Good morning, everyone, and welcome to the FNB First Quarter 2024 Earnings Conference Call. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Lisa Hajdu, Manager of Investor Relations. Ma'am, please go ahead.

Good morning, and welcome to the conference call. We will now turn it over so that we can hear some of the prepared remarks that we have. Thank you. This conference call of FNB Corporation and the reports filed with the Securities and Exchange Commission also contain forward-looking statements and non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in our presentation materials and in our earnings release. Please refer to these non-GAAP and forward-looking statement disclosures contained in our related materials, reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until Thursday, April 25, and the webcast link will be posted to the About Us, Investor Relations section of our corporate website. I will now turn the call over to Vince Delie, Chairman, President and CEO.

Thank you, and welcome to our first quarter earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. FNB produced a solid quarter, reporting operating earnings per share of $0.34 and operating net income available to common shareholders totaling $123 million. Our balance sheet resilience, robust fee income generation, strong credit results and continued progress of our clicks-to-bricks strategy were at the forefront this quarter. Our team remains focused on balance sheet management to position FNB for optimal flexibility during the volatile interest rate period. This is evidenced by our tangible common equity ratio ending the first quarter at an all-time high of 8%. In addition, our company reported solid loan growth of 6% and deposit growth of 2% on a year-over-year basis. Deposit mix remained similar to the prior quarter with a favorable total deposit cost of less than 2%, which is expected to remain superior to peers. Tangible book value per share also reached a record high at $9.64, an 11% increase year-over-year as tangible book value growth remains a key value driver of our strategy. FNB maintained strong levels of liquidity and uninsured and non-collateralized deposit coverage ratio of 162%. Our non-interest income continues to grow, reaching $87.9 million, a near record level. This achievement is the result of our geographic expansion in a decade of strategic investments in our mortgage, wealth management, international banking, treasury management and capital markets capabilities, including the launch of loan syndications and the FNB debt capital markets platform. Our diversified business model has enabled non-interest income to grow 75% from $200 million in 2016 to over $350 million on an annualized basis. We recognize the benefit of having diverse revenue streams, which complement one another during various points of the economic cycle. Looking ahead, we will continue to diversify our non-interest income products and services with plans to further enhance our treasury management, merchant services and payment capabilities. This past decade also included the launch of our clicks-to-bricks strategy. That vision along with our investments in people and infrastructure for data analytics has laid the groundwork for the success of our digital bank today, as well as FNB's increased use of AI in the future. What began with QR code enabled product boxes has evolved into an omni-channel experience with our proprietary eStore. Paired with our new common application, we can bundle products and streamline the application process, enabling customers to open 30 products with one application, creating efficiencies and significantly reducing the number of keystrokes for our clients. Our strategy offers us the opportunity to align high-value product solutions for our customers based on need in a bundled manner, which helps retain and attract clients. FNB also leverages our investments in data infrastructure and analytics for driving revenue growth through enhanced lead generation. Our enterprise data warehouse stores over 71 billion records across 41,000 attributes, enabling our data scientists to utilize machine learning more effectively. We developed Opportunity IQ, our proprietary tool that utilizes AI and data aggregation to produce a one-page snapshot of our customers, including the lead score and next best product to offer. This at-a-glance insight enables our employees to have elevated conversations and deepen our relationships with clients. Leveraging our proprietary data and analytics within our common app, we can improve product penetration through tailored offerings to our customers, to increase their financial well-being and client loyalty to our brand. As we continue to expand our current relationships and gain new households, FNB remains steadfast in our consistent underwriting standards and credit management process. I will now turn the call over to Gary to provide additional information on our credit risk metrics.

