact could be a $1 billion.

Kevin S. Blair: Reduce risk weightings, including mortgage government lending securitization exposures in multifamily term loans.

Or more reduction in risk weighted assets.

The impact of cap ratios could be greater than 20 basis points.

Kevin S. Blair: The largest impact of this effort is coming from loans that qualify for reduced our TBA treatment within our lender finance portfolio, but in order to achieve that risk weighting.

So if we successfully complete this work and given where we are with capital.

Jon Glenn Arfstrom: And then just to follow up quickly, Jamie, for you. Kevin just mentioned it, but what do you need to do for the RWA optimization efforts? Who needs to approve it?

We're already at the higher end of our range and that's our intent.

Stay at the higher end of our target range and so we will likely.

Kevin S. Blair: The 20% and in many cases relative to the 100% risk weighting. We have today, we have to perform proper analysis and documentation in light of the regulatory capital requirement under the simplified supervisory formula approach and.

We deploy this capital any capital generated from there.

Andrew Jamie Gregory: When could it happen? And how much capital do you think it could free up? Thank you. Yeah, Jon, thanks for the question. Hey, look, you're aware we've been working on improving our ROE for multiple years. And recently, we put a lot of effort into a review of what is consuming our risk-weighted assets. We've been looking at real estate lines, C&I, unfunded commitments, and the general kind of return for every dollar of risk-weighted assets that we put on the book.

When it is completed either securities repositioning our share repurchases and kind of how to maintain our capital ratios at the given level.

Kevin S. Blair: And unfortunately, we haven't completed that effort. So we cannot give specific details on the impact of capital ratios, but as we said in the prepared remarks as we show in the deck, we believe it can be meaningful.

We say you asked about what could this be and we feel confident about the $1 billion billion or more comment.

Upside is probably around $2 billion and so we have work to do but we do expect to complete it in the near term and we'll report back once we get farther along.

Kevin S. Blair: Given what we've completed to date, we think the impact could be a $1 billion or more reduction in risk weighted assets.

Andrew Jamie Gregory: Some of these strategies affect our go-to-market strategies; some of them affect what we do as far as our inorganic strategies, like the sale of business lines that we did in 2023. But the effort we're talking about today is around certain loan categories that could be eligible to have reduced risk weightings, including mortgage, government lending, securitization exposures, and multifamily term loans. The largest impact of this effort is coming from loans that qualify for reduced RWA treatment within our lender finance portfolio.

Okay very good thank you very much.

Kevin S. Blair: Impact of cap ratios could be greater than 20 basis points.

Thanks, John.

Kevin S. Blair: If we successfully complete this work and given where we are with capital.

Thank you.

The next question is from the line of.

Kevin S. Blair: We're already at the higher end of our range.

Abraham Pernod from Bank of America.

Kevin S. Blair: And that's our intent is to me.

Kevin S. Blair: Stay at the higher end of our target range and so we will likely deploy this capital any capital generated from the.

Please go ahead.

Hey, good morning.

Good morning, everyone.

Kevin S. Blair: When it is completed to either.

Yes. Thank you just following up on <unk>.

Repositioning our share repurchases and kind of try to maintain our capital ratios at a given level.

And the NIM outlook.

So you always have this expectation that annuity.

Speaker Change: We say you asked about what could this be and we feel confident about the $1 billion billion or more comment.

Guidance.

I'm trying to think through around what's changed what's not changed.

Andrew Jamie Gregory: But in order to achieve that risk weighting, down to 20% in many cases relative to the 100% risk weighting we have today, we have to perform proper analysis and documentation in light of the regulatory capital requirements under the Simplified Supervisory Formula approach.

Can you talk about the pricing competition in your markets.

Speaker Change: Side is probably around $2 billion and so we have work to do but we do expect to complete it in the near term and we'll report back once we get farther along.

Of your peers reported yesterday talked about a significant pickup in pricing competition on deposits in the southeast markets are you seeing the same thing and just the level of visibility around mix and the deposit beta that you called out in the slide deck.

Speaker Change: Okay very good thank you very much.

Speaker Change: Thanks, John.

Ebrahim as.

Speaker Change: Thank you.

As we've talked about in the past I don't think the pricing competition is going to abate I mean everyone's in the market for liquidity and.

Speaker Change: The next question is from the line of.

Speaker Change: Abraham Pune Wala from Bank of America. Please go ahead.

Andrew Jamie Gregory: And Unfortunately, we haven't completed that effort yet, so we cannot give specific details on the impact of capital ratios. But as we said in the prepared remarks, as we show in the deck, we believe it could be meaningful. Given what we've completed to date, we think the impact could be a billion dollars or more reduction in risk-weighted assets. And the impact of capital ratios could be greater than 20. So, if we successfully complete this work and get where we are with capital, we're already at the higher end of our range.

As an industry, we traditionally use price to attract new deposits and so we haven't seen a big change. There. We also haven't seen any of the competitive data suggest that rates are going higher matter of fact, when we look at our production this quarter for new deposits, we actually declined about eight basis points and so we've kept our.

Speaker Change: Okay.

Speaker Change: Hey, good morning.

Speaker Change: Good morning Adrian.

Speaker Change: Yes. Thank you just following up on <unk>.

Speaker Change: AI and the NIM outlook.

Adrian: So you always had this expectation that annuity cuts in your guidance.

Adrian: I'm trying to think through around what's changed what's not changed.

Rates roughly the same.

And that has left us in a competitive position roughly in the same place our production was up about 12% quarter on quarter. So I wouldn't suggest to you that there is a big change in the competitive landscape I think its always very competitive and we're looking for ways to position ourselves not just with rate, but other ways to win new deposits, but haven't.

Adrian: Can you talk about the pricing competition in your markets like we had one of your peers reported yesterday talked about a significant pickup in pricing competition on deposits.

Adrian: The southeast markets are you seeing the same thing and just the level of visibility around and it makes in the peak deposit beta that you called out in the slide deck.

Andrew Jamie Gregory: And that's our intent, to stay at the higher end of our target range. And so we'll likely deploy this capital, any capital generated from this, when it's completed, to either securities repositioning or share repurchases and kind of try to maintain our capital ratios at the given level. We say, you ask about what this could be, and we feel confident about the billions, billions of dollars or more comments.

Really seen a big change in the pricing backdrop, Jamie you won't talk a lot about niv and how we think about that yes.

Adrian: Ebrahim.

Adrian: We've talked about in the past I don't think the pricing competition is going to abate I mean everyone's in the market for liquidity and as an industry. We traditionally use price to attract new deposits and so we haven't seen a big change. There. We also haven't seen any of the competitive data suggests that rates are going higher matter of fact, when we look at our.

Let me just speak to the first quarter going to the second quarter. Because this is the inflection point right. We had 17 basis points of deposit cost increase in the first quarter and obviously given our margin outlook, we expect that to abate in the second quarter. So.

Jon Glenn Arfstrom: The upside is probably around two billion dollars, and so we have work to do, but we do expect to complete it in the near term, and we'll report back once we get further along. Okay, very good. Thank you very much.

Let's kind of go through the components in the first quarter.

Adrian: Production this quarter for new deposits, we actually declined about eight basis points and so we've kept our rates roughly the same.

Driver of margin compression on the liability side with an IV declines and then increased interest bearing costs.

Operator: Thank you. The next question is from the line of Ebrahim Poonawala from Bank of America. Please go ahead. Good morning. Good morning, everyone.

Adrian: It has left us in a competitive position roughly in the same place our production was up about 12% quarter on quarter. So I wouldn't suggest to you that there is a big change in the competitive landscape I think its always very competitive and we're looking for ways to position ourselves not just with rate, but other ways to win new deposits, but haven't.

And when you think about those individually for non expiring deposits as we showed on slide five the trends there are positive and we had a.

Ebrahim Huseini Poonawala: Yes, I guess it's following up on NII and the name outlook. So you always had this expectation around no rate cuts in your guidance. So I'm trying to think through what's changed versus what's not changed. Can you talk about the pricing competition in your markets? Like we had one of your peers reported yesterday, talking about a significant pickup in pricing competition on deposits in the Southeast markets. Are you seeing the same thing? And just the level of visibility around NIP mix and the peak deposit beta that you call out in the slide deck. Thanks.

January where we saw a large amount of attrition in that portfolio, but then we saw stabilization in February and growth in March.

We expect the stabilization to continue and be given the change in trends now to be clear, we expect <unk> as a percent of total deposits to decline as we head through year end, but we think that that pressure will be much more moderate than what we saw early in the year.

Adrian: Really seen a big change in the pricing backdrop, Jamie you won't talk a lot about niv and how we think about that yes.

Andrew Jamie Gregory: Let me just speak to the first quarter going to the second quarter. Because this is the inflection point right. We had 17 basis points of deposit cost increase in the first quarter and obviously given our margin outlook, we expect that to abate in the second quarter. So let's kind of go through the components in the first quarter the driver.

Kevin S. Blair: You know, Ebrahim, as we've talked about in the past, I don't think the pricing competition is going to abate. I mean, everyone's in the market for liquidity. And as an industry, we traditionally use price to attract new deposits. And so we haven't seen a big change there. We also haven't seen any of the competitive data suggest that rates are going higher.

Year.

When you think about interest bearing deposit the pressure on the first quarter calls was driven by increases in each category of now money market and Cds. When you look at the non maturity deposits on money market deposits.

Andrew Jamie Gregory: <unk> of margin compression on the liability side with an IV declines and then increased interest bearing costs.

Andrew Jamie Gregory: And when you think about those individually for non interest bearing deposits as we showed on slide five the trends there are positive and we had a.

Average rate of money markets for US has been flat since December when you look at the now account the average rate of now accounts has been flat since January so we're seeing stability in these portfolios now time deposits do continue to creep up due to production being higher than the rolling off right.

Kevin S. Blair: Matter of fact, when we look at our production this quarter for new deposits, we actually declined about eight basis points. And so we've kept our rates roughly the same, and that has left us in a competitive position roughly in the same place.

Andrew Jamie Gregory: January where we saw a large amount of attrition in that portfolio. But then we saw stabilization in February and growth in March and we expect the stabilization to continue and be given the change in trends now to be clear, we expect <unk> as a percent of total <unk>.

And the growth in the portfolio, but what I'd say about that is when you look at the second quarter, we had $2 4 billion of maturities in time deposits and our new and renewed rate on time deposits in the first quarter was right at 254, 5%.

Kevin S. Blair: Our production was up about 12 percent quarter on quarter, so I wouldn't suggest to you that there's a big change in the competitive landscape. I think it's always very competitive, and we're looking for ways to position ourselves not just with rates but other ways to win new deposits. But I haven't really seen a big change in the pricing backdrop. Jamie, do you want to talk a little about NIB and how we think about that?

Andrew Jamie Gregory: Now that's to decline as we head through year end, but we think that that pressure will be much more moderate than what we saw early in the year. When you think about interest bearing deposit the pressure on the first quarter calls was driven by increases in each category of now money market and Cds when you look at the non maturity.

$2 4 billion maturing at four 4% and our going on new production in the first quarter for new and renewed is four 5% so very similar so thats.

Thats just going to we expect that to be reduced pressure going forward to the cost of interest bearing deposits.

Andrew Jamie Gregory: Posits on money market deposits.

Andrew Jamie Gregory: Yeah, Ibrahim, you know, let me just speak to the first quarter going into the second quarter, because this is the inflection point, right? We had 17 basis points of deposit cost increase in the first quarter. And obviously, given our margin outlook, we expect that to abate in the second quarter. So let's kind of go through the components.

Andrew Jamie Gregory: The average rate of money markets for US has been flat since December when you look at the now accounts. The average rate of now accounts has been flat since January so we're seeing stability in these portfolios now time deposits do continue to creep up due to production being higher than the rolling off right.

And so combination of all of those things on the liability side, along with the normalization of loan fees less interest reversal and the residual benefit of the first quarter head maturities gives us confidence in the second quarter margin, which is the launching point for margin expansion in the second half of the year.

Andrew Jamie Gregory: Deposits and the growth in the portfolio, but what I'd say about that is when you look at the second quarter, we had $2 $4 billion of maturities in time deposits and our new and renewed rate on time deposits in the first quarter was right at 254, 5%. So we have $2 4 billion maturing at four.

Andrew Jamie Gregory: And in the first quarter, the driver of margin compression on the liability side was NIB declines and then increased interest rates. And when you think about those individually, for non-experiencing deposits, as we showed on slide five, the trends there are positive. And we had a January where we saw a large amount of attrition in that portfolio, but then we saw stabilization in February and growth in March. And we expect the stabilization to continue in NIB given the change in trends.

That's great color. Thank you for walking through all of that.

Yes.

On credit also can be preserved.

Has your macro view changed in terms of what Youre seeing in the markets today for the <unk>.

<unk> for the UK book today versus back in Jan.

Andrew Jamie Gregory: 4%.

Andrew Jamie Gregory: And our going on new production in the first quarter for new and renewed was four 5%. So very similar so that's.

Thanks.

Putting aside some money being conservative I am trying to get a sense of are you seeing signs within the portfolio.

Andrew Jamie Gregory: That's just going to we expect that to be reduced pressure going forward to the call of interest bearing deposits.

Imply a little bit more worsening than you expected a few months ago.

Andrew Jamie Gregory: Now, to be clear, we expect NIB as a percent of total deposits to decline as we head through year end, but we think that that pressure will be much more moderate than what we saw early in the year. When you think about interest-bearing deposits, pressure on the first quarter costs was driven by increases in each category of now money market NCDs. However, when you look at the non-maturity deposits on money market deposits, the average rate of money markets for us has been flat since the beginning of the year. When you look at the now accounts, the average rate of now accounts has been flat since January.

Andrew Jamie Gregory: And so combination of all of those things on the liability side, along with the normalization of loan fees less interest reversal and the residual benefit of the first quarter hedge maturities give us confidence in the second quarter margin, which is the launching point for margin expansion in the second half of the year.

Ebrahim no no we are not in a matter of fact, when you think about general macro economy, we're actually seeing general improvement in the outlook there and you can see that in our waterfall and the change in the allowance you can see that that push towards a reduction in the allowance this quarter and as Kevin mentioned earlier the performance was.

Really the deep dive we did on multifamily now just to be clear as he mentioned, we haven't seen degradation in the quality of that portfolio, but what we have done is just increase the allowance based on.

Speaker Change: That's great color. Thank you for walking through all of that and just separately on credit also can be preserved.

Speaker Change: Has your macro view.

Speaker Change: In terms of what Youre seeing in the markets today.

Andrew Jamie Gregory: So we're seeing stability in these portfolios. Now, time deposits do continue to creep up due to production being higher than the rolling off rate of time deposits and the growth in the portfolio. But what I'd say about that is when you look at the second quarter, we had $2.4 billion of maturities in time deposits. And our new and renewed rate on time deposits in the first quarter was right at two and a half, I mean, four and a half percent.

Speaker Change: For the economy for the your credit book today versus back in Jan.

What we're seeing out there with valuation with office occupancy just just out of Prudence and so the allowance increase you see is based on that Youll see an increase in the allowance associated with CRE due to that move we've increased the allowance to loan ratio in CRE about 14 basis points in this quarter and.

