Release Date: January 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: The NIM expansion was really nice to see in the quarter. I wanted to start off on the loan yields. They were actually up quarter-over-quarter. Just wanted to make sure there wasn't any sort of onetime interest benefit in the quarter. And assuming not, how do you think about that loan yield going forward? A: Shalene Jacobson, CFO: We did have a small amount of nonaccrual interest that came back on, but it was less than $500,000, so it wouldn't have been real meaningful to the NIM. If the Fed keeps rates flat, we probably won't move our cost of deposits much. We have about $450 million of variable rate loans that will reprice during 2025, so we expect loan yields to continue to rise.
Q: Looking at the overall NIM, is the expectation that it can continue to expand from the fourth quarter level? A: Tyson Abston, CEO: Yes, we're modeling continued growth in our NIM throughout '25. We're not giving specific guidance, but we see expansion in our NIM in different rate environments, whether rates go up, down, or stay flat.
Q: Do you think we begin to see loans growing in the first quarter of 2025? Or is it going to take some time? A: Tyson Abston, CEO: We anticipate some loan growth, but we're not sure exactly how it will net out during the year. We have the capacity and liquidity to grow the loan book as we see quality opportunities, and we're more optimistic on loan growth in '25 than in the last two years.
Q: How does the loan-to-deposit ratio impact your view on deposit growth in the year ahead with the potential for loan growth to pick up? A: Tyson Abston, CEO: Focusing on deposit growth as a core strategy isn't our focus for '25, but we are always focused on building core deposit relationships. We generally open about 10,000 new checking accounts a year, which is a core driver of franchise value.
Q: Any color for us for the expense growth in 2025? A: Shalene Jacobson, CFO: We're expecting expenses to be up only about 1% or 2% next year. We're targeting a 2.5% expense growth relative to total assets, with some commercial loan officers built into our budget for 2025.
Q: On the M&A theme, what are your updated thoughts around consolidation in Texas? A: Tyson Abston, CEO: We're open to anything that makes sense for our shareholders long term. We're primarily focused on organic growth but are in a position to be acquisitive if the right opportunity comes along.
Q: Is there any reason to think that you would have any sort of provision expense in the near term? A: Shalene Jacobson, CFO: Our ACL model is based on qualitative factors and forward economic estimates. If the economy continues to improve, we may adjust those factors down and reduce our provision unless we grow significantly.
Q: How aggressive would you like to be with the buyback? A: Tyson Abston, CEO: We're willing to be more aggressive with the buyback. We see a disconnect between the intrinsic value of the bank and where we're trading, so we plan to be more aggressive in utilizing our buyback capacity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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