Thank you, Vince, and good morning, everyone. We ended the quarter with our asset quality metrics remaining at a solid level. Total delinquency finished the quarter at 64 basis points, down 6 basis points from the prior quarter. NPLs in OREO decreased 1 basis point to end at 33 basis points, a multiyear low, with net charge-offs of 16 basis points. I'll provide an update on our CRE portfolios and conclude with an overview of our credit risk management strategies and focus around the current environment. Total provision expense for the quarter stood at $13.9 million, providing for loan growth and charge-offs. Our ending funded reserve stands at $406 million or 1.25% of loans, flat compared to the prior quarter, continuing to reflect our strong position relative to our peers. When including acquired unamortized loan discounts, our reserve stands at 1.36%, and our NPL coverage position remains strong at 425%, inclusive of the discounts. We continue to closely monitor the non-owner-occupied CRE portfolio and on a monthly basis review upcoming maturities, largest exposures and analyze overall market performance across our footprint. At quarter end, delinquency and NPLs for the non-owner-occupied CRE portfolio improved slightly and continue to remain very low at 19 and 13 basis points, respectively. Specifically related to the non-owner-occupied office portfolio, our most recent review reflected a 60% weighted average LTV, providing additional protection for potential market declines. Delinquency and NPLs were 3 and 2 basis points, respectively, outperforming the prior quarter. Net charge-offs for the non-owner-occupied CRE portfolio reflected solid performance for the quarter at 9 basis points, confirming our consistent underwriting and strong sponsorship. We remain focused on credit risk management, along with consistent underwriting, which allows us to maintain a balanced well-positioned portfolio throughout various economic cycles. On a quarterly basis, we continue to perform specific in-depth reviews of our portfolios as well as full portfolio stress tests. Our stress testing results for this quarter have again shown lower net charge-offs and stable provision compared to the prior quarter's results, with our current ACL covering approximately 90% of our projected charge-offs in a severe economic downturn, again confirming that our diversified loan portfolio enables us to withstand various stressed economic scenarios. In closing, our asset quality metrics ended the quarter at good levels. Our loan portfolio continues to remain stable and benefits from proactive risk management being further enhanced by experienced banking teams and tenured leadership, which have successfully managed through many economic cycles. We continue to seek loan growth through a diversified mix of products and geographies while maintaining our strong core credit philosophy and consistent approach to underwriting through the cycles. I will now turn the call over to Vince Calabrese, our Chief Financial Officer, for his remarks.

