Q2 2024 Huntington Bancshares Inc Earnings Call

Greetings and welcome to the Huntington Bancshares second quarter 2024 earnings conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation.

Operator: At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. At this time, I'll now turn the conference over to your host, Tim Sedabres, Director of Investor Relations. Please go ahead, sir.

If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded.

At this time, I'll now turn the conference over to your host, Tim Sedabres, Director of Investor Relations. Please go ahead, sir.

Timothy R. Sedabres: Thank you, Operator. Welcome, everyone, and good morning.

Timothy R. Sedabres: Copies of the slides we will be reviewing today can be found in the Investor Relations section of our website, www.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about one hour from the end of the call. Our presenters today are Steve Steinour, Chairman, President, and CEO, and Zach Wasserman, Chief Financial Officer. Brendan Lawlor, Chief Credit Officer, will join us for the Q&A. Earnings documents, which include our forward-looking statement disclaimer and non-GAAP information, are available on the Investor Relations section of our website. With that, I now turn it over to Steve.

Timothy R. Sedabres: Thank you, Operator. Welcome, everyone, and good morning. Copies of the slides we will be reviewing today can be found on the Investor Relations section of our website, www.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about one hour from the close of the call.

Speaker Change: Our presenters today are Steve Steinour, Chairman, President and CEO , and Zach Wasserman, Chief Financial Officer. Brendan Lawlor, Chief Credit Officer, will join us for the Q&A.

Speaker Change: Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information, are available on the Investor Relations section of our website. With that, let me now turn it over to Steve.

Stephen D. Steinour: Thanks, Tim. Good morning, everyone, and welcome. Thank you for joining the call today. We're pleased to announce our second quarter results, which Zach will detail later. These results are supported by our colleagues who live our purpose every day as we make people's lives better, help businesses thrive, and strengthen the communities we serve. Now on to slide four.

Stephen D. Steinour: Thanks Tim. Good morning everyone and welcome. Thank you for joining the call today. We're pleased to announce our second quarter results which Zach will detail later.

Zach: These results are supported by our colleagues who live our purpose every day as we make people's lives better, help businesses thrive, and strengthen the communities we serve.

Stephen D. Steinour: There are five key messages we want to share with you today. First, we are intensely focused on executing our organic growth strategies and leveraging our position of strength. Our robust liquidity and capital base put us in a position to drive growth, and we are investing in new geographies and businesses in addition to existing businesses. Second, we expanded net interest income, and we expect it to continue to grow sequentially from the first quarter trough.

Speaker Change: Now on to slide four. There are five key messages we want to share with you today.

Speaker Change: First, we are intensely focused on executing our organic growth strategies and leveraging our position of strength. Our robust liquidity and capital base put us in a position to drive growth, and we are investing in new geographies and businesses in addition to existing businesses.

Speaker Change: Second, we expanded net interest income, and we expect it to continue to grow sequentially from the first quarter trough.

Stephen D. Steinour: This outlook is supported by accelerating loan growth and sustained deposit growth to power future revenue expansion. Third, we drove fee revenues higher in the quarter with support from our three major focus areas, capital markets, payments, and wealth management.

Speaker Change: This outlook is supported by accelerating loan growth and sustained deposit growth to power future revenue expansion. Third, we drove fee revenues higher in the quarter with support from our three major focus areas, capital markets, payments, and wealth management.

Stephen D. Steinour: Fourth, we are achieving strong credit performance with stable net charge-offs, which are tracking as expected for the year. This is a direct result of our sustained and disciplined approach to credit over many years and our aggregate moderate to low-risk appetite. Finally, we believe the net result of these actions will deliver expanded profitability from here and into 2025 and beyond. I will move us on to slide 5 to recap our performance.

Speaker Change: Fourth, we are achieving strong credit performance with stable net charge-offs, which are tracking as expected for the year. This is a direct result of our sustained and disciplined approach to credit over many years and our aggregate moderate-to-low-risk appetite.

Speaker Change: Finally, we believe the net result of these actions will deliver expanded profitability from here and into 2025 and beyond.

Stephen D. Steinour: We delivered accelerated loan growth with average balances growing by $2 billion from a year ago. Annualized loan growth in the quarter was 4.7 percent. Average deposit balances also increased, growing $8 billion, or 5.5% over the past year. Capital further strengthened with a reported Common Equity Tier 1 of 10.4% and an adjusted Common Equity Tier 1 of 8.6%, inclusive of AOCI. Liquidity remains top tier, with coverage of uninsured deposits of 204%, a peer-leading level. Credit quality was stable, as net charge-offs improved by one basis point from the first quarter to 29 basis points.

Speaker Change: I will move us on to slide 5 to recap our performance. We delivered accelerated loan growth with average balances growing by $2 billion from a year ago. Annualized loan growth in the quarter was 4.7%.

Speaker Change: Average deposit balances also increased, growing $8 billion or 5.5% over the past year.

Speaker Change: Capital further strengthened with reported Common Equity Tier 1 of 10.4% and adjusted Common Equity Tier 1 of 8.6% inclusive of AOCI.

Speaker Change: Liquidity remains top tier with coverage of uninsured deposits of 204%, a peer leading level.

Speaker Change: Credit quality was stable as net charge-offs improved by one basis point from the first quarter to 29 basis points.

Stephen D. Steinour: We are sustaining momentum in the growth of our primary bank relationships, with consumer and business increasing by 2 and 4 percent, respectively, year over year. Again, this past quarter, we seized the opportunity to add talented bankers. We're pleased to add new deposit focus capabilities in the mortgage servicing and homeowners association title and escrow areas. These new teams build upon the prior investments we've made in the Carolinas, Texas, and three new commercial verticals.

Speaker Change: We are sustaining momentum in the growth of our primary bank relationships, with consumer and business increasing by 2 and 4 percent respectively, year over year.

Speaker Change: Again, this past quarter, we seized the opportunity to add talented bankers. We're pleased to add new deposit focus capabilities in the mortgage servicing and homeowners association title and escrow areas.

Speaker Change: These new teams build upon the prior investments we've made in the Carolinas, Texas, and three new specially commercial verticals.

Stephen D. Steinour: As we shared last month, we are bringing in-house our merchant acquiring business within our payments organization to further accelerate revenues and capabilities. As I mentioned, our disciplined positioning of robust capital and liquidity enables our ability to sustain a growth posture. Capital continues to increase, with adjusted CET1 up approximately 50 basis points from a year ago. Liquidity also continues to be robust, supported by sustained deposit gathering. We were pleased to once again deliver top quartile results in this year's CCAR stress test exercise, with Huntington's modeled credit losses second best in the peer group.

Speaker Change: As we shared last month, we are bringing in-house our merchant acquiring business within our payments organization to further accelerate revenues and capabilities. As I mentioned, our disciplined positioning of robust capital and liquidity enables our ability to sustain a growth posture.

Speaker Change: Capital continues to increase, with adjusted CET1 up approximately 50 basis points from a year ago. Liquidity continues to be robust, supported by sustained deposit gathering.

Speaker Change: We were pleased to once again deliver top quartile results in this year's CCAR stress test exercise, with Huntington's modeled credit losses second best in the peer group. Our stress capital buffer was reduced and came in at the minimum level of 2.5%.

Stephen D. Steinour: Our stress capital buffer was reduced and came in at the minimum level of 2.5%. Across our markets, we see the broader economy continuing to hold up. Our new initiatives, teams, and geographies provide growth opportunities even as the broader environment for customer loan demand remains somewhat muted. Zach, it is over to you to provide more detail on our financial performance.

Speaker Change: Across our markets, we see the broader economy continuing to hold up. Our new initiatives, teams, and geographies provide growth opportunities, even as the broader environment for customer loan demand remains somewhat muted.

Zachary J. Wasserman: Thanks Steve and good morning everyone. Slide 6 provides highlights of our second quarter results. We reported earnings per common share of $0.30. The quarter included a $6 million notable item related to the updated FDIC deposit insurance fund special assessment, but this did not have an impact on EPS.

Speaker Change: Zach, over to you to provide more detail on our financial performance.

Zach: Thanks, Steve, and good morning, everyone. Slide 6 provides highlights of our second quarter results.

Zach: We reported earnings per common share of $0.30. The quarter included a $6 million notable item related to the updated FDIC Deposit Insurance Fund Special Assessment. This did not have an impact on EPS.

Zachary J. Wasserman: Return on Tangible Common Equity, or ROTCE, came in at 16.1% for the quarter. Adjusted for notable items, it was 16.2%. The average loan balance increased by $2 billion, or 1.7% versus Q2 last year. Average deposits continue to grow, increasing by $8 billion, or 5.5% on a year-over-year basis. Credit quality remains strong, with net charge-offs of 29 basis points. However, allowance for credit losses decreased by 2 basis points and ended the quarter at 1.95%.

Speaker Change: Return on Tangible Common Equity, or ROTCE, came in at 16.1% for the quarter.

Speaker Change: Adjusted for notable items, ROTCE was 16.2%. Average loan balances increased by $2 billion, or 1.7%, versus Q2 last year. Average deposits continued to grow, increasing by $8 billion, or 5.5%, on a year-over-year basis.

Speaker Change: Credit quality remains strong, with net charge-offs of 29 basis points. Allowance for credit losses decreased by 2 basis points and ended the quarter at 1.95%.

Zachary J. Wasserman: Adjusted CET1 ended the quarter at 8.6% and increased roughly 10 basis points from last quarter. Supported by earnings, tangible book value per share has increased by nearly 8% year over year. Turning to slide 7, consistent with our plan and prior guidance, loan growth is accelerating quarter over quarter. Our sequential growth in loans into Q2 of $1.5 billion was more than double the sequential dollar growth into the first quarter. This likewise drove acceleration of loan growth on a year-over-year basis, from 1.2% in Q1 to 1.7% in Q2. At our current run rate of growth, 4.7% annualized, we are on track for the full year plan.

