Regions Financial Corporation

Q3 2021 Earnings Conference Call


spk_0: that morning to welcome to the region financial corporations quarterly earnings call my name is shelby and elder your operator for today's call i would like to remind everyone that all participants all minds have been placed on listen only at the end of the call there will be a question and answer session if you to ask a question please press store one on your telephone keypad oh now turn the call over to dana know and to begin
spk_1: thank you she always welcome the wage other third quarter twenty twenty one ali jonathan about how level commentary regarding that boy and documents which i play on board with incitement disappointment are available and the about so allegedly section of our website these disclosures cover presentation materials prepared comments and alan out on the paul ever john today more young ones with richard to join on holiday we're very pleased with our performances course switch to damage to six hundred twenty four million dollars resulting in earnings per share of sixty five cents adjusted pretax income increased four percent sequentially
spk_2: hundred years day positive operating on average
spk_1: our ability to keep the momentum going into labor solid third quarter results comes from three primary factors far as we can benefit from are growing footprint on plummet levels are improving and most are marked it's a well below the national level
spk_2: people have been says are continuing to move into or fifteen state footprint in that bodes well for a growth prospects for the remainder year and into twenty twenty two to to make strategic investments in poland growth markets or we can grow new customers and deep and existing relationships on that note for also please shared year to date net a job growth has exceeded account job growth the precision three years combined
spk_3: second
spk_2: quality has demonstrated incredible resiliency and continues to exceed our expectations businesses across all industries have found ways to adapt and prosper to spy on supply chain in labor issues and consumers trade cautiously manage their finances overall we feel very good about the health of our business and consumer customers third we can to take advantage of opportunities to invest in talent technology and capabilities to support groups for instance earlier this month we paused are acquisition of interbank been a leading home improvement point of sale linder a key part porn or strategy to the premier leonard homeowners we also entered into an agreement to a parser ball capital partners
spk_1: well as a strong reputation and proprietary technology platform that will expand our rules state capital markets capabilities
spk_2: what's the transition just complete we expect to be a top five bag agency producer thereby against the ball acquisitions compliment our existing portfolio pricey capabilities in the consumers and corporate fact we will continue to evaluate proven nonbank him as a opportunities the allow us to expand our products and services and or relevancy we our customers also we recently we or bygone sort of bad now checking to kill this new product has all the benefits of a traditional turkey you can help without the concerns of overdraft fees and folly are vestments and digital data positioning us for growth through technology enabled sales experience and branches and across all platforms edwards are responding to the parts lot service advice and guidance they receive from regions today more than two thirds of our house where transactions or digital further last two years active mobile bad news is europe up twenty three percent and notably sell transactions have more than tripled with a really good about our progress and momentum we operate some the best markets in the country that was solid strategic plan and outstanding team and experience to compete effectively we focus everyday on delivering products and services that are valued bar customers for continuous for our communities and provide an appropriate return to our shareholders now they move raj was details regarding corner
spk_4: thank you john
spk_2: start with a balance sheets
spk_1: adjusted average and amigos england's increased parsley one percent during the course all their business loans continue to be impact about low utilization rate as liquidity pipelines had surpassed three pandemic levels tradition production remain strong when line of credit commitments increasing two billion dollars here today consumer loans reflected another strong quarter of more his production company bad modest growth and credit cards however
spk_2: malone's remain negatively impacted by exit portfolios and further details and home equity overall we can expect for year two thousand twenty one suggested average loan balances be down by low single digits compared to two thousand and twenty although we expect just didn't want to grow by lows
spk_5: single digits
spk_1: with respect alone guidance we are not including any impacts from our interbank act which closed on october the first and resulted in the addition of three point one billion dollars and loan balances that the benefit the fourth quarter and beyond
spk_2: so let's turn to deposits
spk_1: although the pace of the public growth slowed else is contagious increases to new record levels increase is primarily due to higher account balances however that john mentioned we are also producing strong new account rose we are continuing to analyze probable future deposit behavior and bases