Thanks, Gary, and good morning. Today, I will review the first quarter's financial results and walk through our second quarter and full year guidance. Total loans and leases ended the quarter at $32.6 billion, a 3.3% annualized linked quarter increase driven by growth of $209 million in consumer loans and $53 million in commercial loans and leases. Residential mortgages led consumer loan growth driven by on-balance sheet production this quarter in physician and jumbo mortgage loans. Total deposits ended the quarter at $34.7 billion, a slight increase of $24 million linked quarter even with the headwind of seasonal deposit outflows. For context, our seasonal deposits peak in mid-November and trough in mid-February, and balances should continue to build through the next couple of quarters benefiting from normal seasonality and our team's success in driving deeper market penetration on an organic basis. As of March 31, non-interest-bearing deposits comprised 29% of total deposits, maintaining the same level at year-end. While the deposit mix continues to shift from low interest checking and savings products into higher-yielding CDs and money market products, we believe we will continue to outperform the industry in both a mix and deposit cost perspective. Our deposit costs ended the first quarter at 2.04%, leading to a total cumulative deposit beta of 36% since the current interest rate increases began in March of 2022. The first quarter's net interest margin was 3.18%, a decline of only 3 basis points. A 15 basis point increase in the total yield on earning assets to 5.40% was slightly more than offset by a 19 basis point increase in the total cost of funds to 2.33%. On a monthly basis, net interest margin was down a modest 1 basis point per month during the first quarter, and March's net interest margin was 3.17%. Net interest income totaled $319 million, a $5 million decrease from the prior quarter, with over half the difference due to the current quarter having one less day. Turning to non-interest income and expense. Non-interest income totaled a robust $87.9 million with linked quarter growth in nearly every line of business. Wealth management revenues increased 12% compared to the prior quarter, reaching a record $19.6 million through continued strong contributions across the geographic footprint. Mortgage banking operations totaled $7.9 million, the highest quarterly figure since 2021 with our focus on the purchase market driving good production growth. Several of the lines of business that Vince mentioned had strong performance this quarter. Our debt capital markets platform, which is part of capital markets, had a record number of bond transactions this quarter, more than double the prior record. Treasury management revenues have gained momentum as we execute on our strategic initiatives, building out the platform with total TM revenues increasing around 19% from the year ago quarter, driving the increase in the service charge line item. Operating non-interest expense totaled $234.1 million, an increase of $15.2 million from the prior quarter after adjusting for $3 million of significant items in the current quarter and $46.6 million last quarter. This quarter's significant items included $1.2 million of branch consolidation expenses and $4.4 million estimated for the additional FDIC special assessment partially offset by a $2.6 million reduction to the previously estimated loss on the indirect auto loan sale that closed in February. The largest driver for operating non-interest expense was salaries and employee benefits, which increased $15 million, primarily related to normal seasonal long-term compensation expense of $6.9 million, seasonally higher employer payroll taxes, which increased $4.6 million, and reduced salary deferrals given seasonally lower loan origination volumes. As previously mentioned, FNB redeemed all of our outstanding Series E perpetual preferred stock on February 15 and paid the final preferred dividend of $2 million on the redemption date. The excess of the redemption value over the carrying value on the preferred stock of $4 million was considered a significant item impacting earnings. FNB continues to actively manage our capital position for ample flexibility to grow the balance sheet and optimize shareholder returns while appropriately managing risk. Our financial performance and capital management strategy resulted in our TCE ratio reaching 8% and CET1 ratio at 10.2%, both record levels. Tangible book value per common share was $9.64 at March 31, an increase of $0.98 or 11.3% compared to March 31, 2023. AOCI reduced the tangible book value per common share by $0.70 as of quarter end compared to $0.87 for the year ago quarter. Let's now look at guidance for the second quarter and full year of 2024. We are maintaining our full year balance sheet guidance. We project period ending loans to grow mid-single digits on a full year basis as we increase our market share across our diverse geographic footprint. Total projected deposit balances are expected to grow low single digits on a year-over-year spot basis. Overall, our projected full year income statement guide is consistent with last quarter, with some additional thoughts on where we expect to land within the provided ranges. Our projected full year net interest income is still expected to be between $1.295 billion and $1.345 billion, assuming 225 basis point rate cuts occurring in the latter half of 2024. Our current expectation is to be in the lower half of the full year guide, given those two rate cuts, but where we ultimately end up in the range may change due to the fluidity of the rate environment and the number and timing of interest rate cuts that actually occur. Second quarter net interest income is projected between $315 million and $325 million. The non-interest income full year guide remains between $325 million and $345 million. However, given the strong momentum in the first quarter, we anticipate being in the upper half of that range. The second quarter non-interest income guide is between $80 million and $85 million. Full year guidance for non-interest expense is expected to be between $895 million and $915 million, with the second quarter non-interest expense expected to be between $220 million and $230 million. Full year provision guidance is $80 million to $100 million and is dependent on net loan growth and charge-off activity. Lastly, the full year effective tax rate should be between 21% and 22%, which does not assume any investment tax credit activity that may occur. With that, I will turn the call back to Vince.