Speaker Change: This is the same.

Speaker Change: Anthony.

Speaker Change: Putting aside some money being conservative I am trying to get a sense of are you seeing signs within the portfolio.

Speaker Change: Imply a little bit more worsening than you expected a few months ago.

Speaker Change: Ebrahim no no we are not in a matter of fact, when you think that the general macro economy, we're actually seeing general improvement in the outlook there and you can see that in our waterfall and the change in the allowance you can see that that push towards a reduction in the allowance this quarter and as Kevin mentioned earlier the performance was really.

But again thats indicative of the environment more than the performance of the portfolio.

Got it and just on the multifamily deep dive can be downgraded for loans anything else I mean, there's obviously a lot of chatter about supply coming on.

Andrew Jamie Gregory: So we have $2.4 billion maturing at 4.4%, and our going on new production for the first quarter for new and renewed is 4.5%, so very similar. So that's just going to, we expect that to be, reduced pressure going forward on the cost of interest-bearing deposits. And so the combination of all of those things on the liability side, along with a normalization of loan fees, less interest reversals, and the residual benefit of the first quarter hedge maturities gives us confidence in the second quarter margin, which is the launching point for margin expansion in the second half.

Next year or two im assuming you kind of work through that in the four loans that you downgraded us all you've kind of identified as having any for any signs of weakness.

Speaker Change: The deep dive we did on multifamily now just to be clear as he mentioned, we haven't seen a degradation in the quality of that portfolio, but what we have done is just increase the allowance based on.

Yeah, Hey, Ebrahim, it's Bob Thanks for the question, Yes, just as Kevin mentioned those four credits were downgraded to what we would classify as a special mentioned status just based on.

Speaker Change: What we're seeing out there with valuations with office occupancy just just out of Prudence and so the allowance increase you see is based on that Youll see an increase in the allowance associated with CRE due to that move we've increased the allowance to loan ratio in CRE about 14 basis points in this quarter.

Interest rate stress as it relates to coverage we have great sponsors there we don't see really any significant loss content more just getting making sure. We had the classification right and again it was just for multifamily loans that that.

Andrew Jamie Gregory: So, thank you for walking me through all of that. Have your macro views changed in terms of what you're seeing in the markets today for the economy, for your credit book today versus back in January, or is this reserve build essentially just putting aside some money, being conservative? I'm trying to get a sense of whether you are seeing signs within the portfolio that imply a little bit more worsening than you expected a few months ago? Ebrahim, no, no; we are not.

That moved to special mention but nothing changed in terms of our outlook for print.

Speaker Change: And so but again thats indicative of the environment more than the performance of the portfolio.

For any kind of loss content relative to multifamily we still feel like yes. There is some supply issues in pockets in certain markets, but again from our perspective is there is a lot of equity in these projects rent increases have been going strong for a few years, they're settling now and actually retracting a little bit, but there's a fair amount of.

Speaker Change: Got it and just on that multifamily deep dive could be downgraded for loans anything else I mean, there's obviously a lot of chatter about supply coming on over the next year or two im assuming you kind of walk through that in the four loans that you downgraded us all you've kind of identified as having anything any signs of weakness.

Cushion in these projects.

Andrew Jamie Gregory: In fact, when you think about the general macro economy, we're actually seeing general improvement in the outlook there. And you can see that in our waterfall and the change in the allowance, you can see that that pushes towards a reduction in the allowance this quarter. And as Kevin mentioned earlier, the performance was really the deep dive we did on multifamily.

Certainly the demand is still there relative to housing single family Hasnt constraints and Ebrahim just referenced slide 23 in the appendix, where we give you a little more detail on the entire multifamily portfolio, including the fact that 11% of it is student housing again, very low LTV performing at a very high level NPL ratios only $5.

Speaker Change: Yeah, Hey, Ebrahim, it's Bob Thanks for the question yet.

Kevin mentioned those four credits were downgraded to what we would classify as a special mentioned status just based on.

Bob: Interest rate stress as it relates to coverage we have great sponsors there we don't see really any significant loss content more just getting making sure we had the classification.

Andrew Jamie Gregory: Now, just to be clear, as he mentioned, we haven't seen any degradation in the quality of that portfolio. But what we have done is just increase the allowance based on, you know, what we're seeing out there with valuations and office occupancy, just out of prudence. And so the allowance increase you see is based on that. You'll see an increase in the allowance associated with CRE due to that move. We've increased the allowance to loan ratio and CRE by about 14 basis points in this quarter. And so, but again, that's indicative of the environment more than the performance of the portfolio. Got it. And just on that monthly family deep dive, we downgraded four loans. Anything else?

At this point so the deep dive as Bob said, we have done in other asset classes just to get that look in your question was did you find anything else. Obviously, if we had found anything else, we you've seen greater risk migration.

Bob: And again it was just for multifamily loans that.

Bob: That moved to special mention but nothing changed in terms of our outlook for free.

Bob: Or any kind of loss content relative to multifamily we still feel like yes. There is some supply issues in pockets in certain markets, but again from our perspective is there is a lot of equity in these projects rent increases have been going strong for a few years, they're settling now and actually retracting a little bit, but there is a fair amount of.

Got it thank you for taking my questions.

Thank you.

Next question is from the line of Steven Alexopoulos with Jpmorgan.

Hey, good morning, everybody.

Bob: Cushion in these projects.

Good morning.

Bob: Certainly the demand is still there relative to housing single family housing constraints and Ebrahim just referenced slide 23 in the appendix, where we give you a little more detail on the entire multifamily portfolio, including the fact that 11% of it is student housing again, very low LTV performing at a very high level NPL ratios only five basis.

I wanted to start looking at two.

2020 for outlook.

It's based on flat rates from current levels and I'm curious I know the forward curve is changing by the minute, but assuming the current one does play out and we did get two cuts or something in that range. You still think we would see this NIM expansion 10 to 15 bps.

Ebrahim Huseini Poonawala: I mean, there's obviously a lot of chatter about supply coming on over the next year or two. So I'm assuming you kind of worked through that, and the four loans that you downgraded were all you kind of identified as having any signs of weakness? Yeah, Ebrahim. It's Bob.

At this point so the deep dive as Bob said, we've done in other asset classes just to get that look in your question was did you find anything else. Obviously, we would have found anything else you would have seen greater risk migration.

In the second half of the year and are you still in this adjusted revenue growth range, if we do get those cuts.

Bob: Thanks for the question. Yeah, just as Kevin mentioned, those four credits were downgraded to what we would classify as a special mention status just based on, you know, interest rate stress as it relates to coverage. We have great sponsors there; we don't see really any significant loss content, more just making sure we had the classification right. And again, it was just for multifamily loans that that moved to special mention, but nothing changed in terms of our outlook for any kind of loss content relative to multifamily.

Yes, I mean, the simple answer to that is to your point the forward curve changes all the time, which is why we.

Speaker Change: Got it thank you for taking my questions.

Gave our guidance to flat rates why we did in January as well.

Speaker Change: Thank you.

But when we look out there what we would say is during an easing cycle. We do expect to see margin pressure, we remain relatively neutral to the front of the curve. So we do expect once deposit costs stabilize to be at a similar spot when we come out of the easing cycle as it were going going in but during the cycle we would.

Speaker Change: Thank you. The next question is from the line of Steven Alexopoulos with Jpmorgan.

Steven A. Alexopoulos: Hey, good morning, everybody.

Steven A. Alexopoulos: Good morning, I wanted to start looking at it.

Steven A. Alexopoulos: 2024 outlook slide.

Back somewhere between six and 12 basis points impact to the margin.

Steven A. Alexopoulos: It's based on flat rates from current levels and I'm curious I know the forward curve is changing by the minute, but assuming the current one does play out and we did get two cuts or something in that range. You still think we would see this NIM expansion 10 to 15 bps.

Bob: We still feel like yes, there are some supply issues in pockets in certain markets. But again, from our perspective, there's a lot of equity in these projects, rent increases have been going strong for a few years, they're settling now and actually retracting a little bit. But there's a fair amount of cushion in these projects.

But with the forward curve to your question on the full year revenue, we think that the forward curve given where it is today would be less than 1% impact on revenue for 2024.

Steven A. Alexopoulos: In the second half of the year and are you still in this adjusted revenue growth range.

Okay got it you wouldn't see that NIM expansion.

Below the low end of the range, if we do get cuts.

Steven A. Alexopoulos: Get those cuts.

Steven A. Alexopoulos: Yes, I mean, the simple answer to that is to your point the forward curve changes all the time, which is why we gave.

You are saying.

Not material.

Bob: And certainly, the demand is still there relative to housing constraints. And Ebrahim, I'll just reference slide 23 in the appendix where we give you a little more detail on the entire multifamily portfolio, including the fact that 11% of it is student housing, again, very low LTV performing at a very high level NPL ratios, only five basis points. So the deep dive is, as Bob said, we did in other asset classes, just to get that look. And your question was, did you find anything else?

Yeah.

We gave guidance for the low end of the range, but it would be less than one and.

Steven A. Alexopoulos: Our guidance to flat rates why we did in January as well, but when we look out there what we would say is during an easing cycle. We do expect to see margin pressure, we remain relatively neutral to the front of the curve. So we do expect once deposit costs stabilize to be at a similar spot when we come out of the easing cycle as it were.

And again, Steve and Thats before we were to do anything with the risk weighted asset. That's just based on the current baseline forecast.

Got it.

Okay and then on this large C&I credit that you guys called out you said.

A couple of times it was resolved.

Steven A. Alexopoulos: Going in but during the cycle, we would expect somewhere between six and 12 basis points impact to the margin.

That mean that <unk> associated with this fiscal way into Q or does it also mean that maybe youre getting recovery on that loan what is resolved.

Steven A. Alexopoulos: But with the forward curve to your question on the full year revenue, we think that the forward curve given where it is today would be less than 1% impact on revenue for 2024.

Andrew Jamie Gregory: Obviously, if we had found anything else, we would have seen greater risk migration. Thank you for taking my questions. Thank you. The next question is from the line of Stephen Alexopoulos with J.P. Morgan. Good morning, everybody. Good morning. Good morning, Steve.

Yes, David it's Bob.

Drop through bankruptcy, we took the charge off this quarter the NPL.

Obviously state into the second quarter, but it's been refinanced and resolved so yes that npls should go away.

Speaker Change: Okay got it and you wouldn't see that NIM expansion.

Speaker Change: <unk>.

Speaker Change: Low the low end of the range if we did get those thank you.

Steven A. Alexopoulos: I wanted to start. So looking at the 2024 outlook slide, it's based on flat rates from current levels. And I'm curious, I know the forward curve is changing by the minute, but assuming the current one does play out and we did get it, do you still think we would see this NIM expansion of 10 to 15 bits? Transcripts provided by Transcription Outsourcing, LLC.

We will come out got it.

Hey, thanks.

Speaker Change: So you are saying.

Kevin I had a big picture question.

Speaker Change: Not materially.

Speaker Change: People are seeing and baggage.

So luxury in your annual report, where you talk about the grow the bank mantra right the shareholder letter.

Speaker Change: Yeah.

Speaker Change: We gave guidance at the low end of the range, but it would be less than one and.

Look at this year I getaway expenses are flat because the revenue environment is pretty slow.

Speaker Change: And again, Steve and Thats before we would do anything with the risk weighted asset that's just based on the current baseline forecast.

Looking at your markets right.

Most banks would be very envious of your market.

Speaker Change: Got it okay.

Andrew Jamie Gregory: Yeah, I mean, the simple answer to that is, and to your point, the poor curve changes all the time, which is why we gave our guidance for flat rates, and why we did in January as well. But when we look out there, what we would say is, during an easing cycle, we do expect to see margin pressure. We remain relatively neutral to the front of the curve, so we do expect once deposit calls stabilize to be at a similar spot when we come out of the easing cycle, as it were, going in.

Speaker Change: Okay.

Think about this balance of investing enough to really take advantage of the growth potential in your market.

Speaker Change: On this large deal.

Speaker Change: And I credit that you guys pulled out.

Speaker Change: You said a couple of them resolved now does that mean that you gave.

Environment improves we expect.

Speaker Change: Associated with this does go away.

The pace of investments to improve does obviously your loan growth is not much different than a bank that really have a much worse footprint that you have just wondering when do we start to see.

Speaker Change: Or does it also mean that maybe youre getting recovery on that loan what is resolved.

Speaker Change: Yeah, Hey, Steve It's Bob.

Bob: It was a drop through bankruptcy, we took the charge off this quarter the NPL.

The novus deliver growth, that's really commensurate with the great markets that you're in.

Bob: Obviously state into the second quarter, but it's been refinanced and resolved so yes that npls should go away.

Yeah.

Look.

Steven.

The question that we wrestle with every day in terms of investments how much do you spend today for long term shareholder value and we are leaning in behind the scenes we're at zero.

Speaker Change: What will come out got it.

Andrew Jamie Gregory: But during the cycle, we would expect somewhere between 6 and 12 basis points of impact on the margin. But with the forward curve, to your question on the four-year revenue, we think that the forward curve, given where it is today, would have a less than 1% impact on revenue for 2020. Okay, got it. So you wouldn't see that NIM expansion, and you'd be... below the low end of the range.

Speaker Change: Okay. Thanks.

Speaker Change: Kevin I had a big picture question.

Kevin S. Blair: So luxury in your annual report, where you talk about the grow the bank mantra right the shareholder letter.

For this year, but we're still adding team members in our commercial area for our private wealth area, we're investing in technology and you've never spend enough you always want to spend a little more we take a very financial approach to how we look at investments in terms of earn back period.

Kevin S. Blair: I look at this year I getaway expenses are flat because the revenue environment is pretty slow.

But when I look at your markets right.

Kevin S. Blair: It would be very envious of your market.

Kevin S. Blair: Think about the balance of investing enough to really take advantage of the growth potential in your markets and if the environment improves we expect the pace of investments to improve because obviously your loan growth is not much different than banks that really have a much worse footprint that you have im just wondering when do we start to see.

Andrew Jamie Gregory: It would be less than 1% impact, it just depends, yeah, you know, we gave guidance to the low end of the range, but it would be less than 1%. And again, Steven, that's before we would do anything with the risk-weighted asset. That's just based on the current baseline forecast. Yep. Got it. And then on this large CNI credit that you guys pulled out, I, Unknown Executive, Manan Gosalia, Cal Evans, Andrew Gregory, Synovus Financial Corp., is resolved. Yeah, hey, Steve, it's Bob.

And whether that's adding a new resource or adding a technology, we look at how long it takes for that investment to payback.

And we continue to keep a very regimen approach to doing that but as revenue grows.

We're going to increase the level of spend we want to make sure positive operating leverage for US is less about something we're trying to do I just think it's good stewardship of first for.

Kevin S. Blair: No that's deliver growth, that's really commensurate with the great markets that you're in.

Kevin S. Blair: Yes.

For shareholders, we want to invest as much as we can as presented by the revenue growth that we have so yes as revenue improves and 25% and 26, you will see us invest more and I couldnt agree with you more we have a real opportunity in the southeast not just because of the demographic shifts, but as we've said you look at our J D power <unk>.

