WEBVTT - BI Weekend: Deere, McDonalds Earnings 0:00:00.280 --> 0:00:11.440 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:11.520 --> 0:00:13.520 with Alex Steele and Paul Sweeney. 0:00:13.560 --> 0:00:16.759 The real app performance has been the US corporate high yield. 0:00:16.960 --> 0:00:18.079 Are the companies lean enough? 0:00:18.079 --> 0:00:19.320 Have they trimmed all the fats? 0:00:19.400 --> 0:00:22.560 The semiconductor business is a really cyclical. 0:00:22.160 --> 0:00:26.160 Business, breaking market headlines and corporate news from across the globe. 0:00:26.280 --> 0:00:28.800 Do investors like the M and A that we've seen? 0:00:29.080 --> 0:00:32.120 These are two big time blue chip companies. 0:00:32.440 --> 0:00:35.839 Window between the peak and cunt changing super. 0:00:35.520 --> 0:00:39.720 Fast Bloomberg Intelligence with Alex Steele and Paul Sweeney on 0:00:39.840 --> 0:00:41.440 Bloomberg Radio. 0:00:42.000 --> 0:00:44.400 I'm Alex Steele and I'm normal Linda filling in for 0:00:44.440 --> 0:00:45.080 Paul Sweeney. 0:00:45.120 --> 0:00:47.479 On today's Bloomberg Intelligence Show. We're going to dig inside 0:00:47.479 --> 0:00:50.360 the big business stories impacting Wall Street and the global markets. 0:00:50.479 --> 0:00:52.800 Each and every week we provide in depth research and 0:00:52.880 --> 0:00:54.880 data on some of the two thousand companies in one 0:00:54.960 --> 0:00:57.480 hundred and thirty industries our analysts cover worldwide. 0:00:57.560 --> 0:00:59.320 Today, we'll take a look at it TD Bank because 0:00:59.360 --> 0:01:01.080 exiting it's in Charles Schwab. 0:01:01.360 --> 0:01:03.720 Plus, we'll discuss why sales at the fast food giant 0:01:03.840 --> 0:01:05.720 McDonald's improved last quarter. 0:01:05.640 --> 0:01:07.200 But first we take a look at earnings from the 0:01:07.240 --> 0:01:08.720 farm machinery leader Deer. 0:01:09.080 --> 0:01:11.800 This week, Deer said that North American sales are expected 0:01:11.840 --> 0:01:14.440 to be down thirty percent this year for Maura. 0:01:14.240 --> 0:01:16.759 And Nora and I were joined by Christopher Chiolino, Bloomberg 0:01:16.800 --> 0:01:19.959 Intelligence Senior US machinery analyst, and we first asked Chris 0:01:19.959 --> 0:01:22.039 for his take on this week's earnings report. 0:01:22.240 --> 0:01:24.080 We knew going into the quarter that was going to 0:01:24.080 --> 0:01:27.160 be a pretty ugly print, but these results were really 0:01:27.640 --> 0:01:31.720 well below even some of the most bearish expectations. The 0:01:31.800 --> 0:01:36.840 company really continues to underproduce retail demand across the board 0:01:36.880 --> 0:01:38.959 to bring down some of the excess inventories that the 0:01:39.000 --> 0:01:42.640 industry has been plagued with. We also sounds like some 0:01:43.240 --> 0:01:45.920 products there were some timing issues, so products got pushed 0:01:45.959 --> 0:01:50.560 out to subsequent quarters, which which weighed on the one 0:01:50.640 --> 0:01:54.520 Q performance. Now, Deer did reaffirm its twenty twenty five 0:01:54.600 --> 0:01:57.480 net income outlook, and it certainly seems that we are 0:01:57.520 --> 0:01:59.760 approaching a cyclical trough this year. 0:02:00.480 --> 0:02:01.080 But just our. 0:02:01.000 --> 0:02:03.440 Concern lies that you know, earnings may not be fully 0:02:03.480 --> 0:02:06.280 de risked here. You continue to see further softness on 0:02:06.320 --> 0:02:10.880 the largeag side used equipment inventories remain somewhat of an overhang. 