spk_2: analysis of pandemic related deposits and flow characteristics the currently believe partially thirty percent or ten to twelve billion dollars of deposit increases can be used to support longer term growth rate cycle
spk_1: additional portions of the deposit increases could persist on the balance sheets are likely to be more rate sensitive
spk_2: she of the net interest in and march
spk_1: ten damage related items continues impact net interest income and margin
spk_2: yes interest income from ppp loans to decrease twelve million dollars from the third quarter but is expected to pick up in the fourth quarter tash average twenty five billion dollars during the quarter and when combined with ppp produce third quarter reported margin back to the for basis points excluding excess past and ppp net interest income grew almost one and a half for settling quarter and are adjusted margin was essentially stable three point three oh for said
spk_1: this reflects strings or england growth as well as to balance sheet management efforts despite a near zero short term break that and similar to quarter corners the impact on in i have historically low long term interest rates was completely offset by balance sheet management strategies lower deposit costs are hedging income
spk_2: during the third quarter we repositioned an additional five billion dollars overseas swaps which shorten the maturity from two thousand and twenty six too late two thousand twenty two
spk_4: the repositioning locked in the associated james
spk_1: it will be advertised of the remaining lives of the interest rate swaps and will allow for more been iii expansion when rates are projected to increase further with inclusion of dinner bags sex trade loan portfolio less hedges will be needed to protect and i stand the net interest margin profile from falling right
spk_2: did you have to value created from are hedging program is approximately one point six billion dollars roughly seventy five percent of that amount has either been recognized or is locked into future earnings from hedge terminations reflecting the dynamic management of are hedging strategy exploding interbank and ppp adjusted net interest income should be relatively stable in the fourth quarter after closing the non recurring teachers recovery and the third quarter the pudding ppp day and the interbank acquisition
spk_1: boy porter net interest income is expected to grow between five and six percent and the fourth quarter as illustrated on the slide over a longer horizon a strengthening economy ability to benefit from higher rates organic and strategic balance she grows are expected to ultimately drive net interest income growth
spk_6: take a look at sea revenue and expense
spk_1: i just a non interest income increased eight percent from the per quarter primarily attributable to strong travel markets activity including record one syndication revenues and solid emanating advisory fees we expect our markets to remain strong and the fourth quarter generating revenue and the sixty to seventy million dollar range excluding the impact of sleepy and deviate
spk_2: provide more specificity regarding two thousand and twenty two expectations and january other non interest income also increase during the quarter to ten increase in the value of certain equity investments as well as increase james associated with a cell of started a small dollar equipment lungs and leases mortgage income decrease quarter over quarter primarily due to mortgage servicing right evaluation adjustments partially offset by improve secondary market james service charges remain relatively stable compared to the price for the we continue to expect they will remain ten to fifteen
spk_1: percent was free pandemic levels were attributed to declined to cheeses and press or behavior
spk_2: as well as test for benefits from enhancements or overdraft practices including transaction posting order
spk_1: pardon agencies remain stable compared to the second quarter debit and credit cards been remain above pretend democrat holes as we continue to benefit from elevated account road
spk_2: increased economic activity in our footprint given the timing of interest rates declined in two thousand and twenty and excluding the fourth quarter benefit from our interbank acquisition we expect two thousand twenty one adjusted total revenues to be a modestly compared to the prior year but this will ultimately be dependent on the timing amount of the loan forgiveness
spk_6: move on and on interest expense
spk_1: adjusted managers expenses increase thirty percent quarter as higher salary and benefits and professional legal fees were offset by decline and marketing expenses salaries and benefits increase four percent from early due to fire bearable based compensation associated with elevated town as well as one additional day in the third quarter
spk_2: associates it can also increased by one hundred and forty nine positions during the quarter with the vast majority of those within revenue producing businesses further exceptional performance particularly in credit is also contributing to hire and as compensation we will continue to prudently manage expenses while best thing and technology products
spk_6: he bought a girl business