Kevin S. Blair: Look.

Speaker Change: Stephen It's the question that we wrestle with everyday in terms of investments how much do you spend today for long term shareholder value and we are leaning in behind the scenes we're at zero.

Bob: It was resolved through bankruptcy. We took the charge off this quarter. The NPL, you know, obviously stayed into the second quarter, but it's been refinanced and resolved. So yes, that NPL should go away. It won't come out.

Speaker Change: For this year, but we're still adding team members in our commercial area private wealth area, we're investing in technology and you'd never spend enough you always want to spend a little more we take a very financial approach to how we look at investments in terms of earn back period.

Have a look at our Greenwich survey, our clients tell us that we serve them better than our competitors and in that case, we should not only get the benefit of the growth of the southeast, but we should get higher market share growth by taking clients from our competitors. So yes, we want to continue to invest prudently, we do use revenue growth as the <unk>.

Bob: Got it. Okay, thanks. Kevin, I had a big picture question. So I love reading your annual report where you talk about this growing the bank mantra, right, the shareholder letter. And when I look at this year, I understand why expenses are flat because the revenue environment is pretty tough. But when I look at your markets, right, I mean, most banks would be very envious of your market. What do you think about this balance of investing enough to really take advantage of the growth potential in your markets, and is the environment improved? Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: And whether that's adding a new resource or adding a technology, we look at how long it takes for that investment to payback.

Speaker Change: And we continue to keep a very regimen approach to doing that but as revenue grows.

Calibrate or on how much we are willing to spend as margin starts to expand as the economy.

Speaker Change: We're going to increase the level of spend we want to make sure positive operating leverage for US is less about something we're trying to do I. Just think it's good stewardship of first for shareholders, we want to invest as much as we can as presented by the revenue growth that we have so yes as revenue improves and 25% and 26 Youll see us <unk>.

<unk> is more growth, we will spend more money and lastly, just on the loan growth side I think in our loan slide Youll see that the areas that we continue to invest and we are growing we are up 11% annualized and middle market CIB and specialty, but because we've been right sizing the balance sheet, we've been downplaying our share.

Kevin S. Blair: You know, look, Steven, it's the question that we wrestle with every day in terms of investments. It's, you know, how much do you spend today for long-term shareholder value, and we are leaning in behind the scenes, we're at zero for this year, but we're still adding team members in our commercial area, our private wealth area, we're investing in technology, and you never spend enough. You always want to spend a little more. We take a very financial approach to how we look at investments in terms of the earnback Whether that's adding a new resource or adding technology, we look at how long it takes for that investment to pay back. And we continue to keep a very regimented approach to doing that.

Speaker Change: More and I couldn't agree with you more we have a real opportunity in the southeast not just because of the demographic shifts, but as we've said you look at our J D. Power survey, you'll look at our Greenwich Survey, our clients tell us that we serve them better than our competitors and in that case, we should not only get the benefit of the growth.

National credits as well as senior housing, which has had a fairly big headwind on loan growth and we've seen some more constructive activity on CRE that allows us to see some payoff activities that we haven't seen some for some time, so as we get to a more normalized level on shared national credits in senior housing.

Speaker Change: Or the southeast, but we should get higher market share growth by taking clients from our competitors. So yes, we want to continue to invest prudently, we do use revenue growth as a calibrated on how much we're willing to spend as margin starts to expand as the economy.

And we get our pipeline start to build again on CRE. When you add in the strategic growth Youre going to see that loan growth go back to levels that are far higher than they are today and ones that I think you would point to as being higher growth.

Kevin S. Blair: But as revenue grows, we're going to increase the level of spend; we want to make sure you know, positive operating leverage for us is less about something we're trying to do. I just think it's good stewardship for shareholders that we want to invest as much as we can, as presented by the revenue growth that we have. So yes, as revenue improves in 25 and 26, you'll see us invest more. And I couldn't agree with you more; we have a real opportunity in the southeast, not just because of the demographic shifts.

Speaker Change: Provides us more growth, we'll spend more money and lastly, just on the loan growth side.

Okay perfect. Thanks for taking my questions.

Thank you Steve.

Speaker Change: And our loan slide Youll see that the areas that we continue to invest and we are growing we are up 11% annualized and middle market CIB and specialty, but because we've been right sizing the balance sheet. We've been downplaying are shared national credits as well as senior housing, which has had a fairly big headwind.

Thank you. The next question is from the line of Kathryn Miller with VW.

Thanks, Good morning.

Good morning Catherine.

Alright.

Kevin you talked last quarter about a <unk>.

Kevin S. Blair: But as we've said, you look at our JD Power survey, you look at our granite survey, our clients tell us that we serve them better than our competitors. And in that case, we should not only get the benefit of the growth of the southeast, but we should get higher market share growth by taking clients from our competitors. So yes, we want to continue to invest prudently; we do use revenue growth as a calibrator for how much we're willing to spend. As margin starts to expand, as the economy provides us with more growth, we'll spend more money.

In our growth rate from fourth quarter 2003.

Speaker Change: On loan growth and we've seen some more constructive activity on CRE that allows us to see some payoff activities that we haven't seen some for some time, so as we get to a more normalized level on shared national credits in senior housing and we get our pipeline start to build again on CRE when you add.

Fourth quarter, 24, being about 8% to 10% and as we think about your revised guidance is at the lower end of the revenue range feels like NII is inflicting that a little softer is there enough on what youre seeing in fees and expenses to still get to that 8% to 10% <unk> rate or is the.

Speaker Change: In the strategic growth Youre going to see that loan growth go back to levels that are far higher than they are today and ones that I think you would point to as being higher growth.

And rate environment.

Eating into that a little bit to where that that high single digit growth rate is really any more than a 2020.

Speaker Change: Okay perfect. Thanks for taking my questions.

Kevin S. Blair: And lastly, just on the loan growth side, I think in our loan slide, you'll see that the areas that we continue to invest in, we are growing, we are up 11% annualized on middle market CIB and specialty. But because we've been right sizing the balance sheet, we've been downplaying our shared national credits as well as senior housing, which has had a fairly big headwind on loan growth.

This decline in margin this quarter kind of delays that sort of high single digit PPR growth maybe into 'twenty five a little bit based on this forecast, but as Jamie said, we have a lot of levers. We're working on right now that would allow us to potentially increase our forecast on.

Speaker Change: Thank you Stu.

Speaker Change: Thank you. The next question is from the line of Kathryn Miller with <unk>.

Kathryn Miller: Thanks, Good morning.

On the revenue front, and we're going to keep the expenses.

Kathryn Miller: Good morning Catherine.

Kathryn Miller: Right.

They were they were forecasted originally so give us some more time as we work through this year, but to your point based on this <unk>.

Kathryn Miller: Kevin you talked last quarter about a <unk>.

Kathryn Miller: In our growth rate from fourth quarter 2003.

Seven basis point decline this quarter margin it would delay that sort of quarter over quarter increase in fourth quarter and to your point maybe into 'twenty five but we'll continue to update this forecast as we get to the conclusion of the risk weighted asset optimization program.

Kathryn Miller: Quarter 24 of being about 8% to 10% and as we think about your revised guidance kind of at the lower end of that.

Kevin S. Blair: And we've seen some more constructive activity on CRE that allows us to see some payoff activities that we haven't seen for some time. So as we get to a more normalized level on shared national credits and senior housing, and we get our pipeline start to build again on CRE, when you add in the strategic growth, you're going to see that loan growth go back to levels that are far higher than they are today and ones that I think you would point to as being higher growth. Thanks for taking my questions.

Kathryn Miller: Revenue range feels like NII is inflicting but a little softer is there enough on what youre seeing in fees and expenses to still get to that 8% to 10% <unk> rate or is the NAND and rate environment eating into that a little bit to where that that high single digit growth rate is really going to be more into 2020.

Okay. That's helpful and makes sense and then as we think about.

Thank you and our higher for longer.

Environment, you've given great disclosure and discussion Jamie.

Kathryn Miller: Yeah.

Difference in the margin.

Kathryn Miller: This decline in margin this quarter kind of delays that sort of high single digit PNR growth maybe into 'twenty five a little bit based on this forecast, but as Jamie said, we have a lot of levers. We're working on right now that would allow us to potentially increase our forecast.

Once we start to see rate cut.

Steven A. Alexopoulos: Thank you. The next question is from the line of Katherine Miller with KPW. Thanks. Good morning.

The 12 basis points that you talked about.

About what gross how growth changes when we start to get your guide is nearing history without cuts, but is it fair to say that when we start to get cut that that growth could actually start to accelerate.

Unknown Executive: Morning, Kevin. You talked last quarter about a PPNR growth rate of about 8 to 10% from fourth quarter 23 to fourth quarter 24. And as we think about your revised guidance, kind of to the lower end of the revenue range, feels like NII is inflecting, but a little softer. Is there enough in what you're seeing in fees and expenses to still get to that 8 to 10% PPNR rate? Or is the NIM and rate environment eating into that a little bit to where that high single-digit growth rate is really going to be more of a 2025 reality?

Kathryn Miller: On the revenue front, and we're going to keep the expenses.

And then if we kind of highest for longer we stay at the low end of that growth range, just kind of curious about the dynamic between growth and margin.

Kathryn Miller: They were they were forecasted originally so give us some more time as we work through this year, but to your point based on this <unk>.

In the rate environment.

We do believe that.

Easing would be stimulated growth.

On the loan book, we also believe.

Kevin S. Blair: You know, this decline in margin this quarter kind of delays that sort of high single-digit PPNR growth, maybe into the low-25s a little bit based on this forecast. But as Jamie said, we have a lot of levers we're working on right now that would allow us to potentially increase our forecast on the revenue front. And we're going to keep the expenses where they were forecasted originally. So give us some more time as we work through this year. But to your point, based on this seven basis point decline in this quarter's margin, it would delay that sort of quarter over quarter increase in the fourth quarter. And, to your point, maybe into 25.

When we look at our client profile on.

Our marginal rate cut or a margin rate hike.

Kathryn Miller: Okay. That's helpful and makes sense and then as we think about you and are higher for longer.

Does not have it does not have a tremendous impact on the credit outlook of our clients like when we look at that.

Kathryn Miller: Environment.

The credit impact of easy and tightening we.

Speaker Change: You've given great disclosure and discussion Jamie.

Speaker Change: Is it different than the margin.

We think that our kind of our <unk> disclosures are a good indication of the rate impact there and the only 30% of those have any sort of rate component to the modification and so we don't think theres, a big credit impact, but theres also an easing environment. There are positives that are to fee revenue and so we believe that it will.

Speaker Change: Once we start to see rate cut.

Speaker Change: At 12 basis points that you talk about <unk>.

Speaker Change: About what growth how growth changes when we start to get caught your guide is the euro history without cut but is it fair to say that when we start to get cut that that growth could actually start to accelerate.

Unknown Executive: But, you know, we'll continue to update this forecast as we get to the conclusion of the risk-weighted asset optimization program. That's helpful. It makes sense.

Be a net positive to your point on the loan side to loan production, but also to capital market fees to mortgage fees core banking fees and so there when you look across the income statement. We think it would be positive to loan growth. We think it could ease deposit mix pressures and we think it would be positive to fee revenue.

Speaker Change: And then if we can hire for longer we stay at the low end of that growth range, just kind of curious about the dynamic between growth and margin.

Andrew Jamie Gregory: And then as we think about weighing you in a hire for longer environment, you've given great disclosure and discussion, Jamie, about the difference in the margin. You know, once we start to see rate cuts, those six to 12 basis points that you talk about, I think about how gross changes when we start to get cuts. Your guide is zero to three without cuts, but is it fair to say that when we start to get cuts, that gross could actually start to accelerate? And then if we were kind of higher for longer, would we stay at the low end of that growth rate?

Speaker Change: In the rate environment.

Speaker Change: We do believe that.

Speaker Change: Easing would be stimulative growth on the on the loan book, We also believe.

Okay.

When we look at our client profile.

Yes, I think we focus so much signs of some margin rate and the higher for longer versus <unk> rate cut it feels like there is enough about the <unk> rollout and Thats really why youre kind of thinking about only less than 1% change.

Speaker Change: Marginal rate cut or a marginal rate hike.

Speaker Change: It does not have it does not have a tremendous impact on the credit outlook of our clients like when we look at.

Speaker Change: The credit impact of easing and tightening.

Yes.

If we can touch on the top half of the year long before tariffs.

Speaker Change: We think that our kind of our <unk> disclosures are a good indication of the rate impact there and the only 30% of those have any sort of rate component to the modification and so we don't think theres a big credit impact, but there is also in an easing environment. There are positives that are to fee revenue and so we believe that it.

That's right.

Unknown Executive: Just kind of curious about the dynamic between growth and margin in the rate environment. We do believe that easing would be stimulative growth on the loan book. When we look at our client profiles, a marginal rate cut or a marginal rate hike does not have, you know, it does not have a tremendous impact on the credit outlook of our clients.

Alright, great very helpful. Thank you.

Thank you.

Next question is from the line.

Gary Tenner with D. A davidson.

Hi, Thanks, Good morning, a couple.

Speaker Change: You'll be a net positive to your point on the loan side to loan production, but also to capital market fees to mortgage fees core banking fees and so there when you look across the income statement. We think it would be positive to loan growth. We think it could ease deposit mix pressures and we think it would be positive to fee revenue.

A question on credit just that.

Good morning, just that large C&I credit that you called out a few times could you be any more specific in terms of kind of industry and maybe the.

Andrew Jamie Gregory: Like, when we look at the credit impact of easing and tightening, we think that our, kind of, FDM disclosures are a good indication of the rate impact there, and only 30% of those have any sort of rate component to the modification. And so we don't think there's a big credit impact, but there's also, in an easing environment, there are positives that are to fee revenue. And so we believe that it'll be a net positive, to your point on the loan side, loan production, but also to capital market fees, mortgage fees, and core banking fees.

The issues surrounding that particular credit was.

Longer.

Term struggling company or maybe just some color behind that.

So I think we focus so much on just the margin right and in the higher for longer versus environmentally E rate cut it feels like there is enough without that you lay out and Thats really why youre kind of thinking about only less than 1% change in <unk>.

Yeah, Gary it's Bob Thanks for the question, it's an aviation credit South Florida bankruptcy.

Working through we were a senior lender with another lender involved in subordinated debt behind us work through the bankruptcy as a going concern sale.

Speaker Change: If we start to get tucked in the back half of the year long before tariffs.

Option.

Speaker Change: That's right.

It didn't materialize as well as we thought it would we increased reserves on the credit we actually had the credit fairly well reserved and when we took the charge off it was pretty much equal to the reserve amount. So.

Yes.

Speaker Change: Great very helpful. Thank you.

Speaker Change: Thank you.

Andrew Jamie Gregory: And so there are, you know, when you look across the income statement, we think it'd be positive for loan growth, we think it could ease deposit mix pressures, and we think it would be positive for fee revenue. That makes sense.

