Hello and welcome to the Huntington Bancshares First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Tim Sedabres, Director of Investor Relations. Please go ahead, Tim.

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

Thanks, Tim. Good morning, everyone, and welcome. Thank you for joining the call today. We're pleased to announce our first quarter results, which Zach will detail later. Again, these results are supported by our colleagues who live our purpose every day, as we make people's lives better, help businesses thrive, and strengthen the communities we serve. Now on to Slide 4. There are five key messages we want to leave you with today. First, we are executing our organic growth strategies and leveraging our position of strength. As planned and managed over the years, our liquidity and capital metrics are top tier. Second, we delivered loan growth in the quarter and expect the pace to accelerate over the remainder of the year. Our teams are acquiring new customers and relationships in both commercial and consumer categories. We are maintaining our momentum in deposit gathering with a well-managed beta. Third, we expect to drive sequential increases in net interest income and fee revenues from the level reported in the first quarter, supported by accelerating loan growth, coupled with effective balance sheet management. Fourth, we continued to rigorously manage credit, consistent with our aggregate moderate to low risk appetite. Finally, we are positioned to power earnings expansion over the course of the year and into 2025. Our investments are delivering results and the underlying core is performing well. I will move us on to Slide 5 to recap our performance. We delivered long growth with balances growing by $1.6 billion from a year ago and have grown by a 4% CAGR over the past two years. This pace reflects our intentional optimization efforts last year, and we believe we are positioned to accelerate growth over the course of 2024 and carrying into 2025. Deposit balances also increased, growing $7.9 billion, or 5.5%…

Thanks, Steve, and good morning, everyone. Slide 6 provides highlights of our fourth quarter results. We reported GAAP earnings per common share of $0.26 and adjusted EPS of $0.28. The quarter included $39 million of notable items, primarily related to the updated FDIC deposit insurance fund special assessment of $32 million, which was driven by higher losses from last year's bank failures. Additionally, we incurred $7 million of costs related to incremental business process offshoring, efficiency plans that were finalized during the quarter. These items collectively impacted EPS by $0.02 per common share. Return on Tangible Common Equity, or ROTCE, came in at 14.2% for the quarter. Adjusted for notable items, ROTCE was 15.3%. Average deposits continued to grow during the quarter, increasing by $1.1 billion or 0.7%. Cumulative deposit beta totaled 43% through quarter end. Average loan balances increased by $701 million or 0.6% for the quarter. Credit quality remains strong with net charge-offs of 30 basis points. Allowance for credit losses was stable and ended the quarter at 1.97%. Turning to Slide 7, as I noted, average loan balances increased quarter-over-quarter and were higher by 1.3% year-over-year. For the quarter, loans increased at a 2.3% annualized pace. We expect the pace of future loan growth to accelerate over the course of 2024. Loan growth was commercial-led for the quarter with total commercial loans increasing by $691 million. Commercial balance growth included distribution finance, which increased by $352 million, benefiting from normal seasonality. Auto floor plan increased by $313 million. CRE balances declined by $31 million. All other commercial portfolios were relatively unchanged on a net basis. Within other commercial, we saw notable strength in regional and business banking balances, as a result of sustained production levels and the continued retention of all SBA loan production on balance sheet.…

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

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Manan Gosalia from Morgan Stanley. Your line is now live.

Hi good morning. So your comments on the NII guide were very thorough, so I really appreciate that. I think, so the lower end of your guide is now for three cuts, and I think your guide is a little bit more conservative on deposit betas than some of the other comments we've heard. So I was wondering if you can expand on that a little bit. Is that based on conversations you're having with customers or what's driving that?