0:02:11.600 --> 0:02:13.720 Currency headwinds are going to be more pronounced in the 0:02:13.760 --> 0:02:16.960 back half, and really we still have this uncertainty around 0:02:17.000 --> 0:02:20.000 what the US trade policy is going to be and 0:02:19.520 --> 0:02:22.400 what and what those retaliatory actions are going to be 0:02:22.440 --> 0:02:22.760 as well. 0:02:22.800 --> 0:02:25.239 Well, I was going to say, if they sound relatively 0:02:25.280 --> 0:02:28.040 confident they'll be at trough, but then you add on tariffs, 0:02:28.040 --> 0:02:30.760 how well does that confidence hold up? 0:02:31.840 --> 0:02:34.119 Yeah, I mean that's the million dollar question, right, I mean, 0:02:34.200 --> 0:02:37.799 I would say that AG historically has had a tremendous 0:02:37.840 --> 0:02:41.840 amount of pricing power and deer in particular, this is 0:02:42.680 --> 0:02:45.480 a company in a market that even gets positive price 0:02:45.560 --> 0:02:48.919 in down markets. You know, this quarterly sales were down 0:02:48.919 --> 0:02:52.000 over thirty five percent, earnings down significantly, and we were 0:02:52.000 --> 0:02:55.440 still up on pricing. It will add costs, but they 0:02:55.480 --> 0:02:57.280 have a history and the track record of being able 0:02:57.280 --> 0:02:58.239 to pass those through. 0:02:59.120 --> 0:03:01.640 What has really been concern for investors out of this 0:03:01.720 --> 0:03:03.079 report as they're looking forward? 0:03:04.560 --> 0:03:07.480 Yeah, I think there's two big concerns here. One is, 0:03:07.840 --> 0:03:11.079 you know, the expectation is that yes, twenty five is 0:03:11.120 --> 0:03:12.960 trough and that we should start to see that this 0:03:13.040 --> 0:03:16.560 recovery build into twenty six. But I still think there's 0:03:16.560 --> 0:03:18.440 a lot of uncertainty out there as to what the 0:03:18.919 --> 0:03:23.799 recovery trajectory looks like, just given the uncertainty around trade 0:03:23.800 --> 0:03:26.200 and tariffs, you know, I think we're probably looking at 0:03:26.240 --> 0:03:29.119 a lower for longer type cycle. So maybe we don't 0:03:29.160 --> 0:03:32.840 get that typical acceleration in the first year after a 0:03:32.880 --> 0:03:35.760 cyclical trough. So I think investors are still trying to 0:03:35.840 --> 0:03:39.360 digest that. And then too, you know, the costs side 0:03:39.400 --> 0:03:41.840 of the equation. It certainly seems that costs are going 0:03:41.920 --> 0:03:43.920 to go up. How are they going to mitigate that 0:03:43.960 --> 0:03:46.520 through some of their you know, internal initiatives or even 0:03:46.640 --> 0:03:49.160 from shifting some production around with their footprint. 0:03:49.720 --> 0:03:52.400 I also am wondering where we are in terms of 0:03:52.800 --> 0:03:57.080 the cyclicality of equipment, Like are are farmers operating on 0:03:57.160 --> 0:03:58.960 older stuff that they're going to have to replace or 0:03:58.960 --> 0:04:01.440 did they already do that during the pandemic. So they're 0:04:01.480 --> 0:04:03.080 good for a while, and it's going to take like 0:04:03.200 --> 0:04:05.920 really new high tech products to get them to fork 0:04:05.960 --> 0:04:08.080 over that kind of cash. 0:04:08.160 --> 0:04:09.960 I think we're good for a little bit a little 0:04:09.960 --> 0:04:11.840 bit of time here. I mean, you have to remember, 0:04:12.000 --> 0:04:14.880 up we had you know, three four strong years of 0:04:14.920 --> 0:04:18.880 growth up to the twenty twenty three peak. Yes, twenty 0:04:18.880 --> 0:04:20.839 four was a down year. We were down, you know, 0:04:20.920 --> 0:04:24.680 fifteen sixteen percent in terms of units on high horsepower equipment. 0:04:25.279 --> 0:04:27.839 We're looking at somewhere of a twenty five to thirty 0:04:27.880 --> 0:04:31.400 percent decline in volumes this year. So that's going to 0:04:31.440 --> 0:04:34.839 put us, you know, att lows of you know, over 0:04:34.880 --> 0:04:37.400 the last two decades where we haven't seen before. So 0:04:38.120 --> 0:04:41.240 from these levels, we think there's probably limited downside risk. 0:04:41.320 --> 0:04:44.680 But you know, farmers still have the ability to you know, 0:04:44.760 --> 0:04:47.400 push out some of these replacement purchases at least for 0:04:47.440 --> 0:04:49.039 another few years, we think. 