spk_2: exposing approximately thirty five million dollars of course android expenses associated with our fourth quarter interbank acquisition we expect a judgment managers expenses to be a modestly compared to two thousand and twenty
spk_1: we remain committed to generating positive operating leverage over time
spk_2: from an asset quality standpoint we delivered an exceptionally strong poor as overall credit continues to perform better than expected
spk_1: reflecting continued broad based improvement across virtually all portfolios and continued recoveries associated with strong collateral asset values and your allies in charge off decreased nine basis points during the quarter to fourteen basis points representing the company's lowest level on records posts are two thousand and six merger of eagles in addition to lower charge offs nonperforming loans
spk_2: business or says criticized was also improve while total delinquencies remain unchanged during the quarter
spk_1: or allows for credit losses decline twenty basis points to one point eight percent of total lungs and two hundred and eighty three percent of total non accrual lungs exploding ppp lungs or allows for credit losses was one point eight three percent
spk_2: the decline in the allowance reflects better than expected credit trends and contain constructive outlook on the academy
spk_1: the it's reduction resulted in a one hundred and fifty five million dollars
spk_7: to the provisions
spk_2: teacher levels of the allowance will depend on the timing of charge offs greater certainty when respect to the resolution of remaining risk to credit losses
spk_6: as well as the integration of in a bank
spk_2: dear today and charge asked or twenty five basis points and we expect for year two thousand and twenty one that charge asked to approximate that same level which includes the impact of interbank can excludes the benefits of any future recoveries that may occur with respect to capital or common equity tier one ratio increase partially forty basis points to an estimated ten point eight percent score as previously noted we continue to prioritize utilization of our capital organic growth and and bank acquisitions like interbank dance the ball that propel future growth dion that we share repurchases to manage or capital levels
spk_1: share repurchases were temporarily pause the head of the and or by closing which absorbs approximately one billion dollars in capital in the fourth quarter we anticipate being back in the repurchase market this quarter that expect the man common equity tier one to the midpoint of our nine point two five percent to nine point seven five percent operating range by year end wrapping up on the next line or two thousand and twenty one expectations which we've already addressed and summary we're very pleased with our third quarter results in are poised for growth as economic recovery continues pre tax preparation income remained strong expenses are well controlled
spk_2: quality is outperforming expectations capital and liquidity your salad and we're optimistic about the pace of economic recovery and our markets with that were happy to take your questions
spk_0: thank you so floor now open for questions if you have a question please press to starkey followed by the number one on your telephone keypad it's at any point your question is answered you may remove yourself from the key by pressing the pound key it's for just a moment to how that and a roster if first question it's from peter winter of let's which securities
spk_8: good morning
spk_9: the one it ask about those long growth and those wondering if you could just talk about where the loan growth is coming from mama the commercial side and is it's more a function of the the new account growth said that you're saying
spk_2: couple things are small we are producing a little improvements in law musicians fun with the lotion was off thirty basis points in the quarter and that trend is continuing through the first couple of weeks of the fourth quarter
spk_10: production is on two levels consistent with three pandemic levels since essentially two times what we're experiencing about a year ago commitments are off over two billion dollars and that's largely the result of new relationships they were adding resulting from disruption in markets that were operating in town we've been able to acquire growth is occurring in some of our specialized industry businesses transportation
spk_2: and healthcare financial services technology in the fans are all generating finding new opportunities and are pipelines are again back is free pandemic levels and two times essentially what they were about a year ago so good activity despite
spk_10: labour shortages supply chain issues constrain the economy of a bit our markets are doing well our customers have a positive outlook on the economy and the future and his result we are beginning to experience some one growth and feel good about
spk_2: ah thanks for twenty twenty two
spk_9: free cell phone since i wanted ask about typography does in your ass and census to the mana can you to talk about what you're assuming force depositors today versus how that compares to last time the said was raising rates