FNB had a good start to the year. And we are optimistic that as we enter the second half of the year, we have the potential to return to positive operating leverage and benefit from a more favorable interest rate environment as well as a growing pipeline for loans and deposits. Our award-winning client experience is shaped by our digital technology and eStore. And we are proud to appear among some of the nation's largest banks as a finalist for a Fintech award for innovation and customer experience. Our strategy is consistently supported by third-party recognition. In fact, we received approximately 30 awards for our client service, financial performance and culture during the first quarter alone, with multiple awards received in 2024 for small business and middle market excellence. These select examples of FNB's third-party recognition highlight the strength of our business model and financial achievements which led to FNB being named by S&P Global Market Intelligence as one of the top 50 performing U.S. public banks. The ongoing recognition that our company receives is made possible by our engaged teams. We provide an environment where everyone has an opportunity to excel. And as a result, FNB is a top workplace in the U.S.A. for the fourth consecutive year based upon employee feedback. Our employees' dedication enables us to serve all of our stakeholders and positions FNB for continued success. I want to thank the team for their outstanding efforts in the first quarter given the difficult operating environment, and I look forward to working together to build on our momentum throughout the year.

And our first question today comes from Frank Schiraldi from Piper Sandler. Please go ahead with your question.

Good morning. Regarding the net interest income guidance and the loan-to-deposit ratio, I recall that you previously mentioned taking certain actions as you approach a 95% to 96% loan-to-deposit ratio to avoid reaching 100%. I understand there’s some seasonal variation in deposits, but I’m interested in what actions you might consider. I know there was the indirect auto sale which seemed to help. Could you elaborate on what other potential actions you might take? Also, could you remind us of the impact of a 25 basis point cut in interest rates? Thank you.

I would say on the loan-to-deposit ratio, Frank, we've historically talked about 97% as kind of a level where we've taken action. The action was leveraging the franchise we have to generate deposits. So the last time that happened, we generated close to $1 billion in CDs to bring it back down into the kind of balanced range. You know, 100% is there as a line, but 97% is a line that we would kind of manage down once we get close to it. And there are a lot of things we can do. As you know, we have a big focus on generating demand deposits throughout the company, our traditional commercial businesses, treasury management, small business; it’s a focus that has always been present. Generating additional deposits, bringing in new households and new customers is a key part of it. Additionally, adjusting our pricing strategy midyear last year helped create more saleable products out of our originations than we had before. Now we're up in the mid-40s for saleable percentage compared to the low 20s previously. That's another lever we have. In the indirect business, while we did a sale, we also have a lever there as far as how much we want to grow at a given time depending on what's available on the balance sheet.

There are a whole list of things that we look at both asset and liability. So Vince mentioned many of them. I think our pipeline for new production is pretty strong from a deposit perspective. I don't think that we're worried about that. So obviously, in the event that we need to generate deposits, the pricing mechanisms are there, but we prefer to grow organically and try to bring in a balanced mix of deposits that are accretive. That is going very well for the company.

Great. Regarding the NII, it seems that you have one less rate cut factored into your expectations, but you're guiding towards the lower half of the previous range. Is that based on your position in the first quarter and the trends moving forward? I assume you might still gain a bit from having fewer rate cuts in your guidance. I'm just curious about what drives that decision.

You answered it pretty well, Frank. The key drivers in our guidance from January had three cuts, one of them was December. So December falls off, which doesn’t have much impact for the full year. The two cuts we have in the second half of the year are, in the short term, positive. We’re still in an asset-sensitive position. We’ve been organically moving back towards neutral. So in the short term, there is a benefit from having that cut. The guidance we adjusted in the first quarter placed us at the lower end of our range for net interest income. The timing of our seasonal deposits and average borrowers were a little higher, just potentially the timing of that. By the end of the quarter, we were back to flat, up a little bit. We’ll see, the interest environment is very fluid. There’s potential for us to beat that if the loan growth is stronger, that’s kind of what’s baked in there. There’s an opportunity for us to be above that. But just kind of where we sit, we thought it was appropriate to guide at the bottom of the range.

Right. Okay. So to confirm, the third rate cut late in the year really didn't affect the situation. Therefore, going from three to two rate cuts doesn't have an impact given the timing of those cuts?

Right.

Okay, great. Thank you.

