Q1 2025 Truist Financial Corp Earnings Call
Only mode.
A brief question and answer session will follow the formal presentation.
As a reminder, this event is being recorded.
Speaker Change: It is now my pleasure to introduce your host Mr. Brad Milsap.
Brad Milsap: Thank you Betsy and good morning, everyone. Welcome to <unk> first quarter 2025 earnings call with US today are chairman and CEO Bill Rogers, Our CFO, Mike Mcguire, our chief risk officer, Brad vendor as well as other members of <unk> Senior management team.
Brad Milsap: During this morning's call they will discuss <unk> first quarter results share their perspectives on current business conditions and provide an updated outlook for 2025.
Brad Milsap: The accompanying presentation as well as our earnings release and supplemental financial information are available on the truth Investor Relations website, IR Dot truest Dot com.
Brad Milsap: Our presentation today will include forward looking statements and certain non-GAAP financial measures. Please review the disclosures on slides two and three of the presentation regarding these statements in measures as well as the appendix where appropriate reconciliations to GAAP with that I will turn it over to bill Thanks, Brad and good morning, everyone and thanks for joining our call today, so before we.
Brad Milsap: Our first quarter results.
Brad Milsap: Let's begin as we always do with purpose on slide four.
Brad Milsap: Curious to as a purpose driven company dedicated to inspiring and building better lives and communities, which is the foundation of guide for everything we do in times like this with a little more uncertainty our purposeful approach delivered with care resonates more than ever.
Brad Milsap: We're committed to being a steady reliable and supportive partner, helping our clients with financial planning and personalized experiences from dedicated industry specialists that focus on understanding their needs. We're.
Brad Milsap: We're here to support our clients and communities with our strong balance sheet.
Brad Milsap: Export industry advice digital capabilities, and a comprehensive suite of products, our capital position, our liquidity, our strong market share and our talented purposeful teammates delivering against our clear strategy have us well positioned for any environment.
Brad Milsap: We're going to provide some more examples of how our purposeful approach is driving our results throughout the call today. So now turning to our results on slide pop.
Brad Milsap: Market volatility and economic uncertainty have certainly increased.
Brad Milsap: Which has resulted in a change in our view of the operating environment investment banking and capital markets activity has slowed materially in the shape of the yield curve has shifted as.
Brad Milsap: As a result of these conditions, we are reducing our revenue outlook, which now assumes a flat year over year investment banking and trading revenue and slightly lower net interest income due to lower medium term interest rates.
Brad Milsap: Given this outlook, we have also reduced our expenses for the year and are opportunistically buying back additional shares in the second quarter.
Brad Milsap: So what's not changing is our focus on our five key strategic priorities aimed at driving better growth improving profitability towards our medium term targets and achieving positive operating leverage.
Brad Milsap: First we are executing against our strategic growth initiatives, which include deepening and expanding existing client relationships in areas like premier banking middle market banking payments and well all of which represent significant opportunities to capture additional share within our existing client base.
Brad Milsap: Second we're fully committed to maintaining our expense discipline, which was once again evident in the first quarter. We continue to expect to achieve positive operating leverage in 2025, I believe that we can offset a portion of our lower revenue outlook by finding additional efficiencies in our company.
Brad Milsap: Third although the absolute rate of expense growth will be lower we are continuing our investments in talent and our technology platform, which is improving the client experience driving new account production and delivering efficiencies.
Brad Milsap: One example of these investments is our new patented artificial intelligence tool called truest client pulse.
Brad Milsap: That will give our teammates insights into friction points with clients will be able to leverage real time actionable data to effectively listen to our clients' needs and enhance their tourist experience.
Brad Milsap: Or if we will never take for granted our strong track record of on asset quality as we will continue to focus on maintaining strong risk discipline and controls.
Brad Milsap: We have strengthened and derisked our balance sheet over the last several years and our credit and risk teams are fully engaged with our clients to better understand the impact of the changing economic landscape.
Finally, our relative capital advantage allows us to accomplish our strategic growth goals and return capital to our shareholders in the form of dividends and share repurchases over the next several years.
Brad Milsap: As you can see we continue to feel good about our strong foundation, our positive momentum across our banking franchise, which was evident in our first quarter results.
Brad Milsap: For the first quarter, we reported net income available to common shareholders of $1 2 billion or <unk> 87, a share.
Brad Milsap: At a high level, our solid performance in the first quarter was defined by several key themes the positive loan and deposit growth momentum we experienced in the fourth quarter continued into the first quarter as both average loans and deposits increased linked quarter.
Brad Milsap: Adjusted <unk> remained stable linked quarter as we were able to offset a linked quarter decline in revenue with lower adjusted noninterest expenses, reflecting our commitment to maintaining that discipline.
Brad Milsap: From a credit and capital perspective, our metrics remained strong consistent with the fourth quarter of 2024, we returned $1 2 billion of capital to shareholders through our common dividend and repurchase of $500 million of our common stock during the first quarter of 2025.
Brad Milsap: We've already completed $500 million of share repurchases in the second quarter of 2025, and given our strong capital position and current trading levels, we plan to target up to an additional $250 million.
Brad Milsap: Stock this quarter.
Speaker Change: Before I hand, the call over to Mike to discuss our quarterly results I want to spend some time discussing the progress we're making on our strategic priorities and the positive momentum, we're seeing within our business segments and with our digital initiatives on slides six and seven.
Speaker Change: In consumer and small business banking I'm encouraged by another solid quarter of consumer loan growth net new checking account growth and progress with our premier banking clients as we deepen relationships and acquired key new clients and households through digital and traditional channels.
Speaker Change: Average consumer and small business loan balances increased one 3% linked quarter due to growth in residential mortgage indirect auto and service finance with production up 47% year over year and pipelines continue to increase.
Speaker Change: Importantly, we're not sacrificing our credit standards or pricing discipline to drive growth.
Speaker Change: Consumer credit metrics remained stable and new consumer loan production spreads are accretive to the overall portfolio.
Speaker Change: Debit card spend for our consumer clients increased 4% on a year over year basis with growth coming across all income bands and driven by spending areas and areas like travel and entertainment net new checking account growth was once again positive in the first quarter as we added more than 39000, new consumer and business.
Speaker Change: This accounts, which reflects a 40% increase over the first quarter of last year.
Speaker Change: Partly we are seeing growth within our Premier banking segment, which was one of our key focus areas as we've highlighted previously.
Speaker Change: During the fourth quarter, we generated nearly $1 8 billion of new deposit production in our Premier managed segment, which represents a 23% year over year increase over the first quarter of 2024, driven by significant improvement in banker productivity and new hires.
Speaker Change: As an example, we increased the number of financial plans deliver per banker by 15%, which helped drive $1 $6 billion of new investment production during the quarter as those are highly correlated.
Speaker Change: And wholesale I'm encouraged by this quarter's loan growth improved production and progress in key focus areas like payments and well.
Speaker Change: During the quarter, we saw 1% growth in average wholesale loans driven by growth from new and existing clients and increase production as.
Speaker Change: As I've mentioned previously we have a specific focus on capturing more of the middle market I'm very pleased with the momentum we're already experiencing in production and results.
Speaker Change: Changing market conditions have made our outlook for investment banking and trading more challenging than we originally estimated to start this year.
Speaker Change: We did have our second best quarter ever in debt capital markets, but lower overall, M&A and equity capital markets activity resulted in growth coming in less than expected as many clients postponed planned transactions.
Speaker Change: However, I am confident that our advice driven business model is well suited to help our clients navigate current market conditions and continue to grow our share given the investments we continue to make in talent products and industry verticals.
Speaker Change: And well, we launched a new digital client interface that significantly improve the client experience increased new client and adviser acquisition and helped drive higher net asset flows despite volatile equity and fixed income markets. Our payments team continues to launch new services that meet our clients' needs for solutions that provide them.
Speaker Change: With speed simplicity and safety.
Speaker Change: The first quarter, we enhanced our real time payments capabilities, including launching zelle, disbursements, which enables wholesale clients to more efficiently pay consumers.
Speaker Change: These enhancements along with continued investments in talent have driven a meaningful increase in overall satisfaction scores as well as the ongoing increases in our payments penetration rate with existing clients enhancing the client experience in growing our digital capabilities are important parts of our overall strategy, let me discuss that a little more detail on slide <unk>.
To improve the client experience increased new client and adviser acquisition and help drive higher net asset flows despite volatile equity and fixed income markets.
Speaker Change: <unk>.
Speaker Change: <unk> continues to demonstrate strong performance in digital with year over year growth across all core digital metrics in the first quarter of 2025, we opened 195000, new digital accounts, which reflects a 13% increase over the first quarter of last year and includes 77000 new to bank.
Our payments team continues to launch new services that meet our clients' needs for solutions that provide them with speed simplicity and safety during.
During the first quarter, we enhanced our real time payments capabilities, including launching zelle, disbursements, which enables wholesale clients to more efficiently pay consumers. These enhancements along with continued investments in talent have driven a meaningful increase in overall satisfaction scores as well as the ongoing increases in our payments.
Speaker Change: Over 60% of our new digital clients are millennials and Gen Z <unk>.
Speaker Change: Aligning with our strategy to engage clients early and built enduring relationships over time.
Speaker Change: Truest assessed as our AI tool that supports client conversations and provides a seamless transition to a truest teammate when and acquired warrants further assistance.
And attrition rate with existing clients enhancing the client experience in growing our digital capabilities are important parts of our overall strategy, let me discuss that a little more detail on slide seven.
Speaker Change: <unk> supported over 1 million conversations in the first quarter of 2025 with more than 80% require no further teammate interaction, which helps drive further efficiencies in our consumer business as client behavior shift to more self service.
<unk> continues to demonstrate strong performance in digital with year over year growth across all core digital metrics in the first quarter of 2025, we opened 195000, new digital accounts, which reflects a 13% increase over the first quarter of last year and includes 77000 new to bank clients.
Speaker Change: We expect to continue to grow our digital presence with clients as we further leverage our modern and scalable technology platform.
Over 60% of our new digital clients are millennials and Gen Z <unk>.
Speaker Change: Now, let me turn it over to Mike to discuss our financial results in a little more detail Mike.
Thank you Bill and good morning, everyone.