Sure, Manan. Thanks for the question. This is Zach. I'll take that. Broadly speaking, we're seeing the NIM outcome, but very similar to the view we had before, just as I mentioned, the sort of moderate tuning lower, you know, clearly the biggest change in the environment over the last three months, since we gave guidance in January, was the expectation for a much longer pause in this Fed posture or any rate reductions. And so at the margin, really we're seeing slightly higher deposit funding costs and overall interest-bearing liability costs. The other thing that's important, and I'm trying to note this in the prepared remarks as well, is that the deposit volumes are coming in very strong and slightly at the higher end of our prior expectation as well. And so that's contributing somewhat, although really good core funding clearly for the accelerating loan growth over time. So that's really the driver. You know, as we entered the quarter, we [just provide one last piece of color] (ph) on that. As we entered the quarter, the market forward was for the first rate reduction to be in March. We always knew that -- that was, we took the view -- that was likely not to be the case, but clearly that was the forecast of the market broadly. And we were beginning to execute the early stages of down beta actions. We've discussed shortening CD term duration, changing other elements of our pricing. You know, as we went throughout the quarter, clearly that reset. And so we've had to continue to be dynamic, as we would always be in managing deposit pricing, and likely now those more substantive downgrade actions will be pushed further out. So that's really the biggest driver of it, sort of the timing of when we'll begin to see more significant downgrade actions. Over time, we would expect to be just as effective going forward as we've been in the past on that -- and it's really just, you know, when will that occur? And hence, a few bps of additional funding costs here in 2024.

Now, is any of that because you're also planning ahead of this accelerating loan growth that you're expecting?

You know, it's a good question Manan, but the posture, we're in this custody moment here, clearly, of when will rate cuts reduce, and also not only when will the first one happen, but what will be the expected trajectory by the market, and by customers really thereafter. For us, we're very dynamic and granular in how we manage this to really optimize the next best unit of funding here. So continually thinking about when is that rate cut going to happen and obviously attempting to play in front of it. With that being said, we're talking about marginal tuning here and I wouldn't overplay it.

And then if I could add, this is Steve. Our commercial pipeline is very robust and each month of the quarter has improved. So we're going into the second quarter with a very good, healthy outlook. As we think about our guidance for the year, we think on the loan side, we're going to be closer to the top end, which is in part the consideration for adding the deposits at the rate that we're doing here at this earlier stage of the year. Manan, thanks for the question.

Thank you. Our next question is coming from John Pancari from Evercore ISI. Your line is now live.

Good morning.

Good morning, John.

So Thanks for the color on the NII guide. Just to confirm again, it does indicate that you are factoring in a higher for longer environment when all said and done in your outlook. But again, you maintain the NII guide of down 2% to up 2%. Is the primary reason for the maintaining that versus any upside by it would be if it mainly the deposit costs that you just discussed coming in higher, or is there any other factor?

That is the primary driver. So yes is the answer to that. Seeing a little lower, few basis points lower NIM, but incrementally somewhat stronger loan growth, those things are largely offsetting, and continue to see the ultimate results in that guidance range. And importantly, the keeping for us is that trajectory, growing net interest income on a dollar basis out of the first quarter into the second quarter, and continuing on to the third and fourth quarter, and the outcome of that's going to be solidly expanding revenue growth and solidly expanding profit growth as well. So yes to the fundamentals of your question and the overall outlook, generally unchanged.

Got it. Okay, thanks for that, Zach. And then separately, back to the loan growth topic, Steve, you just discussed that you've got confidence in the outlook, particularly given your pipelines. Can you talk about where demand stands now, where utilization is now, and what type of inflection do you see here? Because it seems like you've got confidence in the back half strengthening. I mean, what anecdotal data do you have to kind of support that acceleration? Thanks.

Thanks, John. We see the commercial pipeline for the second quarter, particularly the high probability of close level to be very, very good, very strong relative to the last five quarters. So as I said, each month has improved in the first quarter. Second quarter strength is obvious now at this stage. We're also seeing good business banking, loan growth, and we have the benefit of these new initiatives, none of which have [books] (ph) that they're carrying. So the three new initiatives, especially banking last year, and the Carolinas off to a really good start. Texas was there a couple of weeks ago. Got a great team there as well. All of those investments will bolster our activities throughout the year. And then, as you know, we've got one of the largest [split-up] (ph) finance companies in the country. That tends to be somewhat seasonal fourth quarter. So those would be the combination of factors that give us a lot of confidence that we'll be at or near that upper end of our guide for the full year.

Thank you. Our next question today is coming from Scott Siefers from Piper Sandler. Your line is now live.

