Deposit Pricing
Q: Explain deposit pricing competition drivers?
A: Management described how an increase in special deposit offers forced rate adjustments on existing customers, leading to higher deposit costs—with over $1 billion shifting into higher-rate positions—highlighting a competitive environment.

Operating Leverage
Q: Will operating leverage turn positive next year?
A: Management expects a shift to positive operating leverage in 2025, driven by improved fee and fixed income revenues amid a potential rate cut scenario, though some uncertainty remains.

Loan Growth
Q: What drives the slowdown in loan growth?
A: The slowdown is largely due to seasonal trends in mortgage warehouse lending and a reduction in CRE fund-ups; refinancing activity might pick up if rates decline further.

Capital Ratio
Q: Could capital ratio drop to 10–10.5% soon?
A: Management reiterated that the current 11% CET1 ratio will be maintained until clearer economic and regulatory signals emerge, meaning any reduction is likely deferred until 2025.

Share Buybacks
Q: Will share repurchase activity continue?
A: The bank plans to continue opportunistic buybacks within its current authorization, making decisions based on favorable stock valuations and overall capital management.

NII Outlook
Q: Does flat balance sheet imply no mix shift?
A: Updated guidance factors in a flat to down 2% net interest income, acknowledging mix shifts and deposit cost pressures that are inherent in a stable balance sheet approach.

Expense Efficiency
Q: Are expense cuts deferring costs to next year?
A: Management indicated that through operational efficiencies, expenses should remain flat or decline in the second half, without significant costs being pushed into the next period.

Mortgage Rates
Q: What rate drop is needed for refinancing?
A: Significant rate cuts are deemed necessary to trigger a strong pickup in refinancing activity, as current mortgage rates around 7% do not sufficiently incentivize borrowers, although purchase lending remains solid.

Fixed Income Outlook
Q: How will fixed income revenue perform?
A: While a more aggressive rate cut could improve fixed income revenues, management remains cautious, expecting only modest enhancements under the current outlook.

LDR Strategy
Q: How does LDR affect deposit pricing?
A: Rather than strictly managing the loan-to-deposit ratio, the focus is on defending customer relationships by adjusting deposit rates as needed, reflecting a flexible funding strategy.

NPL Office
Q: What caused the increase in office NPLs?
A: The rise in nonperforming office loans is attributed to higher rates reducing cushions, though strong underwriting and conservative risk management keep overall credit performance within expectations.

CRE Reserves
Q: Is there flexibility in CRE reserve build?
A: Management believes that current CRE reserves are conservatively set and could be released if improvements occur, especially given limited lease renewals in the office segment.

Tech Investment
Q: Will tech spending focus on treasury upgrades?
A: Upcoming technology investments are targeting core system improvements, particularly in treasury management and GL, which are key to enhancing client services and operational efficiency.

Bond Restructure
Q: Will capital be used for bond restructuring?
A: Management dismissed the idea of significant bond book restructuring, explaining that such moves would only shift earnings timing without adding long-term economic value.

Spot Margin
Q: What was the June spot margin?
A: The spot margin stood at 3.35% as of June, reflecting the current environment in deposit pricing and cost management.