We think we managed it the right way it was from our perspective. It had had good equity in it but for a number of specific factors that really won't get into in the bankruptcy, but nonetheless, the best option was to get it refinanced or sold through an asset sale thats exactly what happened.

Speaker Change: Next question is from the line.

Speaker Change: Gary Tenner with D. A davidson.

Gary Tenner: Hi, Thanks, good morning a.

Gary Tenner: A couple of question good morning on credit just.

Gary Tenner: Good morning, just a large C&I credit that you called out a few times could you be any more specific in terms of kind of industry and maybe the.

Unknown Executive: So it's, you know, I think we focus so much on just the margin right in the higher for longer versus environment where we see rate cuts, but it feels like there's enough with all the way out. And that's really why you're kind of thinking about only a less than 1% change in NII if we start to get cuts in the back half of the year along the forward curve. That's right.

We ended up taking a charge and getting it resolved so.

Does that help.

Yes, It does I appreciate it and then.

Gary Tenner: The issues surrounding that particular credit was.

Just in terms of the expectation Jamie for a flat NIM in the second quarter.

Gary Tenner: Longer.

Gary Tenner: Term struggling company or maybe just some color on that.

Given the commentary about the trends in the first quarter I think the cost of total deposits at March was essentially flat for the quarter.

Gary Tenner: Yeah, Hey, Gary it's Bob Thanks for the question, it's an aviation credit South, Florida sort of bankruptcy working through we were a senior lender with another lender involved in subordinated debt behind us work through the bankruptcy as a going concern sale that option.

<unk>.

Pricing on now accounts and money market has been pretty flat so other than some additional mixed potentially in a small amount of upward.

Unknown Executive: All right. Great. Very helpful. Thank you. Thank you. The next question is from the line of Gary Turner with DA Data Center. Thanks, good morning.

Gary Turner: A couple of questions on credit just that morning, just that large CNI credit that you called out a few times. Could you be a little more specific in terms of kind of, you know, industry and maybe the issues surrounding that particular credit were, you know, a longer, Transcribed by https://otter.ai Yeah, Gary, it's Bob. Thanks for the question. It's an aviation credit, South Florida bankruptcy.

Didn't materialize as well as we thought it would we increased reserves on the credit we actually had the credit fairly well reserved and when we took the charge off it was pretty much equal to the reserve amount. So.

On CV based on the kind of repricing.

Are those.

Feels like the flattened and even a little bit conservative am I missing something.

Gary Tenner: We think we managed it the right way it was.

As im interpreting your comments on the net.

Gary Tenner: From our perspective, it had had good equity in it but for a number of specific factors that really won't get into in the bankruptcy, but nonetheless, the best option was to get it refinanced and sold through an asset sale that's exactly what happened.

Your comments on the deposit side and the funding costs are spot on in that.

Bob: Working through We were a co-senior lender with another lender involved in subordinated debt behind us, you know, working through the bankruptcy as a going concern sale that, you know, option, didn't materialize as well as we thought it would. We increased reserves on the credit. We actually had the credit fairly well-reserved, and when we took the charge off, it was pretty much equal to the reserve amount. So we think we managed it the right way.

Thats, what we see is we see a little bit of pressure due to niv declines ongoing now.

And we ended up taking a charge in getting it resolved.

Gary Tenner: Does that help.

We haven't seen anything in April.

Speaker Change: Yes, It does I appreciate it and then.

They would turn us from that impact aprils been constructive to date.

Speaker Change: In terms of the expectation Jamie for a flat NIM in the second quarter.

Expect to see a little bit of pressure on time deposits, but as I mentioned the maturities are at a similar rate as our new and renewed production rate.

Andrew Jamie Gregory: Given the commentary about the trends in the first quarter I think the cost of total deposits at March was essentially flat for the quarter and.

Those that's where we are on the deposit side and we do expect to see stability as I said on the non maturity interest bearing deposits.

Bob: It was, you know, from our perspective, it had good equity in it, but for a number of specific factors that I really won't get into in the bankruptcy, but nonetheless, the best option was to get it refinanced and sold as an asset sale. That's exactly what happened.

Andrew Jamie Gregory: And you flag.

Andrew Jamie Gregory: Pricing on now accounts and money market has been pretty flat so other than some additional.

And then when you look at the first quarter margin. It was also impacted by loan fees being lower than typical is impacted by interest reversals and we think that those are.

Andrew Jamie Gregory: <unk> potentially in a small amount of upward.

Andrew Jamie Gregory: Bush on CD based on the kind of repricing.

Gary Turner: And, you know, we ended. Does that help? Yeah, it does. And then just in terms of the expectation, Jamie, for, you know, a flat NIM in the second quarter, given the commentary about the trends in the first quarter, I think the cost of deposits in March was essentially flat to the quarter, you know, and you flag, you know, Pricing on now accounts and money market's been pretty flat.

Andrew Jamie Gregory: Are those.

Andrew Jamie Gregory: Feels like the flattening.

More of a first quarter event and will not be continued and so there are tailwind there to the margin but for now.

Speaker Change: There's a little bit conservative and I am I missing something.

As im interpreting your comments.

Our guidance is for flat in the second quarter, but those are the individual components as we see them.

Speaker Change: Your comments on the deposit side and the funding costs are spot on and that's that.

Thank you.

Speaker Change: That's what we see is we see a little bit of pressure due to niv declined ongoing now.

Thank you.

Next question.

From the line of Jared Shaw with Barclays.

Speaker Change: We haven't seen anything in April.

Okay.

They would turn us from that impact aprils been constructive to date.

Gary Turner: So other than some additional, you know, mixed potentially in a small amount of upward push on CD based on the kind of repricing of those I feel like the flattening, [inaudible] Your comments on the deposit side and the funding calls are spot on, and that's what we see. We see a little bit of pressure due to NIB declines ongoing. Now, you know, we haven't seen anything in April that would turn us from that.

Hey, good morning, everybody.

Good morning.

Speaker Change: We would expect to see a little bit of pressure on time deposits, but as I mentioned the maturities are at a similar rate as our new and renewed production rate.

Maybe just following up on on the question, Steve was asking about the the market. When you when you strip out some of the noise from portfolios that Youre exiting would you say youre being successful in attracting new to the bank customers right now.

Speaker Change: So those that's where we are on the deposit side and we do expect to see stability of that that on the non maturity interest bearing deposits.

Or is most of that.

Core growth coming from existing customers and can you comment I guess, a little bit on the competitive market with maybe some of the bigger peers are they.

Speaker Change: And then when you look at the first quarter margin. It was also impacted by loan fees being lower than typical is impacted by interest reversals and we think that those are.

Andrew Jamie Gregory: In fact, April's been constructive to date. We would expect to see a little bit of pressure on time deposits, but as I mentioned, the maturities are at a similar rate to our new and renewed production rate. So that's where we are on the deposit side, and we do expect to see stability, as I said, on the non-maturity interest bearing deposits. And then, when you look at the first quarter margin, it was also impacted by loan fees being lower than typical, and it was impacted by interest reversals, and we think that those are more of a first quarter event and will not be continued, and so there are tailwinds there to Thank you. Thank you. The next question is from the line of Jared Shaw with Barclays. Hey, good morning, everybody.

<unk>.

Are they still losing customers overall or do you feel like there maybe doing a little better job or recently retaining.

Speaker Change: More of a first quarter event and will not be continued and so there are tailwind there to the margin but for now.

Those commercial customers.

Yes, absolutely not only winning customers, we start with winning talent and so you look at those areas that we highlighted strategic growth initiatives middle market over the last three years, we've increased our bankers by roughly 50% and those bankers are continuing to win new business business from the Institute.

Speaker Change: Our guidance is for flat in the second quarter, but those are the individual components as we see them.

Speaker Change: Thank you.

Speaker Change: Next question is.

They've come from as well as just prospecting efforts and so the growth in middle market. Both on the loan and deposit side is coming from that new talent and from new clients on the CIB front. We have 24 ftes were up right around $725 million in loan Outstandings, another $50 million of growth this quarter.

Speaker Change: From the line of Jared Shaw with Barclays.

Speaker Change: Okay.

Jared David Wesley Shaw: Hey, good morning, everybody.

Good morning.

Jared David Wesley Shaw: Maybe just following up on on the question, Steve was asking about the market. When you when you strip out some of the noise from portfolios that you're exiting.

Six new clients, we've onboard at this year, and so thats coming from brand new relationships and expanding existing relationships, our specialty lending area, both for our lender finance as well as our restaurant services again, new clients expanding existing relationships. So in every situation not only winning.

Jared David Wesley Shaw: So youre being successful in attracting new to the bank customers right now.

Jared David Wesley Shaw: Or is most of that.

Jared David Wesley Shaw: Core growth coming from existing customers and can you comment I guess, a little bit on on the competitive market with maybe some of the bigger peers are they.

Jared David Wesley Shaw: Good morning. Good morning. Maybe just following up on the question Steve was asking about the market, you know, when you strip out some of the noise from portfolios that you're exiting, would you say you're being successful in attracting new customers right now, or is most of that Core Growth coming from existing customers? And can you comment, I guess, a little bit on the competitive market with maybe some of the bigger peers? Are they... Are they still losing customers overall, or do you feel like they're maybe doing a little better job more recently of retaining those commercial customers? Yeah, absolutely. Not only winning customers, but we start with winning talent.

Jared David Wesley Shaw: Are they still losing customers overall or do you feel like there maybe doing a little better job or recently retaining.

Talent, we are winning.

The competitive.

Or of taking clients from other folks so that that's the game as I said earlier, we have a great marketplace, but if you think rising tides raise all boats. Then you are missing an opportunity we want to get more than our fair share of growth and we're doing that in those areas.

Jared David Wesley Shaw: Those commercial customers.

Speaker Change: Yes, absolutely not only winning customers, we start with winning talent.

Speaker Change: So you look at those areas that we highlighted strategic growth initiatives, you know middle market over the last three years, we've increased our bankers by roughly 50% and those bankers are continuing to win new business business from the institutions they've come from as well as just prospecting efforts and so the growth in middle market both on the loan.

Offsetting that are areas that we're running down credit and that doesn't mean that we're losing clients in many situations, where just de emphasizing growth in those areas and letting certain loans to pay off and pay down. So we are super excited the competitive landscape with the big banks to your point, there's always opportunities anytime there is a merger there continues to be.

Kevin S. Blair: And so you look at those areas that we highlight as strategic growth initiatives, you know, the middle market. Over the last three years, we've increased our bankers by roughly 50%, and those bankers are continuing to win new business, business from the institutions they've come from, as well as just prospecting efforts. And so the growth in the middle market, both on the loan and deposit sides, is coming from that new talent and from new clients.

Speaker Change: On the deposit side is coming from that new talent and from new clients on the CIB front. We have 24 ftes were up right around $725 million in loan Outstandings, another $50 million of growth this quarter.

Some personnel changes that occur, which allow us to go out and get more talent in these marketplaces, we've been adding it in all of our metro markets and really across all of our.

Speaker Change: Six new clients, we've on boarded this year and so thats coming from brand new relationships and expanding existing relationships, our specialty lending area, both for our lender finance as well as our restaurant services again, new clients expanding existing relationships. So in every situation not only winning talent we are.

Our footprint and look you go back to the FDIC data last year to talk about this we grew market share in the state of Georgia by 100 basis points in the MSA of Atlanta, 150 basis points and so for me. That's the real message is we've got to get talent, we've got to grow at a pace that meet.

Kevin S. Blair: On the CIB front, we have 24 FTEs, we're up to right around $725 million in loan outstandings, another $50 million of growth this quarter, six new clients we've onboarded this year, and so that's coming from both brand new relationships and expanding existing relationships. Our specialty lending area, both for our lender finance as well as our restaurant services, again, new clients, expanding existing relationships. So in every situation, not only are we winning talent, but we are winning the competitive war of taking clients from other folks. So that's the game.

Speaker Change: Winning the.

Speaker Change: Competitive war of taking clients from other folks so that that's the game as I said earlier, we have a great marketplace, but if you think rising tides raise all boats, then youre missing an opportunity we want to get more than our fair share of growth and we're doing that in those areas offsetting that are areas that we're running down credit.

Our shareholders' expectations, but most importantly, we've got to take share from our competitors.

Okay, that's great color. Thanks.

And then maybe shifting just a little bit im looking at slides 22, and 'twenty three and looking at the maturity schedules of office and multifamily over the next two years, what's the what's the expectation with with with those maturities.

Speaker Change: And that doesn't mean that we're losing clients in many situations. We're just.

Kevin S. Blair: As I said earlier, we have a great marketplace, but if you think rising tides raise all boats, then you're missing an opportunity. So we are super excited. The competitive landscape with the big banks, to your point, there's always opportunities. Anytime there's a merger, there continues to be some personnel changes that occur, which allows us to go out and get more talent in these marketplaces. We've been adding it to all of our metro markets and really across all of our businesses.

Speaker Change: Emphasizing growth in those areas and letting certain loans to pay off and pay down. So we are super excited the competitive landscape with the big banks to your point.

Is your appetite to try to retain those if possible or what's the.

Speaker Change: There is always opportunities anytime there's a merger there continues to be some personnel changes that occur which allow us to go out and get more talent in these marketplaces, we've been adding it in all of our metro markets and really across all of our.

I guess health of those loans being able to be <unk>.

Taken out somewhere else away from the bank.

Yeah, Hey, Bob just to start on that and Jamie can touch on it as well but.

Certainly our first and foremost priority is to work with our clients.

Kevin S. Blair: Footprint, and look you go back to the FDIC data last year to talk about this. You know, we grew market share in the state of Georgia by a hundred basis points, and the MSA of Atlanta, by 150 basis points. And so for me, that's the real message: we've got to get talent.

Speaker Change: Our footprint and look you go back to the FDIC data last year to talk about this we grew market share in the state of Georgia by 100 basis points in the MSA of Atlanta, 150 basis points and so for me. That's the real message is we've got to get talent, we've got to grow at a pace that meets our.

Again to Kevin's point is that if it is a relationship clients. Some of it we are doing business with in the loan matures and we're going to work to retaining that client. That's our first priority now because the non relationship transactional piece of business and we don't have that much of that but we do have some as Kevin mentioned in his <unk>.

Kevin S. Blair: We've got to grow at a pace that meets our shareholders' expectations. But most importantly, we've got to take share from our competitors. Okay, that's a great color.

Speaker Change: Our shareholders' expectations, but most importantly, we've got to take share from our competitors.

Comments around Remixing, the balance sheet a little bit.

We may we may choose to exit or get that refinance but it really comes down to client selection. We think we've got good clients that can move through these maturities we've certainly done.

Speaker Change: Okay, that's great color. Thanks.

Jared David Wesley Shaw: Thanks. And maybe I'm going to shift just a little bit, you know. I'm looking at slides 22 and 23 and looking at the maturity schedules of office and multifamily over the next two years. What's the expectation with those maturities? Is your appetite to try to retain those if possible? Or what's the, I guess health of those loans being able to be taken out somewhere else away from the bank? Yeah, hey, Jared, it's Bob.