Aligning with our strategy to engage clients early and build enduring relationships over time.
Speaker Change: I will start with our performance highlights on slide eight we.
<unk> assessed as our AI tool that supports client conversations and provides a seamless transition to a truest teammate when and acquired warrants further assistance tourist assists supported over 1 million conversations in the first quarter of 2025 with more than 80% required no further teammate <unk>.
Speaker Change: We reported first quarter 2025, GAAP net income available to common shareholders of $1 2 billion or <unk> 87 per share included in our results our <unk> per share of restructuring charges, primarily related to facilities optimization initiatives and severance.
Speaker Change: Total revenue decreased three 2% linked quarter as both net interest income and noninterest income declined.
Traction, which helps drive further efficiencies in our consumer business as client behavior shift to more self service.
Speaker Change: Adjusted expenses decreased five 4% linked quarter, which helped hold P. PNR stable and drive a 130 basis point improvement in our efficiency ratio on a linked quarter basis.
We expect to continue to grow our digital presence with clients as we further leverage our modern and scalable technology platform.
Speaker Change: Next I'll cover loans and leases on slide nine.
Mike: Now, let me turn it over to Mike to discuss our financial results in a little more detail Mike.
Speaker Change: Average loans held for investment increased by one 1% on a linked quarter basis due to growth in both average commercial and average consumer loans.
Mike: Thank you Bill and good morning, everyone.
Mike: I will start with our performance highlights on slide eight.
Speaker Change: Average commercial loans increased $1 8 billion or 1%, primarily due to $2 billion of growth in C&I loans, partially offset by decline in CRE loan balances.
Mike: We reported first quarter 2025, GAAP net income available to common shareholders of $1 2 billion or <unk> 87 per share included in our results our <unk> per share of restructuring charges, primarily related to facilities optimization initiatives and severance.
In our consumer portfolio average loans increased $1 6 billion or one 3% linked quarter due to growth in residential mortgage and indirect auto.
Mike: Total revenue decreased three 2% linked quarter as both net interest income and noninterest income declined.
Speaker Change: End of period loans increased $2 3 billion or <unk>, 7%.
Mike: Adjusted expenses decreased five 4% linked quarter, which help hold P. PNR stable and drive a 130 basis point improvement in our efficiency ratio on a linked quarter basis next I'll cover loans and leases on slide nine.
Speaker Change: Based on our current loan pipeline and a solid start to the year. We continue to believe that we can generate low single digit end of period loan growth in 2025.
Speaker Change: Moving now the deposit trends on slide 10.
Speaker Change: Average deposits increased $2 2 billion sequentially or is the <unk> six driven by growth in time deposits and interest checking which was partially offset by declines in noninterest bearing and money market savings balances.
Mike: Average loans held for investment increased by one 1% on a linked quarter basis due to growth in both average commercial and average consumer loans.
Mike: Average commercial loans increased $1 8 billion or 1%, primarily due to $2 billion of growth in C&I loans, partially offset by decline in CRE loan balances.
Speaker Change: End of period deposits increased $13 2 billion or three 4%, which was impacted by two larger but short term client deposits that drove period end deposit balances higher on a linked quarter basis, excluding the impact of these two deposits average deposit balances would have been relatively stable on a linked quarter basis.
Mike: In our consumer portfolio average loans increased $1 6 billion or one 3% linked quarter due to growth in residential mortgage and indirect auto.
Mike: End of period loans increased $2 3 billion or <unk>, 7%.
Speaker Change: During the quarter, we continued to actively manage rate paid which resulted in a decrease in our deposit costs, specifically total deposit costs decreased by 10 basis points sequentially to $1, 79%, which implies a 30% cumulative total deposit beta.
Mike: Based on our current loan pipeline and a solid start to the year. We continue to believe that we can generate low single digit end of period loan growth in 2025.
Mike: Moving now the deposit trends on slide 10.
Mike: Average deposits increased $2 2 billion sequentially or is the <unk> six driven by growth in time deposits and interest checking which was partially offset by declines in noninterest bearing and money market and savings balances.
Speaker Change: Interest bearing deposit costs decreased by 16 basis points sequentially to 246% that represents a 43% cumulative total interest bearing deposit beta overall, we expect average deposit balances to remain relatively stable in the second quarter compared with the first quarter of 2025.
Mike: End of period deposits increased $13 2 billion or three 4%, which was impacted by two larger but short term client deposits that drove period end deposit balances higher on a linked quarter basis, excluding the impact of these two deposits average deposit balances would have been relatively stable on a linked quarter basis.
Speaker Change: Next I'll move to net interest income and net interest margin on slide 11.
Speaker Change: Taxable equivalent net interest income decreased two 4% linked quarter or $86 million.
Speaker Change: Primarily due to the impact of two fewer days in the first quarter.
Mike: During the quarter, we continued to actively manage rate paid which resulted in a decrease in our deposit costs, specifically total deposit costs decreased by 10 basis points sequentially to $1, 79%, which implies a 30% cumulative total deposit beta.
Speaker Change: Our net interest margin decreased six basis points on a linked quarter basis to 3.0% to 1%.
Speaker Change: For full year 2025, we expect net interest income to increase by approximately 3% versus 2024, driven primarily by low single digit loan growth 325 basis point reductions in the fed funds rate and the benefit of fixed rate asset repricing.
Mike: Interest bearing deposit costs decreased by 16 basis points sequentially to 246% that represents a 43% cumulative total interest bearing deposit beta overall, we expect average deposit balances to remain relatively stable in the second quarter compared with the first quarter of 2025.
Speaker Change: As you can see on the top right hand side of this slide we updated our outlook for fixed rate asset repricing.
Speaker Change: We expect to reprice, approximately $42 billion of fixed rate loans and securities over the remainder of 2025, we now expect that the benefit from repricing. These assets will be approximately 40 to 50 basis points lower than we previously expected in January due to lower medium term interest rates.
Mike: Next I'll move to net interest income and net interest margin on slide 11.
Mike: Taxable equivalent net interest income decreased two 4% linked quarter or $86 million.
Mike: Primarily due to the impact of two fewer days in the first quarter.
Mike: Our net interest margin decreased six basis points on a linked quarter basis to 3.0% to 1%.
Speaker Change: We also updated our swap portfolio disclosure in the bottom right hand corner of the slide which is relatively unchanged from the prior quarter.
Mike: For full year 2025, we expect net interest income to increase by approximately 3% versus 2024, driven primarily by low single digit loan growth $3 25 basis point reductions in the fed funds rate and the benefit of fixed rate asset repricing.
Speaker Change: Turning to noninterest income now on slide 12.
Speaker Change: Noninterest income decreased $78 million or five 3% versus the fourth quarter. The linked quarter decrease was primarily attributable to a $69 million decline in other income related to certain equity investments and other gains that were higher in the fourth quarter of 2024.
Mike: As you can see on the top right hand side of this slide we updated our outlook for fixed rate asset repricing.
Speaker Change: On a linked quarter basis, noninterest income declined $54 million or three 7% compared to the first quarter of 2024, primarily due to lower investment banking and trading income and lower wealth management income.
Mike: We expect to reprice, approximately $42 billion of fixed rate loans and securities over the remainder of 2025, we now expect that the benefit from repricing. These assets will be approximately 40 to 50 basis points lower than we previously expected in January due to lower medium term interest rates.
Speaker Change: Lower M&A fees were the primary driver of the year over year decline in investment banking and trading income while wealth management income would have been slightly higher on a year over year basis were it not for the impact of the sale of Sterling capital management in July 2024.
We also updated our swap portfolio disclosure in the bottom right hand corner of the slide which is relatively unchanged from the prior quarter.
Mike: Turning to noninterest income now on slide 12.
Next I will cover noninterest expense on slide 13.
Mike: Noninterest income decreased $78 million or five 3% versus the fourth quarter. The linked quarter decrease was primarily attributable to a $69 million decline in other income related to certain equity investments and other gains that were higher in the fourth quarter of 2024.
Speaker Change: Adjusted noninterest expense, which excludes the impact of restructuring charges decreased five 4% linked quarter due to lower other expense professional fees and outside processing and equipment expense personnel expense remained relatively stable linked quarter as the normal seasonality associated with the first quarter personnel expenses were off site.
On a linked quarter basis, noninterest income declined $54 million or three 7% compared to the first quarter of 2024, primarily due to lower investment banking and trading income and lower wealth management income.
Speaker Change: Are offset by a reduction in incentives.
Speaker Change: Adjusted expenses increased one 5% versus <unk> 24, due to higher professional fees and outside processing expense, partially offset by lower personnel expense moves.
Mike: Lower M&A fees were the primary driver of the year over year decline in investment banking and trading income while wealth management income would have been slightly higher on a year over year basis were it not for the impact of the sale of Sterling capital management in July 2024.
Speaker Change: Moving to asset quality on slide 14.
Speaker Change: Our asset quality metrics remained stable on both alike and linked quarter basis, reflecting our strong credit risk culture, and proactive approach to quickly resolving problem loans.
Mike: Next I will cover noninterest expense on slide 13.
Mike: Adjusted noninterest expense, which excludes the impact of restructuring charges decreased five 4% linked quarter due to lower other expense professional fees and outside processing and equipment expense personnel expense remained relatively stable linked quarter as the normal seasonality associated with the first quarter personnel expenses were off site.
Speaker Change: Net charge offs increased one basis point to 60 basis points linked quarter, but were down four basis points versus the first quarter of 2024.
Speaker Change: Our loan loss provision exceeded net charge offs, but growth in certain loan portfolios contributed to a one basis point decrease in our a triple O ratio to 158%.
Mike: Are offset by a reduction in incentives.
Speaker Change: Nonperforming loans held for investment as a percentage of total loans increased one basis point linked quarter and three basis points on a linked quarter basis to 48 basis points Npls have remained in a narrow band of $45 to 48 basis points over the last five quarters.
Mike: Adjusted expenses increased one 5% versus <unk> 24, due to higher professional fees and outside processing expense, partially offset by lower personnel expense moves.
Mike: Moving to asset quality on slide 14.
Speaker Change: <unk> been actively analyzing our exposure to consumer and wholesale clients that we believe will be most impacted by tariffs potential reductions in government spending and more severe economic scenarios. Although this analysis is ongoing and dynamic we have a strong understanding of our exposure and we believe that were adequately reserved at this time.