spk_6: will is david so in our deposit betas would have them through the cycle last time fellow upper thirties forty percent range they do about that and right now we're trying to gauge is the surge deposits we had some thirty five to thirty six billion dollars have surged pounds for recent thirty percent of with can be put to work the other seven days as likely to either run off our or come at a much higher costs when you think about seventy percent of surged posit that bases gun the substantially higher than our core we would pegged as close as a seventy five percent on that component parts but just remember when and the last race like we want to lose because of betas as that's the best the value of our franchise
spk_11: low cost low volatile
spk_6: deposit side of we're looking to extract value out of as we get a more normal rate environment
spk_9: okay thanks for taking my questions
spk_0: and you
spk_12: your next question is from can used in of jeffrey
spk_13: born can say thanks to morning guys the average one did ask you to send a little more on you're just tired think about that long term repositioning i saw on the deck that he'd sell locked in or realize seventy five percent and so yeah this is always a back and forth here between you know keep a net income and positioning for higher rate so as you think forward and as we get closer to home rates
spk_6: going off what what do you where do you want to be positioned at that point in terms of the it's assets as simply profile well so you know our our goal is never really to take a lot of interest rate risk trials because we've taken
spk_5: we're trying to trying to gauge where we think rates are going to be
spk_6: obviously and and two thousand and eighteen we anticipated reached declining we put on our for starting swaps to protect us in the down right as which more confidence that the economy can reopen and that of said is as likely to raise rates
spk_5: we want to take some that protection off which we done and that with repositioning as a five million dollars
spk_6: today we have about twenty billion dollars notional protection received six flops and particular we have some other floors but for the most part they're and swap form that protection goes through twenty two where we start gauging the fact that there's a little bit more probability of of rate starting to rise towards the end of twenty two and we want to participate in that that rate environment so are are slide on on t j was trying to demonstrate how we and off from the protection that we have in elo rate promise to let the rate areas of as swaps either terminate on their own or because we termism as we did with the five billion dollars we locked in that game
spk_13: enjoy that benefit through the remainder of the swap period yeah raised as good at a good news wide and just on interbank to that point about it can you help us understand like what you think
spk_6: the originations could be as you look forward and at the next couple years like with the pace of rich nation to look like i know it's going to depend on the environment but it seems like he can def we continue to share as you feel that book of sure so as we discussed before the industries about a hundred and seventy five billion dollar industry annual production year very fragmented interbank represented represented about one percent of that are proud billion seven a production the think the top five players and industry account for right at ten percent of that history so there is a great opportunity for us to really leverage their technology and and we think we can grow that faster than they did but dub right now we're looking at least have that kind of production of a billion seven on top of ass if you look at the yield on the portfolio today didn't answer this question but i'm glad to have you so you understand of air by understands that the guild on that his arrive at college six percent because of the we had more than three point one billion dollar book the market so we don't
spk_13: see that's a bad deal which is deferred amortize as geologist overtime or new production on the other hand will get and so you're looking at going from a six percent that nine nine percent job on the new production weeks darker on it just a little bit sashes they have worked as as gonna be a nice growth engine forced to that's what which
spk_14: and that the on a slide
spk_15: perfect thanks david
spk_16: thank you next question is jennifer diverse true securities morning so question for you
spk_17: the slides you have a sincere
spk_18: as the last several years nurses your peers
spk_19: which is essentially bloody appears
spk_20: wasn't
spk_21: what a horrible are you happy
spk_6: what was going to use with instances and
spk_22: like it's the a little slices
spk_6: still maintaining
spk_2: lola lola
spk_23: so you're refer to slide twenty one's inner for this david and
spk_6: we've we've we're honest and be and close growing on as depicted on the page what we're trying to demonstrate does we had a shift strategically several years ago the focus on improving our risk adjusted return on capital because we think that's what shareholders wanted we've gone from second to last terms of eternal days will common equity we'll see where revenge bitter before number four five this year
spk_24: and so it's worth and we've reduced our risk profile dramatically over time so we've exited businesses so an example would be auto businesses we've gotten out of long only relationships that don't didn't give us the for relationship value that we need and want
spk_6: and us where we four being paid for the rest we're taking and things like real estate so we did we've had this massive shift and we've we've worked through