Speaker Change: Adjusted CET1 ended the quarter at 8.6% and increased roughly 10 basis points from last quarter.

Speaker Change: Supported by earnings, tangible book value per share has increased by nearly 8% year-over-year.

Speaker Change: Turning to slide 7, consistent with our plan and prior guidance, loan growth is accelerating quarter over quarter.

Speaker Change: Our sequential growth in loans into Q2 of $1.5 billion was more than double the sequential dollar growth into the first quarter.

Speaker Change: This likewise drove acceleration of loan growth on a year-over-year basis.

Speaker Change: from 1.2% in Q1 to 1.7% in Q2.

Speaker Change: at our current run rate of growth.

Speaker Change: 4.7% annualized.

Zachary J. Wasserman: We expect the pace of future year-of-year loan growth to accelerate over the course of 2024. Loan Growth in the Quarter was supported by both commercial and consumer loan categories. Total commercial loans increased by $689 million. Excluding commercial real estate, commercial growth totaled $1.1 billion for the quarter.

Speaker Change: We are on track for the full year plan. We expect the pace of future year-of-year loan growth to accelerate over the course of 2024.

Speaker Change: Loan Growth in the Quarter was supported by both commercial and consumer loan categories.

Speaker Change: Total commercial loans increased by $689 million. Excluding commercial real estate, commercial growth totaled $1.1 billion for the quarter.

Zachary J. Wasserman: Over the past year, CRE balances have declined by $1.3 billion, with the concentration of CRE as a percent of total loans declining 1.5 percentage points, from 10.9% to 9.6% today. Even as we have managed CRE balances lower, all other loan balances have increased by over $4 billion or 4% from the prior year. Drivers of commercial loan growth in the second quarter included $600 million from new geographies and specialty verticals. These included Fund Finance, Carolinas, Texas, Healthcare Asset Based Lending, and Native American Financial Services.

Speaker Change: Over the past year, CRE balances have declined by $1.3 billion, with the concentration of CRE as percent of total loans declining 1.5 percentage points, from 10.9% to 9.6% today.

Speaker Change: Even as we have managed CRE balances lower, all other loan balances have increased by over $4 billion or 4% from the prior year.

Speaker Change: Drivers of commercial loan growth in the second quarter included $600 million from new geographies and specialty verticals. This included fund finance, Carolinas, Texas, health care asset-based lending, and Native American financial services.

Zachary J. Wasserman: Auto floor plan increased by $279 million. Regional and Business Banking increased by $233 million. In total, consumer loans, average balances grew by $757 million, or 1.4% for the quarter. Within consumers, average auto balances increased by $436 million. Residential Mortgage increased by $199 million, benefiting from production as well as slower prepayments. RV and Marine balances increased by $74 million.

Speaker Change: Auto floor plan increased by $279 million dollars. Regional and business banking increased by $233 million dollars.

Speaker Change: In total consumer loans, average balances grew by $757 million, or 1.4% for the quarter. Within consumer, average auto balances increased by $436 million.

Speaker Change: Residential mortgage increased by $199 million, benefiting from production as well as slower prepay speeds.

Zachary J. Wasserman: Turning to slide 8, as noted, we drove another quarter of solid deposit growth. Average deposits increased by $2.9 billion, or 1.9%, in the second quarter. The total cumulative deposit beta was 45%. The cost of deposits increased by 9 basis points in the second quarter, which matched the increase in earning asset yield. This was half the rate of change in deposit costs we saw into the first quarter, a continuation of the decelerating trends in funding costs even as deposit growth increased. Within the quarter, there was a notable further deceleration, with June deposit costs only slightly higher than May.

Speaker Change: RV and Marine balances increased by $74 million.

Speaker Change: Turn to slide 8. As noted, we drove another quarter of solid deposit growth. Average deposits increased by $2.9 billion, or 1.9% in the second quarter.

Speaker Change: Total cumulative deposit beta was 45%.

Speaker Change: Cost of deposits increased by 9 basis points in the second quarter, which matched the increase in earning asset yields.

Speaker Change: This was half the rate of change in deposit costs we saw into the first quarter, a continuation of the decelerating trends in funding costs even as deposit growth increased.

Speaker Change: Within the quarter, there was notable further deceleration, with June deposit costs only slightly higher than May. We are actively implementing our Down Beta Action Plan, which is further supported by the robust deposit growth we have delivered.

Zachary J. Wasserman: We are actively implementing our down beta action plan, which is further supported by the robust deposit growth we have delivered. This position is allowing us to selectively reduce rates and change other terms across the portfolio in advance of potential rate cuts later this year. Turning to slide 9, our cumulative deposit growth since the start of the rate cycle of 7.9% is differentiated versus the preponderance of peers. We have outperformed by double-digit percentage points on deposit growth over this time.

Speaker Change: This position is allowing us to selectively reduce rates and change other terms across the portfolio in advance of potential rate cuts later this year.

Speaker Change: Turning to slide 9, our cumulative deposit growth since the start of the rate cycle of 7.9% is differentiated versus the preponderance of peers.

Speaker Change: We have outperformed by double-digit percentage points on deposit growth over this time.

Zachary J. Wasserman: As a result, we've been able to fund loan growth with deposits and, at the same time, manage the loan-to-deposit ratio lower over the past year, which will support continued acceleration of lending. Turning to slide 10, the non-interest-bearing mixed shift is tracking closely to our forecast. Average non-interest-bearing balances decreased by $280 million, or 0.9% from the prior quarter.

Speaker Change: As a result, we've been able to fund loan growth with deposits and at the same time manage the loan-to-deposit ratio lower over the past year, which will support continued acceleration of lending.

Speaker Change: Turning to slide 10, non-interest bearing mix shift is tracking closely to our forecast. Average non-interest bearing balances decreased by $280 million or 0.9% from the prior quarter. This represents a continued deceleration of mix shift consistent with our expectations.

Zachary J. Wasserman: This represents a continued deceleration of the mix shift consistent with our expectations. Within the consumer deposit base, average non-interest-bearing deposits were modestly higher quarter over quarter, but this was offset by a modest decelerating trend of lower non-interest-bearing balances from commercial deposits. On to slide 11.

Speaker Change: Within the consumer deposit base, average non-interest bearing deposits were modestly higher quarter over quarter. This was offset by a modest decelerating trend of lower non-interest bearing balances from commercial depositors.

Zachary J. Wasserman: For the quarter, net interest income increased by $25 million, or 1.9%, to $1,325,000,000. We are pleased to have delivered growth off the trough levels from last quarter and believe this inflection in revenues will continue into the third and fourth quarters. Net interest margin was 2.99% for the second quarter. Reconciling the change in NIM from Q1, we saw a decrease of two basis points. This was due to a higher cash balance, with the spread net of free funds flat versus the prior quarter.

Speaker Change: On to slide 11.

Speaker Change: For the quarter, net interest income increased by $25 million, or 1.9%, to $1,325,000,000. We are pleased to have delivered growth off the trough levels from last quarter, and believe this inflection in revenues will continue into the third and fourth quarters.

Speaker Change: Net Interest Margin was 2.99% for the second quarter. Reconciling the change in NIM from Q1, we saw a decrease of two basis points.

Speaker Change: This was due to higher cash balances, with spread net of free funds flat versus the prior quarter.

Zachary J. Wasserman: We continue to benefit from fixed-rate loan repricing, with loan yields expanding by nine basis points from the prior quarter. As a reminder, we continue to analyze and develop action plans for a wide range of potential economic and interest rate scenarios for both short-term rates as well as the slope and belly of the curve. Our working assumption for the second half of the year is aligned with a forward curve that projects two rate cuts by year end.

Speaker Change: We continue to benefit from fixed rate loan repricing with loan yields expanding by nine basis points from the prior quarter.

Speaker Change: As a reminder, we continue to analyze and develop action plans for a wide range of potential economic and interest rate scenarios, for both short-term rates as well as the slope and belly of the curve.

Speaker Change: Our working assumption for the second half of the year is aligned with a forward curve which projects two rate cuts by year-end.

Zachary J. Wasserman: Based on that outlook, we see net interest margin relatively stable over the next two quarters at or around the 3% level, plus or minus a few basis points. Turning to slide 12, our level of cash and securities increased as we benefited from higher funding balances from sustained deposit growth. We expect cash and securities as a percent of total average assets to remain approximately 28% as the balance sheet grows over time. We are reinvesting Securities Cash Flows in short-duration HQLA, consistent with our approach to manage the unhedged duration of the portfolio at approximately the current range. Turn to slide 13.

Speaker Change: Based on that outlook, we see net interest margin relatively stable over the next two quarters at or around the 3% level, plus or minus a few basis points.

Speaker Change: Turning to slide 12, our level of cash and securities increased as we benefited from higher funding balances from sustained deposit growth. We expect cash and securities as a percent of total average assets to remain approximately 28% as the balance sheet grows over time.

Speaker Change: We are reinvesting securities cash flows in short-duration HQLA, consistent with our approach to manage the unhedged duration of the portfolio at approximately the current range. Turning to slide 13. As a reminder, our hedging program is designed with two primary objectives.

Zachary J. Wasserman: As a reminder, our hedging program is designed with two primary objectives: to protect margin and revenue in downrate environments and to protect capital in potential uprate scenarios. As of June 30, our effective hedge position included $17.4 billion of received fixed swaps, $5.5 billion of floor spreads, and $10.7 billion of pay fixed swaps. The pay-fix swaps, which successfully protected capital, have a weighted average life of just over three years and will begin to mature over the course of 2025.