Speaker Change: And then maybe shifting just a little bit im looking at slides 22, and 'twenty three and looking at the maturity schedules of office and multifamily over the next two years, what's the what's the expectation with with with those maturities.

A lot of analysis on what does the rate environment look like and what the capital markets look like relative to maturities stress testing cap rates et cetera.

Is it just your appetite to try to retain those if possible or what's the.

So we feel okay about our ability to move through our maturity schedule.

What I would consider to be significant credit event now, though there'll always be some stress there, but we feel good about it particularly as it relates to multifamily.

Speaker Change: I guess health of those loans being able to be.

Speaker Change: Taken out somewhere else away from the bank.

Bob: Yeah, Hey, Jared as Bob just to start on that and Jamie can touch on it as well but.

Bob: Just to start on that, and Jamie can touch on it as well, but, you know, certainly our first and foremost priority is to work with our clients. And, you know, again, to Kevin's point, if it is a relationship client, somebody that we're doing business with, and the loan matures, we're going to work to retain that client. And that's our first priority.

<unk>, maybe to your point will be a little more stressed relative to valuations because thats kind of where we are in the cycle, but from our perspective, we have.

Certainly our first and foremost priority is to work with our clients.

Speaker Change: Again to Kevin's point is that if it is a relationship client somebody that we are doing business with in the loan matures and we're going to work to retain that client. That's our first priority because it's a non relationship transactional piece of business and we don't have that much of that but we do have some as Kevin mentioned in his comments around remixing the balance sheet of <unk>.

A little over 10% of our office book is currently rated and that book has been analyzed enormously.

And we're sitting at around 10% and Thats relatively stable to last quarter.

Bob: Now, if it's a non-relationship, transactional piece of business, and we don't have that much of that, but we do have some, as Kevin mentioned. Comments around remixing the balance sheet a little bit, we may choose to exit or get that refinanced. But it really comes down to client selection.

Six loans in their make up a majority of that number so.

I mean that we can kind of work through those six and we don't backfill, we can kind of get through the office maturity wall as well. So we're feeling pretty confident about our ability to manage through it and Bob the only thing I'd add to that is that when you think about each asset class are a little different but on the 35% of our multifamily is in construction. So when those are completed.

Speaker Change: Little bit.

Speaker Change: We may we may choose to exit or get that refinanced, but it really comes down to client selection. We think we've got good clients that can move through these maturities, we've certainly done it.

Bob: We think we've got good clients that can move through these maturities. We've certainly done a lot of analysis on what the rate environment looks like and what the capital markets look like relative to maturities, stress testing, cap rates, etc. We feel okay about our ability to move through our maturity schedule without what I would consider to be significant credit events. Now, there will always be some stress there, but we feel good about it, particularly as it relates to multifamily office, which, to your point, will probably be a little more stressed relative to valuations because that's kind of where we are in the cycle. But from our perspective, we have a little over 10% of our office book is currently rated, and that book has been analyzed enormously.

Speaker Change: A lot of analysis on what does the rate environment look like and what the capital markets look like relative to the maturities stress testing cap rates et cetera. So.

They will go on to permanent financing, we're not generally a long term permanent financing for those and so there'll be a kind of a natural churn in what we've seen in the last two quarters is a fairly healthy level of payoff and paydown activity both from a sales as well as just refinancing through some of the agencies and so I think the important part is to Bob's point, we're going to.

Speaker Change: So we feel okay about our ability to move through our maturity schedule without what I would consider to be significant credit event now, though there'll always be some stress there, but we feel good about it particularly as it relates to multifamily office, maybe to your point will be a little more stressed relative to valuations because thats.

Keep the clients, we want to keep in those asset classes that we want to continue to lend into those that will go into more permanent financing. The markets are opening up and it's going to be a much more constructive environment and then we'll be able to backfill those with new construction projects and new CRE developments behind that.

Speaker Change: Kind of where we are in the cycle, but from our perspective, we have.

Speaker Change: Little over 10% of our office book is currently rated and that book has been analyzed enormously.

Bob: And we're sitting at around 10%, and that's relatively stable compared to last quarter, and six loans in there make up a majority of that number. So assuming that we can kind of work through those six and we don't backfill, we can kind of get through the office maturity wall as well. So we're feeling pretty confident about our ability to manage through it.

Speaker Change: And we're sitting at around 10% and Thats relatively stable to last quarter.

Alright, Thanks, a lot.

Thank you the next question.

Speaker Change: Six loans in their make up a majority of that number so.

Is from the line of Michael Rose with Raymond James.

Speaker Change: That we can kind of work through those six and we don't backfill, we can kind of get through the office maturity wall as well. So we're feeling pretty confident about our ability to manage through it and about the only thing I'd add to that is that when you think about each asset class are a little different but almost 35% of our multifamily is in construction. So when those are completed.

Hey, good morning, everyone. Thanks for taking my questions.

Jamie I was just hopeful that on slide 16, you can give us some color around your beta assumptions on the way down and maybe how you arrived at some of those that'd be helpful. Thanks.

Andrew Jamie Gregory: And Bob, the only thing I'd add to that is that when you think about each asset class, they're a little different, but almost 35% of our multifamily is in construction. So when those are completed, they'll go on to permanent financing. We're not generally a long-term, permanent financer for those, and so there will be kind of a natural churn. And what we've seen in the last two quarters is a fairly healthy level of payoff and paydown activities, both from sales as well as just refinancing through some of the agencies.

Yes, Michael as we think about beta is actually pretty similar to what we discussed a.

Speaker Change: They'll go into permanent financing, we're not generally a long term permanent financer for those and so there'll be a kind of a natural churn in what we've seen in the last two quarters is a fairly healthy level of payoff and paydown activities, both from sales as well as just refinancing through some of the agencies and so I think the important part is to Bob's point, we are going.

A few months ago.

When you look at our portfolio and this is why we included that slide really give some clarity at a high level of how do we think about repricing deposits in an easing environment and so you have obviously you have a portion of the portfolio that noninterest bearing then you have a portion of the portfolio.

Speaker Change: Keep the clients, we want to keep in those asset classes that we want to continue to lend into those that will go into more permanent financing. The markets are opening up and it's going to be a much more constructive environment and then we'll be able to backfill those with new construction projects and new CRE developments behind that.

Andrew Jamie Gregory: And so I think the important part is, to Bob's point, we're going to keep the clients we want to keep and those asset classes that we want to continue to lend into. Those that will go into more permanent financing, the markets are opening up, and it's going to be a much more constructive environment. And then we'll be able to backfill those with new construction projects and new CRE developments behind them. Great, thanks a lot.

Really high beta.

It's a little more systematic and those are time and brokered.

We do expect to see those.

Brokered deposits will reprice.

Speaker Change: Alright, Thanks, a lot.

At a very high beta thing with time time will just and then on the maturities, but then you get into the half of the portfolio have the deposit book that is either standard and low beta or <unk>.

Speaker Change: Thank you the next question.

Is from the line of Michael Rose with Raymond James.

Michael Edward Rose: Hey, good morning, everyone. Thanks for taking my questions.

High beta until the standard and lower beta is around 30% of the portfolio.

Michael Edward Rose: Jamie I was just hopeful that on slide 16, you can give us some color around your beta assumptions on the way down and maybe how you arrived at some of those that'd be helpful. Thanks.

Jared David Wesley Shaw: Thank you. The next question is from the line of Michael Rose with Raymond. Hey, good morning, everyone.

Those are easier to reprice, because theyre largely standard rate, but their rates didn't go up as much in a tightening cycle. So we don't expect them to go down as much in the easing cycle Thats why we have the lower beta there and then on the exceptions and a higher beta at 20% of the deposit book.

Andrew Jamie Gregory: Yes, Michael as we think about betas is actually pretty similar to what we discussed a few months ago.

Michael Edward Rose: Thanks for taking my questions. Jamie was just hoping that on slide 16, you could give us some color around your beta assumptions on the way down and maybe how you arrived at some of those. That'd be helpful.

Andrew Jamie Gregory: When you look at our portfolio and then this is why we included that slide really give some clarity at a high level of how do we think about repricing deposits in an easing environment and so you have obviously you have a portion of the portfolio that noninterest bearing.

Those we do expect to see.

Decline at a higher beta you can see our assumptions on the slide.

Andrew Jamie Gregory: Yeah, Michael, as we think about betas, it's actually pretty similar to what we discussed a few months ago, and this is why we included that slide, really giving some clarity at a high level of how we think about repricing deposits in an easing environment. And so you have, obviously, a portion of the portfolio that's non-interest bearing, then you have a portion of the portfolio that's really high beta, and it's a little more systematic. And, you know, those are time and negotiated.

But those will take those take conversations in some part that will likely be a little bit slower to reprice now we have plans for all of this though.

Andrew Jamie Gregory: Then you have a portion of the portfolio that really high beta.

Andrew Jamie Gregory: It's a little more systematic and those are time and brokered.

The timing is really up to us it depends on the environment and growing.

Andrew Jamie Gregory: We do expect to see those.

The competitive landscape there are a lot of different factors that will go into it but.

Andrew Jamie Gregory: Brokered deposits will reprice.

Andrew Jamie Gregory: At a very high beta thing with time time will just be and then on the maturities, but then you get into the half of the portfolio have the deposit book that is either standard and low beta or <unk>.

And that's how we haven't set up we're ready to go.

Even though it looks like the timing of it continues to get delayed.

Very helpful. And then maybe just as a follow up from a kind of a regulatory.

Andrew Jamie Gregory: High beta and so the standard and lower beta is around 30% of the portfolio.

Aspect, but I think there is some fear that some of the bigger bank rules.

Andrew Jamie Gregory: We do expect to see those, you know, brokered deposits reprice at a very high beta, same with time; time will just depend on the maturities. But then you get into the half of the portfolio, half the deposit book, that is either standard and low beta or, you know, high beta. And so the standard and lower beta is around 30% of the portfolio; those are easier to reprice because they're largely standard rates, but their rates didn't go up as much in a tightening cycle.

Or what happened with them and what <unk> could get pushed down to bank sub $100 billion can you just kind of talk.

Andrew Jamie Gregory: Those are easier to reprice, because theyre largely standard rate, but their rates didn't go up as much in a tightening cycle. So we don't expect them to go down as much in the easing cycle Thats why we have the lower beta there and then on the exceptions and the higher beta 20% of the deposit book.

Talk about what the CET, one ratio kind of looks like when including kind of the OCI impact similar to what some larger banks are contemplating at this point. Thanks.

Yes.

On the capital side, when we look at that.

Andrew Jamie Gregory: Those we do expect to see.

Our CET one inclusive of OCI is eight 2%.

Andrew Jamie Gregory: Decline at a higher beta you can see our assumptions on the slide.

And.

Andrew Jamie Gregory: So we don't expect them to go down as much in the easing cycle. That's why we have the lower beta there. And then on the exceptions, higher beta, 20% of the deposit book, those we do expect to see decline at a higher beta, you can see our assumptions on the slide. But those will take, you know, those take conversations in some part, they'll likely be a little bit slower to reprice. Now, we have plans for all of this.

Andrew Jamie Gregory: But those will take those take conversations in some part that will likely be a little bit slower to reprice now we have plans for all of this so.

We feel fine about that as we look at our capital ratios, including OCI, We think Theyre manageable, we think the OCI accretion will happen over time.

Andrew Jamie Gregory: The timing is really up to us it depends on the environment depends on.

We believe about 30% of the OCI will creep back in.

By the end of next year.

Andrew Jamie Gregory: The competitive landscape there are a lot of different factors that will go into it but.

So that that's where we currently stand and.

Andrew Jamie Gregory: That's how we haven't set up we're ready to go.

On capital ratios, we mentioned this risk weighted asset work.

Andrew Jamie Gregory: So, you know, the timing is really up to us; it depends on the environment, it depends on the competitive landscape. There are a lot of different factors that will go into it. But that's how we have it set up; we're ready to go, even though it looks like the timing of it continues to get delayed. Very helpful.

Andrew Jamie Gregory: Even though it looks like the timing of it continues to get delayed.

That is expected to improve capital ratios.

Speaker Change: Very helpful. And then maybe just as a follow up from a kind of a regulatory aspect.

It's interesting we haven't determined exactly what we would do when we get to the finish line on that but it's an interesting question when you're taking the context of <unk> inclusive of Aoc highlight the cat four banks.

Speaker Change: Aspect I think there is some fear that some of the bigger bank rules.

Speaker Change: After what happened with them and what <unk> could get pushed down to bank sub $100 million can you just kind of talk about what the CET, one ratio and it looks like when including the OCI impact similar to what some of the larger banks are contemplating at this point. Thanks.

Andrew Jamie Gregory: And then maybe just as a follow-up from a kind of regulatory, you know, aspect, I think there's some fear that, you know, some of the bigger bank rules after what happened with NYCB could get pushed down to banks under $100 billion. Can you just kind of talk about what the CET1 ratio kind of looks like when including kind of the AOCI impacts, similar to what some of the larger banks are kind of contemplating at this point? Thanks. Yeah, you know, on the capital side, when we look at that, our CET-1, inclusive of AOCI, is 8.2%. We feel fine about that.

Securities repositioning would not necessarily impact that because it's already in your capital ratios.

And so that's one of the considerations, we think about when we get to the finish line what does it look like where are we.

Speaker Change: Yeah.

Within our target or above our target range.

Speaker Change: On the capital side, when we look at that our CET one inclusive of OCI is eight 2%.

And what do we do about it that is one of the considerations.

Thanks for taking my questions I appreciate it.

Speaker Change: And.

Thanks, Mike.

Speaker Change: We feel fine about that as we look at our capital ratios, including a OCI, we think they're manageable, we think the Aoc I accretion will happen over time.

Thank you. The next question is from the line of Stephen Scouten from Piper Sandler.

Andrew Jamie Gregory: As we look at our capital ratios, including AOCI, we think that they're manageable. We think the AOCI accretion will happen over time. We believe about 30% of the AOCI will accrete back in over again by the end of next year. So that's where we currently stand on own capital ratios. We mentioned this for squared asset work. That is expected to improve capital ratios, but it's interesting, we haven't determined exactly what we would do when we get to the finish line on this, but it's an interesting question when you take it in the context of CT1, inclusive of AOCI, like the Cat 4 banks, because securities repositioning would not necessarily impact that because it's already in your capital ratio.

Hey, good morning, everyone. Thanks for the time I guess.

Speaker Change: We believe about 30% of the MSCI will creep back in.

I was curious Kevin you mentioned deposits probably.

Speaker Change: By the end of next year.

Pressured a little bit more than you had expected.

Speaker Change: So that's that's where we currently stand and.

Can you talk about was that certain segments certain geographies rural versus maybe wholesale or like kind of what the moving parts of that incremental pressure was or is it more about that mix away from noninterest bearing to bill. Thanks.

Speaker Change: On capital ratios, we mentioned this risk weighted asset work.

Speaker Change: That is expected to improve capital ratios, but it's interesting we haven't determined exactly what we would do when we get to the finish line on this but it's an interesting question when you take into context with <unk> inclusive of Aoc highlight the cat four banks because securities repositioning would not necessarily impact that because it's already.