0:04:49.120 --> 0:04:53.000 Our Thanks to Christopherciellino, Bloomberg Intelligence Senior US Machinery analyst, 0:04:53.279 --> 0:04:54.080 we moved next. 0:04:53.880 --> 0:04:56.000 To the energy sector. This week's shares of the British 0:04:56.000 --> 0:04:58.640 oil giant BP surge the most is twenty twenty. 0:04:59.000 --> 0:05:01.839 This came after news of the activist investor Elliott Investment 0:05:01.880 --> 0:05:03.800 Management said it built a stake in BP. 0:05:04.320 --> 0:05:06.520 And this comes as Elliott seeks to end years of 0:05:06.600 --> 0:05:09.880 underperformance at BP by pushing for significant change for more. 0:05:09.920 --> 0:05:12.520 Alex and I were joined by Will Harris, Bloomberg Intelligence 0:05:12.560 --> 0:05:13.599 Global Energy analysts. 0:05:13.680 --> 0:05:16.240 We first asked Will what all of the problems are 0:05:16.279 --> 0:05:17.479 that Elliott wants to fix. 0:05:17.920 --> 0:05:21.120 I think there's too many to really go through, given 0:05:21.160 --> 0:05:23.720 there our time constraints here, but I think they can 0:05:23.839 --> 0:05:27.839 really boil down to a significant moment, which was the 0:05:27.880 --> 0:05:32.320 original rollout of their twenty twenty energy transition strategy. This 0:05:32.400 --> 0:05:36.159 is the quickest, most risky energy transition of all the 0:05:36.240 --> 0:05:40.400 energy global energy majors, and it sort of it depicted 0:05:40.680 --> 0:05:44.599 a pretty quick drop in their upstream hydrocarbon production, a 0:05:44.640 --> 0:05:50.080 really rapid rollout of their renewables portfolio. And obviously this 0:05:50.160 --> 0:05:54.880 has not been taken well by the market. It's undermined 0:05:54.920 --> 0:05:58.719 the sustainability of their distribution, it's hit their returns, and 0:05:58.839 --> 0:06:01.800 especially now when we are seeing a sort of backlash 0:06:01.880 --> 0:06:06.200 against ESG, we're seeing a slowing of energy transition paces 0:06:06.240 --> 0:06:10.040 across this sector. It hasn't gone down well for BP's 0:06:10.440 --> 0:06:12.719 financial performance or share evaluation. 0:06:13.080 --> 0:06:15.560 So well, if we go back to that moment in 0:06:15.600 --> 0:06:18.280 twenty twenty, and I was there when they laid out 0:06:18.279 --> 0:06:21.240 this new strategy. Was that a bad strategy or is 0:06:21.279 --> 0:06:23.479 it bad timing or some combination. 0:06:25.080 --> 0:06:27.440 There is some part of me that has a little 0:06:27.440 --> 0:06:30.160 bit of sympathy for BP because because I think they 0:06:30.160 --> 0:06:32.560 were trying to do the right thing, and then of 0:06:32.800 --> 0:06:35.680 course Russia's invasion of Ukraine sort of up ended the 0:06:35.680 --> 0:06:42.360 global energy sector pretty materially. I also think that they were, yes, 0:06:42.680 --> 0:06:45.480 trying to do the right thing, but doing the right 0:06:45.520 --> 0:06:49.680 thing isn't isn't always what's best for investors, And I 0:06:49.680 --> 0:06:52.840 think just comparing it to some of their their peers, 0:06:52.880 --> 0:06:56.320 particularly Shell, which has taken a much much more capital 0:06:56.360 --> 0:06:59.719 discipline approach, they have a very high bar for acquisitions. 0:07:00.040 --> 0:07:04.720 They've been very prudent in their energy transition rollout, and 0:07:05.000 --> 0:07:08.520 we can just see in the financial performance and how 0:07:08.560 --> 0:07:10.720 the market is valuing them, which has been the more 0:07:10.720 --> 0:07:13.520 successful strategy over the last four or five years. 0:07:13.920 --> 0:07:18.080 As we think about BP in particular, what really can 0:07:18.120 --> 0:07:20.840 they do in this moment? What are investors really looking for? 0:07:21.800 --> 0:07:25.880 So I think I think I'll touch on what Elliott 0:07:26.600 --> 0:07:28.400 is I think going to try and do. There's four 0:07:28.480 --> 0:07:30.520 levers that I think Elliott might try and pull here, 0:07:30.760 --> 0:07:33.800 and the first is transition business spin off, so this 0:07:34.600 --> 0:07:37.320 can remove debt and capital intensity of these businesses off 0:07:37.360 --> 0:07:41.080 the balance sheet. We think they'll push to focus on 0:07:41.200 --> 0:07:44.680 growing their oil production. More, the current oil production is 0:07:44.680 --> 0:07:47.440 supposed to be declining about ten percent to twenty thirty. 