Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide an update on how you're thinking about the core margin and the total margin path for the rest of the year?
A: James Reske, CFO, noted that despite previous forecasts of stability, the margin has compressed by about 10 basis points each quarter. The current forecast suggests stability going forward, assuming a falling rate environment with the Fed funds projected to drop to 4.3% by year-end. The forecast includes about four rate cuts. If rates remain higher for longer, it could be even more beneficial.
Q: What are your thoughts on accretion, specifically the contribution in the first quarter and expectations moving forward?
A: James Reske explained that discount accretion from purchase accounting was seven basis points in the quarter and is expected to fade by about one basis point every quarter.
Q: Could you discuss the loan growth outlook, particularly how you're balancing commercial and consumer lending?
A: Ryan Thomas, IR Officer, indicated that while the bank aims for mid-single-digit growth, it's primarily driven by commercial lending. Consumer lending might provide a tailwind, but significant growth would require competitive pricing adjustments, especially in the auto loan sector.
Q: How are you managing the challenges associated with deposit costs and growth in relation to loan growth?
A: James Reske mentioned that the bank has been adjusting deposit rates to align with market conditions and manage growth effectively. The strategy includes being competitive but not leading the market in deposit rates, aiming to balance deposit inflows with loan outflows.
Q: Can you provide insights into the current pipeline for loans and where you see the best opportunities?
A: James Reske highlighted that while consumer loan demand is moderated, there is a healthy pipeline in SBA and some C&I sectors. Commercial real estate demand is subdued, but there are opportunities for growth in specific deals.
Q: What is the strategy around managing the securities portfolio and liquidity on the balance sheet?
A: James Reske stated that the bank prefers loan growth over securities investments but will use some excess liquidity for securities to maintain balance sheet flexibility. The focus remains on deploying resources in a way that supports sustainable growth and meets regulatory requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
