Hancock Whitney Corporation - 6 (HWC) 18 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Kathryn Mistich	Investor Relations Manager
John Hairston	President and Chief Executive Officer
Mike Achary	Chief Financial Officer
Chris Ziluca	Chief Credit Officer
Catherine Mealor	KBW
Michael Rose	Raymond James
Kevin Fitzsimmons	D.A. Davison
Brandon King	Truist
Brett Rabatin	Hovde Group
Casey Haire	Jefferies
Brad Milsaps	Piper Sandler
Matt Olney	Stephens
Christopher Marinac	Janney Montgomery Scott

Call transcript

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Operator

Good day ladies and gentlemen, and welcome to Hancock Whitney Corporation’s First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this call is being recorded.

I would now like to introduce your host for today’s conference Kathryn Mistich, Investor Relations Manager.

begin. may You

Kathryn Mistich

good and Thank afternoon. you,

with During today’s risks company’s would harbor most forward-looking and and published We recent XX-K including identified may to we language and remind the the was safe uncertainties make like the everyone statements. review therein. release XX-Q, call, to in earnings the and that presentation carefully

made. the You Whitney speak Hancock statements made date which should on by keep in mind that they were as any of forward-looking only

is rapidly As and the everyone economic environment understands, evolving current changing.

Hancock and on predict assumptions, results of by performance guarantees are expectations Whitney’s limited. or and predict future plans are the to those accurately statements implied ability could differ project based forward-looking economic materially inherently the any forth statements. reasonable or market actual is forward-looking our in from that our or effects strategies results developments believe or but or results set not We reflected of performance or

forward-looking or Hancock Whitney on statements. undertakes any undue place not such no you update forward-looking reliance obligation revise cautioned to are statements, to and

remarks measures. non-GAAP financial of the Some contain

to the reconciliations link the find in tables. Investor X-K measures website. included comparable posted presentation most release webcast and can You financial in our The also are our conference slides GAAP call with earnings the Relations on

slides We today’s will call. some of in reference these

Chief Participating in Ziluca, Achary, Officer. Credit today’s Chris call are and John Hairston, Mike President and CFO; CEO;

turn I now the will John call to over Hairston.

John Hairston

joining you today. Thank Thanks good for us everyone. Kathryn, afternoon and

solid as a investor strong we've The solid deck. well-diversified the failures maintain commercial, deposit by unique March. bank among that Despite Page of season clients to levels detailed early despite of wealth and first to launched continued quarter X industry XXXX stable our volatility of was a and base noise, within year, on start consumer, capital, in liquidity, the all

Both seen failures client in March and have segments. the since we including growth the deposits, linked bank of XX, weekend total core quarter

XX. after core growth client deposits the March majority in our of fact, In came

deposits are XX. of which client million post core quarter, was up million XXX the For March added XXX

show We added and and additional details we stability in among believe in markets base. the have that client our the strength we deck our

literally in We XXX with stability footprint. the and figuratively have synonymous name storms strength many Whitney Hancock and our and is weathered years both over

with deposit higher quarter, resulted though continued remix environment cost pleased and The growth the in coupled CD a have deposit beta current are quarter. deposits. the with We deposit a hikes for this promotional to remix rate has than pricing in expected higher resulted banking

portfolio However, seasoned, stable, well-diversified. our and deposit overall remains

our deck. percentage Details are pre-pandemic XX% included of earnings remained X a of DDA’s total as strong on at levels. positives Slides and X above well

as funds, don't XX% and X% Our CDs were today, portfolio only, XX% wealth, as and brokered small a issued public issue March anticipate only precautionary business, is diverse measure CDs. with to needing The X% commercial late XX% brokered consumer, in we anymore. and of

deposits their Uninsured to relationship we limits, and current and Hancock primary March were deposit ensure above businesses maintaining of their funds while further with continue consumers FDIC XX% for ways offer to end both at Whitney. the varied

indicating again in of the a of as drawn was of XX currently which in than sources X, billion position during available less updated of metrics, much we billion, we with Slide use liquidity height X precautionary strength volatility On our almost funds, March.

volatility So, the in and in sit event industry. of billion unlikely we approximately funds with sources available net XX our persistent of

while first We where from TCE to in solid earnings OCI peers quarter-end added strengthened a quarter all do many benefit the note measures impact XX capital. The our quarter, of from Moving a somewhat earlier. have leverage the leverage as result linked precautionary at and impact ratio. itself capital headline reverse declines. for we gradually benefited our basis of XX, the offset Slide on On to should point despite quarter, noted the which volatility

our In deposit the are and well-positioned I very our capital our of detailed, which believe we industry. But summary, given trends, the base, as liquidity, we the may are just for diverse, impact stable environment. operating we granular season, and environment strong current macroeconomic mindful solid and