0:07:47.760 --> 0:07:51.240 We can hope to see that flatten or increase over 0:07:51.240 --> 0:07:54.120 that same time period, and I think there could be 0:07:54.160 --> 0:07:58.040 a push for a board change. The chairman of the board, 0:07:58.080 --> 0:08:03.080 helgat Lund, has overseen VP since twenty seventeen and compared 0:08:03.120 --> 0:08:07.080 to peers, there's been pretty underwhelming performance there and then 0:08:07.120 --> 0:08:10.720 finally a primary US listing. I think that this could 0:08:10.760 --> 0:08:12.960 be a big game changer. It has not only been 0:08:13.000 --> 0:08:17.800 discussed at BP, but amongst the other European majors. It's 0:08:17.840 --> 0:08:21.240 seen as a major hurdle to starting to close that 0:08:21.360 --> 0:08:24.520 valuation gap with Chevron and exon our thanks. 0:08:24.280 --> 0:08:27.520 To Will Harris, Bloomberg Intelligence Global Energy Analysts, we. 0:08:27.520 --> 0:08:30.440 Move next to the leisure sector. Bloomberg Intelligence recently gave 0:08:30.440 --> 0:08:33.640 his twenty twenty five outlook on cruises and theme parks. 0:08:33.320 --> 0:08:35.760 And for more. We were joined by Jody Lori, Bloomberg 0:08:35.760 --> 0:08:37.319 Intelligence Senior Credit Analysts. 0:08:37.360 --> 0:08:39.560 We first asked Jody what she expects to perform well 0:08:39.640 --> 0:08:40.720 for cruise lines this year. 0:08:41.120 --> 0:08:44.160 I will say that the most fascinating thing is the 0:08:44.200 --> 0:08:47.880 momentum continues for the cruise lines. The booking rates continue 0:08:47.920 --> 0:08:50.480 to be very high, and we're seeing that Royal Caribbean, 0:08:50.480 --> 0:08:53.000 we're seeing that Carnival, and that's what management is communicating. 0:08:53.600 --> 0:08:55.959 Whether or not that continues into twenty six is the 0:08:56.040 --> 0:08:58.679 question that we're grappling with. But at least for twenty five, 0:08:58.880 --> 0:09:00.439 it's very very positive moment. 0:09:00.720 --> 0:09:03.160 Jody, it seems like demand out there for experiences is 0:09:03.160 --> 0:09:05.880 still very strong. How about for a family that's thinking 0:09:05.920 --> 0:09:09.320 about a theme park trip versus maybe a cruise, how 0:09:09.360 --> 0:09:10.800 does that kind of shake out? 0:09:12.360 --> 0:09:15.600 Yeah, So, Paul, I think you hit on the major 0:09:15.720 --> 0:09:19.480 issue is that we're seeing these sort of two sets 0:09:19.480 --> 0:09:21.880 of consumers, right the lower end consumers that are pairing 0:09:21.920 --> 0:09:25.640 back or they're still doing experiences, but maybe not as 0:09:25.800 --> 0:09:27.600 lavish an experience. And then you have the high end 0:09:27.600 --> 0:09:31.000 consumers that are still doing very well. High end hotels 0:09:31.040 --> 0:09:34.080 are doing well, high end cruise lines are doing well, 0:09:34.280 --> 0:09:36.680 anything that's higher end. If you put that in the 0:09:36.720 --> 0:09:39.240 perspective of theme parks, one thing that we saw in 0:09:39.280 --> 0:09:41.720 our survey that we ran in November is that for 0:09:41.800 --> 0:09:45.839 theme park vacations, the average consumers income level is a 0:09:45.880 --> 0:09:48.640 little bit lower than the average consumer that's planning to 0:09:48.720 --> 0:09:51.760 do a cruise vacation this year. So I think that's 0:09:51.760 --> 0:09:54.640 pretty telling when you think about the cost of admission, 0:09:54.640 --> 0:09:58.040 when you think about who the target audiences and what's 0:09:58.080 --> 0:10:02.360 going to continue the cash flow generation for the cruise 0:10:02.360 --> 0:10:04.520 lines versus what might be a little bit of a 0:10:04.600 --> 0:10:06.080 sticking point for the theme parks. 