Mike: Our asset quality metrics remained stable on both alike and linked quarter basis, reflecting our strong credit risk culture, and proactive approach to quickly resolving problem loans.
Mike: Net charge offs increased one basis point to 60 basis points linked quarter, but were down four basis points versus the first quarter of 2024.
Speaker Change: As a reminder, <unk> had the second lowest C&I loan loss rate versus our peer group and the most recent CCAR stress tests.
Mike: Our loan loss provision exceeded net charge offs, but growth in certain loan portfolios contributed to a one basis point decrease in our a triple O ratio to 158%.
Speaker Change: Turning to capital on Slide 15.
Speaker Change: On a linked quarter basis, our CET, one ratio declined 20 basis points to 11, 3% as the payment of our common dividend, our $500 million share buyback growth in our balance sheet and the final Cecil phase in <unk>.
Nonperforming loans held for investment as a percentage of total loans increased one basis point linked quarter and three basis points on a linked quarter basis to 48 basis points Npls have remained in a narrow band of $45 to 48 basis points over the last five quarters.
Speaker Change: More than offset current period earnings.
Speaker Change: Our CET, one capital ratio, including the impact of OCI declined 10 basis points linked quarter to nine 6%, reflecting the aforementioned factors, partially offset by a $500 million decrease in OCI due to the increase in longer term interest rates experienced during the quarter.
Mike: We have been actively analyzing our exposure to consumer and wholesale clients that we believe will be most impacted by tariffs potential reductions in government spending and more severe economic scenarios. Although this analysis is ongoing and dynamic we have a strong understanding of our exposure and we believe that were adequately reserved at this time.
Speaker Change: We continue to believe that our strong capital position gives us unique ability to utilize our future earnings and the accretion of OCI to fund balance sheet growth and to return a significant amount of capital to our shareholders.
Mike: As a reminder, <unk> had the second lowest C&I loan loss rate versus our peer group and the most recent CCAR stress tests.
Turning to capital on Slide 15.
Speaker Change: Next I'll provide additional color on our guidance for the second quarter of 2025 as well as for the full year on slide 16.
Mike: On a linked quarter basis, our CET, one ratio declined 20 basis points to 11, 3% as the payment of our common dividend, our $500 million share buyback growth in our balance sheet and the final seasonal phase in.
Speaker Change: For full year 2025, we now expect revenue to increase one 5% to two 5% relative to 2024 adjusted revenue of $20 $1 billion.
Mike: More than offset current period earnings.
Mike: Our CET, one capital ratio, including the impact of OCI declined 10 basis points linked quarter to nine 6%, reflecting the aforementioned factors, partially offset by a $500 million decrease in OCI due to the increase in longer term interest rates experienced during the quarter.
Speaker Change: This compares with growth of three to three 5% previously.
Speaker Change: Our new guidance reflects our updated outlook for lower investment banking activity increased volatility impacting our sales and trading results lower wealth management income, which in part relies on market values and the shape of the yield curve.
Mike: We continue to believe that our strong capital position gives us unique ability to utilize our future earnings and the accretion of OCI to fund balance sheet growth and to return a significant amount of capital to our shareholders.
Speaker Change: The majority of the reduction in our revenue outlook is due to our expectation for lower investment banking and trading activity, which we now expect to remain relatively flat on a year over year basis versus our previous expectation for low double digit growth.
Mike: Next I'll provide additional color on our guidance for the second quarter of 2025 as well as for the full year on slide 16.
Speaker Change: In addition, lower market valuations will slightly pressure our wealth management income.
Mike: For full year 2025, we now expect revenue to increase one 5% to two 5% relative to 2024 adjusted revenue of $20 $1 billion. This compares with growth of three to three 5% previously.
Speaker Change: The remainder of the change to our outlook is related to our latest forecast for the shape of the yield curve, which delayed our ability to lower deposit costs and reduces the benefit of fixed rate asset repricing.
Speaker Change: Our net interest income outlook continues to assume a low single digit end of period loan growth and now assumes 325 basis point reductions in the fed funds rate one in June September and December compared with our previous view of reductions and just March and September.
Mike: Our new guidance reflects our updated outlook for lower investment banking activity increased volatility impacting our sales and trading results lower wealth management income, which in part relies on market values and the shape of the yield curve.
Speaker Change: Based on these assumptions, we expect net interest income to increase 3% in 2025 versus 2024.
Mike: The majority of the reduction in our revenue outlook is due to our expectation for lower investment banking and trading activity, which we now expect to remain relatively flat on a year over year basis versus our previous expectation for low double digit growth.
Speaker Change: In terms of our outlook for adjusted expenses, we now expect full year 2025, adjusted expenses to increase by approximately 1% in 2025 versus 2024. This compares with growth of one 5% previously.
Mike: In addition, lower market valuations will slightly pressure our wealth management income.
Mike: The remainder of the change to our outlook is related to our latest forecast for the shape of the yield curve, which delayed our ability to lower deposit costs and reduces the benefit of fixed rate asset repricing.
Speaker Change: Our improved expense outlook reflects a reduction in incentives due to lower expected revenue in 2025, and other ongoing cost savings initiatives.
Speaker Change: In terms of asset quality, we continue to expect net charge offs of about 60 basis points in 2025, which is unchanged from our previous guidance. Finally, we expect our effective tax rate to approximate 17% or 20% on a taxable equivalent basis in 2025.
Mike: Our net interest income outlook continues to assume a low single digit end of period loan growth and now assumes 325 basis point reductions in the fed funds rate one in June September and December compared with our previous view of reductions and just March and September.
Speaker Change: Looking into the second quarter of 2025, we expect revenue to increase approximately one 5% relative to first quarter revenue of $4 9 billion.
Mike: Based on these assumptions, we expect net interest income to increase 3% in 2025 versus 2024.
Mike: In terms of our outlook for adjusted expenses, we now expect full year 2025, adjusted expenses to increase by approximately 1% in 2025 versus 2024. This compares with growth of one 5% previously.
Speaker Change: We expect net interest income to increase by approximately one 5% in the second quarter, primarily driven by an additional day in the second quarter relative to the first quarter, some loan growth and the benefit from fixed asset repricing, we expect noninterest.
Mike: Our improved expense outlook reflects a reduction in incentives due to lower expected revenue in 2025, and other ongoing cost savings initiatives.
Speaker Change: Noninterest income to increase 1% to 3% driven primarily by higher other income.
Speaker Change: Adjusted expenses of $2 9 billion in the first quarter are expected to increase 2% to 3% linked quarter due to higher personnel expenses related to annual merit increases.
Mike: In terms of asset quality, we continue to expect net charge offs of about 60 basis points in 2025, which is unchanged from our previous guidance. Finally, we expect our effective tax rate to approximate 17% or 20% on a taxable equivalent basis in 2025.
Speaker Change: As it relates to buybacks as Bill mentioned, we plan to target up to $750 million during the second quarter.
Speaker Change: I'll now hand, it back to Bill for some final remarks, alright, thanks, Mike.
Mike: Looking into the second quarter of 2025, we expect revenue to increase approximately one 5% relative to first quarter revenue of $4 9 billion.
Speaker Change: So in conclusion.
Speaker Change: Seeing solid progress in many of our key strategic focus areas, including Premier banking, well payments and middle market banking.
We expect net interest income to increase by approximately one 5% in the second quarter, primarily driven by an additional day in the second quarter relative to the first quarter, some loan growth and the benefit from fixed asset repricing.
Speaker Change: Despite the market volatility our growth mindset and strategic focus remains steadfast.
Speaker Change: Paying close attention to the changes in our markets the economy in client behavior as our credit risk teams are fully engaged in working with our clients to understand the impact of these changes will continue to adhere to the credit and risk discipline that has served our company and shareholders well over multiple economic cycles.
Mike: We expect noninterest income to increase 1% to 3% driven primarily by higher other income.
Mike: Adjusted expenses of $2 9 billion in the first quarter are expected to increase 2% to 3% linked quarter due to higher personnel expenses related to annual merit increases as it relates to buybacks as Bill mentioned, we plan to target up to $750 million during the second quarter.
Speaker Change: The good news is that our advice driven business model is well positioned to succeed in a wide variety of economic scenarios.
Speaker Change: Our robust capital advantage strong liquidity profile demographically attractive markets, where we have strong share more importantly, our balance sheet remains open and ready to help our clients navigate the current environment. We're actively looking for opportunities to serve new and existing clients and capitalize on current and future market disruption.
Mike: I'll now hand, it back to Bill for some final remarks, alright, thanks, Mike.
Bill: So in conclusion.
Mike: Seeing solid progress in many of our key strategic focus areas, including Premier banking, well payments and middle market banking.
Mike: Despite the market volatility our growth mindset and strategic focus remains steadfast.
Speaker Change: <unk> is retaining expanding and adding new talent motivated by our platform markets and the opportunity.
Mike: Paying close attention to the changes in our markets the economy in client behavior as our credit risk teams are fully engaged in working with our clients to understand the impact of these changes will continue to adhere to the credit and risk discipline that has served our company and shareholders well over multiple economic cycles.
Speaker Change: I am as optimistic as ever about <unk> future, especially in light of the momentum I see every day inside this company.
Speaker Change: I'd like to thank all of our teammates for their incredible purposeful focus and productivity and moving our company forward. So again thank you.
Mike: The good news is that our advice driven business model is well positioned to succeed in a wide variety of economic scenarios, given our robust capital advantage strong liquidity profile demographically attractive markets, where we have strong share more importantly, our balance sheet remains open and ready to help our clients navigate the current environment.
Speaker Change: For your interest and your investment in true Us rather me turn it back over to you.
Speaker Change: Thank you Bill.
Speaker Change: At this time, we please explain how our listeners can participate in the Q&A session. As you do that I'd like to ask the participants to please limit yourself to one primary question and one follow up in order that we may accommodate as many of you as possible today.
Mike: We're actively looking for opportunities to serve new and existing clients and capitalize on current and future market disruption.
Speaker Change: We will now begin the question and answer session.
Mike: <unk> is retaining expanding and adding new talent motivated by our platform markets and the opportunity.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Mike: I am as optimistic as ever about <unk> future, especially in light of the momentum I see every day inside this company.