Well, it's both I mean.

Mix away from non interest bearing the first thing, but then when you look at the primary reason that we are seeing increased expenses are increased rates on the CD front and so part of it has been just as more balances move into Cds. The actual remixing the impact that that rate on that portfolio has on the overall portfolio.

Speaker Change: And your capital ratios.

Speaker Change: And so that's one of the considerations that we think about when we get to the finish line what does it look like where are we.

Andrew Jamie Gregory: And so, that's one of the considerations we think about when we get to the finish line, you know, what does it look like, where are we within our target or above our target range, and what do we do about it? That is one of the considerations. Thanks for taking my questions.

Speaker Change: Within our target or above our target range and what do we do about it that is one of the considerations.

The bigger issue as Jamie mentioned, when we look at the individual categories like money market and now those rates have actually peaked and in some cases, it ticked down a basis point or two so it has really more to do with just the remixing into Cds.

Thanks for taking my questions I appreciate it.

Speaker Change: Thanks, Mike.

Speaker Change: Thank you. The next question is from the line of Stephen Scouten from Piper Sandler.

Michael Edward Rose: I appreciate it. Thank you. The next question is from the line of Stephen Scouten from Piper Set. Good morning, everyone.

And those rates.

As the question earlier have stayed very high and the competitive landscape. So we've had to keep our rates higher as well we have tried to shorten the duration. There are odd terms rate is five months. So we're going to have the opportunity if.

Stephen Kendall Scouten: Thanks for your time. I guess I was curious, Kevin, you mentioned deposits probably were pressured a little bit more than you had expected. Can you talk about which segments, certain geographies, rural versus maybe wholesale, or like, kind of what the moving parts of that incremental pressure were? Or is it more about that mix away from non-interest bearing? Well, it's both.

Stephen Kendall Scouten: Hey, good morning, everyone. Thanks for the time I guess.

Stephen Kendall Scouten: Just curious Kevin you mentioned deposits probably where.

Stephen Kendall Scouten: We are pressured a little bit more than you had expected.

Rates were to decline to reprice those deposits much more quickly than if they were 13 months, but it's really more due to the remixing that's happening there.

Stephen Kendall Scouten: Can you talk about was that certain segments certain geographies rural versus maybe wholesale or like kind of what the moving parts of that incremental pressure was or is it more about that mix away from noninterest bearing spill.

David Let me give you one more data point as you look kind of one layer deeper a lot of the deposit outflows that we saw in the first quarter were with our larger clients, but when you look within the community Bank, which you can think about that as being our core.

Stephen Kendall Scouten: Well, it's both I mean, the mix away from non interest bearing the first thing, but then when you look at the primary reason that we're seeing increased expenses are increased rates on the CD front and so part of it has been just as more balances move into Cds, the actual remixing the impact at that rate.

Kevin S. Blair: I mean, the mix away from non-interest bearing is the first thing. But then when you look at the primary reason that we're seeing increased expenses or increased rates, it's on the CD front. And so part of the problem has been just as more balances move into CDs, the actual remixing, the impact that that rate on that portfolio has on the overall portfolio is the bigger issue. As Jamie mentioned, when we look at the individual categories like money market, and now, those rates have actually peaked and, in some cases, ticked down a basis point or two. So it really has more to do with just the remixing into CDs.

Clients.

We saw growth significant growth and transactional deposits and so on now accounts in the community bank. They were up 11% quarter on quarter. If you look at money market accounts, they were up 3% quarter on quarter. So thats strong growth with our core clients and that those are the type trend that that we want to lean into.

Stephen Kendall Scouten: On that portfolio has on the overall portfolio is the bigger issue as Jamie mentioned, when we look at the individual categories like money market and now those rates have actually peaked and in some cases, it ticked down a basis point or two so it has really more to do with just the remixing into Cds.

And help feed as we go through 2024.

Kevin S. Blair: And those rates, as the question earlier mentioned, have stayed very high in the competitive landscape. So we've had to keep our rates higher as well. We have tried to shorten the duration there.

Yes, that's an important distinction I appreciate that and then just one clarifying question on the talked about like a $30 million move in the.

And those rates as the question earlier have stayed very high and the competitive landscape. So we've had to keep our rates higher as well we have tried to shorten the duration. There are odd terms rate is five months. So we're going to have the opportunity if rates were to decline to reprice those deposits much more quickly than if they were.

And the reserve from a qualitative basis is that encapsulating, what you show on slide 18, with the change in your weightings toward the various economic scenarios.

Kevin S. Blair: Our odd terms rate is five months, so we're going to have the opportunity, if rates were to decline, to reprice those deposits much more quickly than if they were 13 months. But it's really more due to the mixing that's happening there.

No that's separate that that would be in the in the portfolio component of that and that's separate than the economic outlook.

Stephen Kendall Scouten: 13 months, but it's really more due to the remixing that's happening there.

Andrew Jamie Gregory: Stephen, let me give you one more data point. As you look kind of one layer deeper, a lot of the deposit outflows that we saw in the first quarter were with our larger clients. But when you look within the community bank, which you can think about those being our core clients, we saw significant growth in transactional deposits. And so on current accounts in the community bank, they were up 11% quarter on quarter.

Stephen Kendall Scouten: Steven Let me give you one more data point as you look kind of one layer deeper.

Okay perfect very helpful. Thanks, guys appreciate the time.

Stephen Kendall Scouten: Lot of the deposit outflows that we saw in the first quarter were with our larger clients, but when you look within the community Bank, which you can think about that as being our core.

Thanks, Steve.

Thank you. The next question is from the line of Manav Garcia with Morgan Stanley.

Hi, Good morning. This is Brian Olsen SKU selling it from a non I was wondering if you could talk about going back to credit.

Stephen Kendall Scouten: Clients.

Stephen Kendall Scouten: We saw growth significant growth and transactional deposits and so on now accounts in the community bank. They were up 11% quarter on quarter. If you look at money market accounts, they were up 3% quarter on quarter. So thats strong growth with our core clients and Thats. Those are the type trends that we want to lean into.

Breakdown of your nonperforming loan balances with C&I aside from that one credit that you charged off this quarter I ask because a few of your peers have sighted weaker C&I this quarter and I am wondering if there are any broad themes that youre seeing from an industry perspective.

Andrew Jamie Gregory: If you look at money market accounts, they were up 3% quarter on quarter. So that's strong growth with our core clients, and those are the types of trends that we wanna lean into and help feed as we go through 2025. Yeah, that's an important distinction.

Stephen Kendall Scouten: And help feed as we go through 2024.

Yeah, Hey, Brian It's Bob I would say no broad themes certainly if you look at our non accrual ratio and I'll set the one credit aside just for this this discussion so would drop us down to around 280 give.

Yes, that's an important distinction I appreciate that and then just one clarifying question on the talking about like a $30 million move in the.

Stephen Kendall Scouten: Appreciate that. And then just one clarifying question on the $30 million move in the reserve from a qualitative basis. Is that kind of encapsulating what you show on slide 18 with the change in your weightings towards the various economic scenarios? No, that's separate.

Stephen Kendall Scouten: And the reserve from a qualitative basis is that kind of encapsulating, what you show on slide 18, with the change in your weightings towards the various economic scenarios.

Give or take $1 billion of non accruals.

70% of that is C&I, so, but no specific industries in there most of those C&I credits have either specific reserves on them or we've already mark those credits to where we think.

Stephen Kendall Scouten: No that's separate that that would be in the in the portfolio component of that and that's separate than the economic outlook.

Andrew Jamie Gregory: That would be in the portfolio component of that, and that's separate from the economic outlay. Okay. Perfect. Very helpful. Thank you, guys. Appreciate the time.

Speaker Change: Okay perfect very helpful. Thanks, guys appreciate it.

As appropriate in the exit.

Speaker Change: Thanks, Steve.

As in process. So yes, the non accrual portfolio would be heavily more heavily weighted to C&I today, but.

Speaker Change: Okay.

Stephen Kendall Scouten: Thanks, Steve. Thank you. The next question is from the line of Manan Gosalia with Morgan Stanley. Hi, good morning. This is Brian Wolczynski filling in for Manan.

Speaker Change: Thank you. The next question is from the line of Manav Garcia with Morgan Stanley.

But from our perspective.

A manageable number of credits we have 13 credits above $5 million and we can put a pretty good pets, along a number of those as it relates to resolution plan. So when you start whittling it down it is C&I heavy but we think we've got a very quantifiable number and more importantly, what we see in terms of new inflows.

Speaker Change: Hi, Good morning. This is Brian <unk> filling in for Manav I was wondering if you could talk about going back to credit.

Brian Wolczynski: I was wondering if you could talk about, going back to credit, the breakdown of your non-performing loan balances with C&I, aside from that one credit that you charged off this quarter. I ask because a few of your peers have cited weaker C&I this quarter, and I'm wondering if there are any broad themes you're seeing from an industry perspective. Yeah, hey, Brian, it's Bob.

Brian: The breakdown of your nonperforming loan balances with C&I aside from that one credit that you charged off this quarter I ask because a few of your peers have sighted weaker C&I this quarter and I am wondering if there are any broad themes, you're seeing from an industry perspective.

<unk> is very light. So we think the C&I piece is going to be continue to be a little more idiosyncratic theres going to be some.

Brian: Yeah, Hey, Brian It's Bob I would say no broad themes certainly if you look at our non accrual ratio and I'll set the one credit aside just for this this discussion so would drop us down to around 280.

Bob: I would say no broad themes. Certainly, if you look at our non-accrual ratio, and I'll set the one credit aside. This discussion would drop us down to around 280 million dollars of non-accruals. About 70% of that is C&I, but no specific industries are mentioned there. Most of those C&I credits have either specific reserves on them, or we've already marked those credits to where we think is appropriate, and the exit is in process.

But that's the way we think about the corporate space and then when you look at sort of the other components of our overall rated portfolio. We've got a senior housing component in there because it's been through the pandemic and the labor cost increases it's beginning to stabilize so that would.

Bob: Give or take $1 billion of non accruals.

Bob: 70% of that is C&I, so, but no specific industries in there most of those C&I credits have either specific reserves on them or we've already mark those credits to where we think is a P.

Be more of a positive and then finally it would be CRE would be the third piece.

And that's specifically related to office and as I mentioned earlier I think we are.

We're around 10%.

Our office portfolio is rated and when we drill into those numbers as Kevin mentioned, the deep dives there that we've done on office and multifamily don't give us any.

Bob: Appropriate and the exit.

Bob: As in process. So yes, the non accrual portfolio would be heavily more heavily weighted to C&I today.

Bob: So yes, the non-accrual portfolio would be more heavily weighted to C&I today, but from our perspective, it's a manageable number of credits. We have 13 credits above $5 million, and we can put a pretty good pencil on a number of those as it relates to resolution plans. So when you start rolling it down, it is C&I heavy, but we think we've got a very quantifiable number, and, more importantly, what we see in terms of new inflows is very light. So we think the C&I piece is going to continue to be a little more idiosyncratic. There's going to be some, but that's the way we think about the corporate space.

Significant concern about just a backlog of new potential problems. So as we work through those office loans that will take time.

Bob: But from our perspective.

Bob: A manageable number of credits we have 13 credits above $5 million.

Bob: We can put a pretty good pets, along a number of those as it relates to resolution plan. So when you start whittling it down it is C&I heavy but we think we've got a very quantifiable number and more importantly, what we see in terms of new inflows.

That framework of those kind of categories. This what's kind of guiding our charge off guard as Kevin mentioned earlier that we think we can begin to see.

Improved charge off numbers towards the back half of the year certainly into 'twenty five assuming that we kind of remain in a in a rate environment and economic environment that we're in and that we don't see really any surprises, but our analysis doesn't reveal that today.

Very light. So we think the C&I piece is going to be continue to be a little more idiosyncratic theres going to be some.

Bob: But thats the way, we think about the corporate space and then when you look at sort of the other components of our overall rated portfolio. We've got a senior housing component in there because it's been through the pandemic and the labor cost increases it's beginning to stabilize so that would.

Bob: And then when you look at sort of the other components of our overall rated portfolio, we've got a senior housing component in there because it's been through the pandemic and the labor cost increases. It's beginning to stabilize, so that would be more of a positive. And then, CRE would be the third piece, and that's specifically related to office.

I appreciate the color. Thank you and then just as a follow up I was wondering if you could unpack your rate sensitivity to the long end of the curve.

The material benefit from the from the increase in the 10 year yields that we've seen over the past few weeks and if so how do you see that playing out through the end of 2024. Thanks.

Bob: Be more of a positive and then finally it would be CRE would be the third piece.

We continue to be asset sensitive to the long end of the curve. So the increase in rate is beneficial to us.

Bob: That's specifically related to office and as I mentioned earlier I think we are.

Bob: And as I mentioned earlier, I think we're around 10% of our office portfolio is rated, and when we drill into those numbers, as Kevin mentioned, the deep dives there that we've done on office and multifamily don't give us any significant concern about just a backlog of new potential problems. So as we work through those office loans, that'll take time. And that framework of those kind of categories is what's kind of guiding our charge-off guide, as Kevin mentioned earlier, that we think we can begin to see, you know, improved charge-off numbers toward the back half of the year, certainly into 25, assuming that, you know, we kind of remain in the rate environment and economic environment that we're in and that we don't see, you know, really any surprises, but our analysis doesn't reveal I appreciate the color.

Bob: We're around 10%.

Bob: Our office portfolio is rated and when we drill into those numbers as Kevin mentioned, the deep dives there that we've done on office and multifamily don't give us any.

It's a similar similar conversations that we've had before where.

When you roll forward from.

The December conference to the January earnings announcement, we vote to a five basis point difference in the margin expectation in the fourth quarter due to the change in rates.

Bob: Significant concern about just a backlog of new potential problems. So as we work through those office loans that'll take time.

Bob: That framework of those kind of categories is whats.

It's a good indication of that asset sensitivity to the long end of the curve is approximately 2%.

Bob: Guiding our charge off guard as Kevin mentioned earlier that we think we can begin to see.

Okay and is that primarily from I would imagine thats, primarily from fixed rate. One repricing do you have any color on how much is coming due over the next three quarters.

Bob: Improved charge off numbers towards the back half of the year certainly into 'twenty five assuming that we kind of remain in a in a rate environment and economic environment that we're in and that we don't see really any surprises, but our our analysis doesn't reveal that today.

So on the securities portfolio, we have about $60 million a month in Paydowns and so that that's just.

Steady flow steady repricing you see our our book yield on the securities portfolio.

Speaker Change: I appreciate the color. Thank you and then just as a follow up I was wondering if you could unpack your rate sensitivity to the long end of the curve do you get a material benefit from the from the increase in the 10 year yields that we've seen over the past few weeks and if so how do you see that playing out through the end of 2024. Thanks.

Brian Wolczynski: And then, just as a follow-up, I was wondering if you could unpack your rate sensitivity to the long end of the curve. Do you get a material benefit from the increase in the 10 year yield that we've seen over the past few weeks? And if so, how do you see that playing out through the end of 2024? Thanks.

That's that's part of that accretion and then we have.