0:10:06.640 --> 0:10:06.960 Jody. 0:10:06.960 --> 0:10:09.079 One of the earliest memories I have of the very 0:10:09.120 --> 0:10:12.439 earliest days of the pandemic was these cruise lines rushing 0:10:12.520 --> 0:10:15.000 out to the bond market. They're raise cash because they 0:10:15.080 --> 0:10:18.560 knew that their business was in for a tough haul there. 0:10:18.960 --> 0:10:21.560 How are the balance sheets of some of these big 0:10:21.600 --> 0:10:24.840 cruise companies theme park companies, How are the balance sheets 0:10:24.880 --> 0:10:25.599 these days? 0:10:26.280 --> 0:10:28.199 So we're going to break it out to the cruise 0:10:28.440 --> 0:10:31.000 versus the theme parks in terms of their balance sheets. 0:10:31.040 --> 0:10:33.559 So for the cruise lines, you know, particularly Carnival and 0:10:33.679 --> 0:10:36.760 Royal Caribbean, they are dead set on getting to investment 0:10:36.760 --> 0:10:39.640 grade level metrics. Norwegian says that they want to as well, 0:10:39.640 --> 0:10:43.200 They've never been investment grade rated. But Carnival and Royal 0:10:43.240 --> 0:10:46.920 Caribbean are really set on keeping leverage very low. They're 0:10:46.920 --> 0:10:49.839 focused on that. Carnival's targeting three point five times by 0:10:49.840 --> 0:10:53.480 the end of next year, so twenty twenty six, Royal 0:10:53.559 --> 0:10:57.440 is targeting below three times this year. What we've modeled 0:10:57.480 --> 0:11:00.280 out is that they can both get there and their 0:11:00.320 --> 0:11:03.080 relatively comfortably. I mean, they've been pretty aggressive in terms 0:11:03.080 --> 0:11:05.800 of de leveraging bringing down the debt load. Viking is 0:11:05.840 --> 0:11:08.120 pretty happy where it is, so we don't see them 0:11:08.240 --> 0:11:10.320 improving much. But they also have a low leverage. Now, 0:11:10.360 --> 0:11:13.199 if you think of the theme parks, they repaid their debt. 0:11:13.240 --> 0:11:15.439 They had this gravy of a year in twenty twenty two, 0:11:15.480 --> 0:11:18.520 everybody rushed to theme parks, regional theme parks. Since then, 0:11:18.559 --> 0:11:22.240 it hasn't been as exciting twenty twenty two to twenty three, 0:11:22.440 --> 0:11:26.199 I should say, And what we're seeing there is a 0:11:26.240 --> 0:11:28.920 little bit more problem now. SeaWorld really doesn't have that 0:11:28.960 --> 0:11:31.320 much debt outstanding. So where we're concerned there is that 0:11:31.320 --> 0:11:34.120 they start getting creative with their balance sheet again, particularly 0:11:34.160 --> 0:11:37.160 if they're finding issues in the business as a whole 0:11:37.160 --> 0:11:39.400 and they need to propel sort of. You know, the 0:11:39.400 --> 0:11:42.720 equity value improving for six Flags. You know, they had 0:11:42.720 --> 0:11:45.520 the merger between six Fags and cedar Fare and that 0:11:45.840 --> 0:11:49.400 is resulting in much higher leverage. Management already bumped out 0:11:49.400 --> 0:11:52.000 the target of when they're bringing down leverage, and we 0:11:52.040 --> 0:11:54.360 already think that it might be a little bit harder 0:11:54.400 --> 0:11:56.800 to achieve even pushing it out by a year and 0:11:56.840 --> 0:11:57.199 a half. 0:11:57.640 --> 0:12:01.280 Our thanks to Jody Laurie Bloomberg Intelligency, your credit analysts. 0:12:00.840 --> 0:12:02.560 All right, coming to have a conversation with the chief 0:12:02.559 --> 0:12:05.199 financial officer over at Huntington National Bank on the firm's 0:12:05.200 --> 0:12:06.720 outlook and opportunities ahead. 0:12:06.840 --> 0:12:09.840 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:09.880 --> 0:12:12.480 depth research and data on two thousand companies and one 0:12:12.559 --> 0:12:15.640 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:15.679 --> 0:12:18.480 b I go on the terminal. I'm Normal Linda, and 0:12:18.520 --> 0:12:19.480 I'm Alex Steele, and. 0:12:19.480 --> 0:12:20.520 This is Bloomberg. 