Speaker Change: To protect margin and revenue in downrate environments, and to protect capital in potential uprate scenarios.

Speaker Change: As of June 30, our effective hedge position included $17.4 billion of received fixed swaps, $5.5 billion of floor spreads, and $10.7 billion of pay fixed swaps.

Speaker Change: The pay-fix swaps, which successfully protected capital, have a weighted average life of just over three years, and will begin to mature over the course of 2025. As these instruments mature, our asset sensitivity will reduce.

Zachary J. Wasserman: As these instruments mature, our asset sensitivity will reduce. Furthermore, at a measured pace over the past several quarters, we have added more forward-starting received FIC swaps, with effective dates starting generally in the first half of 2025. The impact of both the maturities of the pay-fix swaps and the beginning effectiveness of the receive-fix swaps will reduce asset sensitivity in a down-rate scenario by approximately one-third by the middle of next year. As always, we will continue to dynamically manage our hedging program to achieve our objectives of capital protection and NIM stabilization. Moving on to slide four.

Speaker Change: Furthermore, at a measured pace over the past several quarters, we have added more forward-starting received FIC swaps.

Speaker Change: with effective dates starting generally in the first half of 2025.

Speaker Change: The impact of both the maturities of the pay-fix swaps...

Speaker Change: and the beginning effectiveness of the ReceiveFix swaps.

Speaker Change: will reduce asset sensitivity in a down rate scenario by approximately one-third by the middle of next year. As always, we will continue to dynamically manage our hedging program to achieve our objectives of capital protection and NIM stabilization.

Zachary J. Wasserman: Our fee revenue growth is driven by three substantive areas, capital markets, payments, and wealth management. Collectively, these three areas represent nearly two-thirds of our total fee revenue. Within capital markets, revenues increased $17 million from the prior quarter, driven by higher advisory revenue. Commercial banking-related capital markets revenues were stable quarter-to-quarter.

Speaker Change: Moving on to slide 14. Our fee revenue growth is driven by three substantive areas, capital markets, payments, and wealth management. Collectively, these three areas represent nearly two-thirds of our total fee revenues.

Speaker Change: Within capital markets, revenues increased $17 million from the prior quarter, driven by higher advisory revenues.

Speaker Change: Commercial banking-related capital markets revenues were stable, quarter-to-quarter. We expect to sustain and build upon this level over the back half of the year, supported by robust advisory pipelines and capstone, as well as expected new commercial loan production.

Zachary J. Wasserman: We expect to sustain and build upon this level over the back half of the year, supported by robust advisory pipelines and capstone, as well as expected new commercial loan production. Payments and cash management revenue was up $8 million in the second quarter and increased 5% year over year. Treasury management fees within payments continue to grow strongly at 11% year-over-year as we deepen customer penetration. Our wealth and asset management revenues increased 8% from the prior year. Advisory relationships have increased by 8% year-over-year, and assets under management have increased by 17% on a year-over-year basis. Moving on to slide 15.

Speaker Change: Payments and cash management revenue was up $8 million in the second quarter and increased 5% year-over-year.

Speaker Change: Treasury management fees within payments continue to grow strongly at 11% year-over-year as we deepen customer penetration.

Speaker Change: Our wealth and asset management revenues increased 8% from the prior year. Advisory relationships have increased by 8% year-over-year, and assets under management have increased by 17% on a year-over-year basis.

Zachary J. Wasserman: On an overall level, GAAP non-interest income increased by $24 million to $491 million for the second quarter, increasing from the seasonal first quarter low. Excluding the impacts of the CRT transactions, non-interest income increased by $31 million, quarter over quarter. Moving on to slide 16, on expenses, Gap non-interest expense decreased by $20 million, and underlying core expenses increased by $13 million.

Speaker Change: Moving on to slide 15. On an overall level, GAAP non-interest income increased by $24 million to $491 million for the second quarter, increasing from the seasonal first quarter low.

Speaker Change: Excluding the impacts of the CRT transactions, non-interest income increased by $31 million, quarter over quarter.

Speaker Change: Moving on to slide 16 on expenses.

Speaker Change: Gap non-interest expense decreased by $20 million and underlying core expenses increased by $13 million.

Zachary J. Wasserman: During the quarter, we incurred $6 million of incremental expense related to the FDIC Deposit Insurance Fund Special Assessment. Excluding this item, core expenses came in better than our expectations for the quarter, with approximately half of the lower-than-expected result driven by discrete benefits not expected to occur. The increase in core expenses quarter-over-quarter was primarily driven by personnel expenses, as we saw higher revenue-driven compensation and incentives due to production, as well as the full quarter impact of merit increases effective in March. We continue to forecast 4.5% core expense growth for the full year. As we look into the third quarter, we expect core expenses to be higher at approximately $1,140,000,000.

Speaker Change: During the quarter, we incurred $6 million of incremental expense related to the FDIC Deposit Insurance Fund Special Assessment.

Speaker Change: Excluding this item, core expenses came in better than our expectations for the quarter, with approximately half of the lower-than-expected result driven by discrete benefits not expected to recur.

Speaker Change: The increase in core expenses quarter over quarter was primarily driven by personnel expenses as we saw higher revenue driven compensation and incentives due to production as well as the full quarter impact of merit increases effective in March.

Speaker Change: We continue to forecast 4.5% core expense growth for the full year.

Speaker Change: As we look into the third quarter, we expect core expenses to be higher at approximately $1,140,000,000. There may be some variability given revenue-driven compensation.

Zachary J. Wasserman: There may be some variability given revenue-driven compensation. Slide 17 recaps our capital position. Common Equity Tier 1 ended the quarter at 10.4%.

Speaker Change: Slide 17 recaps our capital position.

Zachary J. Wasserman: Our adjusted CET1 ratio, inclusive of AOCI, was 8.6% and has grown 50 basis points from a year ago. Our capital management strategy remains focused on driving capital ratios higher while maintaining our top priority to fund high-return loan growth. We intend to drive adjusted CET1, inclusive of AOCI, into our operating range of 9 to 10%. Slide 18 highlights our results from this year's CCAR exercise. We were pleased to once again continue our trend of top quartile performance for expected credit losses from the stress test.

Speaker Change: Common Equity Tier 1 ended the quarter at 10.4%. Our adjusted CET1 ratio, inclusive of AOCI, was 8.6% and has grown 50 basis points from a year ago.

Speaker Change: Our capital management strategy remains focused on driving capital ratios higher while maintaining our top priority to fund high return loan growth.

Speaker Change: We intend to drive adjusted CET-1, inclusive of AOCI, into our operating range of 9-10%.

Speaker Change: Slide 18 highlights our results from this year's CCAR exercise. We were pleased to once again continue our trend of top quartile performance for expected credit losses from the stress test. This year's result was second best compared to peers.

Zachary J. Wasserman: This year's result was second best compared to peers. Our SCB improved to the 2.5% minimum, and our modeled stress CET1 ratio was the second best in our peer group. Our ACL, as a percentage of CCAR modeled losses, continued to be the highest level compared to our peers.

Speaker Change: Our SCB improved to the 2.5% minimum, and our modeled stress CET1 ratio was the second best in our peer group.

Speaker Change: Our ACL, as a percentage of CCAR modeled losses, continue to be the highest level compared to our peers.

Zachary J. Wasserman: These results validate the consistency of our longstanding approach to maintaining an aggregate moderate to low risk appetite. As shown on slide 19, credit quality is coming in as we expected and continues to perform very well. Net charge-offs were 29 basis points in Q2, one basis point lower than the prior quarter. They remain in the lower half of our through-the-cycle target range of 25 to 45 basis points. Allowance for credit losses, at 1.95 percent, declined by two basis points from the prior quarter, effectively flat, and reflects both a modestly improved economic outlook as well as an increased loan portfolio.

Speaker Change: These results validate the consistency of our long-standing approach to maintaining an aggregate, moderate-to-low risk appetite.

Speaker Change: On slide 19, credit quality is coming in as we expected and continues to perform very well.

Speaker Change: Net charge-offs were 29 basis points in Q2, one basis point lower than the prior quarter. They remain in the lower half of our through-the-cycle target range of 25 to 45 basis points.

Speaker Change: Allowance for credit losses at 1.95%, declined by two basis points from the prior quarter, effectively flat, and reflects both modestly improved economic outlook as well as an increased loan portfolio.

Zachary J. Wasserman: On slide 20, the criticized asset ratio declined 7 percent from the prior quarter, driven by broad-based improvements across commercial portfolios. Non-performing assets increased approximately 5% from the previous quarter to 63 basis points while remaining below the prior 2021 level.

Speaker Change: On slide 20, the criticized asset ratio declined 7% from the prior quarter, driven by broad-based improvements across commercial portfolios. Non-performing assets increased approximately 5% from the previous quarter to 63 basis points.

Zachary J. Wasserman: Turning to slide 21, our outlook for the full year remains unchanged from our prior guidance. As we discussed, we expect loan growth to accelerate, and deposit growth to sustain its quarterly trend. We drove net interest income higher from its trough and expect that trend to continue sequentially in the second half. Core expenses are well-managed and tracking to our full-year outlook, subject to some variability given revenue-driven compensation levels and the timing of staffing ads and expenses related to the insourcing of our merchant acquiring business. We expect to exit the year at a low single-digit year-over-year growth rate.

Speaker Change: while remaining below the prior 2021 level.

Speaker Change: Turning to slide 21, our outlook for the full year remains unchanged from our prior guidance.

Speaker Change: As we discussed, we expect loan growth to accelerate and deposit growth to sustain its quarterly trend.

Speaker Change: We drove net interest income higher from its trough and expect that trend to continue sequentially in the second half.

