Release Date: April 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: About improving profitability and the implied improvement in NII throughout the year. Can you help us understand what the cadence looks like?
A: (James J. Herzog - CFO & Senior EVP) We expect an increasing rate of improvement quarter-to-quarter from the second to third and third to fourth quarters, and this trend should continue beyond this year. Major drivers include maturing swaps and securities, and loan volume, which will pick up significantly in the latter half of the year. We also anticipate benefits from more days in the second half and some liability sensitivity kicking in.
Q: On the deposit side, how do you expect the DDA to total deposit mix to evolve?
A: (James J. Herzog - CFO & Senior EVP) We expect the mix to stay somewhat consistent. We're monitoring it in a higher-for-longer interest rate environment, but it's been holding up well. We anticipate it to remain a competitive advantage, with noninterest-bearing deposits staying strong relative to interest-bearing ones.
Q: Regarding the NII expectation, if we do not get the forward curve and no cuts at all in 2024, what does that mean for your NII?
A: (James J. Herzog - CFO & Senior EVP) If there are no rate cuts, the challenge would be the potential for depositors to ask for higher pay rates, which could slightly impact NII. The liability sensitivity is minor, but rising pay rates could be a factor if rates remain flat.
Q: Can you discuss the confidence in the pickup in loan growth in the latter half of the year and where you see loan generation strengthening?
A: (Peter L. Sefzik - Chief Banking Officer) We expect broad-based growth across our portfolio, particularly in the middle market. We've moved past much of the rationalization from 2023, and with improving pipelines and customer sentiment, we're confident in projecting 4% to 5% point-to-point growth for 2024.
Q: How should we think about the opportunity to further reduce wholesale funding throughout the rest of the year?
A: (James J. Herzog - CFO & Senior EVP) We've completed a large portion of planned reductions. We don't have near-term FHLB maturities and will let some brokered deposits mature off the books while possibly rolling others over. We're also considering a senior debt issuance later this summer, depending on market conditions.
Q: On the expense recalibration introduced last quarter, can you update us on the optimization of the real estate footprint and headcount reductions?
A: (James J. Herzog - CFO & Senior EVP) We are on track with the $45 million cost savings plan. Most colleagues have been notified, and we've seen some headcount reduction already. We plan to reinvest many of these savings, particularly in enhancing our risk management framework.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