Thanks. Good morning, everyone. I wanted to focus on the office loans. I appreciate the detailed information you provided. It seems that the delinquency and non-performing loans for the office loans decreased during the quarter. I’m curious if there were specific events that contributed to this improvement, such as sales. Additionally, I would like more details regarding the slight increase in the criticized portion of the office loans. Thank you.

Yes, Daniel, the slight increase was really one credit that we moved into that category. At this point, it's not a concern for us. It's a credit that is extended out already another five years. It was originally underwritten at a 52% LTV and it's fixed through a swap at 4.5%. They had one tenant move out. They're working on replacing that, but we felt it appropriate naturally to replace that in a rated credit situation. The LTV on it was, like I said, right at about 50% going into the thing. So that increased that 9% criticized to right around 11%. Regarding the portfolio, the office portfolio was down $37 million in exposure and down $15 million from a balance perspective. We have seen some loans pay off in that category as we're managing that book of business. And with the performance of it, where we sit today at those very low levels, we’ll continue to be aggressive around it and manage it appropriately.

Thank you for that insight. Vince, could you share some details about the swaps you have in place that will affect 2025? I'm interested in understanding the potential impact of their rolling off on the margin in that year.

There's $1 billion, $1.2 billion of swaps we have that will mature throughout '25. The $1 billion to be actually within '25 and those received rates are around 75 basis points to 1% currently. We put those on a while ago. Luckily, we didn't do a lot of it, but we had some of that we did put on. So that negative drag will come off really starting in January. There’s 250 that comes off in January. And then the rest of them by October, the rest of the $1 billion kind of rolls off. So that will be additive. I can’t do that math in my head, but that’ll be in next year.

Got it. Okay. So $250 million in January and then the last $1 billion in October. That's it for me. I appreciate the color. Thank you.

Hi, good morning. Thanks for the question. I was hoping to dig in a bit more into your fee guidance, how you notably took that to the upper half of the range. Just wondering which areas have been performing a bit better than maybe you had expected at this time last quarter. And where you see the greatest opportunities to continue to pick up some nice fee diversification and help with fee growth?

Yes, you are correct that diversification is key. Over the past decade, we have developed a broad range of fee-based businesses. I mentioned capital markets earlier; we established a debt capital markets platform to engage in bond economics for our larger clients. With the capital markets reopening, we experienced significant activity in the first quarter, benefiting from this business unit we built a few years back. Syndication activity varies, but our pipelines have increased by about 15%, and I anticipate more syndications as we approach the latter half of the year. Our robust derivatives program, featuring structuring teams in the market, provides clients with advice to manage interest rate risk, and this group performed well this quarter. Despite the current rate environment, they created valuable solutions for our clients during this volatile period. Regarding the mortgage company, we became more aggressive with pricing salable mortgage loans, sacrificing a bit of margin to enhance our off-balance-sheet position. This has significantly contributed to our volume, especially in attractive markets. While our legacy markets see limited inventory and action, we have observed increased activity in the Southeast and Mid-Atlantic regions. Additionally, the SBA had a strong quarter, with some loans yielding higher returns during their construction phases becoming salable, allowing us to realize gains. Our treasury management business has received numerous Greenwich Awards in recent years, particularly for small business and middle market segments. We're expanding this unit by adding personnel and enhancing our merchant services, which is also generating positive contributions. Our strategy is to replace traditional service fees like overdraft charges with higher-value offerings for customers. We're focusing on building our treasury management capabilities to support small businesses, of which we have about 90,000 to 100,000 in our portfolio. There’s a significant opportunity to deepen relationships through our eStore, and we are now working on creating a bundled product for small businesses that includes both treasury management and merchant services. These initiatives involve substantial effort, and we are confident that we can reach the upper end of our guidance range. The annualized figure for the first quarter, which is typically weaker than others, is around 350, and we are pleased with where we are this quarter. I apologize for the lengthy response.