Speaker Change: Core expenses are well managed and tracking to our full year outlook, subject to some variability given revenue driven compensation levels and the timing of staffing ads and expenses related to the insourcing of our merchant acquiring business.

Speaker Change: We expect to exit the year at a low single-digit year-over-year growth rate.

Zachary J. Wasserman: Credit is performing well, aligned with our expectations. With that, we'll conclude our prepared remarks and move over to Q&A. Tim, it is your turn. Thank you, Zach.

Speaker Change: Credit is performing well, aligned with our expectations.

Timothy R. Sedabres: Thank you, Zach. Operator, we will now take questions. We ask that, as a courtesy to your peers, each person ask only one question and one related follow-up, and then if that person has additional questions, he or she can add themselves back into the queue. Thank you.

Timothy R. Sedabres: With that, we'll conclude our prepared remarks and move over to Q&A. Tim, over to you. Thank you, Zach. Operator, we will now take questions. We ask that as a courtesy to your peers, each person ask only one question and one related follow-up. And then if that person has additional questions, he or she can add themselves back into the queue. Thank you.

Operator: We'll now be conducting the question and answer session. If you'd like to ask a question at this time, you may press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Thank you. We'll now be conducting the question and answer session. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star 2 if you would like to withdraw your question from the queue.

Speaker Change: For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you.

Operator: One moment, please, while we poll for questions. Thank you. Thank you. And our first question is from the line of Manan Gosalia with Morgan Stanley. Please proceed with your question.

Speaker Change: Thank you. And our first question is from the line of Manan Gosalia with Morgan Stanley . Please proceed with your question.

Manan Gosalia: Zach, can you expand on your comments on how you're managing downside deposit beta if we get a couple of rate cuts by year end? I mean, I think in the past you've spoken about a downside beta of 20% or so on total deposits. Can that be a little bit better given that you've been more competitive on deposits in the first half of the year?

Manan Gosalia: Hey, good morning. Mornin' to Bob.

Manan Gosalia: Zach, can you expand on your comments on how you're managing downside deposit beta if we get a couple of rate cuts by year end? I mean, I think in the past you've spoken about a downside beta of 20% or so on total deposits. Can that be a little bit better given that you've been more competitive on deposits in the first half of the year?

Zachary J. Wasserman: As I noted in the prepared remarks, we're already beginning the early stages of the down beta playbook. I think reducing acquisition rates, shifting the acquisition mix from time deposits toward more money market, which is easier and faster to manage on a down beta trajectory, shortening the duration of CDs, and making targeted rate reductions in certain client segments. We are already beginning these actions, and they benefited us in the second quarter.

Speaker Change: Thanks Manan, good morning, great question, appreciate the chance to elaborate on this one. As I noted in the prior remarks, we're already beginning the early stages of the down beta playbook.

Speaker Change: I think reducing acquisition rates, shifting the acquisition mix from time deposits toward more money market, which is easier and faster to manage on a down payment.

Speaker Change: [inaudible]

Manan Gosalia: As we look forward, clearly, the performance and trajectory around beta will be a function of what the forward yield curve projects, but importantly, what clients and the markets generally believe to be the rate environment. With that being said, what we're seeing set up now is very conducive to continuing this action, being ready to actually implement the full down beta playbook when we presumably see a rate reduction later this year. So there's good confidence in where things are going in terms of that.

Speaker Change: will be here to talk about performance and trajectory around beta and what clients and the markets generally believe to be the right environment. With that being said, what we're seeing set up now is very conducive to continuing this action and being ready to actually implement the full down-beta playbook when needed.

Speaker Change: When we presumably see a rate reduction later this year, so there's good confidence in where things are going in terms of that.

Manan Gosalia: It's a little early to give precise guidance here because clearly the trajectory around beta over the course of the first year or so will be a function of those market expectations. But it's our general working assumption that we'll be in the mid to high 20s percent down beta range over the first year and then continuing from there and, as I said, shaping up pretty well in the early days.

Speaker Change: That's a little early to give.

Speaker Change: You know, precise guidance, you'll be as clear as the...

Speaker Change: The trajectory I'm being over the course of the first year or so will be a function of those.

Speaker Change: [inaudible]

Zachary J. Wasserman: Got it. And then maybe on the loan side, can you talk about how spreads are tracking? You know, we've had several banks highlighting weaker demand for loan growth, but they're all looking for loan growth. So are you seeing things getting more competitive? And how is that impacting loan spreads overall?

Speaker Change: Got it. And then maybe on the loan side, can you talk about how spreads are tracking? You know, we've had several banks highlighting weaker demand on loan growth, but they're they're all looking for loan growth. So are you seeing things getting more competitive and it does How is that impacting loan spreads overall?

Zachary J. Wasserman: It is certainly a competitive environment, and we're driving growth, as we said, into the second quarter. On a dollar basis, we saw double the growth into the second quarter than we saw in the first quarter, so the acceleration that we have been calling for for some time is happening, and so we feel pretty pleased about that. Part of the question on loan spreads for us overall on a net basis is, where are we growing?

Zachary J. Wasserman: You know, look, in a certain way...

Speaker Change: Oh!

Speaker Change: It is certainly a competitive environment, and we're driving growth, as we said, into the second quarter on a dollar basis. We saw double the growth into the second quarter than we saw in the first quarter. So the acceleration that we have been calling for for some time we're seeing, and so we feel pretty pleased about that. Part of the question on loan spreads for us overall on a net basis is where are we growing? What segments, what categories are we growing in? And where we're focused is driving growth in a lot of the new areas that we've been investing in, which typically come on with...

Zachary J. Wasserman: What segments, what categories are we growing in? And where we're focused is driving growth in a lot of the new areas that we've been investing in, which typically come with pretty attractive spreads relative to the average. I would characterize the spread environment generally as pretty flat on a product and category level, and for us, we're really focused on trying to drive capital optimization, obviously, into the areas with the highest return that often have good spreads but also commonly feed business performance as well.

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Erika Najarian: Our next question is from the line of Erika Najarian with UBS. Please proceed with your question.

Speaker Change: Our next question is from the line of Erika Najarian with UBS. Please receive your questions.

Erika Najarian: Hi, good morning. I wanted to talk through the expected deposit trends for the rest of the quarter. You know, clearly, you have outperformed, as you mentioned, back to the preponderance of your peers at the break cycle in terms of deposit growth. I guess I got the impression that perhaps some of this deposit growth is pre-funding even better loan growth for the second half of the year. And I did notice that you can skip through your portfolio. And at that rate, you've been [inaudible] plus nine basis points for the quarter.

Erika Najarian: Hi, good morning. I wanted to talk through expected deposit trends for the rest of the quarter. You know, clearly you have outcase, as you mentioned, back to preponderance of your peers. That's a great cycle in terms of deposit growth. I guess I got the impression that perhaps some of this deposit growth is pre-funding even better loan growth for the second half of the year. And I did notice that you just get through your six-thirty portfolio, and at that rate that you've been...

Speaker Change: I guess the question here is can you continue to, you know, do you have enough deposits to fund the acceleration of the process you've been waiting for? Or are you expecting it to continue to grow at this pace but closer to the great and competitive dynamics that you observed in June? In other words, it won't be as expensive as the plus nine basis points for the quarter.

Zachary J. Wasserman: Thanks, Eric, for the questions. Zach, I'll take it.

Zach: Thanks Erika for the question, this is Zach, I'll take it. Your line was clipping a little bit as I went up, but I think what I heard was, you know, what is our...

Zach: [inaudible]

Zachary J. Wasserman: Your line was clipping a little bit as I went, but I think what I heard was what our expectation is for loan growth and deposit pricing here in the back half of the year, and will we have enough to fund loans going forward and what the rate trajectory is around that. So let me see if I can address that, and if I haven't covered it, you can follow up. You know, I think we're really pleased with how things are going on upon depositality.

Zachary J. Wasserman: You know, if you take a big step back, you have 15% outperformance versus the peer median over the course of the rate cycle, with a beta that compares pretty favorably to both history and peers. So, you're really doing well.

Speaker Change: You know, I think we're really pleased with how things are going on upon depositality, you know, for sure. You know, if you take a big step back, you know, 15% house performance versus the peer median over the course of the rate cycle, with a beta that compares pretty favorably to both history and peers. So, you know, really doing well. I think what that's allowing us to do is, to your question,

Zachary J. Wasserman: I think what that's allowing us to do is, to your question, pre-fund to some degree future loan growth. And we've seen the low of the deposit ratio just in the last year, 84% this time last year, 81% now, as the court has disclosed. So it sort of sets up that ability to fund with core deposits the accelerating loan growth that we expect. But also, I would note, and this sort of goes back to Manan's question a second ago, it gives us a lot of flexibility to really manage down data and to be selective and disciplined in terms of where that next unit of funding will come from.

Speaker Change: pre-fund to some degree a future loan growth, and we've seen the low of the deposit ratio just in the last year go from 84% this time last year to 81% now that the court has disclosed. So it sort of sets up that ability to fund with core deposits the accelerating loan growth that we expect. But also I would note, and this sort of goes back to Manon's question a second ago, it gives us a lot of flexibility.

Manon: to really manage down data and to be selective and disciplined in terms of where to next.

Zachary J. Wasserman: So that is sort of the intention, and we've been performing really well. I mean, to some degree, I will share that we're actually outperforming our initial budget on deposit growth. It's one of the reasons why we elevated our deposit growth forecast up to the high end of our initial guidance range. You know, I think we saw an extraordinary level of growth in the second quarter, almost $3 billion. I don't expect that same level of sequential growth into the second quarter, but I do expect it to grow, and I would see, you know, some nice sequential growth into the fourth quarter, too, and to be within that overall guidance range of three or four for the whole year.