Speaker Change: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Mike: I'd like to thank all of our teammates for their incredible purposeful focus and productivity in moving our company forward. So again thank you.
Speaker Change: We ask that you limit yourself to one question and one follow up.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Mike: For your interest and your investment and trust, rather me turn it back over to you.
Bill: Thank you Bill.
Speaker Change: The first question today comes from Ken <unk> with Autonomous Research. Please go ahead.
Speaker Change: At this time, we please explain how our listeners can participate in the Q&A session. As you do that I'd like to ask the participants to please limit yourself to one primary question and one follow up anywhere that we may accommodate as many of you as possible today.
Speaker Change: Thanks, Hi, good morning, guys.
Speaker Change: Alright.
Speaker Change: Push and pull question. So it's nice to see the increased buyback in the second.
Bill: We will now begin the question and answer session.
Speaker Change: Second quarter relative to the first and I'm just wondering like how much of that is just real confidence in the capital position versus a bit of an offset to what we're all seeing and you talked about about a potentially slower.
You asked a question you May press star.
Bill: And then one on your Touchtone phone.
Bill: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Loan environment.
Bill: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Ken: Yes, Ken.
Ken: Our strong capital position.
Bill: We ask that you limit yourself to one question and one follow up.
Ken: Really puts us in a position to a couple of things one is capitalized on growth. So the good news is we're seeing some of that.
Bill: At this time, we will pause momentarily to assemble our roster.
Be opportunistic Tom talk a little bit about that and then weather any storm.
The first question today comes from Ken <unk> with Autonomous Research. Please go ahead.
Ken: It might not might be in front of us.
Ken: This quarter was a good intersection of all three of those we did have <unk> growth that we're funding that we feel really good about that we can support our current level of buyback and dividends, obviously feel really really good about that.
Ken: Thanks, Hi, good morning, guys.
Bill: Alright.
Bill: Pushing poll question. So it's nice to see the increased buyback in the second.
Bill: Quarter relative to the first and I'm just wondering like how much of that is just real confidence in the capital position versus a bit of an offset to what we're all seeing and you talked about about a potentially slower.
Ken: And we just want to be opportunistic.
Ken: We saw an opportunity with.
Ken: The price of our shares.
Ken: Utilizing this capital position.
Ken: To invest in truest.
Bill: Loan environment.
Ken: We like investing in <unk>.
Ken: Yes, Ken.
Our strong capital position.
Ken: And doing all that we still maintain that relative capital position. So.
Ken: Really puts us in a position to a couple of things one is capitalize on growth. So the good news is we're seeing some of that.
Ken: A little more opportunistic.
Ken: Relative to current.
Ken: Be opportunistic Tom talk a little bit about that and then weather any storm.
Ken: Share price.
Ken: Got it thanks, that's a better answer to not great worded question second question.
Ken: It might not might be in front of us.
Ken: This quarter was a good intersection of all three of those we did have <unk> growth that we're funding that we feel really good about that we can support our current level of buyback and dividends, obviously feel really really good about that.
Just on the deposit side, and just kind of same context and with the potential for lower rates here, how do you see your ability to control deposit costs.
Ken: And change up your your mix of deposits as you look forward. Thanks guys.
Ken: And we just want to be opportunistic.
Ken: We saw an opportunity with the.
Ken: Hey, good morning, Ken its Mike look I mean, so far so good I would say on the right page story for US we had a good early start when we saw the cuts last year have taken a very client centric approach but.
Ken: The price of our shares.
Ken: Utilizing this capital position.
Ken: To invest in truest.
Ken: We like investing in <unk>.
Ken: And doing all that we still maintain that relative capital position. So.
Ken: Also a disciplined approach in how we're managing.
Ken: In managing the environment. We're in so obviously, we didn't get the cut we thought we might get in May.
Ken: A little more opportunistic.
Ken: Relative to current.
Ken: Share price.
Ken: Still are making some progress obviously on the on the funding portfolio wed expect that too to benefit obviously some more in the second half as we as we see our cuts, but we're doing the things you would expect we're looking at are.
Ken: Got it thanks, that's a better answer to not great worded question second question.
Ken: Just on the deposit side, just kind of same context and with the potential for lower rates here, how do you see your ability to control deposit costs.
Ken: On the on the consumer side looking at our CD portfolio, managing our maturities well, we shortened our portfolio up there a touch sort of advance in advance of some of the cuts.
Ken: And change up your your mix of deposits as you look forward. Thanks guys.
Ken: And as far as mix. It is relatively stable right you saw DDA remix just to touch to 27% this quarter.
Ken: Hey, good morning, Ken its Mike look I mean, so far so good I would say on the right page story for US we had a good early start when we saw the cuts last year have taken a very client centric approach but.
Ken: Don't view that as a troubling trend at all we had a little bit of movement in the portfolio I mentioned in our in our remarks that we had a couple of large deposits come in at the end of the quarter that crossed over the quarter.
Ken: Also a disciplined approach in how we're managing.
Ken: In managing the environment. We're in so obviously, we didn't get the cut we thought we might get in May.
Ken: As well that impacts mix, but feel pretty good.
Ken: Still are making some progress obviously on the on the funding portfolio wed expect that too to benefit obviously some more in the second half as we as we see our cuts, but we're doing the things you would expect we're looking at are.
The only thing I might add.
Ken: We invested in a lot of tools last year that allows us to be a lot more surgical in our deposit pricing. So I think sort of the overall level of sophistication.
Ken: Intensity around deposit pricing continues to improve every quarter sure.
Ken: On the on the consumer side looking at our CD portfolio, managing our maturities well, we shortened our portfolio up there a touch sort of advance in advance of some of the cuts.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from John <unk> with Evercore. Please go ahead.
Ken: And as far as mix. It is relatively stable right you saw DDA remix just to touch to 27% this quarter.
Speaker Change: Good morning, Hey, Joe.
Ken: Don't view that as a troubling trend at all we had a little bit of movement in the portfolio I mentioned in our in our remarks that we had a couple of large deposits come in at the end of the quarter that crossed over the quarter.
Speaker Change: Sure.
Speaker Change: On the on the loan growth side, just wanted to see if you can give us a little more color around what youre seeing in terms of demand.
Speaker Change: If you could talk about utilization are you seeing.
As well that impacts mix, but feel pretty good.
Speaker Change: Any weakening of the of the pipelines and commitments and.
Ken: The only thing I might add.
Ken: We invested in a lot of tools last year that allows us to be a lot more surgical in our deposit pricing. So I think sort of the overall level of sophistication.
Speaker Change: And then also.
Speaker Change: Any areas of strength, where you would have an opportunity given the uncertain backdrop. Thanks.
Ken: Intensity around deposit pricing continues to improve every quarter.
Speaker Change: Yes, sure John So it's been interested in but we feel really good about the investments that we've made over the last several quarters and you see that showing up in this quarter's results.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from John <unk> with Evercore. Please go ahead.
Speaker Change: To start with that as a premise commitments are up so we feel good about that utilization I would say up slightly so that really isn't part of the story. Its a lot more about it's a lot more about production.
Speaker Change: Good morning, Hey, John.
Speaker Change: On the on the loan growth side, just wanted to see if you can give us a little more color around what youre seeing in terms of demand maybe.
Speaker Change: And pretty Universal I mean, you saw our consumer numbers, which were very strong and then within our wholesale units I mean, it's in a lot of different areas.
Speaker Change: Maybe if you could talk about utilization are you seeing.
Speaker Change: Any weakening of the of the pipelines and commitments and.
Speaker Change: The energy healthcare.
Speaker Change: And then also any areas.
Speaker Change: Mentioned middle market before some of our core commercial markets.
Speaker Change: <unk> strength, where you would did you have an opportunity given the uncertain backdrop. Thanks.
Speaker Change: Doing well our C&I production is up every quarter over the last five quarters. So.
John Evercore: Yes sure John.
John Evercore: It's been interested in but we feel really good about the investments that we've made over the last several quarters and you see that showing up in this quarter's results.
Speaker Change: We've got good momentum on that standpoint.
Speaker Change: Our pipelines and consumer are the best I've ever met.
John Evercore: No.
Speaker Change: They are really really significant on C&I, our pipelines are good pull through could be a little bit slower.
John Evercore: We sort of start with that as a premise commitments are up so we feel good about that utilization I would say up slightly so that really isn't part of the story. It's a lot more about it as a lot more about production.
Speaker Change: Have to look at that but but really good so.
Speaker Change: No.
Speaker Change: Despite all the uncertainty and volatility and all the things that we think about sort of our core organic <unk>.
John Evercore: And pretty Universal I mean, you saw our consumer numbers, which were very strong and then within our wholesale.
Speaker Change: Reduction capacity our pipelines.
John Evercore: <unk>.
John Evercore: A lot of different areas.
John Evercore: Energy healthcare I mentioned middle market before some of our core commercial markets.
Speaker Change: In our markets in fairness is probably contributed to this the skill set of our teammates the products and the things that we do.
John Evercore: Doing well.
Speaker Change: I actually have us feeling good about continued continued loan growth and.
John Evercore: Our C&I production is up every quarter over the last five quarters or so.
Speaker Change: And John I would just add on and a lot of the growth. We're seeing is sort of with new and existing clients versus necessarily an increase in utilization.
John Evercore: <unk> got good momentum on that standpoint.
John Evercore: Our pipelines and consumer are the best I've ever met.
John Evercore: That said, it's been up that's a good that's a good trend.
John Evercore: They are really really significant.
John Evercore: On C&I, our pipelines are good.
Speaker Change: Great. Okay. Thank you for that and then separately on the <unk>.
John Evercore: Pull through could be a little bit slower.
John Evercore: And cap market side I know you had.
John Evercore: Have to look at that but really good so.
Speaker Change: Cited some pressures there and I guess, if you could just give us the <unk>.
John Evercore: We.
John Evercore: Despite all the uncertainty and volatility and all the things that we think about sort of our core organic production capacity our pipelines.
Speaker Change: Similar type of color around what youre seeing in terms of the pipeline as the pipeline continues to build and you're just getting a day.
Speaker Change: Delayed pull through of the transactions are you seeing any erosion of that pipeline just given the wild uncertainty around the tariff to be and everything and then one last question related to that why wouldn't your trading business since be benefiting from the volatility versus being negatively impacted.
