Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Derek, could you discuss the trajectory of the margin from the fourth quarter's 2.81% and the impact of the restructuring? Also, could you elaborate on funding dynamics given the expected growth in deposits and loans? A: Derek Meyer, CFO: We expect a stable margin outlook once we benefit from the restructuring, potentially reaching closer to 3%. The market bias suggests fewer rate cuts, which could provide upside. Our hedging strategies and securities repositioning should help stabilize and potentially increase margins. Regarding funding, we aim to close the gap between loan and deposit growth, primarily through core deposits, and expect to reduce reliance on wholesale funding.
Q: Andy, could you explain the expected $1.2 billion C&I growth for this year compared to the previous $750 million forecast? A: Andrew Harmening, CEO: The increase is due to our completed hiring of high-quality relationship managers (RMs) and their ramped-up production. We have clearer visibility into 2025's potential, with growth largely driven by commercial activities. Additionally, our asset-based lending and leasing business, which has grown significantly, continues to offer opportunities.
Q: Pat, regarding the credit side, how far along are you in the deep dive on the loan portfolio, and should we expect continued migration in loan ratings? A: Patrick Ahern, Chief Credit Officer: The deep dives are ongoing, aimed at early recognition of credit changes. This proactive approach helps us stay ahead of potential stress, and we haven't seen a buildup in nonaccruals, indicating we're managing risks effectively.
Q: Andy, with the significant changes made, do you think major changes are over, particularly regarding the balance sheet structure? A: Andrew Harmening, CEO: We've largely completed the necessary changes, especially in reducing residential real estate concentration. While we have no major changes planned for 2024, we remain open to opportunities that align with our growth strategy. Our focus is on executing organic growth.
Q: Andy, how do record-high customer satisfaction scores translate into growth, and does this support the 6% core consumer deposit growth target? A: Andrew Harmening, CEO: Improved customer satisfaction and household growth directly impact deposit growth. We've seen a 23% increase in account quality, and each 1% growth in households equates to $150 million in additional balances. Our strategies, including a new deposit vertical and enhanced RM capabilities, support our confidence in achieving the deposit growth target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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