No, I really appreciate all the color. Thank you so much. Maybe a last question for me, switching back to the balance sheet is on deposits. It seems like if I'm reading your prepared commentary correctly, some of the kind of qualification to NII to the lower half of the range has to do with what you're seeing on the deposit flow side. So can you remind me the seasonality you have with deposits? And is there any color you can provide as to the cadence of what you're thinking about in terms of customer deposit growth to get to that low single-digit range that you reiterated?

I think, first of all, there is an extreme amount of seasonality within the deposit portfolio. It’s kind of difficult to look at the first quarter and draw conclusions between the outflows and inflows recurring throughout the quarter. Really, it starts to build now. We’re beginning to see considerable inflows. The demand deposits were steady at about 29%, I think, right, on a quarter-over basis. Imagine that’s the core of our profitability. It’s basically maintaining those non-interest-bearing deposits. What’s happened over the last few quarters is we’ve seen some of the higher-priced deposit categories moving into CDs or moving into something with a little bit of term within the customer base. That’s eroded a little bit of the net interest income, right? We saw that happen. That’s not surprising; you can see it in the escalation of the data. I believe that over time, throughout this year, we should be able to manage the non-interest-bearing deposit balances in that range and grow the other categories without sacrificing margin because we’ve seen some lower pricing stick in the marketplace. We have to be as hot on the pricing. I think that should help us as we move through the rest of the year and the inflows that occur in many instances, even with the municipal deposits which is true for just about all of them. We don’t do those transactions with municipalities to just get balances. We have a rule here where we have to be the primary disbursement bank for those entities. What ends up happening is the increased activity with ACH activity and wire activity and the movement of increasing the amount of free balances grow to cover those services. So that’s part of what happens over the course of the next three quarters as well. Anyway, Vince, I don’t know if you want to add anything on the timing perspective.

We commented on it kind of troughs in mid-February and builds through October, November is kind of the cadence of that. That’s all I would add.

Thank you so much. I appreciate the color. I’ll step back.

Good morning, guys. Filling in for Russell Gunther. I just had a quick question with regard to your office portfolio. I appreciate the color in the deck. I was wondering if you could provide some additional detail on the geographic breakdown, including specific office exposure in your DC and Baltimore markets.

Yes. In terms of the exposure in DC, we have substantially one transaction in the DC market. We had a few on top of that over the last year. We’ve been able to move those off the balance sheet just in the normal course of refinance at other institutions. So we only have one transaction there, and it’s a $20 million loan. That’s a market that we felt was extremely overheated. So we were very cautious going into that market. We’re pleased with where we sit today with very little exposure there.

Hey, good morning. Just a couple, maybe, Gary, just one for you on the credit side. Just in terms of overall trends in criticized and classified levels, can you give any broad characterization of how trends went this quarter, just before we see the 10-Q filing, just on kind of how those trends were for the whole portfolio rather than just a specific bucket?

Yes. In terms of the criticized trends, they were up slightly, less than that, less than 7 or 8 credits in the criticized. We got a couple moved into the substandard. I touched on one of them earlier, Brian. Those credits basically were from just some slight softer performance. We’re very aggressive in moving those types of credits into a special mention category, which was primarily where the movement was. And we don’t have any concerns with any of those credits that moved into special mention from a loss perspective. Long-term customers, just a little softer performance. We build a little bit of reserve against that softer performance. We expect that to turn around over the next 6 to 12 to 18 months in terms of those particular movements.

