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.
Please consider a small donation if you think this website provides you with relevant information
| Statement |
|---|
| So, we feel good about the stability there |
| This is a good time to really focus on strength of the balance sheet, but we feel like we've been able to keep the non-core funding to a percentage that we feel comfortable with, and we'd rather not increase loan volume by going out and borrowing more money at tighter margins |
| And so, we feel good about where we are |
| And we just want to make sure that we preserve a really nice balance sheet and a good nice core earnings profile |
| We continue to believe that our underwriting and our markets remain good |
| We are pleased with our balance sheet positioning as we move to the fourth quarter of the year |
| If it's a little harder, I think we're still well positioned and if it doesn't happen, I think we have the ability to take advantage of things as we move into '24 |
| I mean, if we get better signals in '24, we are well positioned to move back to where we'd like to have been positioned to over a year ago |
| We are very pleased to report strong operating performance in the third quarter |
| That said, we are pleased to have experienced relative stability in our core net interest margin since May on a monthly basis |
| So, we're accreting capital, our earnings are pretty good, we're repositioning expenses so that we can make sure that we're in a good place from an earnings standpoint, and we're going to see what it provides us as we move into '24 |
| While we do not like to see a decrease in our NIM or pre-tax provision profitability, we feel pretty good about the stabilization in our margin trends and earnings power, which continues to compare favorably relative to the industry and we also feel good about our ability to protect our relative profitability profile in this challenging environment |
| And I think the market here helps us because it is so good, remains good |
| In summary, we believe Stellar is well positioned to manage through the current operating environment and thrive |
| Our funding composition and liquidity position, puts us in a great spot to maintain favorable margins and earnings power |
| We feel really good about our performance over the last five months, and we are going to work hard to defend that |
| Bob Franklin And Will, I would just add, as you think about our approach to this and I know others have different views on it, but we really feel strongly about our core deposit funding |
| We're going to continue to work on continuing the track record of relative outperformance on our cost of funds, which is translating into meaningful outperformance in what has been a stable NIM post the tumults earlier in the year |
| So, on those deposit trends, we felt good about third quarter when we look at the dollar amount of new -- that exceeded closed, that really held nicely |
| We want to be well positioned to grow when the opportunity presents itself |
| And we feel like that's really powerful |
| Strong earnings notwithstanding accelerated amortization of CDI expense has really helped us to internally generated capital at a nice pace, reflected and having shown well over 100 basis point increases in all of our regulatory capital ratios over the last third quarters |
| I mean, the best takeaway we have that we feel good about coming out of September and really the last five months is a relative measure of stability in our net interest margin |
| It was a nice quarter |
| We feel really good about where we are and we're leaving ourselves every option available open |
| So, we feel good about it if it's repricing into those types of levels, but we definitely think of most of it as a pull-forward of market pricing |
| We happen to be in a really nice place in Houston, Texas that is still pretty strong from an economic standpoint |
| So right now, we feel pretty pleased, but we're just cautious about outlook and feel good about where we sit |
| Recall all of this accretion income is interest accretion and that's pretty powerful because ultimately it just brought forward the repricing on the entire acquired portfolio of loans and those loans, when they do reprice, are repricing at market rates |
| I know core funding is a huge advantage to you guys |
| Statement |
|---|
| And I guess the theme maybe that we continue to see a little bit softness as we enter the fourth quarter |
| This was incrementally lower than the $35.2 million, or diluted EPS of $0.66 per share earned in the second quarter due mostly to increases in funding costs more than offsetting increases in interest income, higher noninterest expense and lower noninterest income |
| We did charge-off one loan in the quarter, which was the result of a continued deterioration of a previously identified credit noted in the fourth quarter of 2022 |
| But we're still taking I guess a cautiously optimistic approach there, particularly because we are still in some really, really competitive markets |
| Over the longer term, we see net benefit there, but we're very, very cautious around how we manage the uncertainties of this unprecedented interest rate environment |
| Rates have also put pressure on our net interest margin, but the negative effects are beginning to minimize, and though, we would not call a bottom, with the uncertainties that still exist in the market, we feel we are close |
| So, it feels like the pulse on credit, at least as it pertains to Stellar maybe a bit of cautious optimism |
| And then, on the fee side, fees were a little bit slower this quarter |
| And I know the Durbin impact started in 3Q, but it still looks like there were some -- maybe some other impacts in there, the third quarter, or perhaps Durbin may have been more than we expected |
| So, it's going to be slower than it was in the first part of the year |
| Though the industry continues to experience pressure on the deposit side, due mainly to interest rates, we have seen our base move towards stabilization |
| As you could see, non-performers actually went down fairly significantly and we didn't backfill after we charged the loan-off |
| All I can acknowledge is Durbin has been a little bit more than our expected impact |
| You have to make sure that we're not running into an economy that the Fed was so successful, it's slowing the economy that's hurt all of us and we want to make sure of kind of where we believe things are as we get into '24 |
| But we are cautious about what's out there, because as we see renewals happen and how people are handling higher interest rates, it's been interesting as we go through that to see how people are going about dealing with the increase in rates at a renewal time |
| Notable among the noninterest items with our control of core noninterest expense after excluding merger expenses and for noninterest income, the decreased revenue effect from the Durbin Amendment on our debit card and ATM card line item and reduction in NSF fees |
| So, I think that that's been our conservative view and we've been surprised to the positive |
| But we're cautious, we'll admit it |
| On the loan side, these high interest rates are going to have to move their way through the economy |
| Ray Vitulli So, Will, the -- so, a couple of things that how we got to that, where you saw the little negative growth for the quarter |
Please consider a small donation if you think this website provides you with relevant information