Good morning, guys. Thanks for taking the question. I kind of wanted to revisit the margin as well. So on the deposit pricing, is it possible to make sort of a broad comment about is this sort of something that you're seeing and reflecting kind of market pricing pressures or would you say you're more on sort of the leading? Because it sounds like we're trying to support the loan growth, which is obviously a very positive differentiated factor. But are you all kind of leading with pricing on the deposit side to fund that growth or what does the competitive dynamic look like as well?

Great question, Scott. This is Zach. I'll take it. I would characterize the competitive intensity of the market as generally consistent today with how it was at this time last quarter. So I don't think there's any substantive change. It remains a competitive market, and clients are clearly aware of rate and the competitive rate environment on the consumer, the small business, the commercial side. So it's a transparent market. I think what has happened, part of what we're seeing is, and I'm giving you guidance on it, it’s not just what's happening right now in the market, but the outlook for the whole year. So that's really, I think the way you should interpret these comments is. Whereas before, there was a fairly strong conviction of the marketplace, and even our prior guidance ranges had the first cuts beginning somewhere between March and August, clearly that time frame where cuts has been pushed out. And so the period of time before we can begin to manage substantive downgrade actions has just been extended. And that's really the main driver here. I think our pricing strategy is pretty much the same, which is, continue to price in competitive ways but not lead the markets to be clear and really drive the fundamentals of deposit growth from customer acquisition. We talked about 2% primary bank relationship growth in consumer, 4% in business banking, growing on the commercial side as well. And so that's the underpinning of -- the pricing strategy is really just designed to ensure that there's fair and appropriate pricing as we got on those deposits.

Okay. All right. Perfect. And I think you actually touched on sort of my loan-growth questions in prior responses. So that does -- I appreciate the color.

Yeah. Thanks so much.

Thank you. Next question is coming from Steven Alexopoulos from JPMorgan Chasing Company. Your line is now live.

Hey, good morning, everyone.

Good morning, Stephen.

Not to beat a dead horse on the net interest income guidance, but last quarter with three cuts, that got us to the high end of the range. And now three cuts get us to the low end of the range. And I'm somewhat confused. Zach, I always think your hedge fund magic keeps us relatively stable over short periods of time. I'm a little confused why three cuts now puts us down two versus up two last quarter.

Yeah, good question. I appreciate it. And I think what I’ll just bring back to is the two key things here. Overall, the NIM outlook for us in both scenarios is a few basis points lower, mainly as a function of the timing of when rate reductions will begin and when we'll see substantive downgrade action. It's somewhat higher funding cost environment than we expected. And that's with the main driver. Second thing I would say is the four key factors for us that are driving the NIM this year remains the same. The biggest positive factor is fixed asset repricing, which I’ve just shared in the prepared remarks, we expect to see about $4 billion quarterly repricing of fixed assets. We should drive substantive benefit on the order between 10 basis points and even 12 basis points or 13 basis points, depending on how the value of the curve maintains here over the course of this year. The second positive factor is a gradual reduction to the amount of hedge drag we've got in the NIM. In Q1, we had 16 basis points of hedge drag. And I expect to see something between 5 basis points to up to 8 basis points, to maybe even 10 basis points, again, depending on how the curve moves here over the course of the rest of this year until Q4. Those are the two biggest positive factors. The other two factors are what's going on with variable yields, and what's going on with funding costs. Those are largely offsetting each other in both of those moving off of a direct cost direction, to be clear, in either a higher rate path or a lower rate path scenario. And those are modestly net negative for the full year. It would offset those positives and keep these overall NIM in a generally flat to rising position from here. So none of that has really changed. The last thing I'll say, a third point, is that all of the modeling we're doing continues to indicate that a higher rate scenario overall, all things equal, drives a higher NIM for us. Clearly the -- how this plays out over such a short period of time, three quarters, will really depend on the shape and trajectory and timing and everything. But that's the best we can do. And I think the guidance we're trying to give here with this range of scenarios is designed to allow us to give you stability in terms of the revenue guidance, which ultimately is the most important thing.

Got it. Zach, if we put all this together, you're saying NII bottomed in the first quarter. But I didn't hear you say NIM bottomed in the first quarter. Does that imply NIM has not bottomed in the first quarter?

