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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows mixed results: strong NIM expansion and capital position are positive, but deposit decreases and increased NPAs are concerning. The Q&A reveals uncertainty in loan growth and fee income, with management unable to provide clear timelines for resolving nonaccrual loans. The potential for a share buyback is positive but not yet implemented. Overall, the mixed signals and lack of strong catalysts suggest a neutral stock price movement.
GAAP net income $19,200,000, up from previous year, included non-core items such as a $155,000 gain on former bank premises and a $630,000 gain on extinguishment of subordinated debt.
EPS available to common shareholders $0.65, consistent with previous year, excluding non-core items.
Core net income $19,300,000, up from previous year, reflecting strong expense management and solid margin expansion.
Total loans held for investment Decreased by $480,000, remaining flat on a linked quarter basis due to elevated paydowns and payoffs.
Total deposits Decreased by $53,200,000, primarily due to net decreases in non-interest bearing deposits, driven by customer withdrawals.
Net interest margin (NIM) Expanded by 7 basis points from 3.61% to 3.68%, driven by improved funding costs and disciplined pricing on new loan production.
Weighted average cost of deposits 2.69%, down 12 basis points from the linked quarter, with March showing further improvement at 2.66%.
Core non-interest expense $49,700,000, increased by approximately $700,000 linked quarter due to merit impacts and FICA and bonus accrual resets.
Non-interest income Slightly better than expected, driven by strong SBIC income and SBA loan production and sales.
Non-performing assets (NPAs) Increased by 27 basis points from 0.42% to 0.69%, driven by two C&I relationships totaling $8,400,000.
Annualized net charge-offs Decreased from 11 basis points in Q4 to 7 basis points in Q1.
Tangible common equity (TCE) Exceeds 8%, reflecting a continued build in capital levels.
Total risk-based capital (TRBC) ratio Exceeds 13%, indicating strong capital position.
Acquisition-related expenses Included $679,000 in acquisition-related expenses and $216,000 in core conversion-related expenses.
Efficiency ratio Continued to improve, reflecting better expense management and ongoing IT and infrastructure investments.
Organic deposit growth Increased by $144,000,000 or 5.1% annualized from September 30, 2024, when considering Q1 2025 and Q4 2024 combined.
Loan production Total new and renewed loan production matched total paydowns and payoffs at approximately $500,000,000.
Core CD balance retention rate 83% during March, reflecting strong focus on maintaining core deposit relationships.
Acquisition of Oakwood Bank: Closed the acquisition of Oakwood Bank in Dallas, Texas on October 1, 2024, with integration proceeding as expected and conversion set for September 2025.
Branch Sale: Closed the sale of Kaplan, Louisiana branch on April 4, 2025, including approximately $51,000,000 in deposits at a deposit premium of 8%.
Deposit Growth in Dallas: Expect to increase deposit growth in Dallas post-Oakwood conversion, leveraging the existing branch network.
Core ROA: Core ROA exceeded 1%, indicating strong profitability.
Expense Management: Continued focus on expense management with better than expected trends.
Net Interest Margin: Core net interest margin expanded by 8 basis points due to improved funding costs.
Loan Growth Strategy: Maintaining a focus on net interest margin over volume, with expectations for low to mid single-digit loan growth.
Credit Quality Management: Monitoring credit quality with a focus on maintaining a diversified portfolio and managing C and I exposure.
Credit Migration: The company experienced modest negative credit migration during the quarter, primarily due to two commercial and industrial (C and I) relationships, leading to an increase in non-performing assets (NPAs) from 0.42% to 0.69%.
Loan Growth: Loan balances were flat due to higher payoffs, with expectations for low to mid single-digit growth in the upcoming quarters, influenced by macroeconomic uncertainty.
Deposit Decline: Total deposits decreased by $53 million, primarily due to customer withdrawals, with expectations for muted deposit growth in the second quarter following the sale of a branch.
Regulatory and Economic Uncertainty: The company noted ongoing uncertainty in the economic environment, which could impact loan growth and overall business performance.
Competitive Pressures: There is heightened competition in the deposit market, leading to challenges in maintaining lower funding costs.
Acquisition Integration: The integration of Oakwood Bank is ongoing, with expectations for cost savings to materialize later in the year.
Expense Management: Core non-interest expenses are expected to increase due to merit salary increases and IT investments, which may impact profitability.
Market Conditions: The current market conditions and regulatory environment are causing a pause in M&A conversations, with a wait-and-see approach being adopted.
Acquisition of Oakwood Bank: The integration of Oakwood Bank is proceeding as expected, with conversion set for September 2025.
Expense Management: Continued focus on expense management with better than expected trends.
Branch Optimization: Closed the sale of Kaplan, Louisiana branch, optimizing the branch network.
Loan Growth Strategy: Maintaining a focus on net interest margin over volume, with a healthy pipeline for Q2.
Credit Quality Management: Monitoring credit quality with a focus on maintaining a diversified portfolio.
Q2 Loan Growth Expectations: Expecting low to mid single-digit loan growth quarter over quarter.
Core Net Interest Margin Outlook: Expecting low single-digit basis point improvements in core net interest margin.
Non-Interest Income Projections: Expecting quarterly fee income to stabilize around $11.5 to $12 million.
Core Expenses Guidance: Expecting core expenses in the low $50 million range per quarter.
Capital Return Strategy: No immediate plans for capital return via buybacks until capital build is sufficient.
Shareholder Return Plan: The company is considering a share buyback program but has not yet implemented it. The management indicated that they are building capital and may consider buybacks in the future, depending on market conditions and capital levels.
The earnings call summary and Q&A indicate a positive outlook. Financial performance shows improved loan yields and decreased nonperforming loans. Noninterest income is stable, with strong future growth expectations. The Progressive Bank acquisition is progressing well, and potential share repurchases are positive for shareholders. While some uncertainties exist, such as the impact of a government shutdown on SBA loan sales, overall sentiment is positive, with expectations for loan growth and operational savings. The market is likely to react positively, anticipating a 2% to 8% stock price increase.
The earnings call reveals mixed signals: while there's a positive outlook on loan growth and fee income, concerns about increased NPLs and unclear management responses on NPAs and cost savings temper optimism. The Q&A highlights potential risks and uncertainties, such as elevated FHLB borrowings and flat margins in Q3. Despite some positive elements like the successful core conversion and growth in SSW, the lack of immediate capital return plans and elevated expenses keep the sentiment neutral.
The earnings call presents a mixed picture: while there are improvements in net interest margin and non-interest income, there are concerns about decreased deposits, increased non-performing assets, and lack of clarity in management responses. The absence of share repurchase or dividend announcements also tempers positive sentiment. The Q&A session reveals some optimism but also highlights uncertainties, particularly regarding loan growth and margin expansion. Overall, the sentiment is neutral, as positive aspects are balanced by potential risks and unclear guidance.
The earnings call shows mixed results: strong NIM expansion and capital position are positive, but deposit decreases and increased NPAs are concerning. The Q&A reveals uncertainty in loan growth and fee income, with management unable to provide clear timelines for resolving nonaccrual loans. The potential for a share buyback is positive but not yet implemented. Overall, the mixed signals and lack of strong catalysts suggest a neutral stock price movement.
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