I'll comments. call the to With Mike turn that, further for

Mike Achary

Thanks, afternoon, everyone. John, and good

The strong $X.XX first by primarily Even so, client quarter, basis quarter share. was bit and quarter of net typical core remix quarter from increases overall continued NIM, results fund The CDs, a million point partly income our the and a and in of resulting deposit million runoff were our from XXX solid XX higher was of offset seasonal last this XXX EPS book. a public with narrowing at of deposit driven deposits cost. per in deposits deposit growth with down brokered by

mostly recognize continue for we rates forward, resulting will of CDs. challenge continue be mix shift cost as for the to banks. for remainder sensitive, higher deposits, will in that really likely year, the dynamic from DDA a rate deposit in to elevated. deposits continued the long That are Going all Clients growth as a of be

additional then quarter current NIM May, on of the environment, over the backs based environment the where again an our believe hikes half the raises balance second in Given the year. stabilize then the likely rates and year. That's Fed potentially again from compress second rate in we off will of for any the

around composition found NIM in in in related conservative and to safe the in and sensitivity. interest deck invested XX. portfolio residential as earnings always securities Slide Slides is mortgage on portfolio backed XX commercial Details securities. additional The rate can XX details mostly our and our provide be

fund million portfolio of noted used XXX the to quarter, we As last in loan the runoff partially growth. the quarter's bond about

and to improved noted quarter. flexibility both portfolios to rate in unrealized reduce The provide XX% place a changing AFS environment. slide losses volatility of have since details the around and in and our bottom hedges OCI at HCM have in around the the last help We continue are

forma be, all of ratios losses look Given calculations. about were those might the set bond from the in at of impact that included included pro questions capital the we unrealized capital, if what on a losses unrealized portfolio ratios

that see Slide the in earnings You XX on deck.

over levels and for updated common and Tier and is hikes rate with around that all X for betas, us into an expect unrealized forecasts environment, to future above takeaway higher our remain XXXX. adjusted the annual PPNR losses, after compared we somewhere X%. guidance rate X% capital well-capitalized deposit account The Taking current including currently X% have even we between increase XXXX,

million is was with loans. annualized. the at the in linked You'll Loan see increase of the of that The an of X% related under portfolio driver in-line mortgage in quarter XX one-time or coupled in This with the movement from mainly deck. close updated phase to to completion. guidance growth increase was at quarter, lending the on permit Slide again expectations a construction XXX loans just growth the income CRE producing financing product

was to increase growth on our charge-offs in comment the continue of net handful quick charge-offs credit. compared and by We level of CRE have in recoveries provided limit A lower quarter. smaller and fourth The XX. a information additional Slide driven to on a

to operate basis stable and this loans criticized from continue XXX remains commercial our points. levels of low quarter ACL We at non-accrual and strong both relatively

key wealth income Fee quarter with increase. the this and drivers specialty income, of improved

and elimination last quarter. this reminder, we first up the quarter, were in-line of the service linked but fees full As charges. and announced OD provided is certain previously Expenses for with consumer NSF a quarter guidance

category on the of As Slide the was XX, expense non-interest detailed biggest increase. other

ended deposit produce NIM, the compression efficiency to of With of today's the higher we in environment quarter with higher and company well. us level years first that in expenses to a elevated done and we prior XX.X%. work ratio rates, an In the with costs efficient continues more feel serve

best pure levels deliver ratio to below strive earnings to continue at will XX%. We efficiency

I call back will now John. the turn to

John Hairston

Thanks Mike. call the open moderator, questions. let's And could, if we for

Operator

question KBW. comes Mealor [Operator Our Catherine Instructions] first with from

is open. line Your

Catherine Mealor

everyone. evening, Good Thanks.

John Hairston

Hi, Catherine.

