Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Following our internal efficiency and scalability initiatives of the last couple of years, we’re very confident in our ability to effectively execute on M&A, should the right opportunities arise |
| And so, as we enter the fourth quarter, the balance sheet feels well positioned |
| At the same time, we built our capital, maintained strong reserves and put ourselves in a great liquidity position |
| We’re excited about the future and from a financial perspective, we feel very prepared to execute on any opportunities that may come our way, so both financially and operationally |
| On the revenue side, as you’ve seen in the earnings release, we executed a securities trade that will lead to improvement in net interest income in Q4 and in 2024 |
| Our capital positions are strong across the board, including a CET1 ratio of 11.8%, and a tangible common equity to tangible assets ratio of 9.2% |
| Our liquidity position, which is detailed on page 11 of the financial supplement that we provide each quarter, continues to be strong |
| We made ourselves a better place to bank for our customers, a better place to work for our associates and in that process we’ve improved our operational efficiency |
| From an operational perspective, we feel as strong as we ever have and we’re focused on improving profitability and returns |
| Again, we’re positioned very well with an ACL of 1.57% of our HFI loan portfolio |
| But yes, it’s just making sure that we’re well positioned for next year and the years after |
| We built some momentum there and we’re excited about the growth opportunities that lie ahead of us |
| And what we found was we have very strong borrowers in this asset class that did everything that they said they were going to do |
| Our credit portfolio continues to perform well, although we did move one C&I loan to non-accrual in the quarter |
| As Chris said, we feel very well prepared for any economic downturn |
| And so, if you go back and look at our historical performance, it doesn’t just go back actually two or three years, if you go back to when we start the call, we talk about where our compound annual growth rate of the tangible book value of our stock is, since we’ve become a public company, we go back and we actually look further back than that and we’ve always been a premier performer |
| So, we continue to really engage in that space, and we’re seeing some positive momentum |
| In recent quarterly calls, I’ve discussed priorities of maintaining the strength of the balance sheet and improving internal processes and procedures with the goals of efficiency and scalability |
| When you consider that our deposit base is quite granular and we make very little use of brokered and internet deposits, this keeps us in a strong liquidity position |
| So, we’re going to have a positive tailwind for the margin from the securities transaction, but this is being outweighed in fourth quarter by the public funds, right, being a drag on -- in terms of being higher cost and coming in |
| Increasing profitability and returns are in focus for us, and we’re ready to execute on attractive opportunities that may come our way |
| Going back to what happened in March of this year, again, we feel like we’re well prepared for whatever comes at us |
| And to summarize before going into questions, our balance sheet’s situated in the position of strength, we’re focused on improving profitability and returns |
| When we talk about strengthening on our balance sheet, what we’re doing is creating levers that we can pull as we go through ‘24 to improve our profitability and make sure our returns are where we want them to be |
| We freed up a lot of liquidity from a collateral standpoint as well during the quarter, good work by the team there to further create sources of liquidity |
| You see improvement -- some improvement this quarter that was meaningful |
| And so that’s been a benefit |
| On balance sheet liquidity to tangible assets has increased from 7.4% 12 months ago to 11% today, and we have grown our available sources of liquidity from $6.2 billion in the third quarter of 2022 to $6.8 billion today |
| We’ve grown our tangible book value per share excluding the impact of AOCI at a compound annual growth rate of 14% since our IPO |
| We’ve made significant progress on both of those priorities |
| Statement |
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| So we spent some money, which we knew would hurt our performance |
| The margin, net interest margin has been difficult to forecast over the last several quarters, not only for ourselves, but for others as well based on the discussions we’ve had with our peers |
| Trade also resulted in a pre-tax loss of $14.2 million in the third quarter |
| Positions, as you look across, obviously, we’ve had slower loan growth, so we’ve seen some reduction in relationship managers, but not very much |
| And just if we have any kind of consumer-driven weakness in the next year, 18 months would seem like hotels might actually be somewhat at risk |
| So, it’s really across the board, either urban or rural that we’re seeing deposit pressures |
| And so I think everyone in the environment realizes that’s kind of -- the tough thing is the marks on the balance sheet |
| What we’ve seen is because the velocity of rate increases has slowed that the constant request for repricing has moderated |
| And we don’t want to I think if somebody goes out, if anybody, if we went out and did start buying back now and credit got really difficult for the whole world, we wouldn’t look too smart if we had to raise capital after that |
| And I’m going to alter that just a little bit to say we’re prepared for things to get difficult |
| We would be comfortable with another loss in the $10 million to $20 million range, if the trade met our parameters on earn-back, expected duration, earnings accretion and capital dilution |
| Chris Holmes Yes, I want to make one -- so as we look forward, as Michael said, the velocity of change has really slowed |
| We also reduced our CRE and construction exposure over the last five quarters |
| It sounds like we should expect to see the unfunded loan commitments in the CD space continue to come down |
| Initially, we saw the most pressure from the smaller communities, the kind of the rural markets |
| And so we really paused reinvesting |
| We actually do think things would get slower from here, okay? So we do think that things will get slower |
| But our preparation allows for things to get more difficult than we anticipate they will |
| We don’t really actually expect things to get that difficult |
| Our loan to deposits have declined from 91% to 87% |
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