spk_2: virtually all that there's always areas to prison birds were raided leverage our markets were in fabulous marcus's we think are going to grow faster than most every part of the country and so as we can be contagious reopen we have the liquidity and the capital of the to work we much rather do that bar stock back so i think up
spk_16: we're looking at and improve our or lung growth quite substantially for relative to what you see on page twenty one
spk_25: and i'll just add me i think we've been pretty consistent to say that we expect overtime assuming that we're not working through exit portfolios and other things to grow as raise the economy as the economy grows plus a modest amount given the competitive position we have a lot of markets that we operate and we only get
spk_16: a little more than our fair share but i don't expect us to grow and an outsize right road to to the economy over time there will be periods of time when we can but in general we wanna move
spk_26: go with the economy plus little and manage our business and asylum profitable way that produces consistent sustainable and resilience outcomes for shareholders
spk_2: onset of classes on capital markets and seems to be six and four score the winning the revenue altitude so that business his
spk_10: with the means was eating are you in terms of as glowing
spk_2: is this noise
spk_0: well you know it continues to evolve to go back to two thousand and fourteen we began the emphasize the importance of capital markets and began to acquire develop capabilities serve customers it really was making a very very modest almost normal contribution to the company and as that's obviously change
spk_27: so the last seven years as we continue to make investments in the business we required talents new capabilities we've acquired businesses and will contain the do that i don't know that there's an upward limit on what's the contribution can be we certainly very satisfied with the results with
spk_2: achieved today we've announced earlier this year and we've been approved for freddie license to go with our family does license the acquisition of the ball which is a sea based generating business brings with it additional heard capabilities small balance fat fannie and freddie capabilities to and
spk_6: it's our ability to generate product placement revenue were looking at other opportunities with himself a markets to make acquisitions so we're going to make investments there we know that our customers have needs and we want to make sure that we have the capability to meet those needs and i would expect that capital markets contribution two nine ish revenue into the overall profitability company will continue to grow over time i don't see up for to for upper limit on that
spk_28: next question is from dave rochester of qantas fleet
spk_6: morning i'm on it as a more the smaller had tahoe real quick i mean it sounds like your poised for a pretty sizable buyback this quarter if you're gonna wrap up the year as he won a half percent such as one of the confirmed that that's what you're saying and is he give a rough range around with like the look like from a dollar for secular regrets well i'm so aware in tennessee on dominic way tier one just remind you running use about a billion dollars that and the purchase of interbank which closed october the first so that's a one percentage point nine eight
spk_29: yet for your matter what runner earn back out of and s account for we have left to either invest
spk_30: on talked about the ball or capital partners as a place to do some of that capital we have other not make things were work and on and we are going to prioritize investments in there's not bank acquisitions before share repurchase that being said our goal is to be at night by year and so we don't get
spk_2: a particular deal closed during the quarter of them will bar stock back because we think is optimum level for our risk profile that we have of the company
spk_6: okay for safer the movie just switching to have that would really strategy it's not like you got a lot of momentum on alone growth france some of the sell out to go towards funding that but i'd still have what seems like a lot of exercise and the of see those wonder if you could talk about our back got an interest rates recently a health hazard how you're thinking about throwing that security flaws if at all i'm aware you're seeing the a rates today on would you buy yeah so i would have granted we've we've gotten a better position today than we did you know where the end of last quarter but you're sitting today bradley's right down at one sixty six chance we we had hoped that that would be closer to two percent before we started redeployed some that excess cash because you just not being paid properly for the duration or right now you know so our security
spk_30: to the cash was we put the work today are going on in one thirty one forty spot in their they're coming off at about one seventy to one eighty week we acknowledge we have a lot of cash we just right now want to be patient because we think there were for patients that there's going to be a better opportunity to put that cached were we don't wanna do is a stretch trying to make a short term gains and really good
spk_6: ourselves and a federal because we're upside down and trade and that's just that who we are so many patients i think is is our best