Catherine Mealor

expecting maybe the margin million with over see but deposit this is mix and much to you're start shift trying wanted the the course of I guess how dollar year. question, to I the you’re

a mix shift CDs. non-interest big into and saw out of We bearing

at you then you As guide, CDs today look do think you Thanks. NIBs where envisioning get you how bottom PPNR eventually should how – should and to? where your are

Mike Achary

Mike. Hi, Yes. afternoon. Good Catherine. It's

kind at end see we mix, at XX the another of potentially then, basis Fed rates year. environment our and and of of points deposit balance first of we we rate where terms the of the are think the kind in XX% again, If raising the of we So, were non-interest is, bearing. going the for quarter, about flat

scenario, under end XX% the So, we that probably somewhere this of in see trending range XX% toward that the by year. XX%,

So, pre-pandemic, fourth so as at we of it XX%. XXXX, a reminder, were quarter call

a think from probably at or pretty do year be So, to it. that we'll close now, I level

Catherine Mealor

Great.

mix shift? Is made the won't an like mix going Okay. as case we we're any that levels industry, And be pre-pandemic pre-pandemic there back with go below deposit to I that shift. or what's reason generally to feel

Mike Achary

don't a Well, that we've what helps do. non-interest around our a during bearing lot to pandemic a core case is an in I those the customers. and going potentially lot balance regard hard could think activity I of a But to think no of I assumption think was than awful what crystal for of on it I our the with where thing make mix us earlier a I when ball process. possibly us, Fed again, described operating And has and that of customers started. for, have good PPP lot of to sheet have accounts done think the lot view predict a around And And that's look lower work brought anybody years, a big we the

then that something different materially they If do than change could ultimate that outcome. obviously that,

Catherine Mealor

Mike. John. the It's you, course. to way that. about of hear ahead, helpful Go you're Yes, Thank thinking

John Hairston

most loan adding John. granularity given that with is, we loan of is several on this obviously The to for the liquidity I'll business growth we're growth. add core deployment and and deposit out improving we're the now, the place portfolio bankers the years, we're the focused core funding Catherine, only in that thing in right it

in credit. of fund So, adding And of liquidity typically we're the per smaller bankers are segments. between purpose business primarily and dollar the segments of $X $X.X those types

successful of right fastest we well. It's going And a our book. deposit segment now and that's are very so the more growing

the we that, pandemic] have before above were grow level no chance stay trying at better up same the we staying So, to [at we [ph]. certainly can worse or the growing and of faster than

happened the area QX. results to a what we some hopefully and as So, for had us it's see we'll through in Similar focus we move years. good

Catherine Mealor

then quarter PPNR the we And it expect down the on every your NII Is assume to margin. guidance, – we look be dollars fair as is to follow-up it to day the for year. a rest can does to the that was next guiding quarter but impact down, It's is for lower that you margin the there count that, are but quarter. hard be of the this hear at

about NII you're about think the of how half to trying thinking back just dollar So, the in year?

Mike Achary

Yes.

PPNR our and also give on at think the expenses, and fees year-over-year. obviously X% between look guidance first is, implies I explicit thing somewhere guidance NII if you it or guidance, pretty we of growth X%

do in we go that based the So, to given But down that earlier. NII compression on of We half we out then the quarter, rate think I expect expect we described as second assumption the would some margin year that again flattens kind at accordingly of it, quarter-over-quarter. some be through second the point,

Catherine Mealor

Very helpful. Great. Thank you.

John Hairston

the You questions. bet. Thank you. Appreciate

Operator

comes James. Rose from question next Your Raymond with Michael

line open. Your is

Michael Rose

average long Hey, Just to for on can and my understand expect the Thanks. get just for questions. is what that? things maybe on that build. how a around sense you stick for maybe trying a give good that? you afternoon. impact to Thanks us Mike, like FHLB taking the Certainly term balances sense if might

Mike Achary

glad I'd Michael. Sure. to be

the So, split piece. the into a in Those sheet XX-day again late balance added advances. a to we XX-day were billion advances about piece quarter loan X.X that really was liquidity home and

at most and earlier. north a For mentioned priced added CDs X%, the course, we just of little the then all brokered part, of as we bit

we liquidity additional environment mean big the that is, all If for it's extra on like. long extra bit going period little being, a when ends stability. how happens, basis, you're the the did And keep that sheet? it let's environment up that the and of on a banking potential go we'll get done do XX. March as yes, through though is, on we'll before, So of balance right. question say, any kind as kind probably think what again, depends of than we said it keep the shorter it going really long takes do answer I much in forward, I that forward How keep just looks probably forward liquidity to,

Michael Rose

discernible base Perfect. one trends was sort trying Chris. because non-accrual just here, Appreciate some off Noticed the that just to a any, there? criticized of I but color that know so really like get ticked low for Thanks. loans color Mike. a classified little up it we're Maybe going – just down, bit, looks

John Hairston

mean, pointed base. it the out, Thanks operating Yes, no are at we as I Yes, Michael. really I low low a levels. question. for is mean, worries, historical relatively at you really

probably sort year kind that account, we've of real our we've working significant, if any in but but that in a for non-accruals we it it been to to account really a had may so realistically the following one not into strategy now through to movement move non-accruals. one was it And of where want and been, loan in major a you non-accrual, seem just the been call recast we've – significant issue that process

Michael Rose

Perfect. Thanks back guys. in I'll hop queue.