0:12:24.800 --> 0:12:28.600 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:28.679 --> 0:12:32.080 weekdays at ten am Eastern on Apple CarPlay and Android 0:12:32.080 --> 0:12:35.000 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:35.120 --> 0:12:38.880 you get your podcasts, or watch us live on YouTube. 0:12:39.280 --> 0:12:41.640 I'm Alex Steele and I'm Normal Linda. Filling in for 0:12:41.640 --> 0:12:42.280 Paul Sweeney. 0:12:42.600 --> 0:12:45.680 We move next to the banking sector and Huntington National Bank. 0:12:45.800 --> 0:12:47.760 Co host Paul Sweeney and I were recently joined by 0:12:47.880 --> 0:12:51.000 Zach Wasserman, chief financial officer at Huntington National Bank. 0:12:51.240 --> 0:12:53.400 He discussed where the firm's focus has been and how 0:12:53.440 --> 0:12:56.440 it's never been better positioned to benefit from significant organic 0:12:56.480 --> 0:12:57.480 opportunities ahead. 0:12:57.640 --> 0:13:00.000 And Zach began this portion of the conversation by discussing 0:13:00.080 --> 0:13:02.400 how the bank is now trying to expand beyond lending 0:13:02.440 --> 0:13:03.360 to small businesses. 0:13:03.800 --> 0:13:07.319 The business has been performing exceptionally well recently, and one 0:13:07.320 --> 0:13:11.040 of the reasons is because we're driving expansion both geographically 0:13:11.200 --> 0:13:13.840 and in our commercial business, expanding in a number of 0:13:14.160 --> 0:13:17.920 special divertical areas and national business lines. Just this year, 0:13:17.920 --> 0:13:21.720 we've launched into three new states, North Carolina, South Carolina, 0:13:21.720 --> 0:13:25.480 and Texas, and we've also established eight new special verticals 0:13:25.480 --> 0:13:28.800 that are national, for example of funds financed vertical that's 0:13:28.840 --> 0:13:33.280 supporting private equity clients, one that's focused on the mortgage ecosystem, 0:13:33.320 --> 0:13:36.679 and other national commercial areas. 0:13:37.080 --> 0:13:39.400 Talk to us about loan growth. What I do know 0:13:39.440 --> 0:13:41.800 about the bank business. That's an important driver. So talk to. 0:13:41.720 --> 0:13:44.240 Shot loan growth, where it's coming from, where you're seeing it, 0:13:44.240 --> 0:13:45.559 and is it kind of in line. 0:13:45.360 --> 0:13:47.240 With what you were expecting You know, we've actually had 0:13:47.400 --> 0:13:49.560 very strong loan growth of the last two years. If 0:13:49.600 --> 0:13:51.640 you take a step back, much of the industry has 0:13:51.679 --> 0:13:55.720 been in a pretty neutral position, not actually growing. Huntington 0:13:55.760 --> 0:13:58.559 has grown outperformed that by about ten percentage points. And 0:13:59.040 --> 0:14:01.480 for us, the growth is coming from both our core business, 0:14:01.960 --> 0:14:06.080 which is consumer small business and then mid corporate typically 0:14:06.080 --> 0:14:09.599 private commercial clients, and then also these new initiatives that 0:14:09.640 --> 0:14:12.599 I just mentioned before launching into three New states, a 0:14:12.679 --> 0:14:14.200 number of specialty businesses. 0:14:14.240 --> 0:14:16.199 So we're seeing a nice breadth of growth. 0:14:16.240 --> 0:14:20.640 Actually, one thing that's actually, you know, a nice indication 0:14:20.680 --> 0:14:23.760 of the economic strength is we're seeing strong demand from 0:14:23.800 --> 0:14:27.000 small businesses from our regional banking business, typically in the 0:14:27.080 --> 0:14:29.600 kind of smaller middle market client sets. So it's a 0:14:29.720 --> 0:14:31.480 it's been a healthy dynamic we've been. 0:14:31.360 --> 0:14:35.160 Seeing before you were in this position. You also was 0:14:35.200 --> 0:14:37.800 chief financial officer to Visa, and I know that Huntington 0:14:37.880 --> 0:14:40.240 is trying to get into the payments business in a 0:14:40.240 --> 0:14:44.200 particular way too. What's the what's the market for that 