Manon: [inaudible]

Speaker Change: You know, I think we saw an extraordinary level of growth into the second quarter of almost $3 billion. I don't expect that same level of sequential growth into the second quarter, but I do expect it to grow, and I would see some nice sequential growth into the fourth quarter, too, and to be within that overall guidance range of three or four for the full year.

Zachary J. Wasserman: So, I think that will allow us to kind of absorb the increased lending volumes that we're projecting and core fund them, you know, and set up the ability to manage down beta. In terms of pricing strategy, I'm going to sort of go back a little bit to the answer I gave to Manan, which is, you know, we're being judicious. We're still in acquisition mode, but we're very much cognizant that we are in a position of strength, and that can allow us to execute the early stages of down beta.

Speaker Change: So I think that will allow us to kind of absorb the increased lending volumes that we're projecting and core fund them and set up the...

Speaker Change: In terms of pricing strategy, we are very much cognizant that we are in a position of strength and that can allow us to execute the early stages of data beta. We are seeing in the marketplace reductions in go-to-market acquisition pricing. We are likewise doing that and taking that opportunity.

Zachary J. Wasserman: So, we're, you know, we're seeing reductions in go-to-market acquisition pricing in the marketplace. We're likewise doing that and taking that opportunity, and I believe that, you know, if we do get great reductions here in September, which seems to be a certainty based on market expectations, we'll be able to continue that and drive it forward even further.

Speaker Change: And I believe that, you know, if we do get great reductions here in September , which is, you know, seems to be a certainty based on the market expectations, you know, we'll be able to continue that and to drive it forward even further.

Erika Najarian: Thank you. And just as a follow-up question to that, you know, as I try to put together everything that you've told us about deposit pricing trends, continued fixed-rate asset repricing, and the swaps that are maturing, you know, while you started the year having a generally asset-sensitive position, the way your balance sheet evolved into next year, it sounds like, in terms of both strategically in pricing and, you know, mechanically in terms of some Yeah, a great, great, great question.

Speaker Change: Thank you. And just as a follow-up question to that, you know, as I try to put together everything that you've told us about deposit pricing trends, continued fixed-rate asset repricing, and the swaps that are maturing, you know, while you started the year having a generally asset-sensitive position, the way your balance sheet evolved into next year, it sounds like, you know, in terms of both strategically in pricing and, you know, mechanically in terms of some of these financial engineering rolling off, you will be set up to potentially benefit from that rate curve or lower short rates.

Zachary J. Wasserman: Yeah, great, great, great question. So let me sort of address some of the thinking around the trajectory asset sensitivity, you know, plans. The objective we've had vis-a-vis asset sensitivity management, you know, over the last year, year and a half even, has been to allow our natural asset sensitivity to really maximize the value of the uprate environment, which, which works pretty well. Clearly, now, as we think about, you know, rates topping out and then presumably beginning to fall, we are strategically reducing asset sensitivity.

Speaker Change: Yeah, great question. So let me sort of address some of the thinking around NIM trajectory asset sensitivity plans.

Speaker Change: The objective we've had vis-a-vis asset sensitivity management over the last year, year and a half even, has been to allow our natural asset sensitivity to really maximize the value of the operating environment, which works pretty well.

Speaker Change: [inaudible]

Zachary J. Wasserman: And, you know, the prepared remarks I highlighted are that, you know, the combination of increasing foreign starting receipt fixed swaps and expiration of pay fixed swaps will reduce asset sensitivity by about a third between now and the end of, I'm sorry, the middle of next year. And, you know, we'll continue to be dynamic in managing that, but that's a very intentional reduction in asset sensitivity to manage in the presence of reduced rates.

Speaker Change: Increase in foreign starting receipt fixed swaps and expiration of pay fixed swaps will reduce that sensitivity by about a third between now and the end of the year.

Speaker Change: I'm sorry, the middle of next year.

Speaker Change: We'll continue to be dynamic in managing that, but that's a very intentional reduction in asset sensitivity to manage it in the presence of reduced rates.

Zachary J. Wasserman: I think, by NIM, we're generally seeing pretty stable trends here over the next several quarters. There are two substantive positive factors we've discussed at length. Fixed asset repricing will continue to benefit NIM. The second factor, hedge drag. We had about 16 base points of net hedge drag in the second quarter that we just closed. That will go down to almost a neutral position by the middle of next year in an implied forward scenario, www.youtube.com.uk www.youtube.com.uk

Speaker Change: [inaudible]

Speaker Change: Generally seeing pretty stable trends here over the next several quarters. And there are two substantive positive factors we've discussed over time. Fixed asset repricing will continue to benefit the NIM.

Speaker Change: We, you know, second factor hedge drag, we have about 16 base points of net hedge drag in the second quarter that we just closed. That'll go down to almost a neutral position by the middle of next year in an implied forward scenario.

Speaker Change: So we'll get some benefits from that pretty steadily here over the next...

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: Thank you.

Steven A. Alexopoulos: Our next question is from the line of Steven Alexopoulos with J.P. Morgan. Please proceed with your question.

Steven A. Alexopoulos: Our next question is from the line of Steven Alexopoulos with J.P. Morgan. Please proceed with your question. Okay. Good morning, everyone. Good morning, Steven. I want to start maybe, Zach, for you. So if we do get two cuts this year, say September , December ,

Steven A. Alexopoulos: Okay, good morning everyone. I'm Steven. I want to start, maybe Zach, for you. So if we do get two cuts this year, say September and December, Zach, what's your bias as it relates to the NII outlook, the down one to down four? Where in the range do you think we lean?

Steven A. Alexopoulos: Zach, what's your bias as it relates to the NII outlook, the Down 1 to Down 4? Where in the range do you think we lean?

Zachary J. Wasserman: Yeah. A great question.

Zach: Yeah, great question. Our practice in terms of setting these ranges is to try to box where we think our basic trend is going. We're generally trending pretty well in the middle of that range.

Zachary J. Wasserman: Our practice in terms of setting these ranges is to try to box where we think our basic trend is going. We're generally trending pretty well in the middle of that range, and that's including the couple cuts there. I do think that...

Speaker Change: And that's including the couple of cuts there. I do think that...

Speaker Change: One of the key factors in managing a platinum will be that continued execution on

Speaker Change: [inaudible]

Zachary J. Wasserman: Unknown Executive, Erika Najarian, Manan Gosalia, Robert Siefers, Brendan Lawlor, Huntington We're seeing really encouraging signs there, pipelines look strong, solid performance in Q2, expected to continue to grow and accelerate on a year-over-year basis here in the back half of the year. I think we could see even faster loan growth if some of our new growth initiatives perform even well, even better than they're forecast Pipelines there look really good, and so pull-through is even better than our base plan.

Speaker Change: [inaudible]

Speaker Change: You know, we're seeing really encouraging signs there, pipelines look strong.

Speaker Change: [inaudible]

Speaker Change: perform even less, even better than they're forecasted to do in our base plan.

Speaker Change: [inaudible]

Zachary J. Wasserman: You can see some upward bias on loan growth. Likewise, what we haven't addressed in the Q&A section here is that we did see more CRE runoff in the second quarter than we had expected in our initial budgeting, to the extent that that is lower going forward. You can see some higher loan volumes, and that could lift revenues above the base plan.

Speaker Change: [inaudible]

Steven A. Alexopoulos: The middle of the range, so you're fine. That's the baseline? That's your baseline, okay. That's helpful.

Speaker Change: The middle of the range, is what you're saying.

Steven A. Alexopoulos: And then it's funny, when we look at slide seven, you're calling out the 600 million. That was the increase in average loans from new initiatives, right? I don't know, call it two and a half billion a year. And I'm curious, because you could look at that and say, well, you know, that's sort of a catch-up, you have new bankers and new verticals bringing over their books. But then you're saying momentum is building.

Speaker Change: That's the baseline? That's your baseline, okay.

Speaker Change: That's all four. And then...

Speaker Change: It's funny, when you look at slide 7, you're calling out the $600 million that was the increase in average loans from new initiatives, right? I don't know, call it $2.5 billion a year. And I'm curious, because you could look at that and say, well, you know, that's sort of a catch-up. You have new bankers and new verticals bring over their books. But then you're saying momentum is building. So when we look out from here, we think about that $2.5 billion run rate or so, do you see upside to that as the quarters roll forward? Should we see more contribution from new initiatives and a dollar perspective?

Steven A. Alexopoulos: So when we look out from here, we think about that two and a half billion run rate or so. Do you see upside to that, as the quarters roll forward? Should we see more contribution from new initiatives and the $1 perspective?

Zachary J. Wasserman: You know, I think I'm expecting to see very strong performance in these new initiatives. We're really pleased with how they're doing. Every one of them has booked customers, is booking loans. We're seeing good performance on the full relationship in terms of deposits and fees starting to come through, so we're really pleased with it. And I also wouldn't characterize it necessarily as them bringing their books over.

Speaker Change: You know, I think, I'm expecting to see very strong performance in these new initiatives. We're really pleased with how they're doing. Every one of them has...

Speaker Change: [inaudible]

Zachary J. Wasserman: These were talent bakers with deep experience in their industries and those geographies that we've launched in, and we're just sort of grinding through new client acquisition on a pretty core basis. The trajectory of growth that you highlighted, I expect to see a pretty steady build from here. I don't know that I'd see acceleration per se, but the trajectory we're on is already, you know, very premium to loan growth.

Steven A. Alexopoulos: [inaudible]

Speaker Change: [inaudible]

Steven A. Alexopoulos: Okay, thanks for taking my questions. Thank you.