I expect to see NIM bouncing around these levels, or rising over the course of the rest of the year, depending on how the scenario plays out. And for that, kind of flat to rising NIM, coupled with accelerating loan growth, to drive accelerating net interest income on a dollar basis out of the first quarter into the second quarter of growth and then continuing to grow into the third and the fourth quarter.

Got it. Okay. If I just -- one separate question on the non-interest bearing deposits. Balance is down pretty sharp, average of period end, we're seeing some of your peers showing in February and March good stability in those balances. Did you guys see that as well? Or did you see balances decline through the quarter? Thanks.

Balances were modestly declining through the quarter. As we look at that -- we see a few things. One is the trajectory of dollars of non-interest bearing actually decelerating in terms of their mix shift. Secondly, for the most part, all of the mix shift that we think will happen within consumer has happened. And where there is continued drift in Q1 is really in the business and commercial side. Another point would be we expect the non-interest-bearing mix shift, mix of the percentage to continue to stabilize in the high teens over the course of this year, which is 19.4% as of Q1. You know, and lastly I'll say, as you think about that percentage, it's very notable to measure that percentage if overall deposits are shrinking versus if they're growing. For us, overall deposits are growing strongly as we've said. So the mix is one thing, but the dollars are really the most important thing. In fact, we see stabilizing here over the course of the next couple of quarters.

Got it. Thanks for taking my question.

Thank you. Next question is coming from Ebrahim Poonawala from Bank of America. Your line is now live.

Good morning.

Good morning, Ebrahim.

I guess I just wanted to go back to something, Steve, you mentioned, I think in your prepared remarks, you said that the outlook in the economy is more conducive for growth. Your [indiscernible] probably the most upbeat, I've heard this over the last week. If you don't mind spending some time in terms of breaking down what you're seeing from customers in terms of strength and loan demand, looking into 2Q and beyond, and how much of this strength is just because of the proactive action Huntington has taken to hire bankers in Carolinas, Texas, would love some color around both those aspects. Thank you.

Thank you, Ebrahim. The economy, we all see the aggregate metrics that are released. There's an underlying strength. We're seeing that, particularly because we've been proactive with our lending activities through last year, the core is performing well. We're getting growth in our [auto book] [ph], our distribution finance in particular, our business bank, so very localized levels, principally here in the Midwest. We're also getting growth in a number of our other areas. And these new verticals that have been added, they've all closed the loans. They've all generated lending activity and other activity. And the Carolina expansion and Texas expansion are delivering results and look very promising to us. So we've positioned the bank both with the core activities and these incremental investments, I think, to outperform peers in loan growth and perhaps in a number of other respects as well, certainly through this year and potentially beyond. The pipeline activity I referenced earlier is very promising. And again, the strength of the first quarter with every month improving gives us a lot of confidence. Our investment banking activity, Capstone related, their pipeline is bigger than they've ever had, as an example. So we've got a lot of opportunity in front of us, so now we have to deliver it.

That was helpful. And Zach, a couple of follow-ups for you. One, apologies on NII. I feel like I'm more confused after some of this back and forth. Should we expect if we don't get any rate cuts or maybe just one cut, NII tends towards up 2%. Is that the right takeaway?

It will really be a [technical difficulty] take there. So I think the outcome will be somewhere between that range of EV. When we give these ranges, we try to generally box our plan and land in the middle of it. But of course, there's a bit of variance and just normal variability that's hard to forecast with such decision. So that's the expectation. I think we'll see, as I noted, just to clarify, a flat to rising NIM, a slightly higher NIM in the higher rate scenario, albeit with different drivers, and really coupling that with accelerating loan growth will drive dollars out of the level we've seen in Q1, up into Q2 and beyond, and to land for a full year somewhere in the middle of that range.

All right, so multiple scenarios, middle of the range. And any scenario where this could exceed that up 2%?

Certainly it's possible. We'll have to see how the rate environment plays out here. I think really at this point, we're probably parsing the precision more than is reasonable. It's still a pretty moving target in terms of where the yield curve is now, but I think we'll land somewhere in that range is our best estimate.

Got it. Thank you.

Thank you. [Operator Instructions] Our next question is coming from Ken Usdin from Jefferies. Your line is now live.

