Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total period-end loans increased by 2% on a linked quarter annualized basis, consistent with the company's outlook.
- Customer deposits grew by $183 million during the quarter, reflecting a 4% linked quarter annualized growth.
- Net interest margin expanded to 2.95%, up 8 basis points linked quarter and 29 basis points year over year.
- Non-interest income grew by 6% linked quarter, driven by strong swap fee income and diversified growth from fee-based businesses.
- The company maintained a focus on soundness, profitability, and growth, with a commitment to conservative credit management.
Negative Points
- Average loans were down for the quarter as most funded growth was back-end loaded.
- Total deposits decreased slightly on a linked-quarter basis due to reductions in brokered funding.
- Two specific credit relationships were migrated to nonperforming status, resulting in increased specific reserves and additional provision expense.
- A customer deposit fraud event led to a $4.3 million increase in non-interest expense.
- The company faces a competitive deposit environment, with ongoing pressure on commercial deposits.
Q & A Highlights
Q: Do you have a timeline for resolving the two specific credit issues mentioned?
A: Jay Brogdon, President, explained that the timeline could vary between the two situations. For the downtown St. Louis hotel, they might wait for seasonally stronger months before resolving, aiming for resolution by year-end. The fast food operator's situation is still under analysis due to unexpected fraud, and while they aim for resolution this year, they will proceed thoughtfully to ensure the best outcome.
Q: Can you elaborate on the improvement in the loan pipeline and the factors driving it?
A: Jay Brogdon noted that the improvement is broad-based across various sectors like C&I, CRE, and agriculture. Some demand might have been pulled forward due to borrowers locking in favorable economics. The pipeline is strong across different geographies and categories, with seasonal benefits also contributing.
Q: What are your thoughts on deposit growth strategy and the competitive landscape?
A: Jay Brogdon highlighted that the environment remains competitive, but they are focused on remixing deposits and reducing brokered funding. They saw positive trends in customer deposits and are actively working on initiatives to grow core deposits, despite the competitive pressures.
Q: Could you provide more details on the collateral for the fast food operator credit issue?
A: Jay Brogdon stated that they have collateral in the form of the stores, real estate, and equipment, along with full recourse to the principal. However, recent fraud discoveries have raised concerns about the global cash flow picture, affecting the guarantor's reliability.
Q: How is the rest of the hospitality portfolio performing, and are there any geographic concentrations?
A: Jay Brogdon mentioned that there are no significant concentrations in the hospitality portfolio. The downtown St. Louis hotel is a unique case due to the area's business climate. Overall, the hospitality portfolio has been stable post-pandemic, with no other major issues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