0:14:44.320 --> 0:14:46.080 and how do you guys play and compete in that? 0:14:46.680 --> 0:14:49.400 You know, the market for payments is incredibly broad, and 0:14:49.760 --> 0:14:51.040 if you think if you took a step back. 0:14:50.880 --> 0:14:53.440 To categorize it actually, like is that zell or like 0:14:53.440 --> 0:14:53.920 what is that? 0:14:54.040 --> 0:14:55.840 You know, it is so broad, the one that really 0:14:55.880 --> 0:14:58.800 needs to zoom into it. You know, we have a 0:14:58.880 --> 0:15:02.640 number of card based payment products, so think consumer cards, 0:15:03.080 --> 0:15:07.000 commercial cards, but also importantly treasury management, and that's really 0:15:07.000 --> 0:15:09.600 the biggest driver right now. We're seeing in payments growth 0:15:10.040 --> 0:15:14.080 supporting commercial clients with the ability to accept payments and 0:15:14.120 --> 0:15:18.040 then make payments in essentially every form you can imagine, Alex, 0:15:18.080 --> 0:15:21.040 so big big growth driver there. One of the things 0:15:21.080 --> 0:15:24.760 that we've done recently is invest to expand our merchant 0:15:24.760 --> 0:15:30.040 acquisition capability. Merchant acquiring is when a company accepts payments electronically, 0:15:30.920 --> 0:15:34.320 and it's often the lynchpin of their business. Saw the 0:15:34.360 --> 0:15:36.920 lifeblood of the company is how they accept payments. So 0:15:36.960 --> 0:15:40.240 we launched a merchant acquiring business just in October and 0:15:40.280 --> 0:15:42.720 it's been going incredibly well. So, you know, kind of 0:15:42.960 --> 0:15:45.720 almost every area there's growth in payments for sure, but 0:15:46.040 --> 0:15:49.240 for us, treasury management and commercial payments in particular as 0:15:49.280 --> 0:15:50.120 a major growth driver. 0:15:50.560 --> 0:15:53.600 Talk to us about your long portfolio, specifically your exposure to. 0:15:54.240 --> 0:15:58.560 Office, yeah, real estate, you know, office and commercial real 0:15:58.640 --> 0:16:00.000 estate generally for Huntington is. 0:16:00.120 --> 0:16:01.479 A very small exposure. 0:16:01.520 --> 0:16:06.640 Actually, typically for large regional banks, the average commercial real 0:16:06.720 --> 0:16:09.160 estate within the loan portfolio might be fifteen or twenty 0:16:09.160 --> 0:16:10.240 percent of the loan book. 0:16:10.440 --> 0:16:12.000 For us, it's nine percent, so. 0:16:12.160 --> 0:16:14.720 We're relatively smaller and an office is only one percent 0:16:14.720 --> 0:16:16.360 of that nine To give you a sense. With that 0:16:16.480 --> 0:16:19.160 being said, you know what we're seeing in that commercial 0:16:19.160 --> 0:16:21.720 real estate environment is this is gonna this is gonna 0:16:21.720 --> 0:16:22.400 be a situation that. 0:16:22.360 --> 0:16:24.040 Plays out over multiple years. 0:16:24.560 --> 0:16:29.400 Thankfully, we are seeing a fairly orderly process of refinancing 0:16:29.960 --> 0:16:34.760 and generally seeing pretty sound ability for our commercial real 0:16:34.840 --> 0:16:40.560 estate developers to maintain their financing and to successfully. 0:16:40.400 --> 0:16:43.920 Roll through maturities. But it'll take a while to run through. 0:16:44.160 --> 0:16:47.360 To give you a sense, something like twenty percent of 0:16:47.400 --> 0:16:50.440 the portfolio matures any given year, so this will be 0:16:50.480 --> 0:16:52.480 you know, on average, it'll take five years to really 0:16:52.520 --> 0:16:54.440 roll through. So I think that's a kind of an 0:16:54.440 --> 0:16:57.040 industry dynamic we're seeing, which this is a dynamic that 0:16:57.080 --> 0:16:58.480 will play out over quite sometime. 0:16:59.240 --> 0:17:01.760 What part of this is encompasses any kind of m 0:17:01.800 --> 0:17:04.400 and as is organic yees. 0:17:04.480 --> 0:17:07.560 You know, for us we're focused on organic growth m 0:17:07.600 --> 0:17:10.520 and A. It can be a tool for banks to grow. 0:17:10.600 --> 0:17:12.879 Certainly we've seen m and A in the industry over time. 0:17:13.200 --> 0:17:16.080 With that being said, it can also be distracting to 0:17:16.240 --> 0:17:19.160 the progress that the company is making on organic growth. 