Hi, thanks. Good morning. And thanks for that incremental slide on the swaps detail. I'm wondering if you can just kind of help us understand as we get through the end of this year, both in terms of what that swaps impact looks like and as important, that fixed rate repricing, how should we think about those kind of combined benefits as we get out of ‘24 and think about ‘25? Thanks.

Yeah, it's a terrific question. Just maybe I'll say a few things on that. One is the fixed asset repricing benefit that we saw, and as mentioned earlier, somewhere between 10, 11, 12, 13 basis points outside this year from that $4 billion turning quarterly. Our modeling indicates that we’ll continue on into 2025 at kind of a similar pace. It's really a very long-term phenomenon, and [indiscernible] significant support to the NIM as we get into 2025. On the hedge drag factor within NIM, that’s 16 bps in Q1, reducing down by something like 5 basis points to 8 basis points, as much as 10, depending on the rate scenario, lower by the end of Q4. That should also continue on into the early part of 2025 as well. You probably get to about neutral position if there are some rate reductions. And if you just look at the rate curve, the forward rate curve, there is an expectation in the forward curve at this point that there will be, in fact, reductions either in the back half of this year, certainly into the early part of next year. And so if that comes to pass, then we'll see that 16 basis points sort of fully resolved by the middle of 2025. If there are great reductions, then you see less of that hedge drag coming back. But obviously, then – because there are different environment overall, regardless. The other thing I'll just say, you didn't ask it, but I'll share it is, if you look at the sum total of all of our hedging activities, which, as you know, are always designed to protect capital against up-rate scenarios, protect NIM in down-rate scenarios. That chart that I illustrated in the prepared remarks has a gradual shifting of that exposure as you get into and throughout 2025. The net result of that should be that by the end of 2025, asset sensitivity should be about one-third less. And so that's sort of the intent of that program, more broadly from an interest rate risk and asset sensitivity management perspective.

Okay, cool, and then my follow-up, I'll just separate them. On just the fixed rate repricing, on the asset side, so we know about the meaningful help that you get this year, but then how did that layer in in terms of incremental fix rate benefit that happens into next year?

So, as I noted a bit ago, I think it's about the same benefit as we go out into 2025, and that's fairly similar churn of quarterly volumes, and continue to see the belly of the curve that's largely on those assets are priced, significantly higher than the historical rate of those assets. Over time, of course, you'll begin to see that benefit reduce on a sequential basis. At some point, it starts to [indiscernible] but likely not until the latter part of 2025, at the earliest at this point, based on how the curve is shaping up.

Okay, my mistake, Zach. I didn't separate the two in your answer. My mistake.

No worries. Appreciate your question.

Thank you. Next question today is coming from Jon Arfstrom from RBC Capital Markets. Your line is now live.

Hey, thanks. Good morning. Can you touch a little bit on the fee income outlook and what you expect there? It seems like you're implying a bit of a step up in that based on what you saw in the first quarter, but talk a little bit about what you're seeing there. And then confidence in hitting that midpoint of the guide.

Q1 core fees grew by 3% year-over-year. And our guidance over the full year is between 5% and 7% on a full year. So that clearly implies we're going to see an acceleration of the income and an acceleration on the year-over-year basis, as we looked at this year, and high confidence to achieve that. The core drivers remain the same, as what we've discussed on many prior occasions. Capital markets, payments, and wealth management. You look at, sort of the trends we're seeing right now, what the performance was in the first quarter. Payments revenue is up 7% in the first quarter. Wealth revenue is up 10%. In capital markets, we saw commercial banking related revenues, around two-thirds of the capital markets activities that are really highly correlated to the pace and volume of commercial banking, that grew sequentially into the first quarter -- of the second sequential quarter of growth there. And I think one of the things that will power continued growth in capital markets from here is the fact that commercial loan production is likewise accelerating as Steve noted earlier. Advisory revenues were really beginning to recover well in the back half of 2023, but typically seasonally lower in Q1 for us in our focus in middle market advisory. We did see those advisor revenues lower into the first quarter. But likewise, our expectation for that is for continued expansion into the remaining part of this year. Pipelines look very good, very high quality, great firms that have contracted with us to look for M&A support. And so those are really the drivers from here. Payments continuing to perform, wealth continuing to execute the strategy, and then capital markets driving acceleration as well. And overall, continue to feel really good about landing somewhere in that full year’s range.