John Hairston

you. Thank

Operator

Fitzsimmons Kevin D.A. Davison. with from comes question next Our

is line open. Your

Kevin Fitzsimmons

Hey, good everyone. afternoon

John Hairston

Good afternoon.

Kevin Fitzsimmons

ongoing margin the boosting continuation late fair it be substantial CDs, assumption? while we quarter on quarter fair is given how would in to a still the appreciate Is that what first get of margin the FHLB, steps in I to and guide the than the it NII. more Is was taken – liquidity, saw that fair it compression brokered in the the quarter? DDA shift, on expect and have the second percentage you

Mike Achary

Not Kevin, quarter. quarter the looking I of think second first quarter, somewhere we this necessarily. do margin potentially the to fourth are what compression for magnitude compared the probably we the that around the Mike. is in saw is that at

that So, that be points, somewhere than necessarily it but neighborhood. basis probably the I don't will know in more XX

Kevin Fitzsimmons

just you takes repricing some steps took, and I'm more funding? of on the top think So is the to but a I Because just there it you to priority to and coming it offsets seems of puts sheet through recognize go like, can and is definitely the just stability you more trying loan – that? positive the liquidity look brokered or balance is Mike, wholesale and

Mike Achary

billion necessarily of is, some liquidity. same I forecast, think I don't it of have quarter Well, the into Yes. X.X second know built we the excess

earlier, come does again, little a operating go as that bring current And down is bring or bit bit quarter. down we it going it it down we keep to really the whether a significantly mentioned environment. the I little So second depend the just through at level, as on

things into second raising certainly other have basis The our forecast I the helpful the Fed NIM be as we another think we rates think built quarter could points. XX about is,

our We impact rate from impact variable loans. cumulative received repricing beneficial overall a of some there's So all nice that related our of the to rate of fixed loans.

talks of the So, yields terms there's a slide that in in the deck getting due to the balance about loans that sheet. we're

rate So, cumulative to And that's X.X% going kind for build, forward. and the on not continues fixed a insignificant. loans, that's basis of nearly

amount attractive have of have now. we depending offered to maybe right And is, thing other pretty off The that. likely think the we environment, on some pricing in CD again, I stability we're the of come being

NIM than not it did for a are things the those quarter. build So, help think much all narrowing first case the in I bit the and that little will more

Kevin Fitzsimmons

Mike. Thanks, helpful. Very Okay.

Fed pace, one DDA assuming move the settles that do and Just to the it that kind the Does guess? the you of it high mix the to of best where like but your has if mentioned balance over comes at year go? a more is diminishing shift, pace continues you you of that percentage and – do year-end, down thinking XXs, about think

Mike Achary

Yes, absolutely.

the year. remix deposits quarters. sidelines, If that time I we couple last think goes slow from rates levels the little I as of that through we the potential to saw the more has the [remix] raise to and continue a do then one go will that [ph] of does think then the bit Fed

John Hairston

Kevin, this John. is

to add algebra. the Just one thing to

need move a norms, less balances going the track account pre-pandemic because There's in highs which time. they're of think to XXXX. the business the be aside to that of for both from seem would consumer pandemic side chunks bit and on middle don't the to purpose be for for As money set CDs people a and period it accounts

strong, more the necessities items consumer couple was spending though of last is years. types large spending it even the ticket is of So, versus like

put over if that less course to likelihood people of occurred a quarters quarters X money to into past X there's that sense. makes X next the in X months, that CDs the So, months the

simply excess So, degree pace the natural there away. be of would because some goes

to closer closer to And get balance in all we the so, the get we that norm the makes matters norm, of sense. I hope sheet.

first paying liquidity a Yes, and that the up, find as people two decrease it about you goes the if other excess towards a is, using line predominantly So, that's for saw line its have down seems and cost saw in to you debt. it decrease way sit as driver right? liquidity utilization coming in cost, excess up can the remaining really rates I go debt. and mean, bank we use why revolving pay down time to years, your from

the are Fed's things think So, rate little increases. two to the I pace by interest based those outsized poking of the rate so a speak there of on

they account should we're slow, the see that sense. from and of that makes [indiscernible] some migrate pace as as seeing normalize, an to something and the else. So, we sizes mitigation degree Hopefully

Kevin Fitzsimmons

guys. great. Thank you that’s Yeah,

Operator

with comes King Our next question from Brandon Truist.

is line open. Your

Brandon King

afternoon. Hey, good

John Hairston

afternoon, Good Brandon.