0:17:19.200 --> 0:17:22.600 And for US Alex, we're seeing so much progress on 0:17:22.640 --> 0:17:27.760 our organic growth initiatives, both acquiring customers but also importantly 0:17:28.160 --> 0:17:30.480 putting more and more focus around the value added fee 0:17:30.520 --> 0:17:33.800 services that come around that come to them, namely payments, 0:17:33.840 --> 0:17:36.600 wealth management, and capital markets, and so, you know, just 0:17:36.680 --> 0:17:40.080 the customer acquisition. We're seeing the success in those businesses. 0:17:40.920 --> 0:17:42.720 That's where our focus is. To give you a sense 0:17:42.760 --> 0:17:44.800 in the fourth quarter just that we just closed a 0:17:44.880 --> 0:17:47.280 ten percent year of year revenue growth, really driven by 0:17:47.320 --> 0:17:48.480 those organic strategies. 0:17:49.040 --> 0:17:51.440 What's a typical corporate customer for you guys? 0:17:51.800 --> 0:17:55.879 You know, often, Paul, they are middle market companies that 0:17:55.960 --> 0:17:56.600 are private. 0:17:56.880 --> 0:17:59.200 That's the most typical company. 0:17:59.040 --> 0:17:59.240 You know. 0:18:00.040 --> 0:18:03.360 You know, the regional banks serve a really important niche 0:18:03.359 --> 0:18:06.280 within the overall US economy because you know, the client 0:18:06.359 --> 0:18:10.440 set that we are servicing are typically you know, focused 0:18:10.480 --> 0:18:11.520 on their local market. 0:18:11.560 --> 0:18:13.520 They want a bank with a company that. 0:18:13.520 --> 0:18:17.639 Is deeply embedded in the community and knows them personally. 0:18:17.920 --> 0:18:21.080 But importantly can bring down to them the power of 0:18:21.119 --> 0:18:24.840 a large bank in terms of specialized capabilities. It's actually 0:18:25.119 --> 0:18:27.000 one of the reasons why we've been so successful in 0:18:27.000 --> 0:18:28.320 these new geographic launches. 0:18:29.760 --> 0:18:30.760 How about private credit? 0:18:30.800 --> 0:18:32.840 Is that a competitor to you? 0:18:32.840 --> 0:18:34.600 You know, it's funny we get this question all the time, 0:18:34.880 --> 0:18:36.920 and the answer generally is no, okay. 0:18:37.200 --> 0:18:38.840 You know, private credit. 0:18:38.920 --> 0:18:42.320 Is looking for the sort of you know, the kind 0:18:42.359 --> 0:18:45.639 of loans that they finance are typically where there's more leverage, 0:18:45.920 --> 0:18:48.720 where there's more yield to be had. Because of the risk, 0:18:49.080 --> 0:18:52.240 that's not the core client for Huntington, and so our 0:18:52.440 --> 0:18:55.280 head of Commercial Business mentioned that only in two cases 0:18:55.359 --> 0:18:58.480 last year across our entire business did we see commercial 0:18:58.520 --> 0:19:01.480 borrowers actually go to a price a credit facility away 0:19:01.480 --> 0:19:03.160 from our own lending facility. 0:19:03.600 --> 0:19:06.560 Art thanks to Zach Wasserman, chief financial officer at Huntington 0:19:06.680 --> 0:19:07.280 National Bank. 0:19:07.520 --> 0:19:09.960 I'm staying in finance. This week, Canada's TD Banks that 0:19:10.000 --> 0:19:12.399 it's offloading its entire ten point one percent stake in 0:19:12.440 --> 0:19:14.720 the financial services firm Charles Schwab. 0:19:14.520 --> 0:19:17.280 And this comes as part of a corporate overhaul. In October, 0:19:17.280 --> 0:19:19.560 TD Bank reached the settlement with the US Department of 0:19:19.680 --> 0:19:22.400 Justice and bank regulators over its failure to catch money 0:19:22.440 --> 0:19:24.560 laundering at several American branches. 0:19:24.760 --> 0:19:26.920 For Moura and Nora and I were joined by Paul Goldberg, 0:19:26.920 --> 0:19:28.840 Bloomberg Intelligence senior equity analyst. 0:19:29.040 --> 0:19:31.480