And our markets in fairness, probably contributed to this the skill set of our teammates the products and the things that we do.
John Evercore: Actually I have us feeling good about continued.
John Evercore: Continued loan growth and.
John Evercore: And John I would just add and a lot of the growth. We're seeing is sort of with new and existing clients versus necessarily an increase in utilization. So that said it's been up that's a good that's a good trend.
Speaker Change: Yeah. So let me start with the with the last one first and just sort of remind you remember what our trading what are.
Speaker Change: <unk> banking business looks like we're a pretty traditional investment banking business, you know syndication debt capital markets equity capital markets.
John Evercore: Great. Okay. Thank you for that and then separately on the IB.
John Evercore: And Caf market side I know you.
John Evercore: <unk> cited some pressures there and I guess, if you could just give us the.
Speaker Change: M&A on our trading business is really a client focused trading business. So we have sort of a low vol kind of.
John Evercore: Similar type of color around what youre seeing in terms of the pipeline as the pipeline continued to build and you're just getting a.
Speaker Change: Kind of business so.
John Evercore: Delayed pull through of the transactions are you seeing any erosion of that pipeline just given the wild uncertainty around the tariff to be and everything and then one last question related to that.
Speaker Change: We're not we're not doing a lot of proprietary type trading this is training for our clients.
Speaker Change: So it just doesn't have the same kind of beta maybe attached to attached to its two two its results.
John Evercore: Why wouldn't your trading businesses be benefiting from the volatility versus being negatively impacted.
Speaker Change: They are already as I feel better about investment banking than I have ever.
Speaker Change: I think I feel really good about the talent that we've got on the field field.
John Evercore: Yes, So let me start with the last one first and just sort of remind you remember what our trading what our.
Speaker Change: Feel good about the investments we've made I don't think we've ever been better positioned.
John Evercore: Investment banking business looks like we're a pretty traditional investment banking business, you know syndication debt capital markets equity capital markets.
Speaker Change: The alignment with our overall corporate commercial banking has never been better.
Speaker Change: But prince propensity.
John Evercore: M&A, but our trading business is really a client focus trading business. So we have sort of a low vol kind of.
Speaker Change: Introduce our industry specialties create pipelines and opportunities we had a really good.
John Evercore: Got it kind of business.
Speaker Change: So on our core.
John Evercore: We're not we're not doing a lot of proprietary type trading this is trading for our clients.
Speaker Change: Investment grade debt capital markets quarter.
Speaker Change: Pipelines are just deferred is the way I would say its pipelines came in really strong to begin the quarter pipelines tend to be a little more deferred particularly on the on the M&A side, although in fairness, we just.
John Evercore: It just doesn't have the same kind of beta maybe attached to attached to its two two its results.
John Evercore: There already is I feel better about investment banking than I have ever I think.
Speaker Change: Some new mandates this quarter, so it's not like the spigot shut off.
John Evercore: I feel really good about the talent that we've got on the field.
Speaker Change: Seems to be a little bit deferred we're not losing business to someone else.
John Evercore: We feel good about the investments we've made I don't think we've ever been better positioned.
Speaker Change: I think our clients are primarily pausing from from that standpoint.
John Evercore: The alignment with our overall core.
John Evercore: In commercial banking has never been better.
Speaker Change: No.
Speaker Change: I think overall industry of soda projected to be flat, we thought that seem to be the best place to be positioned.
John Evercore: No.
John Evercore: <unk> propensity.
John Evercore: Introduce our industry specialties create pipelines and opportunities we had a really good.
Speaker Change: If things recover we're never better position.
Speaker Change: We've gained.
So on our core.
Speaker Change: Incremental share every quarter for the last several quarters. So if the market returns, we're going to return with <unk>.
John Evercore: Investment grade debt capital markets quarter.
Speaker Change: Equally to better than the market.
John Evercore: Our pipelines are just deferred is the way I would say its pipelines came in really strong to begin the quarter pipelines tend to be a little more deferred particularly on the on the M&A side, although in fairness. We just we've had some new mandates this quarter. So it's not like the spigot shut off.
Speaker Change: Just right now spot looking at investment banking it seemed to us to be most prudent to.
Speaker Change: To say that that's a flat sort of forecast.
Speaker Change: Got it alright, thank you for that appreciate it thanks.
John Evercore: It seems to be a little bit deferred were not losing business to someone else.
Speaker Change: The next question comes from Erika Najarian with UBS. Please go ahead.
John Evercore: I think our clients are primarily pausing from from that standpoint.
Erika Najarian: Hi, good morning.
John Evercore: No.
Speaker Change: First of all.
Speaker Change: And for Mike.
John Evercore: Overall industry as soda projected to be flat, we thought that seem to be the best place to be positioned.
Speaker Change: You noted that underneath the revenue guide Youre expecting NII increased.
<unk> increased 3%.
John Evercore: If things recover we're never better position.
Speaker Change: Could you remind us what was the is that.
Speaker Change: Unchanged or revised from original January outlook, and if you could give us a sense of how much the revision would have been curve versus size of the balance sheet.
John Evercore: <unk> gained incremental share every quarter for the last several quarters. So if the market returns we're going to return with.
John Evercore: Equal to better than the market.
John Evercore: Just right now spot looking at investment banking it seemed to us to be most prudent to.
John Evercore: Hey, good morning Erika.
John Evercore: You say that Thats, a flat sort of forecast.
Speaker Change: I actually don't think we gave explicit guidance in January for for the year for NII I think it would have been implied.
John Evercore: Got it alright, bill Thank you for that appreciate it thanks.
John Evercore: Closer to <unk>.
John Evercore: Call It high threes, maybe closer to 4%. So we probably have three quarters of a percent or so.
Speaker Change: The next question comes from Erika Najarian with UBS. Please go ahead.
John Evercore: Impact to NII relative to our outlook and it's almost entirely driven by the change in the curve and as we talk about two year.
Erika Najarian: Hi, good morning.
John Evercore: First of all.
Erika Najarian: For Mike.
Erika Najarian: You noted that underneath the revenue guide youre expecting NII to increase 3% if you could remind us what was the is that.
John Evercore: Medium term rates, where we're really looking on the curve is the difference in where the two year is not just today, but where implied to have it throughout the course of the year and so the impact on that.
Erika Najarian: Unchanged or revised from the original January outlook, and if you could give us a sense of how much the revision would have been curve versus sides of the balance sheet.
John Evercore: On the loan repricing opportunity that we've that we've talked about as well as to a lesser extent the securities.
Erika Najarian: Hey, good morning Erika.
John Evercore: Got it.
John Evercore: I apologize if you said this in your prepared remarks, and I just didn't catch it.
Speaker Change: Actually I don't think we gave explicit guidance in January for for the year for NII I think it would have been implied.
Speaker Change: Good morning.
Kim: Thank you Kim.
John Evercore: The baseline unemployment rate.
Erika Najarian: Closer to.
Erika Najarian: Call It high threes, maybe closer to 4%. So we probably have three quarters of a percent or so.
John Evercore: Reserve.
John Evercore: And with the weighted averages.
John Evercore: Thats.
John Evercore: And that it in your first quarter reserve piece.
Erika Najarian: Impact to NII relative to our outlook and it's almost entirely driven by the change in the curve and as we talk about two year.
Speaker Change: We didn't we didn't give you that Erika Brown I'll, let <unk> is here in the room with US you want to talk a little bit about our baseline unemployment outlook, yes. Thanks, Thanks, Mike and Eric because the way we think about that.
Erika Najarian: Medium term rates, where we're really looking on the curve is the difference in where the two year is not just today, but were implied to have it throughout the course of the year and so the impact on that.
Speaker Change: Varying degrees of factors in our allowance unemployment, obviously plays into that we use it across baseline and then the two different.
Erika Najarian: On the loan repricing opportunity that we've that we've talked about as well as to a lesser extent the securities.
Speaker Change: Stress scenarios, I'd say, where we are right now is sort of mid <unk>.
Erika Najarian: Got it.
Erika Najarian: I apologize if he saw this in the prepared remarks, and I just didn't catch it.
Speaker Change: High single digits, when you factor in the modeled output plus the qualitative.
Erika Najarian: Same morning.
Erika Najarian: But could you again.
Speaker Change: Overlays, we feel good about where it sits today, we feel like we can weather whatever is in front of us from a from a credit risk standpoint.
Erika Najarian: The baseline unemployment rate for your reserve.
Erika Najarian: And with the weighted averages.
Speaker Change: And that actual unemployment rate what we're using.
Erika Najarian: Thats.
Erika Najarian: And that is in your first quarter reserves. Please.
Speaker Change: It's got five one in the model, but then you adjust off of that a pull level based on the asset.
Speaker Change: We didn't we didn't give you that Erica Brad I'll, let <unk> is here in the room with US you want to talk a little bit about our baseline unemployment outlook, yes, thanks, Mike and Eric So the way, we think about the varying degrees of factors in our allowance unemployment obviously plays in.
Speaker Change: Thanks.
Speaker Change: Thank you for that.
Speaker Change: The next question comes from Mike Mayo with Wells Fargo Securities. Please go ahead.
Speaker Change: Hi.
Speaker Change: Can you hear me sorry.
Erika Najarian: After that we use it across baseline and then the two different.
Speaker Change: Gotcha Okay.
Speaker Change: Okay great.
Erika Najarian: Stress scenarios I would say, where we are right now is sort of mid <unk>.
I think youre doing what you can in terms of investing in talent and transitioning from defense to offense as.
Erika Najarian: High single digits, when you factor in the modeled output plus the qualitative.
Speaker Change: You said.
Erika Najarian: Overlays, we feel good about where it sits today, we feel like we can weather whatever is in front of us from a from a credit risk standpoint in that actual unemployment rate what we're using.
Speaker Change: And you did get <expletive> loan growth.
Speaker Change: But I'm still just trying to reconcile the overall.
Speaker Change: Guidance.
Speaker Change: <unk>.
Speaker Change: The upbeat comments with.
Erika Najarian: It's got five one in the model, but then you adjust off of that a pull level based on the asset.
Speaker Change: The uncertainty with the macro on the one hand, it sounds like it seems like youre showing more realism.