And Brian, I have a tremendous amount of confidence in Gary and his team, I can tell you. As we look at the portfolio, Gary’s on top of the credits, his people are on top of the credit line and look at these credits and they downgrade them if it’s necessary very quickly. That’s different than what you’ll find in other companies. You’re going to see movement. I think it’s positive because it keeps us well reserved relative to risk. Over long periods of time, Gary has been in the seat for a long time, at least 15 years. Our delinquencies are surprisingly low at historical lows. The overall quality of the portfolio appears to be good. We are focusing on certain segments that we believe globally are soft. You've mentioned office. That’s one area we look at, we focused on. We have tremendous granularity and robust credit culture that encourages prompt action. I think that’s what you’re seeing. There was a slide we presented. Our charge-offs versus reserve build for us. We tend to be very early at reserving and then our charge-offs end up better than the peers. That’s a testament to Gary’s team and getting out early addressing situations helps you get out of trouble so that you’re not experiencing the charge-offs down the road. Waiting and not addressing issues creates a shortfall which exacerbates credit problems when you’re in a cycle.

No, I appreciate it. The numbers speak for themselves, Vince here and Gary; I mean, they’re great and even the criticized not being up much is testimony to the portfolio and the granularity. Just trying to stay in front of it if there’s things that are coming down the pipe. Gary, you mentioned that you’re stress testing. Was there anything specific you guys stress tested this quarter that you would call out? Or just in general, that you just continue to stress test the entire portfolio?

Yes. It's a general stress test of the entire portfolio on a loan level basis, Brian, so it is a deep dive every quarter that Tom Fisher and his team undertake. We review that every quarter. Updates are made on a monthly basis when necessary. It keeps us forward-looking from that perspective. I think it’s a best practice that we’ve put into place that has been very beneficial as we look forward through the economy and what we expect down the road.

Yes, the pipelines are up 15%, and the overall pipeline is up from the last quarter. Remember, we had a big quarter closing out in December of last year, so the fourth quarter of last year was solid from a production perspective. The pipelines are rebuilding, South Carolina is at their second highest level historically. There’s a lot of activity there. We’ve always got a nice pipeline that we call the capital region, which is a central part of the state. It has a tremendous pipeline, and we’ve seen some good activity in some of the rural Pennsylvania markets. The folks in State College, Tony Marfisi and his team are doing a terrific job. We’re seeing a lot of activity and good solid middle market C&I opportunities. I would expect us to continue to build the pipeline as we move through the year and businesses hopefully become more confident in the economy.

Got you. Okay. And the last one for me, and I’ll step back, was just the delay on your DDA levels. You're comfortable that you can maybe sustain this around the current level? What’s the outlook on the capital flexibility with kind of reaching a record level of TCE and CET1? Just kind of your thoughts on capital deployment here if it’s still just primarily organic growth?

Yes. I would say, I mean, on the capital front, we still like 10% as our CET1 target. We think that’s the right level, just given our risk profile of the balance sheet and the high level of capital generation that we’ve been producing. Looking at our guidance, the capital ratio is kind of gradually building from here between now and the end of the year. As you saw this quarter, we had a nice pickup in CET1 and TCE ratios. We commented in January that once the indirect sale cleared, that would be additive. It added about 10 basis points CET1 relative to the TCE ratio. We’ll build from there as we’ve been opportunistic in the past. We’ll look to do some buybacks. We have issuance of stock in the first quarter from normal incentive stuff. We could repurchase some of that and look to do some level of activity as we go through the year.

Given the profitability of the company, we have options, and we're building capital you go back pretty far, so 8% is a nice number for us. It’s a solid TCE ratio.

And ladies and gentlemen, with that being our last question, I'd like to turn the floor back over to Vince Delie for any closing remarks.

I just wanted to make one comment. There was a question earlier about the swaps we have rolling off next year. I mentioned kind of what we're receiving, we're paying 5.44% on that $1 billion. So just as far as the math, as you get into 2025, it's basically $250 million a quarter kind of sub-1% what we're receiving and we're paying around 5.44%. That will be a benefit next year starting in January. Just wanted to clarify that.

Thank you, everybody. Appreciate it. Appreciate the support from our shareholders. And again, very appreciative of our employees and the teams that we have and their desire to win. We have a great culture, a winning culture and people just want to do the best they can for their clients and compete. I think we've proven that we do that very effectively. Thank you. Thank you, everybody.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.