Speaker Change: Got it. Okay, thanks for taking my questions. Thank you.

Robert Scott Siefers: Our next questions are from the line of Scott Siefers with Piper Sandler. Please proceed with your questions.

Speaker Change: Our next questions are from the line of Scott Siefers with Piper Sandler. Please proceed with your questions.

Robert Scott Siefers: Morning, everybody. Thank you for taking the question.

Robert Scott Siefers: Good morning, everybody. Thank you for taking the question. So I think my questions on overall customer demand on loans have sort of been answered, but I was hoping you could maybe address auto in particular. I noticed production is

Robert Scott Siefers: So I think my questions on overall customer demand for loans have sort of been answered, but I was hoping you could maybe address the auto industry in particular. You know, I noticed production is as high as it's been in the last several years. Is that sort of maybe being used as a flex given sort of the overall growth in software overall than you had anticipated maybe earlier this year, albeit within the context that it sounds like things outside of that category are going to advance more robustly later on. So just curious how you're thinking about auto and then, as a follow-up, maybe just sort of quality of that portfolio given the kind of fluctuations we've seen in used car values, slower economy,

Robert Scott Siefers: as high as it's been in the last several years. And that is sort of maybe being used as a flex, given sort of the software overall growth than you had anticipated maybe earlier this year, and albeit within the context that it sounds like things.

Speaker Change: Out of that category I'm going to advance more robustly later on. So just curious how you're thinking about auto and then as the follow-up, maybe just sort of quality of that portfolio given the kind of fluctuations we've seen in used car values, slower economy, etc.

Stephen D. Steinour: Scott, this is Steve. I'll take the question. Our auto business has performed very well this year and in the second quarter. We expect it will continue. We're not using it as a buffer. I think that was essentially what you were asking.

Steve: Scott, this is Steve. I'll take the question. Our auto business has performed very well this year and in the second quarter. We expect it will continue. We're not using it as a buffer. I think that was essentially what you were asking.

Robert Scott Siefers: We just see it as a terrific opportunity. Some of the other banks in the last year or so have pulled back on auto lending. It's created a bit of an opportunity for us, and we'd expect it to continue generating significant volume and growth. As you saw at the CLM and as we've done in the past with auto securitization, we'll manage aggregate exposure with the book, but we've got quite a bit of room at this point.

Steve: We just see this as a terrific opportunity.

Steve: Some of the other...

Steve: and we'd expect it to continue generating.

Robert Scott Siefers: In terms of the quality of the book, it's a super prime book and so has a very low default rate. We've talked about this for years. We focus on default frequency. On the margin, used car pricing can have a slight impact on incremental loss or avoided loss on each repossession, but it's not going to be a big number for us either way. We've shown that this book performs very well over the years, and we expect it will continue to do so.

Speaker Change: with the book, but we've got quite a bit of room.

Speaker Change: at this point.

Speaker Change: In terms of quality of the book, it's a super prime book.

Speaker Change: So, very low default, and we've talked about this for years, we focus on default frequency.

Speaker Change: On the margin, the used car pricing...

Speaker Change: can have a slight impact on incremental loss or avoided loss on each repossession, but it's not going to be a big number for us either way.

Speaker Change: We've shown that this book performs very well over the years. We expect it will continue to do so.

Robert Scott Siefers: Okay, perfect. Thank you. And then, Zach, maybe one for you just on cost.

Zach: Okay, perfect. Thank you. And then, Zach, maybe one for you just on cost. Appreciate sort of the third quarter rise, but then sounds like we're still all on track for the full year. In the past, and I don't want to get too detailed on next year, but you've sort of talked about that normalization of overall cost growth into next year. Any change sort of broadly to how you're thinking about that, or are we still sort of on track for that as well?

Zachary J. Wasserman: Appreciate the sort of third quarter rise, but then sounds like we're still all on track for the full year. In the past, and I don't want to get too detailed on next year, but you've sort of talked about that normalization of overall cost growth into next year. Any change sort of broadly to how you're thinking about that, or are we still sort of on track for that as well?

Zach: On track for that is the headline answer there. I feel really good about how we're managing expenses for the year. You know, there's clearly been a little bit of timing delta from where we would have initially expected to where we are now, but the full year looks pretty good.

Robert Scott Siefers: On track for that is the headline answer there. I feel really good about how we're managing expenses for the year. You know, there's probably been a little bit of timing delta from where we would have initially expected to where we are now, but the full year looks quite healthy as we would have thought initially and aligned with our guidance. What that will set up is, as we discussed on previous calls, a steady deceleration in the rate of year-over-year growth as we go throughout the course of this year.

Zach: As we discussed on previous calls, a steady deceleration.

Robert Scott Siefers: I think the expense growth last quarter was about 5% year-over-year. This is like around 6%, I think, effectively in Q2. It will just close. And you know, that will trend toward low single digits by the time we enter the fourth quarter on a year-over-year basis. And our expectation is that we'll see that run that trend out into 2025.

Zach: [inaudible]

Robert Scott Siefers: Perfect. Okay, good. Thank you for taking the questions. Thank you.

Zach: into 2025.

Speaker Change: Perfect. Okay, good. Thank you for taking the questions. Thank you.

Ebrahim Huseini Poonawala: Our next questions are from the line of Ebrahim Poonawala with Bank of America.

Speaker Change: Our next questions are from the line of Ebrahim Poonawala with Bank of America. Please proceed with your questions.

Ebrahim Huseini Poonawala: I guess, Zach, I'm not sure if I missed it, just talk to us about the loan to deposit ratio, 80%. Do you expect that to stay as is? The guidance kind of implies that.

Ebrahim Huseini Poonawala: Hey, good morning.

Ebrahim Huseini Poonawala: I guess, Zach, I'm not sure if I missed it, just talk to us around the loan-to-deposit ratio, 80%. Do you expect that to stay as is? The guidance kind of implies that. But as we think about all this loan growth coming up...

Zachary J. Wasserman: But as we think about all this loan growth coming up, should we expect the loan to deposit ratio to stay flat, like that's where the bank's going to be managed? Talk to us also about the mix of these deposits that are coming in, if you can talk about things like blended rates or... The Delta will only be kind of temporary, as we see, you know, trends, which might, on a relatively short time basis, might maybe diverge.

Speaker Change: Should we expect the loan-to-deposit ratio to stay flat, like that's where the banks are going to be managed?

Speaker Change: Talk to us also about the mix of these deposits that are coming in if you can talk about like blended rates or

Speaker Change: What the NIB makes of these deposits, that would be helpful.

Speaker Change: Thanks. Yeah, yeah, great, great question.

Speaker Change: I think that we're really pleased with how we're doing on deposit gathering and to some degree just pre-funding loan growth that we're expecting to continue to drive higher here over time. And so I expect over the course of a longer time period, we'll likely see the loan-to-deposit ratio drift back higher again, but still within a pretty tight range. The objective we've got on average over time is to grow our deposits at a very similar rate to loans.

Speaker Change: the Delta will only be kind of temporary as we see trends on a relatively short time basis might maybe diverge. So going to the back half of this year, I'm expecting to see maybe slightly faster sequential loan growth than deposit growth.

Zachary J. Wasserman: So, you know, in the back half of this year, I'm expecting to see maybe slightly faster sequential loan growth than deposit growth, but not so meaningful as to probably shift that ratio very much. Fundamentally, what we're seeing in terms of deposit growth is the same function we've been seeing for the last several quarters. The underlying acquisition of new relationships is quite good.

Speaker Change: So meaningful, let's probably shift that ratio very much.

Speaker Change: Fundamentally, what we're seeing in terms of deposit growth is the same function we've been seeing for the last several quarters.

Ebrahim Huseini Poonawala: We talked about 2% primary bank household growth in consumer, 4% in business bank, and commercial, also growing a lot of new names and new customers, particularly given our new growth initiatives. And also, importantly, a couple of the new verticals we've got are very much focused on deposit gathering, which is very helpful. You know, the mix of it, as I noted in one of the earlier questions, is sort of actively shifting out of more time into more money market that's going to follow your driver, which will help us set up the ability to move beta down at a faster rate going forward.

Speaker Change: underlying acquisition of new relationships is quite good that we talked about.

Speaker Change: 2% in primary banks, household growth and consumer, 4% in business bank.

Speaker Change: Commercial, also growing a lot of new names and new customers, particularly given our new growth initiatives, and also importantly, you know, a couple of the new verticals we've added, very much focused on deposit gathering, which is very much helpful.

Speaker Change: You know, the mix of it, as I noted in one of the earlier questions, is of actively shifting out of more time into more money market that's going to follow your driver, which will help us set up

Ebrahim Huseini Poonawala: And, you know, all that's going to contribute to just that sort of slow progression of topping out deposit costs and then bringing them back down in that decelerating way on the up, and then accelerating on the way down, as we've discussed. That's sort of what we're seeing at this point. In terms of non-interest-bearing, I don't think I've got any question on it yet, but I think in the materials you can see the chart of where that's going, we're seeing a meaningful deceleration of that mix shift out of non-interest-bearing into the first quarter to give you a sense from the fourth quarter, $1.3 billion reduction in non-interest-bearing into the second quarter, which is closed, only $300 million of reduction in non-interest-bearing.

Speaker Change: You'll get to move beta down at a faster rate going forward.

Speaker Change: and you know all that's going to contribute to just that sort of slow slow progression of topping out deposit costs and then and then bringing them back down in that decelerating way on the up and then accelerating on the way down as we've discussed.

Ebrahim Huseini Poonawala: In fact, consumer spending went up. So, I think we're almost done here in terms of the mix shift out of non-interest-bearing, and this will have some toke here in the near term. Got it. And I guess just one quick follow-up. You mentioned expensive, and we'll do low single digits, if I heard you correctly, by the end of the year. Should we be reading into that in terms of 25 expense growth being higher, lower, or same as 25?