spk_31: our best game right now
spk_0: because they want us was one last one on the of fun inside and a you guys who are in a lot of headway on reducing the the higher he borrowed you have
spk_10: was this one or two senior opportunities worth mentioning that the that over twenty two
spk_32: we really we really don't we found ourselves all the time and one never knows i mean this is when you have a volatile rate environment things up
spk_33: you can present themselves as we did last so i mean this quarter where we answered some expensive the dead now we don't really see that opportunity right now but will keep an eye on indices and if there's a trade their that makes sense for with do it
spk_6: where they says thank you your next question is from betsy gray sick of morgan stanley
spk_32: more than six
spk_33: hey good morning on had a really basic question around just loan sales said he did i think i'm a corner and i know that a lot of what you're investing is in driving future longer us as a little pricey that easy give me some parts her what you're doing this
spk_10: jim messages and wouldn't get to this was not that large there were some lungs and were us anything said thing and us and them capital the didn't really made our risk profile the didn't just one the cat type of credit we really
spk_2: wanted to have weeks we had pretty good bed we tap the did we made three million dollars so it wasn't all that dramatic but that's that's why we did it and we see things from time to time that we want offload credit risk management stamp or will do it
spk_10: okay and so he had to follow up here is regarding the underlying growth that you see x p p p n
spk_2: see nine the cree box and in a we know about splicing constraints and all that that and we see some nights growth and some the services as as many give us a census too where where there's an opportunity to deliver on accelerating loan growth as the cpp rolls off or is this current level of non tpp seen i crave it out likely just go sideways from here to any color their be helpful toxic weeks expect expansion of betsy me we're
spk_33: again with an increase in funded commitments customers who are contemplating either
spk_2: expanding their business making investments other things that would result in grow longer across multiple industries similarly to source is gonna run about a forty five percent fatal i'm using the end of the corner just below forty and we're as a said earlier begun will continue to see a little bit of increase it's true the stars the for for so our expectation is that that we will experience long growth across our books a business in the wholesale business and twenty twenty two as labour becomes more available supply chain issues begin to work themselves well and customers can put additional capital war
spk_10: okay and then when you think about the consumer side of the but what what's your thoughts on that
spk_2: we're also think there's lot of option there we talked about interbank and and our focus on lending around the homeowner
spk_10: we've had talked a lot about strategically was important to us but we know that homeowners maintain seventy five percent higher on average deposit balances use more financial services which results in homeowners providing sixty two to three percent more revenue generating opportunities because they have more space
spk_34: financial needs and so are are focus on mortgage on he large and on point of sale lending
spk_5: to the homeowner we think is really important strategic initiatives
spk_35: we see interbank by in particular
spk_36: as a an opportunity to to grow our consumer lending business also expect some expansion and card
spk_0: and a lighted other activities we have we think the consumer business will will grow again and twenty twenty two and beyond
spk_37: okay thanks
spk_38: a bit is david i need to explain that one among us son told you that gain on sale was three million that number should be closer to ten
spk_39: sorry for make sure like that and
spk_38: or thank you
spk_2: your next question in terms of our test to the is rbc
spk_38: a george morning
spk_2: the new jungle david
spk_6: more to come
spk_5: thanks to your comments about supposedly do
spk_6: finishing with those said seventy percent of the serves as you put a hired because the bigger on which gives you the confidence to say that surprising aren't as sticky as that other cities of sense and second what would be to you what would be companies to lower the supplies of better on their seventies this is what you need to see that maybe have a different expectations as they seek out over the next twenty four months well that's the biggest driver is about the thirty percent so what we've what we've done is we've captured the nature of those deposits in the types of a town those deposits have gone and and we've looked at history and the nature the deposit categories imply some would be retained longer than others you know if we miss it which we will capture more than seventy percent them were thinking you know if we started to see in our discussions with our our commercial customers in particular
spk_5: that they want to maintain higher levels and liquidity than we think they will that would be an indicator of being able to put some of that
spk_40: seventy percent to work longer
spk_2: where but we think we're being conservative with at that level but