Brandon King

Yes.

on question as So, you're pretty to much. not strong levels Capital ask growing here I wanted and capital. are a

Just to given or share are where any is trading more to getting any thoughts So, there the repurchases aggressive buyback? at? stock

Mike Achary

Mike. and of We question. haven't that. terms about Hey stance opportunistic look And think Good Yes. in really Brandon, this buybacks really changed. how at we a looking is our at remain

past re-upped As you probably know, the was buyback January. authority this

so. right way buying And now, of quarter for next really really a last Having whole foreseeable shares. end all really certainly see shares don't back we future us back the in bought for that, lot I of the or X% the haven't that's and coming said through the of So, quarter year. the many

right continue certainly take so in changed? active mean, We terms there's of something the that much uncertainty I obviously, as the that's year. to it's out opportunity a environment. this those Has little better to just more and we'll build stance now through buybacks, bit conditions there, with we if reassess in capital to probably be we'll consider go

Brandon King

mind a Makes sense. late NIM Do discussion. I interest was happened that had know the margin quarter? a I for actions to what there's the you of net follow-up And in lot March? then sharing

Mike Achary

Yes.

me. sharing that's with the things the mind from that the in cost I don't for but certainly the March, one deposits. impacting NIM that, looking while March So, certainly of month right have don't our I NIM is we're of it, of

So, as on, quarter basis up points. that went went XXX to the

So, that's certainly NIM. going to impact the

Brandon King

Okay. offline. And you I can follow-up just… then with

John Hairston

can] We'll come [We [ph]. back to that.

Mike Achary

back that. get you to We'll on

Brandon King

Okay.

Operator

Our comes Group. Rabatin with Brett next from question Hovde

open. Your line is

Brett Rabatin

assessment. there line unusual FDIC maybe Hi, that good clear, on afternoon XQ guess other everyone. that else ongoing the from expenses. anything to level couple two bucket And Wanted the I might guidance. included Was I to good items item going quarter here? were a line not Want the questions for level the make sure this different, was ask be in forward? recurring on that first that is obviously a

Mike Achary

Yes, Brad.

think to quarter, going the is forward. so, quarter that in the run million I use rate first level good in pretty or the the XXX fourth – so a

except the the out or categories else storm in we terms quarter, related kind and assumptions. items much pretty built is, In of into in everything the called ongoing prior ongoing we the of had for expenses losses that other that really

think little that going we quarter-to-quarter, forward. continue from around level a but some investments related Data probably going things of category that processing, that near and at to that will other something have on do given is that can that somewhere data bit the we move technology processing

Brett Rabatin

from are you going then from to And have that number, that income, the XQ or growth specific higher any might color in have year-over-year to quarters here have grow, obviously, think to there items fee levels that? propensity in on you're line Okay. grow if

John Hairston

moving is in of fees. This John. Yes, the year. around the are couple a question sure. on There things Thanks for

that X we happened. that year NSF all for December is, of on of fees we OD a the certain and guidance forward, those lot did of One shared eliminate and last

up. decline, balances service charge average of the number deposits As recurring goes

we saw decline maintenance what that NSF. is QX the as expected is volume the in account so, happen in normally recurring And offsetting the fees we of experienced

So that was helpful.

that that was of bit, investment where was fees come related on with softened and little the next of real with it a [ph] [boomlets] mortgage few the happens of for while be for actually But a was or surge we'd as and mortgage, series last pleasant years, the would outside items, secondary secondary the of lost which our engagement type dates years trust – green that star occurred rates a and of these quarter, production of then businesses. surprise a then show, little what any see just of fees, helpful and the the people a And are couple somewhat other production several probably the which we mortgage. for the wealth also from regulatory and card enjoy the fees subsidiary, through

continue And to really to on to to particularly the we're and well do quarter very products fees side add basis, move and treasury weren't very cards. big, while over the people card card purchasing continuing sales on they compared our perform a related first year-to-year the quarter fourth

do lie in you we OD continuing I in the service So, what the do offset guidance how well Is looking of were get that for? charge in we decline card, wealth, year-over-year X% will the X% into well buckets. how secret NSF of on and to a think the to