Speaker Change: That's sort of what we're seeing at this point. In terms of non-interest-bearing, I don't think I've got any questions on it yet, but I think in the materials you can see the chart of where that's going. We're seeing a meaningful deceleration of that mix shift out of non-interest-bearing.

Speaker Change: into the first quarter, to give you a sense from the fourth quarter, $1.3 billion reduction not just bearing.

Speaker Change: The Snack Recorder disclosed only $300 million of reduction in knowledge disparity, and in fact, consumer went up. So, I think we're almost done here in terms of a mixed shift out of knowledge disparity, and this will add some toke here in the near term.

Speaker Change: Got it. And I guess just one quick follow-up. You mentioned expenses will be low single digits, if I heard you correctly, by the end of the year. Should we be reading into that in terms of 25 expense growth being higher, lower, or same as 24?

Zachary J. Wasserman: So the point we've been discussing, I think, for a while in terms of expense growth this year, 4.5% was intentionally higher than what we would otherwise be running at, so that we could invest in some of these new growth initiatives and also, importantly, invest a lot of data and automation capabilities throughout the company, but that pace of growth would reduce as we went into 2025, and that is our plan. I expect to see a lower growth rate of expenses in 2025 than we're seeing in 2024, and the trend is very much supportive of that, because by the time we exit this year, we'll already be exiting at a run rate of year-to-year growth at this point in time.

Speaker Change: So the point we've been discussing for a while in terms of expense growth

Speaker Change: This year, 4.5% was intentionally higher than what we would otherwise be running at, so that we could invest in some of these new growth initiatives, and also importantly, invest a lot of data and automation capabilities throughout the company, but that that pace of growth

Speaker Change: would reduce as we went into 2025. And that is our plan. I expect to see a lower growth rate of expenses in 2025 than I saw in 2020, than we're seeing in 2024. And the trend is very much supportive of that, because by the time we'll exit this year, we'll already be exiting at a run rate of year-to-year growth that's quite low. So I expect to maintain that lower growth rate as we go into 2025.

Zachary J. Wasserman: So we expect to maintain that lower growth rate as we go into 2025. Ebrahim and Zach have shared in the past efforts to lower growth rates in core expense levels of the bank in order to continue to invest in different opportunities, revenue-producing opportunities primarily. You should expect to see that from us in 2025 and beyond as well.

Speaker Change: Ebrahim and Zach have shared in the past.

Speaker Change: efforts to lower growth rates in poor expense.

Speaker Change: [inaudible]

Ebrahim Huseini Poonawala: Thanks, Steven and Zach.

Matt O'connor: Thank you very much. Our next questions are from the line of Matt O'Connor with Deutsche Bank. Please take your questions.

Speaker Change: Noted. Thanks, Steve and Zach. Thank you very much.

Speaker Change: Our next questions are from the line of Matt O'Connor with Deutsche Bank. Please proceed with your questions.

Matt O'connor: Good morning. I was hoping you guys could talk about the risk transfers. What you guys have executed on, there's been some coverage about it, what you did, and some others in the media, and I guess I'm just trying to figure out the logic. I mean, you've got strong capital, you're building capital, I realize you've got kind of a strong long-run outlook. But the rate that was kind of put out there in the media seems pretty high for, you know, what's a very So, just trying to understand kind of the logic of that and the cost to the media public, 7 and a half percent. So anything around the logic and financial impact thing. Yeah, great.

Matt O'connor: Good morning. I was hoping you guys could talk about the risk transfers.

Matt O'connor: There's been some coverage about it, what you've done, and some others in the media. I guess I'm just trying to figure out the logic. You've got strong capital, you're building capital, I realize you've got a strong long-run outlook.

Speaker Change: But the rate that was kind of put out there in the media seemed pretty high for, you know, what's a very high-quality autobook, as you show in the slides here. So just trying to understand kind of the logic of that and the cost to the media, kind of like 7.5%.

Zachary J. Wasserman: Yeah, great question. I'll take that one.

Speaker Change: So anything around the logic and financial impact, thanks.

Speaker Change: Yeah, great question. I'll take that one. You know, if you think about it in terms of our capital play, I'll put these transactions in the context of the overall capital play.

Speaker Change: The plan is really two-fold.

Speaker Change: Drive adjusted CET-1 higher. We were 8.6% adjusted CET-1 in the second quarter. We intend to drive that up into our operating range of 9-10%. I think we're just a handful of quarters away from achieving that.

Zachary J. Wasserman: You know, if you take the background of our capital plans, put these transactions in the context of the overall capital plan, you know, the plan is really twofold: drive adjusted CET-1 higher. You know, we were 8.6% adjusted CET-1 in the second quarter. We intend to drive that up to our operating range of 9-10%. I think we're just, you know, a handful of quarters away from achieving that correct trajectory. And then the second key objective is to fund high-return loan growth. And we're doing just that.

Speaker Change: The second key objective is to fund high return loan growth, and we're doing that, and I think that will continue and accelerate on a year-over-year basis.

Zachary J. Wasserman: And I think, you know, as we said, that will continue and accelerate on a year-over-year basis. And the prime driver of creating the capital to support those objectives is organic earnings and the core earnings power of the company. And that really is the core focus, the main focus. With that being said, and just shifting out to your question on CRT and CLN.

Speaker Change: And the prime driver of creating the capital to support both of those objectives is organic earnings and the core earnings power of the company. And that really is the core focus, the prime focus. With that being said, I'm just shifting out to your question on CRT and CLNs.

Zachary J. Wasserman: Unknown Speaker At the margin, these transactions can be very helpful for just further RWA and balance sheet optimization. And so we're pleased to have done a CDS transaction in the fourth quarter last year and then a very successful credit note transaction in the second quarter. To give you a sense of the economics, the second quarter deal was exceptionally good, less than a 3% cost of capital, so what do I mean by that? $4 billion notional transaction against high-quality, indirect auto loans, 74% reduction in risk-weighted assets, http://TheBusinessProfessor.com And I'm really pleased with how it went; also, the economics are incredibly favorable.

Speaker Change: At the margin, these transactions can be very helpful for just further RWA and balance sheet optimization.

Speaker Change: And so we're pleased to do a CDS transaction in the fourth quarter last year, and then a very successful credit note transaction in the second quarter, to give you a sense of the economics.

Speaker Change: The second quarter deal was exceptionally good.

Speaker Change: Less than a 3% cost of capital, so what do I mean by that? $4 billion notional transaction against high-quality indirect auto loans. 74% reduction in risk-weighted assets.

Speaker Change: and the president of the university of Illinois. I'm also going to be speaking at the conference. I'm going to be giving a presentation on how to apply for the rwa. I'm going to be giving a presentation on how to apply for the rwa. We are going to be giving a presentation on

Speaker Change: is only $7 million into spread on a year one basis plus some modest upfront transaction costs.

Speaker Change: is incredibly efficient.

Speaker Change: at the margin to unlock 17 bits of CDT1 and just continue to...

Speaker Change: Support those prime objectives. So, you know, we look at it as very much tactical. It's not the core underlying driver, but it's just the opportunistic things that come through. And I'm really pleased with how it went, although the economics are incredibly favorable.

Matt O'connor: Okay, that's super helpful. Thank you. Thank you. Our next questions are from the line of John Arfstrom with RBC Capital Markets. Please proceed with your questions.

Speaker Change: Okay, that's super helpful. Thank you.

Jon Glenn Arfstrom: Our next questions are from the line of John Arfstrom with RBC Capital Markets. Please just use your questions. Hey, thanks.

Speaker Change: Thank you.

Speaker Change: Our next questions are from the line of John Arfstrom with RBC Capital Markets. Please proceed with your questions.

Jon Glenn Arfstrom: Hey, thanks. Good morning, guys.

Jon Glenn Arfstrom: May be a question for you, Steve. How far out do you have visibility on loan growth? I'm just thinking a little bit more about the exit rate for NII in 2024 and just curious how you're thinking, you know, beyond the next quarter or two.

Jon Glenn Arfstrom: Well, our pipelines go out a couple of quarters, and so we have visibility through, not full visibility, but partial visibility through the fourth quarter. We don't yet have significant visibility into the fifth quarter. Certain businesses, though, because of the nature of their relationships, our distribution finance, we tie back into the supply base, and we get some insight from them as to what they intend to produce. But on the whole, we don't have significant multi-quarter visibility, John.

Steve: Well, our pipelines go out a couple of quarters, and so we have visibility through, you know, not full visibility, but partial visibility through the fourth quarter.

Speaker Change: We don't yet have significant visibility into...

Speaker Change: 25 certain businesses

Speaker Change: No, because of the nature of their relationships, our distribution of finance.

Speaker Change: We tie back in to the supply base, and we get some insight from them as to what they intend to produce. But on the whole, we don't have significant multi-quarter visibility jump.

Stephen D. Steinour: You do see from our customer base, however, that they're performing well this year. I think there's an expectation, as rates come down, that they'll be doing even more business next year. And that's a general sentiment.

Speaker Change: You do see from our customer base, however, they're performing well this year. I think there's an expectation as rates come down that they'll be doing even more business next year. And that's a general sentiment that some share with you.

Stephen D. Steinour: Um, and I guess this hasn't been touched on, but anything to note on credit, anything you're seeing that's, you know, bothering? Credit Cribs continue to perform very well. We're very pleased with the performance here today. The outlook looks good. As you know, we've spent a lot of time on portfolio reviews and management, and it's looking good. There'll be some lumpiness in commercial real estate over the next couple of years for us and others in the industry, but outside of that, it's looking good, and on the whole, for us, it's not going to be an issue.