spk_41: we just need to see how the economy
spk_2: continues to improve we need have good conversations with our customers about with how they're thinking about it i still uncertain the out there so most of the surge that has gone be iraq is is really the business services vs consumers
spk_6: very good sushi color their homes and then seconds and and uses in these in the mood variables in your answers to these questions impossible for mobile me down not wanting to extend as that cash on the balance sheet which is understandable you fancy that your margin policy negatively affects his as excessive queasy she knew what are you are reading danny see your de margerie education is a for
spk_2: equality for his long way to reposition similar cuisine for loans in there for reducing is and it's the same size driving and fields
spk_6: yeah it's it's important a major strategically we use our investment portfolios as a the manager liquidity not dead to drive you we don't have a lot of credit risk that our investment portfolio
spk_5: lower than most fears and with neutralize really short term impacts of right
spk_42: what we wanna do is get back to what our businesses taking deposits making loans and we think we're in great shape and great markets to really leverage that liquidity and one growth that where the driver of improvement marginal the we stabilize or margin for the most part x pp in cash three thirty and we think that
spk_0: overtime hours we can grow that get back to the much higher march overtime
spk_2: kill an example of that is where of spend we have three billion dollars of interbank loans is that were working in the first quarter as a mention it as an area of about six percent on him and our new production consumer dazzle add on and a year of of the and seven plus will have closer to nine percent so that are city to acquisition which is also six grade is performing extremely well which is just stick to your dating him and execute our plan and are marginal move accordingly and will and i were you thinking
spk_10: your next question interim go unpaid korea's ever for i sigh
spk_2: more jobs morning foreigners of on the on the i'm in a side and the yeah he mentioned is a couple of times in terms of non bank interest to clean your travel discussions or maybe you just elaborate a little bit of around the non bang theory is that that you're interested in her specifically and then the did she can also talk about sub central bank feel interest as well yeah so with respect to not bank with obviously been active particularly and in the capital markets face we would encounter markets
spk_10: and else the ball we want to contain to add to our capabilities whether the and him in a your and
spk_2: providing
spk_6: access kept markets to our commercial customers through a variety of different platforms have anything specifically in mind but we're always looking for opportunities more servicing rights has been
spk_22: very where we've been a quiz on want to contain have a wealth management we think there are potentially some opportunities although lately multiples of been off the rich but we want to contain a look for ways to grow that business and and other fee income generating businesses that that we think of provide a
spk_6: wow us to grow and worse by revenue in importantly provide capabilities to customers with respect to thank him in a has been consistent saying vitamin a is not a strategic priority we think that gemini can be very disruptive we have solid plan we want to contain of focus on executing our plans the economics of by a gemini have not looked terrible favorable in the past given were stock traded can say they experience improvement so that changes the economics we revisit the idea with our board every year as part of our city's planning process and just comes a conclusion that that where we think we can generate talk or towel returns for shareholders by being focused on executing our plans active in the non bank him in a space and so have i have i given a just not been of
spk_43: rt for us had jobs david l and to the number deal so as a mentioned the prioritization of
spk_2: the really focus our capital allocation on on growing our bank
spk_11: corporate development group work for each of our segment leaders to identify capabilities as they like the have companies that they have products and services and we'd love to have to serve our customers
spk_35: it's it's interesting as you do a couple of deals we've had ah you get into the deal flow a little bit more than you would be for and so we just
spk_6: more opportunities for the pros about that capital allocation there and dub and make sure things are really crazy for cheryl worse as we think to grow our business of and ultimately or risk adjusted returns grape or thanks david and then on the capital markets business specifically for know you're given that you're still investing in that business heavily what is and but also given the size of his know what is see consistency ratio your tv where the comp ratio that you're seeing in that because right now well capital markets is full of the about four or five different sub businesses some of a lab quite nice a nicely up
spk_10: efficiency ratios others that that's not so hot
spk_2: we don't really think of it that way we think of it as much as the capability we need to have leverage is all the other things that were doing in our business services segments so we really look at that together