Brett Rabatin

much. That was perfect. color. Great so Thanks

John Hairston

quarter a both literally we occurred near BOLI had which normal that zero. and as little And those In the quarter, showed items probably more Yes. zero where SBIC, fact then close an quarter. being were This of quite a very unusual this we zero other is, called category the add, to last. which the just versus kind of a quarter attractive out is fourth for of

of more little a of bit was type activity. normal QX that terms in So,

Brett Rabatin

Thank Great. you.

Operator

Jefferies. Our Haire with from comes next Casey question

line Your is open.

Casey Haire

thanks. Yes, afternoon, Good guys.

John Hairston

Hi there.

Casey Haire

about guys heard the you forecast for what beta assumes XXs, settling Apologies if in XX% deposit guys I I on you question. first the high talk versus here missed your DDA NIM quarter? did in another the this, NII the

Mike Achary

we No, yet. Mike. is this Casey, haven't Yes,

So, I thank talk deposit about of that total total in you and question. deposits, betas deposit about for deposit when talking really terms our But betas beta.

at XX% for the cycle. we're So, cumulative

And so, in assumption is at XX% of probably for year, fourth basis around on a this will that or deposit quarter cumulative beta the settle the XX%.

Casey Haire

Excellent.

a the hit question. it Okay, color end in to the the of terms the have the like of by To follow-up you hard steep to got there, a if guide a ramp. number and quarters, low get – my of fee of fee you is you're line you XX pretty heard fall great. items that's on remaining that flexibility just but guide short a in looks you expect that, fast? obviously I then guidance, run to going pretty help that And don't you or math, million there to expense is if

Mike Achary

changed we the range. there somewhere range, about we again towards in the the so to that guidance, and when of X% think is the low-end X% X% think haven't is I these, up which the bias probably

we the of about year. likely year, As of trend that fees we to through view, to seasonality from to balance point the as is build recall out how the the calendar think go play tend a

flat So, begin to we expect in beginning go quarter. build it's year fees as the the we year, through amount not the second across to would but like a

the be So, the high would quarter. fourth point

Casey Haire

you. Got

ramp, Like right? a point my it's decent though, right? see You

Mike Achary

Yes, it is.

Casey Haire

All right. me. last for And one Okay. just

you for coverage obviously A – concern. service guys any I color ratio LTV the and On the debt everyone's on do office pie guys. a you know guys B the Have biggest have then of C? and versus small you Class percentage book, it's piece

John Hairston

the on of for real first-of-all, LTV, estate Casey. lot our mean, the on basis. of C&I our – a commercial and Thanks Yes. surveil even I question all book A regular we

office real to perspective, on our commercial the general, certainly average in – staying average in focus attention weighted paid additional from estate is close investment to at the And time. low closer LTV an point LTV XXs in we've customers. this with So, and those

a stay with we it So, lot movement, and easily really are within the time. We're pretty occupancy in And and then at a that upward at on absorbed XX% in levels can be our healthy cap point of running still feel reasonable level LTVs occupancy bound. even this low – the in high. rates, average

So, asset of is pretty to still in for that the on Kind in strong [ph] strong. the And [X.X service location. pretty debt in general X.X] range class depending coverage general.

a most In deck we ours, XX, of Page high do really on the lot earnings stuff. of don't rise we mentioned in

of handful about have of X% those nothing rise, feel recently a of high about it's at book. any looked I literally and In concerned the We them don't really transactions, all. And into significance. particularly

so the all office working buoyant. and little stuff book where mid-to-low suburban in rise locations And that of rest to bit the is more and return to of tends be a

Casey Haire

for color. the Thanks Great. all

John Hairston

bet. You

You're welcome.

Operator

Our Piper next question comes from Brad with Milsaps Sandler.

is Your open. line

Brad Milsaps

Hey, good afternoon.