Erika Najarian: Thanks.
Speaker Change: Thank you for that.
Speaker Change: Currency impacts NII and capital markets and tax investment banking, a little lower guide there on the other hand, it looks like Youre accelerating buybacks in your reserves are not so different and so if the world is that much more difficult why wouldn't you be increasing reserves more why wouldn't you be slowing down buybacks I'm not.
Speaker Change: The next question comes from Mike Mayo with Wells Fargo Securities. Please go ahead.
Speaker Change: Hi.
Speaker Change: Can you hear me sorry.
Speaker Change: Gotcha.
Speaker Change: Okay great.
Speaker Change: I think youre doing what you can in terms of investing in talent and transitioning from defense to offense as you said.
Speaker Change: One thing to do that I'm, just trying to reconcile those thoughts thanks, yes.
Speaker Change: Yes, Mike Great question. So if you think about.
Speaker Change: The guidance its really centered on two things so a flat forecast on investment banking again.
Speaker Change: And you did get <expletive> loan growth.
Speaker Change: But I'm still just trying to reconcile the overall.
Speaker Change: I hope that's wrong markets recover quickly and as I said before when they do we're really really well position in <unk>.
Speaker Change: Guidance.
Speaker Change: Somewhat upbeat comments with.
So again marginal share on that.
Speaker Change: The uncertainty with the macro on the one hand, it sounds like it seems like youre showing more realism the.
Speaker Change: That business over time.
Speaker Change: Well possession, but realistically sort of setting with sort of a spot forecast and looking at sort of overall industry that seem prudent to us and then the other was related to.
Speaker Change: Curve impacts NII and capital markets and tax investment banking in a little lower guide there on the other hand, it looks like Youre accelerating buybacks in your reserves are not so different and so if the world is that much more difficult why wouldn't you be increasing reserves more why wouldn't you be slowing down buybacks.
Speaker Change: Just sort of where we are in the curve everything else in terms of loan production and deposit production.
Speaker Change: Payments penetration all those things, we're not changing any of that I mean, we still feel really good about that and as you evidenced in the first quarter, we actually have strong momentum. So it was a little more.
Speaker Change: Not saying to do that I'm, just trying to reconcile those thoughts thanks, yes.
Speaker Change: Yes, Mike that's a great question. So if you think about.
Isolated to those things versus.
Speaker Change: The guidance its really centered on two things so a flat forecast on investment banking again.
Speaker Change: A statement around that we see some precipice in the market.
Speaker Change: I hope that's wrong markets recover quickly and as I said before when they do we're really really well positioned and we've.
Speaker Change: And then I think as you take that of furthers further step all of those things are considered when we set that when we set that reserve. So I mean, I think we look at volatility and uncertainty in tariffs and potential.
Speaker Change: So again marginal share on that.
Speaker Change: That business over time, and we're well positioned but realistically sort of setting with sort of a spot forecast and look at sort of overall industry that seem prudent to us and then the other was related to.
Speaker Change: Impacts on all of those things related related to related to the reserve and then on the share buyback as I noted earlier.
Speaker Change: Just sort of where we are in the curve everything else in terms of loan production and deposit production in.
Speaker Change: An opportunistic time and we want to.
Speaker Change: True estimate when we want to invest in truth, we've got a strong capital position.
Speaker Change: Payments penetration all those things, we're not changing any of that I mean, we still feel really good about that and as you evidenced in the first quarter. We actually have had strong momentum. So it was a little more.
Speaker Change: <unk> taken a little marginal opportunistic continues to keep us in a really strong capital position to.
Speaker Change: Not only weather any storm, but what I hope is more to invest more in our business and the growth of our business.
Speaker Change: Isolated to those things versus.
Speaker Change: A statement around that we see some precipice in the market.
Speaker Change: I guess, just as a follow up when I think about what could happen. It seems like that loan production in the deposits and the payments could fall off the cliff if this.
Speaker Change: And then I think as you take that furthers further step all of those things are considered when we set that when we set that reserve. So I mean, I think we look at volatility and uncertainty entire offs and potential impacts and all those things related related to related to the reserve and then on the share buyback as I noted earlier.
Speaker Change: Trade War situation. It goes on for too long, so I guess.
Speaker Change: Do you have any.
Speaker Change: Same of contacts tenure.
Speaker Change: Maria.
Speaker Change: That gives us gives us the lens of a framework on how to view. This and also added the pandemic help prepare you and your clients and the impact on supply chains. Thanks.
Speaker Change: Just.
Speaker Change: An opportunistic time, and we want to we like true estimate where we want to invest in truth, we've got a strong capital position.
Speaker Change: The second part of your question on <unk> really really on fire.
<unk> taken a little marginal opportunistic continues to keep us in a really strong capital position.
Speaker Change: I think that's happened I think if we look in talking to a lot of clients.
Speaker Change: They learned a lot during the pandemic in terms of managing working capital I mean, I think it's one of these things I believe it's one of these things when we sort of are perplexed as an industry wide utilization is lower than traditional I think it's cause clients to learn how to manage working capital really well and manage their supply chain is really well.
Speaker Change: Not only weather any storm, but what I hope is more to invest more in our business and the growth of our business.
Speaker Change: I guess, just as a follow up when I think about what could happen. It seems like that loan production in the deposits and the payments to fall off a cliff.
Speaker Change: Trade War situation goes on for too long, so I guess.
Speaker Change: They created a lot more diversity and a lot more consistency. So I do think clients are better prepared understand their supply chains at some multiple of what they did before created more flexibility and optionality in particularly our larger clients.
Speaker Change: Do you have any.
Speaker Change: Frame of context in year.
Speaker Change: Career.
Speaker Change: That gives us the lens of a framework on how to view. This and also added the pandemic prepare you and your clients for the impact on supply chains. Thanks.
Speaker Change: Back to smaller clients, but a larger clients I think they just have more flexibility better understanding of their supply chain and then we're really helping them with that and we've got a really good business that helps them manage and think about how to leverage leverage leverage supply chain.
Speaker Change: Yes, the second part of your question on <unk> really really on FIFO.
Speaker Change: I think that's happened I think if we look in talking to a lot of clients.
Speaker Change: They learned a lot during the pandemic in terms of managing working capital I mean, I think it's one of these things I believe it's one of these things when we sort of our complex is an industry wide utilization is lower than traditional I think it's cause clients learned how to manage working capital really well and manage their supply chains really well.
Speaker Change: And then in terms of in terms of our career, it's really sort of an unusual circumstance and that we sort of look at.
Speaker Change: And you indicated some different.
Speaker Change: Data points, our underlying business is really solid.
Speaker Change: They created a lot more diversity and a lot more consistency. So I do think clients are better prepared.
Speaker Change: Our client business is really solid our consumers are in good shape, our business clients are in good shape. So different maybe from other environments, where you can sort of feel softness in the underlying portfolios.
Speaker Change: Understand their supply chains.
Speaker Change: Some multiple of what they did before created more flexibility and optionality in particularly on larger clients ill go back to smaller clients, but a larger clients I think they just have more flexibility better understanding of their supply chain and then we're really helping them with that we've got a really good business that helps them manage and think about how to leverage leverage.
Speaker Change: Don't see that right now.
Speaker Change: So I.
Speaker Change: I think there's reasons to be.
Speaker Change: Optimistic that people sort of see themselves through this and but we just are unwilling to put sort of all of that into into a forecast.
Speaker Change: Leverage supply chains.
Speaker Change: And then in terms of in terms of our career, it's really sort of an unusual circumstance that we sort of look at.
Speaker Change: And then two into our guidance, but I think we enter into this in a very different situation, where consumers or businesses or more solid and they are I did learn a lot in the supply chain on the small side I think that's a little more challenging on the small business side because their business may not have the kind of flexibility.
Speaker Change: And you indicated some different.
Speaker Change: Data points, our underlying business is really solid.
Speaker Change: In our client business is really solid our consumers are in good shape. Our business clients are in good shape. So different maybe from other environments, where you can sort of feel softness in the underlying portfolios you just don't see that right now so.
Speaker Change: So they could be impacted and one supply chain Avenue from one tariff to one country kind of kind of analysis. So we're looking closely at those idiosyncratic kind of things to make sure that we're keeping an eye on those clients, helping them think through where they go but I think you are it is an interesting time.
Speaker Change: I think there's reasons to be.
Speaker Change: Optimistic that people sort of see themselves through this and.
Speaker Change: In my career.
But we just are unwilling to put sort of all of that into into a forecast.
Speaker Change: And then back to the sort of how the whole premise started I just don't think we've ever been better positioned.
Speaker Change: And then two into our guidance, but I think we enter into this in a very different situation, where consumers and businesses are more solid and they are I did learn a lot in the supply chain on the small side I think thats, a little more challenging on the small business side because.
Speaker Change: Sort of be in the athletic position to respond.
Speaker Change: Good momentum as you mentioned good talent.
And our capital position that allows us to.
Speaker Change: Weather, but also take advantage of opportunities.
Speaker Change: Alright. Thank you thanks, Mike.
Speaker Change: Their business might not have the kind of flexibility so they could be impacted and one supply chain Avenue from one tariff to one country kind of kind of analysis. So we're looking closely at those idiosyncratic kind of things to make sure that we're keeping an eye on those clients, helping them think through where they go.
Speaker Change: The next question comes from Betsy.
Betsy: Betsy <unk> with Morgan Stanley. Please go ahead.
Betsy: Hi, good morning.
Speaker Change: Good morning.
Speaker Change: Mike I just had one quick question for you you mentioned during prepared remarks that you've got I think it's 42 billion that's rolling.
Speaker Change: Thank you or it is an interesting time.
Speaker Change: In my career.
Speaker Change: In <unk> through <unk>. This year and then it is rolling at a lower pickup then you had said before could you just tell us what the yield pick up is that you expect on this 42 billion.
Speaker Change: And then back to the sort of how the whole premise started I just don't think we've ever been better positioned.
Speaker Change: Sort of.
Speaker Change: And the athletic position to respond.
Speaker Change: Good momentum as you mentioned good talent.
Speaker Change: Yes, sure Betsy units.
Speaker Change: So to speak in terms of averages obviously because across that $42 billion you've got <unk>.