Speaker Change: And I guess this hasn't been touched on, but anything to note on credit, anything you're seeing that's

Speaker Change: bothering you, anything that's surprising you positively.

Speaker Change: The credit continues to perform very well. We're very pleased with the performance here today. The outlook looks good. As you know, we've spent a lot of time on portfolio reviews and management.

Speaker Change: And, uh, and we're, you know, still keepin' good, so...

Speaker Change: There will be some wealthiness in commercial real estate over the next couple of years for us and others in the industry, but outside of that...

Stephen D. Steinour: As you know, our pre-concentration continues to reduce. I think we have had a little over $250 million in office payouts over the last six quarters. Half the construction unused commitments have been absorbed, so the pre-book's in good shape.

Speaker Change: There were over $250 million of office payouts over the last six quarters. Half the construction unused commitments have been absorbed, so the pre-book's in good shape.

Jon Glenn Arfstrom: Our final question is from the line of Peter Winter with D.A. Davidson.

Speaker Change: Thank you. Thank you.

Speaker Change: Our final question is from the line of Peter Winter with D.A. Davidson. Please proceed with your question.

Peter J. Winter: Good morning. You guys had a nice rebound in fee income. And then you've got merchant acquiring coming back in house. Starting in the third quarter, which I think adds about $6 million to fees, just do you think that revenue can continue with this momentum and kind of maybe come in at the upper end of that 5% to 7% range?

Peter J. Winter: Good morning.

Peter J. Winter: Morning. You guys had a nice rebound in fee income, and then you've got the merchant acquiring coming on back in-house.

Peter J. Winter: Starting in the third quarter, which I think adds about $6 million to fees, do you think the income that you can continue with this momentum and kind of maybe come in at the upper end of that 5% to 7% range?

Zachary J. Wasserman: Thanks for the question, Peter. This is Zach. I'll take that one.

Peter J. Winter: So, I would share your, you know, the underlying premise of your question, which is that the income performance was very strong. We were really pleased with what we saw. You know, the second quarter was up 6% sequentially from the first, and it continued to run at 5% year-over-year growth rates, and, similar to the first quarter, year-over-year. And our expectation is to land within our 5% or 7% full-year range. You know, as we get into the back half of the year, I would note that some of the growth overs versus last year get a little easier.

Peter J. Winter: Thanks for the question Peter, this is Zach, I'll take that one.

Speaker Change: The underlying premise of your question was that the income performance was very strong. We were really pleased with what we saw. The second quarter was up 6% sequentially from the first.

Speaker Change: continue to run at a 5% year-over-year growth rate, so it's similar to the first quarter year-over-year. And our expectation is to land within our 5% or 7% full-year range.

Speaker Change: As we get into the back half of the year, I would note that some of the grow-overs versus last year have been a little easier. But that being said, I think we'll continue to power sequential growth here. And it really is the three primary areas of focus – capital markets, payments, wealth management. Execution quality is very strong, and the trends we're seeing continue to be very much conducive to that.

Zachary J. Wasserman: But like I said, I think we'll continue to power sequential growth here. And it really is the three primary areas of focus: capital markets, payments, and wealth management. Execution quality is very strong. And the trends we're seeing continue to be very much conducive to that. You know, payments up 5% year over year in Q2, and treasury management within that double digit growth driven by client penetration. Wealth management, you know, continues to run at very strong levels of performance advisory households up 8, you know, AUM and net flows look, look really good.

Speaker Change: The payment is up 5% year-over-year due to treasury management within that double-digit growth.

Speaker Change: Driven by client penetration, wealth management continues to run at very strong levels.

Speaker Change: Performance Advisory Households of AIDS.

Zachary J. Wasserman: And that's driving revenue of 8%. And, you know, capital markets, which were clearly a little bit choppy in the back half of last year. We were pleased to see what we would have expected, which was strong growth in the second quarter, particularly in our advisory business. We know that middle market M&A has been, has been in a challenging environment as the yields were, you know, as the interest rate environment was rising last year.

Speaker Change: AAUM and net flows look really good, and that's driving revenue of 8%. And capital markets, which clearly has been a little bit choppy in the back half of last year, we were pleased to see what we would expect, which was strong growth in the second quarter, particularly in our advisory business.

Speaker Change: We know that the middle market M&A has been...

Speaker Change: have been in a challenging environment as the industry environment was rising last year. Activity is now picking up and I think it will sustain. So I'm expecting sequential growth in each of those areas.

Zachary J. Wasserman: That activity is now picking up and I think it will sustain. So, I'm expecting sequential growth in each of those areas. You know, I think where we landed in the range would be clearly a function of how well we perform in it, but with strong confidence when we get there.

Speaker Change: You know, I think where we landed in the range would be clearly a function of how well we perform in it, but strong confidence is where you get there.

Peter J. Winter: And then just, last question, just on credit. I mean, as you talked about, credit trends are really good. If I look at the ACL ratio, you're at the top end of peers. Just how are you thinking about reserving going forward? Is it kind of like keep the ACL ratio fairly steady at current levels and just support loan growth? And, I guess, what do you need to see to start lowering the ACL ratio?

Speaker Change: And then just, last question, just on credit, I mean, as you talked about, credit trends are really good. If I look at the ACL ratio, you're at the top end of peers.

Speaker Change: How are you thinking about reserving going forward? Is it kind of to keep the ACL ratio fairly steady at current levels and just support loan growth? And I guess what do you need to see to start lowering the ACL ratio?

Brendan Lawlor: Hey Peter, it's Brendan. Excuse me, I'll take that one.

Brendan: Hey Peter, it's Brendan. Excuse me, I'll take that one. You know, as you sort of noted, we basically had the reserve flat this quarter at $195 versus $197 last quarter. It's a modest add to the dollar amount of the reserve.

Peter J. Winter: You know, as you sort of noted, we basically had the reserve flat this quarter at $195 versus $197 last quarter. It's a modest add to the dollar amount of the reserve. You know, we just continue to watch the volatility in just the overall market, but particularly with respect to rates, as well as the impact of the higher, longer rates on our commercial real estate portfolio. So, excuse me. If stronger economic performance comes through in our modeling combined with the continued solid performance of the credit portfolio, that's when we would really look to start to move the reserve down more materially. That will play out over a longer period of time, and so we're continuing to watch and manage this to the right level, but right now, we feel like we're adequately reserved. I got it.

Speaker Change: We just continue to watch the volatility in just the overall market, but particularly with respect to rates.

Speaker Change: As well as the impact of the higher prolonger rates on our commercial real estate portfolio. So, excuse me, um, that's E-C-T-E.

Unknown Executive: Stronger economic performance come through in our model and combined with the continued solid performance of the credit portfolio.

Speaker Change: [inaudible]

Unknown Executive: That's when we would really look to start to move the preserve down more materially. You know, that will be played out over a long period of time. And so we're just continuing to watch and manage this to the right level, but right now we feel like we're adequately reserved.

Peter J. Winter: Got it. Thanks for taking the question.

Unknown Executive: Thanks for getting a question. Thank you.

Peter J. Winter: Got it. Thanks for taking the question.

Stephen D. Steinour: At this time, we have reached the end of our question and answer session. I would like to turn the call back over to Mr. Steinour for closing remarks.

Unknown Executive: At this time, we've reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Steinour for closing remarks.

Peter J. Winter: Shalom.

Speaker Change: Thank you.

Stephen D. Steinour: At this time, we've reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Steinour for closing remarks.

Stephen D. Steinour: Well, thank you for joining us today. In closing, we're pleased with our second quarter results, having delivered sequential growth and both strategy revenues. We're expecting our organic growth strategies and our investments to bear fruit with momentum building across the Bay. Our competitive position remains strong with robust capital liquidity. We continue to seize opportunities to add talented bankers across our businesses. We remain focused on our long-term strategic objectives, and collectively, the board, executives, and our colleagues are a top-tier shareholder with a strong alignment to deliver meaningful value for our shareholders.

Stephen Steinour: Well, thank you for joining us today and closing the clearest with our second quarter results, and we delivered some cultural growth in both strategy revenues. We're expecting our organic road strategies, and our investments are bearing fruit with momentum, building across the bank. Our competitive position remains strong with robust capital liquidity. We continue to see the opportunities to add down the bankers across our businesses. We remain focused on our long-term strategic objectives. And collectively, the board executives and our colleagues are top-down shareholders; we have strong alignment delivered meaningful value for our shareholders.

Stephen D. Steinour: Well, thank you for joining us today. In closing, we're pleased with our second quarter results, having delivered sequential growth in both strategy and revenues. We're expecting our organic growth strategies and our investments are bearing fruit with momentum building across the Bay.

Stephen D. Steinour: Our competitive position remains strong with robust capital liquidity. We continue to seize the opportunities to add talented bankers across our businesses.

Stephen D. Steinour: We remain focused on our long-term strategic objectives. Collectively, the board, executives, and our colleagues are a top-down shareholder. With a strong alignment, we have delivered meaningful value for our shareholders. Finally, a special thank you to our nearly 20,000 colleagues.

Stephen D. Steinour: Finally, a special thank you to our nearly 20,000 colleagues here at the bank who support our customers every day or are the backbone of these results. Thank you for your support and interest. And I think we have a great day. Thank you.

Stephen D. Steinour: Finally, a special thank you to our nearly 20,000 colleagues here at the bank who support our customers every day and are the backbone of these results. Thank you for your support and interest in Huntington. Have a great day.

Speaker Change: here at the bank who support our customers every day and are on the backbone of these results. Thank you for your support and interest in Heineken. Have a great day.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Unknown Executive: This will conclude today's conference. I disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Speaker Change: Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.