John Hairston

Brad. Hey,

Brad Milsaps

based assume change a not little a the the the fair bit most and gave or locked in how expense not expense dependent Is down, base, just expense maybe necessarily question. of surprised, all on to guidance of flexibility little you is Casey's the lot guidance? that guide on, kind a Mike, it just to understandable, revenue. within of given too, just there's variability revenue PPNR didn't wanted Obviously, follow-up was came pressure which is but on the I maybe

Mike Achary

is, expense the out neighborhood X.X%, growth little the we pension back bit. if of the quarter about more some in and there the expenses a thing the first we again think guide, I to X.X%. certainly in of probably is is the was think really that end FDIC, when about like increase But flexibility X% upper that's that toward bias other and X% range the things

as modestly quarter forward, the bit, of kind just the using really probably in year. a second numbers, So, back-end going we the a up little flattish quarter. expenses the kind again you run of first rate And go through then, see of know we

we're how thinking that's So, expenses. of kind about

John Hairston

leverage than But this relationships. pace. NII John. reaction liquidity The on that reinvestment could is and up there's that tech, sales. more to people of is a current “crisis” slowed it to in crisis some both a that. slow be and however our in driving and industry. industry We an focused to forward levers for treasury reinvestment this plan our and understandable. our adding little I'll as banks terms on don't more crisis the more add a were really that much as And then pressure therefore And of that see haven't confident lot which particularly takes bankers smaller, reducing in long get continue in bit don't of really that's Brad, to as pulled in shouldn't reinvestment in are bankers, we couple

pull we'd quarters more could focused we important so, PPNR versus and years. it's take benefit. in the think continue long-term we be investors a to the next on And our not I the to short-term several lever building reinvestment, think the more but next decrease to that And several

So, behind that's and play the We think beneficial the run. still it's reinvestment long the more thesis. smart in the really logic

And haven't that so, declined at we all.

sour certainly the environment not sense, then sharing makes were the if Now, that's to taking we capacity have that the foster to but that, moment. that we're the at to point do that or that

Brad Milsaps

even so just renewal coming due lot what this one of That's just about fairly curious, think trying a have just trigger the process? the on, as I appreciate I a about for And years, next think book. CRE the move the – appreciate as you the pace Got final it Maybe next, how about or renewals John. could the then is additional Chris. pace I of pretty on appraisals it. through kind soon think helpful, year you it is and over color just that. you to do to was and several

Chris Ziluca

coming We are Yes, in next question. just excellent or than been speaking, the good ahead a pretty renewals have actually is at less of kind could further out, stay do spread of we've Yes, be evenly little it's along It they and year evenly decisions way. what out. we kind to looking the us of which a really probably out, to, spread but manage and bit two generally the thing. make allows book that,

Brad Milsaps

guys. Great. Thank appreciate you, I it.

John Hairston

bet. questions. You for the Thanks

Operator

Matt Olney Stephens. comes with Your from next question

Your line is open.

Matt Olney

Thanks guys.

secondary was completed. those Anything that We financing you the loans the moved, keep shutdown. out construction you relatively for the loan that growth Just CRE to to financing us about a on permanent follow-up I from quarter hearing the first are else tell phase permanent in can dynamic? was still as markets called growth, guess construction the that

that So, how curious dynamic impacting I'm the Thanks. is bank? just

John Hairston

John. is color you some that. I'll This on Sure. give

about occupancy So, in was multifamily. healthy We high set, CRE a you buyer still income have that looking if will. Demand extremely for growth footprint. category, our the producing pretty in at still XX% is

And so, and level unit the support price of activity. at support there's for plenty

shown of and So, about XX% CRE. multifamily literally of was in CRE migration to the half we've C&D was from growth that in about

go C&D create And would of the so that question why didn't down? naturally

answer time. because that And to to flight draw tend is, are over projects in that already the

new production ago. or I where So, quarters from is, commitment would even a couple of modestly down maybe it was call moderately

inflation revolving happen what and benefit any maybe combination is see is cost, costs cost think supply the to cost, wait for if happen, think I should benefit bit. see to few is of So, we perhaps to I which of think on months on labor down expected there's to going this they causing year a beginning debt a developers of

I in total mean basis profitability a XX the or basis project. difference can XX a make points big of just points

So, have declined bucket the the even is commitments though flat. showed C&D

as that's that that's not in, operating the course levels time continue, we enjoying of And by. uniquely our see we're area both business permanent the growth occupancy of increasing is those goes and year, appetite in so, CRE multifamily pretty overall support, as in most the but may the in we through go the and because

Matt Olney

any you product that John. product your multi-family That's as like markets, markets? helpful, within what And primary that where that far within color is as then mentioned,