spk_6: the baby see based businesses generally aren't as efficient but that's okay and lows or complimentary and were making sure where in delivering those products and services and will be okay and if you look at our faces he raced over time is this quarter where the second best and terms of the situation
spk_44: that fifty six six and looking to improve that over time even though we're adding some of these other businesses or less efficient
spk_45: yeah god is if i could as warm were related thing just to that on the comp expense flee quarter of fourteen million i know on flights and indicated that
spk_14: the performance of the t business was part of that plus the details how much of this quarter increase was truly from the sea performance
spk_46: well we had a so our years a data base salary number is down quarter to quarter of a sour for up just marginally most that was really driven by
spk_47: incentives and we also had about five million dollars in the shower benefit line related related to the hr assets valuations it's assets expense i'm sorry often income that five million dollars i think if you've looked it slide you'll see that so you need to break that outside or does this is got it
spk_48: it or thanks to him
spk_47: your next question is matt o'connor of delay today
spk_49: in fact water
spk_6: fight it has a job growth medium term potential says roy how form and all the drivers law that says hostile a call here of if we were to think about how that might look for
spk_24: expenses
spk_6: any thoughts on that either a big pressure or
spk_50: fox and them around us
spk_6: well he didn't have those a little bit that were will give you good good numbers on that were in terms of with the next few years are you know come as you wrap up the expense tiger all this revenue change know are we squeeze steadily been committed to positive operating leverage and we didn't really good job of controlling our expense base
spk_47: in a we've we've been around one percent compound annual growth rate on expenses over the last for five years we are seeing a bit of inflation
spk_51: that will impact us some
spk_49: and our industry which is back in two thousand and twenty do with gonna find ways to overcome it and so will give you exact that would that commitment is in january
spk_52: but dove
spk_53: the bottom line is were ruined our business we're going to grow revenue
spk_6: yeah room work on controlling our expenses and as is improving returned over time and like us and sees is specifically dare you thought about a couple a bigger categories charges i love the market size the alpha comment on carbs improve ago how to gory car payments yeah i think i'm asking if you go to have got the line items at the current agencies continue to grow nicely for us we're up some twelve percent year over year digg part of that volumes and volumes up because there's more transactions per per owner we have more owners have more it when you grow checking accounts this is what you get get usage in particular debit card usage of rush and so that's why we get so fixated on making sure the investors we make in the fast growing markets
spk_54: really help us grow customers and it's paying off so you see the cards agencies
spk_0: we've we've added wells advisers
spk_10: help us grow wealth management and challenging say we're almost twelve percent year over year
spk_55: and and far that grew by the market market said nyse run to
spk_6: and and mortgage and mortgages been a little volatile with a nice production this year and this past quarter but twenty two is probably not going to be as strong as was and twenty one and twenty we sat and talked for twenty one relative to twenty and we've added a really nice years or who knows but just proud of the fact that we've got a lot of difference non revenue sources that work in and multiple different economies and rate environments and and our goal is to continue to grow our total revenue control expenses and and control credit web nice returned to cheryl or as here
spk_5: your final question is from david conrad of kb debbie
spk_6: he had to set of the morning had a fellow question on the securities portfolio and and thanks to the color on the front of taxes but it looks like securities yields actually when applicable basis points this quarter so curious about lower been premium or disease june and maybe
spk_30: the future benefits as higher res you could you a draw from lower lower spencer
spk_56: i mean free american nation bow fifty million dollars would benefit and little bit of from that we think next quarter could be a tad lower than that
spk_57: so just around the edges wickets
spk_6: we good see some improvements there my whole point on that was we're just not gonna take risk to geez a quarter or six months we really want invests all along all and we just don't see putting our cash to work
spk_58: more than we have now we get a different rate varmint we get a lot steeper to the joker will we paid for the rest away by like change your mind
spk_59: and any color on was fun premiums asian was you know looking back in two thousand and eighteen
spk_2: no was essentially lower than sixty year
spk_10: is an advantage cereal yeah i don't remember the numbers off top my head where potions of the to the to the forty million dollars for quarter range
spk_0: but

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