About $5 billion mortgage portfolio that that is paying paying down at about 10% a year.

Andrew Jamie Gregory: We continue to be asset sensitive at the long end of the curve, so the increase in rates is beneficial to us. It's similar, you know, similar conversations we've had before where when you rolled forward from the December conference to the January earnings announcement, we spoke to a five base point difference in the margin expectation for the fourth quarter due to the change in rates. That's a good indication of that asset sensitivity to the long end of the curve. It's approximately.

Speaker Change: We continue to be asset sensitive to the long end of the curve. So the increase in rate is beneficial to us.

Great. Thank you for taking my questions.

Thank you Brian.

Thank you we have the.

Speaker Change: It's a similar similar conversations that we've had before where.

Our next question from the line of Chemo Priscilla from Stockholm.

Speaker Change: When you rolled forward from.

Yes.

Speaker Change: The December conference to the January earnings announcement, we spoke to a five basis point difference in the margin expectation in the fourth quarter due to the change in rates.

Hi, good morning.

Good morning.

Maybe.

Can we get an update on what you expect the cadence of brokered deposits declined to look like throughout the course of the year and then as we look at broader time deposit growth just your appetite there. It seems like there is some.

Speaker Change: Thats a good indication of that asset sensitivity to the long end of the curve is approximately 2%.

Andrew Jamie Gregory: Okay, and is that primarily from, I would imagine that's primarily from fixed rate one repricing? Do you have any color on how much is coming due over the next three quarters? So on the securities portfolio, we have about $60 million a month in paydowns. And so that's just a steady flow, steady repricing. You see our book yield on the securities portfolio. That's part of that accretion.

Speaker Change: Okay and is that primarily from I would imagine thats, primarily from fixed rate on repricing do you have any color on how much is coming due over the next three quarters.

The ability for the balance sheet, maybe to use some balance sheet liquidity and maybe not grow time deposits as fast as <unk> been growing maybe just give us your thoughts about just the 85% loan to deposit or the cadence of broker deposit pay downs and then your appetite for time deposits.

Speaker Change: So on the securities portfolio, we have about $60 million a month in paydowns and so that that's a steady flow steady repricing you see our our book yield on the securities portfolio.

Yes, great question on brokered we do expect to see those continue to decline as we go through the year.

Speaker Change: That's that's part of that accretion and then we have.

Andrew Jamie Gregory: And then we have... About a $5 billion mortgage portfolio that is paying down at about 10% a year. Great, thank you for taking my question. Thank you, Brian. Thank you. We have the next question from the line of Timur Braziler from Wasago. Good morning. Good morning.

Speaker Change: About $5 billion mortgage portfolio that that is paying paying down at about 10% a year.

It's safe to use $250 to $500 million per quarter.

For that.

Time deposits Youre exactly right first if you look at wholesale funding were down.

Speaker Change: Great. Thank you for taking my questions.

Over 30% and wholesale funding year over year, and so that gives a lot of flexibility on the liquidity side to choose the most economical way to fund the bank now with regards to time deposits part of that is client demand and so we have to react to where clients are on what they're looking for on their deposit.

Speaker Change: Thank you Brian.

Speaker Change: Thank you.

Speaker Change: The next question from the line of Chemo Priscilla from Mustang.

Speaker Change: Okay.

Chemo Priscilla: Hi, good morning.

Timur Felixovich Braziler: Maybe. Can we get an update on what you expect the cadence of broker deposits declines to look like throughout the course of the year? And then as we look at broader time deposit growth, just your appetite for that, it seems like there's some ability for the balance sheet maybe to use some balance sheet liquidity and maybe not grow time deposits as fast as they've been growing. Maybe just give us your thoughts about just the 85% loan to deposit, the cadence of broker deposit paydowns, and then your appetite for time deposits. Yeah, Timur, great questions.

Chemo Priscilla: Good morning.

Chemo Priscilla: Maybe.

And there's a lot of attraction to time deposits and so we need to be there for them with a competitive rate, but you are right.

Chemo Priscilla: Can we get an update on what you expect the cadence of brokered deposit declined to look like throughout the course of the year and then as we look at broader time deposit growth just your appetite there. It seems like there is some.

The pressure to get incremental liquidity is simply not there given all the avenues, we have for liquidity and we can we could slow down the decline in brokered we could use online bank or Hugo time deposits.

Chemo Priscilla: The ability for the balance sheet, maybe to use some balance sheet liquidity and maybe not grow time deposits as fast as they have been growing maybe just give us your thoughts about 85% loan to deposit so the cadence of broker deposit pay downs and then your appetite for time deposits.

And we do expect core deposits to be relatively stable in the first half of the year and then we expect to see growth in the second half of the year and so we.

We will continue to analyze and be balanced on the profitability and the client demand piece of that but that's how we're looking at it.

Speaker Change: Yes, great Great question on brokered we do expect to see those continue to decline as we go through the year.

Andrew Jamie Gregory: On repurchased, we do expect to see those continue to decline as we go through the year. It's safe to use $250 to $500 million per quarter for that. On time deposits, you're exactly right. First, if you look at wholesale funding, we're down over 30% in wholesale funding year over year. And so that gives a lot of flexibility on the liquidity side to choose the most economical way to fund the bank.

Speaker Change: It's safe to use $250 to $500 million per quarter.

Okay, and then within the loan book just in the C&I portfolio.

Speaker Change: That.

Speaker Change: On time deposits, you're exactly right first if you look at wholesale funding were down over 30% and wholesale funding year over year, and so that gives a lot of flexibility on the liquidity side to choose the most economical way to fund the bank now with regards to time deposits part of that is.

8% of C&I loans that are in our finance and insurance companies can you give us an update us.

What that entails and then more specifically what component of those loans are to borrowers that are using that as leverage to make other commercial loans.

Andrew Jamie Gregory: Now, with regard to time deposits, part of that is client demand. And so we have to react to where clients are on what they're looking for in terms of their deposits. And there's a lot of attraction for time deposits. And so we need to be there for them with a competitive rate. But you're right.

Look that's the portfolios, our lender finance business and as Jamie talked about earlier, maybe to give you some comfort around the asset quality. Those are the portfolios. We're looking at to get the reduced risk weighted asset treatment. So as Jamie mentioned, 100% risk weighting down to protect potentially 20 <unk>.

Speaker Change: Client demand and so we have to react to where clients are on what they're looking for their deposits and theres a lot of attraction to time deposits and so we need to be there for them with a competitive rate, but you are right.

Timur Felixovich Braziler: The pressure to get incremental liquidity is simply not there, given all the avenues we have for liquidity, and we could, you know, slow down the decline in brokered deposits, we could use online banking, or we could grow time deposits. We do expect core deposits to be relatively stable in the first half of the year, and then we expect to see growth in the second half of the year. And so we, you know, we will continue to analyze and be balanced on the profitability and the client demand piece of that.

Speaker Change: The pressure to get incremental liquidity is simply not there given all the avenues, we have for liquidity and we can we could slow down the decline in brokered we could use online bank or Hugo time deposits.

Risk weighted treatment, which means that there's good sponsorship theres good coverage on the assets and to your point. These are not levered assets. These are asset base.

Speaker Change: We do expect core deposits to be relatively stable in the first half of the year.

Structures that provide repayment within the ability to liquidate those assets. So it's not a levered portfolio per se, it's well structured its asset base and ultimately may qualify for actual lower risk weighted asset treatment.

Speaker Change: And then we expect to see growth in the second half of the year and so we.

Speaker Change: We will continue to analyze and be balanced on the profitability and the client demand piece of that but that's how we're looking at it.

Timur Felixovich Braziler: But that's how we're looking at it. Okay, and then within the loan book, just in the C&I portfolio, 20% of C&I loans that are to finance and insurance companies, can you give us an update as to what that entails? And then more specifically, what component of those loans is to borrowers that are using that as leverage to make other commercial loans?

Great. Thank you.

Thank you.

Speaker Change: Okay, and then within the loan book.

Next question from the line of Russia Russell Gunther.

Speaker Change: Our C&I portfolio.

Speaker Change: As a percent of C&I loans that are in our finance and insurance companies can you give us an update as to what.

Okay.

Yes.

Hey, good morning, guys.

Good morning.

Speaker Change: What that entails and then more specifically what component of those loans are to borrowers that are using that as leverage to make other commercial loans.

I just wanted to good morning.

Just a couple of quick follow ups first on growth just wanted to get a sense for what inning you would say we were in terms of the strategic.

Kevin S. Blair: Look, the portfolios are lender finance businesses, and as Jamie talked about earlier, maybe to give you some comfort around the asset quality, those are the portfolios we're looking at to get the reduced risk-weighted asset treatment. So, as Jamie mentioned, 100% risk-weighting down to potentially a 20% risk-weighted treatment, which means that there's good sponsorship, and there's good coverage on the assets. And to your point, these are not levered assets; these are asset-based structures that provide repayment within the ability to liquidate those assets. So, it's not a levered portfolio per se, it's well-structured, it's asset-based, and ultimately, it may qualify for actual lower risk-weighted asset treatment.

Decline in non relationship loans that I understand this is included in the guide, but it will be helpful to get a sense of the magnitude of the impact and timeline for that headwind to abate and kind of get back to that growth. Your outlook you were discussing earlier.

Speaker Change: Look that's the portfolios, our lender finance business and as Jamie talked about earlier, maybe to give you some comfort around the asset quality. Those are the portfolios. We're looking at to get the reduced risk weighted asset treatment. So as Jamie mentioned, 100% risk weighting down to protect potentially.

But look when you look at the quarter, we had about $77 million of declines in the snick portfolio. Another $50 million in third party. Those will continue for the foreseeable future number one remember that both of these were surrogates for the securities portfolio, when we had excess liquidity.

Speaker Change: 20% risk weighted treatment, which means that there's good sponsorship theres good coverage on the assets and to your point. These are not levered assets. These are asset base.

Speaker Change: Structures that provide repayment within the ability to liquidate those assets. So it's not a levered portfolio per se, it's well structured its asset base and ultimately may qualify for actual lower risk weighted asset treatment.

And so in this environment, unless we're seeing better economics.

Expect that sort of run rate to continue so expect somewhere around $100 million to $120 million of runoff each quarter. So that would not change now the good news is that could be more than offset as we get to some of these market related declines. So once senior housing gets to kind of their final.

Timur Felixovich Braziler: Great, thank you. Thank you. We have the next question from the line of Russell Gunther with Steve. Hey, good morning, guys. Good morning.

Speaker Change: Great. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you we have the next question from the line of Russia, Russell Gunther with Stephens.

Portfolio size and the real estate portfolio builds back their pipeline to offset some of the pay down activities I think that those market related declines were more than offset the growth there will more than offset these strategic declines, which would put more of the the growth back towards.

Russell Elliott Teasdale Gunther: Hey, good morning, guys.

Russell Elliott Teasdale Gunther: Good morning, just wanted to good morning.

Russell Elliott Teasdale Gunther: Morning. Just a couple quick follow-ups. The first on growth. Just wanted to get a sense for what inning you'd say we were in in terms of the strategic decline in non-relationship loans. I understand this is included in the guide, but it would be helpful to get a sense of the magnitude of the impact.

Russell Elliott Teasdale Gunther: A couple of quick follow ups first on growth just wanted to get a sense for what inning. You would say we were in in terms of the strategic decline in non relationship loans that I understand. This is included in the guide, but it would be helpful to get a sense of the magnitude of the impact and timeline for that headwind to abate and kind of get back to that.

That mid single digit level.

That's great. Okay. I appreciate that there and then just switching gears on.

The fee guide.

Could you guys just remind us the outlook for green Sky to contribute this year and then the capital market's expectation as well just confidence in that year over year growth rate and drivers there.

Kevin S. Blair: Timeline for that headwind to abate and kind of get back to that growthier outlook you were discussing earlier. Well, look, when you look at the quarter, we had about $77 million of declines in the SNCC portfolio and another $50 million in third-party. These will continue for the foreseeable future. Number one, remember that both of these were surrogates for the securities portfolio when we had excess liquidity. And so in this environment, unless we are seeing better economics, we would expect that sort of run rate to continue. So expect somewhere around $100 to $120 million of runoff each quarter. So that would not change.

Russell Elliott Teasdale Gunther: Growth your outlook you were discussing earlier.

Russell Elliott Teasdale Gunther: But look when you look at the quarter, we had about $77 million of declines in the snick portfolio. Another $50 million in third party. Those will continue for the foreseeable future number one remember that both of these were surrogates.

If you look at the first quarter on on Green Sky.

It played out as expected, we had a strong quarter, a little less than $8 million of revenue associated with that.

Going forward the reason for the revenue will change. So if you think about it that deal closed in the first quarter. So we had a pass through of the loan book.

Russell Elliott Teasdale Gunther: For the securities portfolio, when we had excess liquidity.

Russell Elliott Teasdale Gunther: So in this environment, unless we're seeing better economics.

But going forward as the flow arrangement and in the flow arrangement, we actually expect revenues to be in a similar area slightly below the first quarter, but in a similar area per quarter as we go through 2020 'twenty four.

Russell Elliott Teasdale Gunther: Would expect that sort of run rate to continue so expect somewhere around $100 million to $120 million of runoff each quarter. So that would not change now the good news is that could be more than offset as we get to some of these market related decline. So once senior housing gets to kind of their final portfolio.

Kevin S. Blair: Now, the good news is that it could be more than offset as we get to some of these market-related declines. So once senior housing gets to kind of their final portfolio size, and the real estate portfolio builds back their pipeline to offset some of the paydown activities, I think that those market-related declines will more than offset the growth there, will more than offset these strategic declines, which would put more of the growth back towards that mid-single-digit level.

With regards to capital market, we feel really good about 2024, we think it can be a strong year for capital market.

Coming off of.

So size and the real estate portfolio builds back their pipeline to offset some of the paydown activities I think that those market related declines were more than offset the growth there will more than offset these strategic declines, which would put more of the growth back towards.

The first quarter.

And increasing as we go through the year and the components of capital markets.

Client client swaps, which are relatively low at the moment.

But we expect to see.

Growth in lead arranger fees agency fees.

Russell Elliott Teasdale Gunther: And that mid single digit level.

Kevin S. Blair: That's great. Okay, I appreciate that there. And then, just switching gears onto the fee guide. You guys just remind us the outlook for Green Sky to contribute this year and then the capital markets expectation as well, just confidence in that year-over-year growth rate and drivers. Well, yeah, if you look at the first quarter for Green Sky, it played out as expected.

And we expect to see those as we go through 2020, 'twenty 'twenty four and we think that's going to be one of the good drivers. When we said overall NII growth in the low to mid single digits.

Speaker Change: That's great. Okay. I appreciate that there and then just switching gears onto the fee guide.

Speaker Change: You guys, just remind us the outlook for green Sky to contribute this year and then the capital market's expectation as well just confidence in that year over year growth rate and drivers there.

Is that a lot of that is capital markets.

We think of the strength there will continue.

Speaker Change: If you look at the first quarter on on Green Sky.

As we go through this year and to your point to Jamie's conviction those are in our pipeline today in our pipeline in CIB in wholesale are the largest.