Okay, good, helpful. I won't go back to net interest income, but I do want to ask about credit. Your numbers obviously look good, but anything you want to flag internally that you're seeing, and I'm curious also what you're seeing externally from a credit point of view. Thank you.

Hey, this is Brendan. I'll take that one. As you sort of noted in your question, the story of the quarter is [indiscernible]. Across all of the credit metrics, pretty much in-line with where we reported either the fourth quarter or seasonally adjusted when you think about delinquencies, looking back at first quarter of last year, we're right in-line. And we feel really good about the position that we're sitting in right now. If there's the one place that everybody continues to focus on and talk about, and we're highly focused on it ourselves is office and the commercial real estate side. But as we've talked about in the past, we have one of the smaller books relative to our office portfolio. And we have a decent reserve against it. So while we're watching it and actively managing it, we feel very well protected against it at this point

Just to add to that, thanks Brendan. We've reduced the office portfolio by about $500 million over the course of the last four quarters. And our largest loan is $40 million. The average is $7 million-ish. So it's very granular, and it gets a lot of attention. And we expect it will continue to reduce throughout this year.

Okay, good. If I can ask one more, I'm going to violate the one-in-one follow-up, but just bigger picture, there's been this myopic focus on the margin and net interest income. Do you guys -- do you feel incrementally better or worse about that plus or minus 2% guide? Because on one hand we're thinking about a lower margin in the very near-term and I get that, but it seems like it's higher funding costs to fund loan growth, which seems to be at the higher end of it. So I guess, the question is with some of these new developments do you feel better or worse about that higher or lower end of the net interest income guide? I think that would help people. Thanks.

Great question Jon. I'll take that one. [indiscernible] two statements I would make. First is, I feel really good about the overall performance of the business. For us, it's about executing long-term growth, long-term value creation. And Q1 set that up really well. We've seen confidence in loan growth accelerating, great core funding, and therefore the confidence in being within that range is very strong. At the margin, my revenue outlook is a touch lower than was the case before. But I think we're in the range of tuning at this point, Jon, and hence, not overly parse this -- somewhere in that range, typically try to land in the middle of the ranges that we're giving.

Okay. All right, thank you, appreciate it.

Thank you. Next question is coming from Peter Winter from D.A. Davidson. Your line is now live.

Good morning. I wanted to follow up on Jon's question just on credit. If I look at the ACL ratio, it's at the top end of the peers and credit is really holding in and you feel good about the economy. How are you thinking about reserving going forward? Is the plan to keep the ACL ratio fairly steady and just kind of support loan growth?

Peter, it's Brendan. I'll take a chunk of that. You're noting the stability quarter-over-quarter, and that's accurate. I think, as we look forward, it's really fact specific as to how the ACL coverage will move quarter-over-quarter, as we take into account the modeling of our economic scenarios, the view of credit at that time, as well as the loan growth, as you referenced in your question. We put all of that into the mix to sort of drive out of our modeling what we believe the right level of coverage is. And so -- it's harder for us to, you know, for anybody frankly to -- in this environment, to really give any strong guidance, as to which way the ACL will move, as it's really a quarterly specific metric these days, and the way it's run. So it's hard for me to come out and say, well -- we think it'll do this, and we think it'll do that.

Okay. Peter, this is Steve. I'll just add to that. We've tried to be conservative with reserves over the years. We believe we're in that posture today and we expect to grow loans above peer this year and potentially beyond with the investments in these new businesses and regions we've made. And there's still a lot of uncertainty about where rates are going to go, when they’re going to move, the geopolitical tension, the uncertainties that can spawn from elections, both ours and other countries. So we're just trying to be conservative at this stage. Should we continue to perform at the level we are, there will be reserve recapture at some point.

Okay. Thanks, Steve. Just one quick follow-up. Just that comment that you're feeling better about loan growth. How much of the loan growth acceleration is new markets versus just core strength? And is part of that positive outlook, given the early success that you're seeing on the new initiatives?