Speaker Change: And our capital position that allows us to.
Speaker Change: Weather, but also take advantage of opportunities.
Speaker Change: A meaningful portion of its loans some securities and then even within loans, you've got a pretty wide variety of products in that bundle, but back in January we mentioned that we felt like call. It 90 to 100 basis points of I'll call it incremental run on versus run off.
Mike Mayo: Alright. Thank you thanks, Mike.
Betsy: The next question comes from Betsy <unk> with Morgan Stanley. Please go ahead.
Betsy: Hi, good morning.
Speaker Change: Good morning.
Speaker Change: And we think that that's lower by 40 to 50 basis points.
Mike Mayo: Mike I just had one quick question for you you mentioned during prepared remarks that you've got I think it's 42 billion that's rolling in <unk> through <unk> this year.
Speaker Change: Almost half.
Speaker Change: And again.
Speaker Change: Our term exposure is really more in that sort of two year part of the curve. The whole curve is important to us, but especially I would say two to five is probably as we think about.
Mike Mayo: And then it's rolling at a lower pickup then you had said before could you just tell us what the yield pick up is that you expect on this 42 billion.
Speaker Change: That repricing opportunity, probably 75% of that opportunity is less than five years.
Mike Mayo: Yes, sure Betsy and it's it's sort.
Speaker Change: Okay, but on the average $42 billion is going to roll it.
Mike Mayo: So to speak in terms of averages obviously because across that $42 billion you've got <unk>.
Speaker Change: On average 45 bps pick up higher.
Mike Mayo: A meaningful portion of its loans some securities and then even within loans, you've got a pretty wide variety of products in that bundle, but back in January we mentioned that we felt like call. It 90 to 100 basis points of I'll call it incremental run on versus run off.
Speaker Change: Higher than that probably closer to like 50 to 60.
Speaker Change: Plus a little it actually changes over the over the over the over the year Betsy. So our view on twos. As an example is this is based on implied implied forwards is that the two year will probably decline a touch over the course of the year and so maybe in.
Mike Mayo: And we think that that's lower by 40 to 50 basis points.
Mike Mayo: Almost half.
Speaker Change: This quarter and next quarter, we're picking up maybe its closer to 60 to 70, and then maybe it's closer to 50 to 60 basis points later in the year.
Mike Mayo: And again.
Mike Mayo: Our term exposure is really more in that sort of two year part of the curve. The whole curve is important to us, but especially I would say two to five is probably as we think about.
Speaker Change: Got it okay. Thank you Super helpful. And then just on the question on on loan growth as you think through the puts it.
Mike Mayo: That repricing opportunity, you're probably 75% of that opportunity is less than five years.
Speaker Change: Okay, but on the average $42 billion is going to roll it.
Speaker Change: It takes here on the outlook are you changing your lending standards.
Speaker Change: On average 45 bed pickup no higher than that probably closer to like 50 to 60.
Speaker Change: Oh gosh now Betsy, we're just constantly consistent.
Speaker Change: Plus a little it actually changes over the over the over the over the year about DSO.
Speaker Change: And lending standards, and how we think about our portfolio and how we think about our opportunities.
Speaker Change: Our view on <unk> as an example is this is based on implied implied forwards is that the two year will probably decline a touch over the course of the year and so maybe in this.
Speaker Change: And everything that you're seeing from us.
Speaker Change: Just really strong execution.
Speaker Change: And that within that framework.
Speaker Change: Okay, So lending things don't change.
Speaker Change: This quarter and next quarter, we're picking up maybe its closer to $60 to 70, and then maybe it's closer to 50% to 60 basis points later in the year.
As the environment unfolds.
Speaker Change: You'll see growth from.
Speaker Change: Got it okay. Thank you Super helpful. And then just on the question on on loan growth as you think through the puts it.
Speaker Change: Like adding new customers I suppose thats really the message you have for us yes.
Speaker Change: Yes, I mean, adding new clients expanding with existing clients being more.
Speaker Change: It takes here on the outlook are you changing your lending standards.
Speaker Change: Relevant.
Speaker Change: Expanding in markets, where we weren't before building our middle market business consumer execution Premier production all of those things and those in those categories.
Speaker Change: Oh gosh now Betsy, we're just constantly consistent.
Speaker Change: And lending standards, and how we think about our portfolio and how we think about our opportunities.
Speaker Change: Hey, thanks.
Speaker Change: Yep.
Speaker Change: Yes.
Speaker Change: And everything that you're seeing from us just like just really strong execution.
Speaker Change: The next question comes from Matt O'connor with Deutsche Bank.
Speaker Change: Within that within that framework.
Speaker Change: Please go ahead.
Speaker Change: Okay, So lending standards don't change.
Speaker Change: Good morning can you elaborate on some of the areas that youre targeting for cost saves.
Speaker Change: As the environment unfolds.
Speaker Change: Maybe we can what the restructuring charges were for this quarter and how that helps going forward.
Speaker Change: You'll see growth from.
Speaker Change: Like adding new customers I suppose thats really the message you have for us.
I'll start and maybe turn it to you on the specific on the restructuring charges and whatnot.
Speaker Change: Yes, I mean, adding new clients expanding with existing clients being more.
Speaker Change: You remember in 2023, we started with.
Speaker Change: Relevant.
Speaker Change: Expanding in markets, where we weren't before building our middle market business consumer execution Premier production all of those things and those in those categories. Okay.
Speaker Change: Significant expense initiative, where we went and looked at everything in our company in terms of opportunities and you saw a lot of that in the consolidation and simplification of our business, creating better.
Speaker Change: Better better pull through so lot of this is just realizing continued to realize the benefits of those those activities. So.
Speaker Change: Okay. Thanks.
Speaker Change: Yep.
Speaker Change: Yes.
Speaker Change: The next question comes from Matt O'connor with Deutsche Bank.
Speaker Change: This isn't our.
Speaker Change: One time stop start kind of thing this is a continuation of the learnings that we.
Speaker Change: Please go ahead.
Matt O'connor: Good morning can you elaborate on some of the areas that youre targeting for cost saves.
Speaker Change: Embedded in our system and our continuous improvement opportunities. So they're all those same kind of categories continued to.
Matt O'connor: Maybe we can what the restructuring charges were for this quarter and how that helps going forward.
Matt O'connor: I'll start and maybe turn it to you on the specific on the restructuring charges and whatnot.
Speaker Change: Get the benefits of being more efficient.
Speaker Change: Consolidations spans and layers all of those traditional things that come in terms of in terms of expense saves.
Matt O'connor: You remember in 2023, we started with.
Matt O'connor: Significant expense initiative, where we went and looked at everything in our company in terms of opportunities and you saw a lot of that in the consolidation and simplification of our business, creating better.
Speaker Change: But all of that is offset against the investments that we're making so that's an important component here is what we're not stopping as the investments that we're making in our.
Speaker Change: Digital capabilities, which I've talked about.
Matt O'connor: Better better pull through so lot of this is just realizing continued to realize the benefits of those those activities. So.
Talent that continues to be.
Speaker Change: Wanting to be part of our part of our platform Treasury management and payments.
Matt O'connor: This isn't our.
Matt O'connor: One time stop start kind of thing this is a continuation of the learnings that we.
Speaker Change: Our risk.
Speaker Change: Infrastructure. So it's toggling all of those things and allowing a little more of those expense savings to come through.
Matt O'connor: Embedded in our system and the continuous improvement opportunities. So there are other all those same kind of categories continued to.
Speaker Change: To help offset some of the investments that we want to continue to make something Michael that you talk about the specifics on the on the restructuring.
Matt O'connor: Get the benefits of being more efficient.
Speaker Change: Restructuring yeah on the restructuring charges map this quarter. It was predominantly some some corporate facilities rationalization.
Matt O'connor: Consolidations spans and layers all those traditional things that come in terms of in terms of expense saves.
Matt O'connor: But all of that is offset against the investments that we're making so that's an important component here is what we're not stopping there is the investments that we're making in our.
Speaker Change: And then also some severance so those were really the two notable items.
Speaker Change: I think you asked how big of a part.
Speaker Change: Our story that will be throughout the course of the year, we don't expect there to be significant restructuring charges throughout the course of the year.
Matt O'connor: Digital capabilities, which I talked about.
Matt O'connor: Talent that continues to be.
Matt O'connor: Wanting to be part of our part of our platform Treasury management and payments.
Speaker Change: Because as I sit here today, I see $40 million to $50 million.
Speaker Change: Hi, Syed.
Matt O'connor: Our risk.
Speaker Change: So.
Matt O'connor: Infrastructure. So it's toggling all of those things and allowing a little more of those expense savings to come through.
Speaker Change: That helps.
Speaker Change: Okay, that's $40 million to $50 million.
Speaker Change: Some of the year.
Speaker Change: Yes.
Speaker Change: Okay.
Matt O'connor: To help offset some of the investments that we want to continue to make something Michael that you talked about the specifics on the restructuring.
Speaker Change: Helpful. Thank you.
Speaker Change: The next question.
Matt O'connor: Restructuring yeah on the restructuring charges map this quarter. It was predominantly some some corporate facilities rationalization.
Speaker Change: Ebrahim <unk> with Bank of America. Please go ahead.
Speaker Change: Hey, good morning I.
Matt O'connor: And then also some severance so those were really the two notable items.
Speaker Change: I guess maybe.
Speaker Change: Mike for you.
Mike Mayo: On capital and apologies if I if you already addressed this but when you look at the CET one.
I think you asked how big of a part.
Matt O'connor: Our story that will be throughout the course of the year, we don't expect there to be significant restructuring charges throughout the course of the year.
Speaker Change: <unk> I guess.
Mike Mayo: Give us a sense of I appreciate the sensitivity to the stock price.
Speaker Change: How much more aggressive can you be on the pace of buybacks and is data CET one target that we should keep in mind in the near term below which you don't want capital levels.
Matt O'connor: Because as I sit here today, I see $40 million to $50 million.
Syed: Hi, Syed.
Matt O'connor: So.
Matt O'connor: That helps.
Matt O'connor: Okay, that's $40 million to $50 million.
Speaker Change: Yes, good morning, Ebrahim look I think on the buyback we feel good about our the rhythm that we established the 500 a quarter.
Matt O'connor: Rest of the year.