Speaker Change: It played out as expected, we had a strong quarter little less than $8 million of revenue associated with that.

Russell Elliott Teasdale Gunther: We had a strong quarter, a little less than $8 million of revenue associated with that. And going forward, the reason for the revenue will change. So if you think about it, that deal closed in the first quarter, so we had a pass-through of the loan book. But going forward, it's the flow arrangement.

<unk> been in some time and so it's not just forecasting we actually see the transactions that we'll be able to execute on.

Speaker Change: And going forward. The reason for the revenue will change. So if you think about it that deal closed in the first quarter. So we had a pass through of the loan book, but going forward as the flow arrangement and into Florida, We actually expect revenues to be in a similar area slightly below the first quarter, but in a similar area per quarter as we go through 2000.

I appreciate it guys. Thank you both.

Andrew Jamie Gregory: And in the flow arrangement, we actually expect revenues to be in a similar area, slightly below the first quarter, but in a similar area per quarter as we go through 2024. With regard to capital markets, we feel really good about 2024. We think it's going to be a strong year for capital markets coming off of the first quarter and increasing as we go through the year. And the components of capital markets, you know, we have client swaps which are relatively low at the moment. But we expect to see growth in lead arranger fees and agency fees as we go through 2020 and 2024. And we think he's going to be one of the good drivers.

Thank you.

Next question from.

From the line of Chris telephone Marina.

<unk> Janney Montgomery Scott.

Hey, Thanks, just a quick question for Bob as it pertains to the office maturities are any of those tied back to medical office is that blended in with the number.

2024.

Speaker Change: With regards to capital market, we feel really good about 2024, we think it can be a strong year for capital market.

Speaker Change: Coming off of the <unk>.

Chris it's blended in.

Speaker Change: First quarter.

Speaker Change: And increasing as we go through the year and the components of capital markets.

The total office book.

And then.

So we kind of excuse me.

Speaker Change: We have.

Yes, the medical component is about 400 gig.

Speaker Change: Client client swaps, which are relatively low at the moment, but we expect to see.

Give or take a million dollars of our total office book.

Speaker Change: Road and lead arranger fees agency fees.

So we can proportionately adjustment maturities by by that was all I.

Speaker Change: And we expect to see those as we go through 2020, 'twenty 'twenty four and we think that's going to be one of the good drivers. When we said overall NII growth in the low to mid single digits and that a lot of that is capital markets.

I would say on that so I'm sorry, Chris.

There is about $400 million of medical office loans in our current office portfolio that does not include the asset sale. We did on the institutional medical office buildings. So we still have about $400 million.

Kevin S. Blair: When we said overall NIR growth in the low to mid-single digits and that a lot of that was capital markets, we think that the strength there will continue as we go through this year. And to your point, you know, to Jamie's conviction, you know, those are in our pipeline today. And our pipeline, CIB, and wholesale are the largest they've been in some time. And so it's not just forecasting. We actually see the transactions that we'll be able to execute. I appreciate it, guys. Thank you both.

Speaker Change: Think of the strength there will continue.

Mainly speaking community banking medical office.

Speaker Change: As we go through this year and to your point to Jamie's conviction those are in our pipeline today and our pipeline in CIB in wholesale are the largest they've.

Is that are in our office portfolio today.

Great and Bob are you seeing any further stress on debt service coverage ratios as it pertains to office.

Speaker Change: <unk> been in some time and so it's not just forecasting we actually see the transactions that we'll be able to execute on.

Or has that largely been reflected in the criticized component.

It's largely been reflected Chris I mean, we certainly is still migrating and there is certainly still a slight negative bias to office, obviously you've got.

Speaker Change: I appreciate it guys. Thank you both.

Russell Elliott Teasdale Gunther: Thank you. We have the next question from the line of Christopher Marinac with Jenny Montgomery-Skoll. Hey, thanks. Just a quick question for Bob as it pertains to the office maturities. Are any of those tied back to medical office? Is that blended in with the number? Chris, it's blended in.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Question.

Valuation changes and we certainly feel good about the markets. We're in but some of them are more stressed than others, but from a debt service coverage perspective, it would be reflected in our current rate is status of around 10 basis, 10% rather on.

Speaker Change: Your line of Chris telephone Marina.

Chris: <unk> Janney Montgomery Scott.

Chris: Hey, Thanks, just a quick question for Bob as it pertains to the office maturities are any of those tied back to medical office is that blended in with the number.

The Red book, So, obviously lease explorations and lease rollovers and those types of things are what we're doing everyday in analyzing those.

Chris: Chris it's blended in.

Christopher William Marinac: That's the total office book, and Vince. Yeah, the medical component is about 400, give or take a million from our total office book. So we can proportionately adjust the maturities by that. That was all I was saying on that. No, I'm sorry, Chris. You know that there are about $400 million in medical office loans in our current office portfolio. That does not include the asset sale we did on the institutional medical office building. So we still have about $400 million of, you know, broadly, mainly speaking, community banking medical offices that are in our office portfolio today. Great

Chris: Total office book.

Chris: And then okay.

Looking out to our maturities and when these leases rollover or the sublease activities et cetera. So a lot of variables in our office analysis, which is kind of built into our sort of normal portfolio management.

Speaker Change: Excuse me yes.

Bob: Yes, the medical component is about 400.

Bob: Give or take $1 million of our total office book.

Bob: So we can proportionately adjusted debt maturities by by that result.

Business as usual activities today.

Speaker Change: I would say on that so I'm.

And it's reflected in our current risk rating and we feel we feel good about the actually its accuracy of those right now.

Speaker Change: Im sorry, Chris.

Speaker Change: There is about $400 million of medical office loans in our current office portfolio that does not include the asset sale. We did on the institutional medical office buildings. So we still have about $400 million.

Great. Thanks for all the disclosure on this we appreciate it.

Thanks, Chris.

Speaker Change: Mainly speaking community banking medical office.

Thank you. The next question is from the line of.

Speaker Change: Is that are in our office portfolio today.

Brendan.

<unk> Securities.

Bob: And Bob, are you seeing any further stress on debt service coverage ratios as it pertains to office, or has that largely been reflected in the criticized component? It's largely been reflected, Chris.

Great and Bob are you seeing any further stress on debt service coverage ratios as it pertains to office or is that largely has been reflected in the criticized component.

Hey.

On the.

Net interest margin expansion.

The 15 basis points and second half of this year, how much of that are you expecting to occur in the fourth quarter versus third quarter.

Speaker Change: It has largely been reflected Chris I mean, we certainly still migrating and there is certainly still a slight negative bias to office, obviously you've got.

Bob: I mean, you know, we certainly are still migrating, and there's certainly still a slight negative bias to office. Obviously, you've got, you know, valuation changes, and we certainly feel good about the markets we're in, but some of them are more stressed than others. But from a debt service coverage perspective, it would be reflected in our current rated status of around, you know, 10% on the rated book. So, obviously, lease expirations and lease rollovers and those types of things are what we do every day and analyze those, looking out to our maturities and when these leases roll over, our sub-lease activities, etc.

And then second part of your question is.

Beyond that is that a certain pace that we can expect going forward or could even be more just looking at your fixed rate pricing schedule.

Speaker Change: Valuation changes and we certainly feel good about the markets. We're in but some of them are more stressed than others, but from a debt service coverage perspective, it would be reflected in our current rate is status of around 10 basis, 10% rather on.

Okay.

Yes, Brandon.

Speaker Change: On the ready book, So obviously lease explorations and lease rollovers and those types of things are what we're doing everyday in analyzing those.

Great question.

We do expect to see that expansion largely in the second half of the year and late in the year is an important time for that expansion and largely due to some hedge maturities in the fourth quarter, we have $750 million of maturities in the fourth quarter at pretty low rates and those will be impactful to both the fourth.

Speaker Change: Looking out to our maturities and when these leases rollover or the sublease activities et cetera. So a lot of variables in our office analysis, which is kind of built into our sort of normal portfolio management.

Bob: So, a lot of variables in our office analysis, which is kind of built into our sort of normal portfolio management business as usual activities today, and it's reflected in our current risk ratings, and we feel good about the accuracy of those right now. Great. Thanks for all the disclosure on this. We appreciate it. Thanks, Chris.

<unk> and then incrementally again to the first quarter in 2025, I think when you think longer term about our margin what I would say as far as thinking about the headwinds on the liability side. We clearly saw those in the first quarter, we expect those to.

Speaker Change: Business as usual activities today and.

Speaker Change: And it's reflected in our current risk rating and we feel we feel good about the actually its accuracy of those right now.

Speaker Change: Great. Thanks for all the disclosure on this we appreciate it.

Speaker Change: Thanks, Chris.

Be mitigated in the second quarter as we see stabilization.

Thank you. The next question is from the line of.

Christopher William Marinac: The next question is from the line of Brandon King with Tourist Security. Hey, two-part question on the Met Interest Margin Expansion, the 10 to 15 basis points in the second half of this year. How much of that are you expecting to occur in the fourth quarter versus the third quarter? And then the second part of that question is... Looking beyond that, is that a certain pace that we can expect going forward, or could it even be more just looking at your fixed rate only pricing schedule? Yeah, Brandon, you know, it's a great question.

In both rate and mix.

And so then you look at the margin do you think about the benefit of the fixed rate asset repricing and so that really becomes powerful and it's a multi year benefit and so we've talked about that in the past but.

Speaker Change: Brendan King with <unk> Securities.

Brandon Thomas King: Hey, two part question on the.

Brandon Thomas King: Net interest margin expansion of 10 to 15 basis points and second half of this year.

That benefit will flow through 2025 fewer soon assuming rates stay relatively stable and we will continue to see that benefit and so when I look longer term and I look at the fourth quarter of this year compared to the fourth quarter of 2025, there is about a 20 basis.

Brandon Thomas King: How much of that are you expecting to occur in the fourth quarter versus third quarter.

Brandon Thomas King: Then second part of your question is.

Brandon Thomas King: Looking beyond that is that a certain pace that we can expect going forward.

Brandon Thomas King: Or could even be more just looking at sort of a fixed rate won't be pricing schedule.

Point benefit due to fixed rate asset repricing and there are a lot of variables that can impact that outside of those fixed rate repricing benefit, but that's a pretty important tailwind.

Brandon Thomas King: Okay.

Brandon: Yes, Brandon.

Brandon: Great question.

Brandon Thomas King: We do expect to see that expansion largely in the second half of the year. And late in the year is an important time for that expansion, largely due to some hedge maturities in the fourth quarter. We have 750 million of hedge maturities in the fourth quarter at pretty low rates. And those will be impactful to both the fourth quarter and then incrementally again to the first quarter in 2025. I think when you think longer term about our margin, what I would say is, first, think about the headwinds on the liability. We clearly saw those in the first quarter.

Speaker Change: We do expect to see that expansion largely in the second half of the year and late in the year is an important time for that expansion largely due to some hedge maturities in the fourth quarter, we have $750 million of headroom Ed maturities in the fourth quarter.

The margin and so yes, we expect margin expansion to continue as we get into next year.

Just due to that fixed rate asset repricing, but just wanted to be really clear on that one.

Okay.

Speaker Change: Pretty low rates and those will be impactful to both the fourth quarter and then incrementally again to the first quarter in 2025, I think when you think longer term about our margin what I would say as far as thinking about the headwinds on the liability side. We clearly saw those in the first quarter, we expect those to.

Very helpful and then lastly.

On the <unk> optimization once that's complete.

How are you thinking about deploying.

Deploying that capital generally into securities repositioning versus potentially buying back more shares.

Yes.

Andrew Jamie Gregory: We expect those to be mitigated in the second quarter as we see stabilization in both rate and mix. And so then you look at the margin, and you think about the benefit of the fixed-rate asset repricing. And so that really becomes powerful, and it's a multi-year benefit. And so we've talked about that in the past, but that benefit will flow through 2025, assuming rates stay relatively stable, and we'll continue to see that benefit.

That's a.

Speaker Change: Be mitigated in the second quarter as we see stabilization.

Great question, and it's something that we're currently working through.

Speaker Change: In both rate and mix and.

We will make we will make the decisions on that once the analysis and documentation is complete because.

Speaker Change: And so then you look at the margin do you think about the benefit of the fixed rate asset repricing and so that really becomes powerful win it's a multi year benefit and so we've talked about that in the past but.

Pretty hefty lift to get to where we want to be and make sure that we've done everything everything right, but the way we are thinking about that as looking at our capital ratios and we also look at our capital ratios inclusive of Aoc I, because we think that.

Speaker Change: That benefit will flow through 2025, if you assume you're assuming rates stay relatively stable and we will continue to see that benefit and so when I look longer term and I look at the fourth quarter of this year and are compared to the fourth quarter.

Cat four banks in the way the regulators are looking at it we think that that's that matters as well and so we want to be balanced in how we deploy it but.

Andrew Jamie Gregory: And so when I look longer term, and I look at the fourth quarter of this year, and I compare it to the fourth quarter of 2025, there is about a 20 basis point benefit due to fixed-rate asset repricing. And there are a lot of variables that can impact that outside of those fixed-rate repricing benefits, but that's a pretty important benefit.

Speaker Change: 2025, there is about a 20 basis point benefit due to fixed rate asset repricing and there are a lot of variables that can impact that outside of those fixed rate repricing benefits, but that's a pretty.

Hi.

Assuming things play out like we expect.

We would expect to deploy.

Large portion of it the securities repositioning deploy some of it to share repurchases, but really just try to stay at the high end of our target range of <unk> 10 to 10, 5% and so more to come on that you can be sure that as soon as we have everything locked down which we expect in the near term.

We will let everybody know.

Great. Thanks for taking my questions.

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

Thank you Angela and.

I appreciate everyone being in attendance today and your continued interest in Synovus I'd also like to thank and recognize all of our team members who are listening in today. Our financial results are as we presented them. This morning are a direct result of what you do daily to serve our clients and to differentiate us from our competitors.

Our first quarter results reflect the contraction in the margin and we believe that this will reverse in two expansion for the year to come our fee income expectations have risen our expenses are being well managed on the credit front as we've shared today lots of metrics, but the summary is the outlook for charge offs is stable to lower even as we build our allowance.

Higher and from an overall business activity standpoint, we're seeing some green shoots our loan pipelines are starting to increase a bit in sales activities across our client segments are picking up.

As we've shared in recent quarters, our strategic focus is on leveraging our trusted and valued approach to serving and advising our clients to deepen relationships and deliver prudent and profitable growth.

As we navigate an uncertain economic and interest rate environment. We are equally focused on strengthening our returns as well as our balance sheet, which in turn translates into a more risk resilient profile.

Truly believe that we have progress throughout the remainder of this year and even into 2025, and we will continue to build upon our momentum and return the bank to a more diversified and consistent growth orientation for our investors. We look forward to seeing many of you in the upcoming conferences in May and June and we stand ready to address any of your <unk>.

<unk>, thanks to all and now operator that concludes our first quarter 2024 earnings call.

Thank you gentlemen, this concludes today's call. Thank you for joining you may now disconnect your lines.

Q1 2024 Synovus Financial Corp Earnings Call

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