This is Zach. I'll take that one. If you look at the full year loan growth outlook that we've got, it's between 3% and 5%. About 60% of that growth, we think will come from the core, and about 40% from these new organic expansion areas [Technical Difficulty]. And the mix of the overall company's growth will be weighted toward commercial, but consumer also growing pretty well. So that's the kind of broad answer in terms of the magnitude of them. And really, the other point is yes. The early traction is really very positive. We're seeing customers already being acquired, loans being booked, and the pipelines across all of the five new areas of focus for the three commercial verticals, Carolinas and Texas. The pipeline cumulatively is approaching $2 billion of loans, and also very significant deposit pipeline. Remember, these are tend to be full relationship strategies that are gathering loans, but also deposits, also fee income businesses in capital markets and payments and treasury management. So quite good early traction here. Obviously, starting from a low basis, Steve mentioned, so we're going to see that build here over the course of time. The last thing I'll say is, of those five, the most significant contributors in 2024, we expect to be the fund finance vertical in the Carolinas. Over time, the others will also be very significant, particularly Texas. But just in terms of the early momentum that we're seeing and based on when they started and were staffed, those two will be the most significant for 2014.

And just one last final. Does the core loan growth assume a pickup in-line utilization?

Not in substance. So if you think about the three big areas where we have outstanding lines in the broad middle market commercial lines, you saw that tick up just a tiny bit into the first quarter pretty flat, and it's not our expectation that that will change substantively from here. The second one being distribution finance. And that one we did see a benefit into the first quarter from -- and that was the typical seasonal pattern. We think that line generally now is stable level broadly. And we're just going to see the typical seasonal pattern. It's highest in the first quarter, it's lowest in the third quarter, just based on the kind of the cycles of inventory and sales. And then the last one is auto floor plan. We did see that also benefit us somewhat into the first quarter. But again, we think we're now at a point coming out of COVID, particularly in the auto floor plan business, where manufacturing has reached a stable level relative to sales, and we're going to see line utilization generally trending in a pretty consistent area from here in the floor plan business. So not counting on it really for the continued growth, although certainly benefiting from some seasonality in the first quarter.

And each of those businesses Zach referenced, we expect net increase in customers. So they'll have a core organic growth as primary driver.

Thanks. I appreciate all the color.

Thank you. Next question today is coming from Matt O'Connor from Deutsche Bank. Your line is now live.

Good morning. Most of my questions have been answered, but just from an industry point of view, are there any updates on the debit card interchange reform and remind us how meaningful that could be for you guys. And if any of -- it's incorporated in guidance, which I assume it's not. But any updates on that front? Thank you.

Yeah, good question Matt. Thanks. So the answer is no, broadly. No substantive update in terms of where that may be going. For us, we've got a really strong debit card franchise, it's one of the best in the country in terms of relative penetration and utilization within our consumer and small business base. So that's a real benefit to us. If you were to just run the numbers on the proposal as it was proposed, think it's around a $90 million annualized impact for us. With that being said, if history is a guide, often those proposals are changed substantively between the time they were initially put forth and when enacted, either to not come forth at all or to be substantively altered. So we'll see -- for us in our payment strategy, there's so much growth opportunity and so many opportunities to engage our customers that there will be, over time, ways to mitigate some of that and to certainly offset with other payments related to growth. As best we can tell at this point, to be fair, there is a proposal that would be at some point mid to latter part of ‘25 that will take effect. And so not in the guidance for ‘24 as you just noted.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Steve for any further closing comments.

So, in closing, we're pleased with our first quarter results. We're seeing momentum build across the bank, which will drive improved performance over the course of the year and beyond. We clearly expect our investments in our businesses to deliver growth this year and the future. The balance sheet is well positioned, ample capital and robust opportunities to support our growth initiatives. Our focus remains centered on driving core revenue growth, carefully managing expenses and growing loans consistent with our aggregate moderate to low risk appetite. Just as a reminder, the Board Executives, our colleagues, our top 10 shareholder collectively reflecting our strong line to build shareholder value. Finally, we would not be able to take care of our customers without the efforts of our nearly 20,000 exceptional colleagues engaged every day across the bank. Thank you for your support. Thank you for your questions and your interest in Huntington. And have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.