Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you update us on the net interest margin (NIM) trajectory and what your models are indicating for the future? A: David Zalman, CEO, stated that they are on track with previous projections, expecting the NIM to be around 3.25% to 3.30% on average for 2025, with a slight increase by the end of the year. CFO Asylbek Osmonov confirmed this, noting that the projections are based on static balance assumptions without growth.
Q: What are your expectations for loan growth, especially given the positive sentiment from clients? A: David Zalman mentioned that while there is positive sentiment, they are cautious about aggressive loan growth. Kevin Hanigan, President and COO, added that recent acquisitions have required adjustments, but they expect low to mid-single-digit growth as customer sentiment improves.
Q: With the recent stock repurchase program, what is your approach to capital allocation between repurchases and M&A? A: David Zalman expressed a preference for conserving capital for potential mergers and acquisitions (M&A), given the favorable regulatory environment and interest from potential sellers. However, if the stock price declines, they might consider repurchasing shares.
Q: How do you view the current provision for credit losses, and is there a need to start provisioning for growth? A: David Zalman indicated that with $389 million in provisions and $81 million in non-performing assets, they feel adequately reserved unless there are significant changes or unforeseen events.
Q: What is the outlook for deposit growth and cost management, especially if the Fed changes rates? A: David Zalman noted that they have managed deposit costs well, maintaining a low cost of funds. They anticipate a 2.5% organic deposit growth rate for the year, with some room to adjust rates on certain products if necessary.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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