John Hairston

I'll growth. Sure. predominantly the best markets but more some projects the the happening in are population that add color, Chris enjoying are may multifamily want and to start

until by in pre-pandemic, last years and to we X so, it was X of bit more out to that Texas predominantly just a that's stimulated I some wasn't and pandemic, the begin it's or think little stay it it not see going we exaggerated. had flatten And the different overall. trends than the course And And probably but was Florida. that's –

is going So, areas in around suburban footprint, other to those the Florida. there projects and MSAs leading are around the but the in be project Texas

Chris Ziluca

to dynamics we add markets, a absolutely the construction that those the we're might projects what into little John sure going geography. be are, under including oversaturated make individual maybe not And various bit. is right. of look an project really kind that's of I'll a just at that to But that supporting

John Hairston

three And be clear, mind. coming we a and Yes. front securities did in year, covering of we months year thought And it's growth really we more said coupled the flow mid-singles for core at then that was than gave we this what we feverishly towards deposit with the while would cash and ago with focus think the that portfolio, it growth, we environment considered doing get than close guide that. anemic in the to for be I fairly, have off endeavoring be been loan with in may a time and loan to the would the growth pretty QX, the rather working

to by goes happened the think for more toward think more got important. that were in thoughtful year. on the even events we I and do mid-March, So, as time planning what we is, look We

the to over It so, and us to we that will in our It's asset very of whatever to focus loans, of NIM, grow test to out expense and cycle be. through And ratio, focus that to efficiency cycle. out a ratio, quality just is course the PPNR, important turns the are loans. growing sectors our core next on on grow loaning months, then to believe we intending survive several about the deposits

important all of sheet take And if opportunity more and we'll growth So, up achieve better us. give for to then that. to begins a on have as growth to that the balance give advantage would to that, be market we

little healthier We to have of when it's plenty bit we environment. that [indiscernible] do firepower a think

Matt Olney

Okay. Thank you.

Operator

comes Janney Marinac Your Montgomery from Scott. next question from Christopher

Your line is open.

Christopher Marinac

you just the thank of had impact us capital. Slide Hey, I this you hosting and afternoon. thank all about Mike the and for John and question XX a

from flow as do time detail as further back, a If all taken. you be being of punitive? you that help scenarios those the losses you there this cash impact the that hedges are little What's where could the scenario have goes or on

Mike Achary

and flow million the our value XX million about market right now hedges. of it's hedges, of a the negative Well, a cash positive hedges fair flow terms terms in the XX value in of is cash

million $XX that included is in So calculations. obviously those

a extent and the improves a bit that of help going that to So, forward. that's little

Christopher Marinac

of into the fair details And end to that deck the as at protected the you then than getting today, Mike better were? mechanically, are very of some you say? rates go down, Is

Mike Achary

start value Obviously, carry Yes. less negative. hedges, cash go if then the obviously down, those flow rates becomes to

plus support. of a terms that's NII so, And the in

Christopher Marinac

a [ph]? book, Okay. those didn't hedges related flow I natural have guess beyond securities if mean passes, you their have And [theoretically getting the question, time on of place, So, ratio] some right? be cash should as your I then better even you in still amortization own numbers and

Mike Achary

Yes, about quarter. absolutely. right And now the off million flow the portfolio coming bond cash is per XXX

the to significant the and go little off value we that's And the The down will duration coming So, that. a shorten as bonds also through go amount obviously. carry of then bonds bit. a begins

Christopher Marinac

Okay.

outlets probably you're necessarily then to where that point? expensive do it's with applicable of Fed even too in the this that's reason to: but at no position a there's still not anyways, and So, restructure a, created some the

Mike Achary

a in have mean at bond not we But so. we of now, appetite the like something terms an else quarter-by-quarter I but think something restructuring right. execute it's that's basis, Right on portfolio, don't to I anyone that look does No, you're on.

Christopher Marinac

the it. extra appreciate Great. Thanks I today. detail for

Mike Achary

bet. You

John Hairston

you much. Thank very

Mike Achary

Okay.

back was I Brandon's the for want NIM call, to His get the close March. around month we Before the question to of question.

X.XX%, points at so the basis quarterly was X average. that off about So

to just back to wanted on get that. Brandon So,

Operator

further remarks. are call to the over at this now time. There no back questions John closing for I'll turn

John Hairston

us. and to for road. forward for to look late you calling call the seeing Thanks Thank your and the for attention interest We Chantelle the we'll in everyone for running afternoon. call on you, appreciate everyone's

Operator

today's for concludes your call. Thank you conference participation. This

disconnect. You may now

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