Matt O'connor: Yes.
Matt O'connor: Okay.
Matt O'connor: Helpful. Thank you.
Speaker Change: I think again that with the dividend.
Ebrahim: The next question comes from Ebrahim <unk> with Bank of America. Please go ahead.
Speaker Change: Sure.
Speaker Change: Equating to approximately our earnings we feel like is a pretty elevated and as we've said with our sort of more medium term capital planning something that we believe can be more sustainable I think the $2 50 incremental that were looking at this quarter bill framed it well it's opportunistic we.
Ebrahim: Hey, good morning, I guess, maybe.
Mike Mayo: Mike for you.
Mike Mayo: On capital and apologies if you already addressed this but when you look at the CET one.
Speaker Change: We saw a pretty significant selloff.
Mike Mayo: Without <unk>.
Speaker Change: Selloff in the industry in the stock and so had the flexibility to frankly have a bias for action there, but I wouldnt expect for us to necessarily continue to.
Mike Mayo: Give us a sense of I appreciate the sensitivity to the stock price, but how much more aggressive can you be on the pace of buybacks and is data CET one target that we should keep in mind in the near term below which you don't want capital levels as well.
Speaker Change: To exercise that flexibility in terms of a target we talked a little bit about this earlier in the year and some of last year it will be.
Mike Mayo: Yes, good morning Ebrahim.
Mike Mayo: On the buyback we feel good about our the rhythm that we established the 500 a quarter.
Speaker Change: <unk> for us to actually see a final rule on Basel and have a better sense for an implementation timeline.
Mike Mayo: I think again that with the dividend.
Speaker Change: We've talked about a 10% area kind of operating area I think thats still sensible based on everything that we know now.
Mike Mayo: Equating to approximately our earnings we feel like is a pretty elevated and as we've said with our sort of more medium term capital planning something that we believe can be more sustainable I think the $2 50 incremental that were looking at this quarter Bill framed it well, it's opportunistic we saw a pretty significant.
Speaker Change: Don't think it's a moment short term or we would be eager to.
Speaker Change: To add a ton of leverage so I think we sort of stay the course here with the 500.
Speaker Change: And we'll watch the market and we will and we'll we'll adjust as as it makes sense.
Mike Mayo: Sell off in the industry in the stock and so had the flexibility to frankly have a bias for action there, but I wouldnt expect for us to necessarily continue to.
Speaker Change: That's helpful. Thank you that's all I had.
Speaker Change: The last question today comes from Gerard Cassidy with RBC. Please go ahead.
Mike Mayo: To exercise that flexibility in terms of a target we talked a little bit about this earlier in the year and some of last year.
Speaker Change: Hi, Bill Hi, Mike.
Gerard Cassidy: Thanks, Mike.
Mike Mayo: It will be important for us to actually see a final rule on Basel and have a better sense for an implementation timeline.
Speaker Change: Can you share with us.
Speaker Change: We hear a lot of your competitors looking to the southeast and your primary franchise as an area of expansion and growth.
Mike Mayo: We've talked about a 10% area kind of operating area I think thats still sensible based on everything that we know now.
Speaker Change: Can you tell us has competition changed or intensified and then second and as part of that.
Mike Mayo: Think it's a moment short term or we would be eager to.
Mike Mayo: To add a ton of leverage so I think we sort of stay the course here with the 500.
Speaker Change: Are you seeing any kind of aggressive lending going on from your competitors.
Mike Mayo: And we'll watch the market and we will and we'll we'll we'll adjust as as it makes sense.
Speaker Change: The euro obviously not willing to to.
Speaker Change: Compete against because it's too aggressive.
Mike Mayo: That's helpful. Thank you that's all I had.
Speaker Change: Yes.
Speaker Change: One thing.
Speaker Change: My entire career in these markets, they're always competitive there competitive because they are great markets.
Speaker Change: The last question today comes from Gerard Cassidy with RBC. Please go ahead.
Speaker Change: So.
Gerard Cassidy: Hi, Bill Hi, Mike.
I wouldn't say anything, particularly.
Speaker Change: Thanks, Mike.
Speaker Change: Can you guys share with us.
Speaker Change: Differentiated we compete with a lot of smart competitors.
Speaker Change: We hear a lot of some of your competitors looking to the southeast and your primary franchise as an area of expansion and growth.
Speaker Change: I don't think anything sort of out of the ordinary in terms of.
Speaker Change: Pricing or structure.
Speaker Change: And then as I've mentioned earlier there are other markets, where we're also expanding talked about Texas in Philadelphia in Ohio, and other places, where we have big investments too.
Speaker Change: Can you tell us has competition changed or intensified and then second as part of that.
Speaker Change: Are you seeing any kind of aggressive lending going on from your competitors.
Speaker Change: Competing really really well in those markets. So I think just on the overall competitive market <unk>.
Speaker Change: Youre, obviously not willing to to.
Speaker Change: Compete against because it's too aggressive.
Speaker Change: <unk> seen the results of how we've.
Speaker Change: Yes, there are let's say one thing.
Speaker Change: How we fared in this competitive environment with our.
Speaker Change: My entire career in these markets, they're always competitive there competitive because they are great markets.
Speaker Change: Loan growth production capabilities continuing to improve the investments we've made so.
Speaker Change: So.
Speaker Change: I wouldn't say anything, particularly.
Speaker Change: I think my answer would be we have.
Speaker Change: Never been more competitive in terms of our athletic position.
Speaker Change: Differentiated we compete with a lot of smart competitors.
Speaker Change: So and these are highly competitive markets.
Speaker Change: I don't think anything sort of out of the ordinary in terms of.
Speaker Change: Don't know any other way to describe it.
Speaker Change: Pricing or structure.
Speaker Change: Very good and then as a follow up on just loans in general.
Speaker Change: Then as Ive mentioned earlier there are other markets, where we're also expanding talked about Texas in Philadelphia in Ohio, and other places, where we have big investments too.
Speaker Change: In the fourth quarter.
Speaker Change: You folks and your peers are required on a best efforts basis to put out the exposure to loans to non depository financial institutions and your numbers are not that expensive as some of your peers can you share with us those categories, where there is some on.
Speaker Change: Competing really really well in those markets. So I think just on the overall competitive market.
Speaker Change: You've seen the results of how we've.
Speaker Change: How we fared in this competitive environment with our.
Speaker Change: The business credit intermediary can't agree or private equity funds.
Speaker Change: Loan growth production capabilities continuing to improve the investments we've made so.
Speaker Change: What are you guys seeing in those kinds of categories and since been a growth area for the industry.
Speaker Change: I think my answer, but we've never been more competitive.
Brad Milsap: Yes, Brad.
Speaker Change: You talked about the end EFI and I would say summary, it's pretty traditional for us, but Brad you could go into little more detail yeah. Thanks for our further questions. So I'd say look our India by exposure, obviously was impacted by the definitional change.
Speaker Change: In terms of our athletic position.
So and these are highly competitive markets I mean, I don't know any other way to describe it.
Speaker Change: Very good and then as a follow up on just loans in general.
Speaker Change: The portfolio in the aggregate is about 13 different.
Speaker Change: In the fourth quarter.
Speaker Change: You folks and your peers are required on a best efforts basis to put out the exposure to loans to non depository financial institutions and your numbers are not that excessive as some of your peers can you share with us those categories, where there is some on.
Speaker Change: Sub sectors across 20 different asset classes, there long time, corporate investment banking and CRE clients with our largest concentration in rights.
Speaker Change: But we approach it with sort of a full credit risk governance model. We've got really good limits in place, we manage contagion risk and so this is regular way business for us to support our clients.
The business credit intermediary can't agree or private equity funds.
Speaker Change: What are you guys seeing in those kinds of categories and so that's been a growth area for the industry.
Speaker Change: We feel really good about where our exposure sits even post the definitional change.
Brad: Yes, Brad.
Speaker Change: And just as a follow up here are you seeing the competitors the private credit guys or just the non bank lenders impact.
Brad: You talked about the end EFI and I would say summary, it's pretty traditional for us, but Brad you could go into little more detail yeah. Thanks for our further questions. So I'd say look our India exposure, obviously was impacted by the definitional change.
Speaker Change: Impacting.
Speaker Change: <unk>.
Speaker Change: Your customers in these categories as well or what are you seeing on that side of it.
Brad: The portfolio in the aggregate is about 13 different.
Speaker Change: Yes, I think private credit certainly has been part of our ecosystem for a long time.
Brad: Sub sectors across 20 different asset classes, there long time, corporate investment banking and CRE clients with our largest concentration in rights.
Speaker Change: I don't know whether its unique to this portfolio, but certainly.
Brad: But we approach it with sort of a full credit risk governance model. We've got really good limits in place, we manage contagion risk and so this is regular way business for us to support our clients.
Speaker Change: A competitive force that we think through and deal with and obviously by our results.
Speaker Change: Also very competitive against them as well.
Speaker Change: Very good I appreciate the color gentlemen, thank you sure. Thanks.
Brad: And we feel really good about where our exposure sits even post the definitional change.
Brad: And just as a follow up here.
Brad Milsap: This concludes our question and answer session I would like to turn the conference back over to Brad for any closing remarks.
Speaker Change: Are you seeing the.
Speaker Change: <unk> private credit guys or just the non bank lenders in <unk>.
Speaker Change: Okay. Thank you Betsy that completes our earnings call do you have any additional questions. Please feel free to reach out to Investor Relations team. Thank you for your interest interest and we hope you have a great day Betsy you may now disconnect the call.
Speaker Change: <unk>.
Speaker Change: Your customers in these categories as well or what are you seeing on that side of it.
Speaker Change: Yes, I think private credit certainly has been part of our ecosystem for a long time.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Don't know, whether it's unique to this portfolio, but certainly.
Speaker Change: A competitive force that we think through and deal with.
Speaker Change: Obviously by our results.
Speaker Change: Also very competitive against them as well.
Speaker Change: Very good I appreciate the color gentlemen, thank you sure. Thanks.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Brad Nelson for any closing remarks.
Speaker Change: Okay. Thank you Betsy that completes our earnings call do you have any additional questions. Please feel free to reach out to the Investor Relations team. Thank you for your interest interest and we hope you have a great day Betsy you may now disconnect the call.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.