Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you elaborate on the expected trends for NII and NIM for the rest of the year?
A: (Glenn I. MacInnes - Executive VP & CFO) We anticipate benefits from loan growth, investment portfolio restructuring, and fixed rate loan portfolio repricing. However, deposit costs are expected to peak in Q2 and Q3, which may offset some gains. We aim for a net interest margin around 3.45% by year-end, with a full-year average around 3.41% to 3.42%.
Q: What are the common threads in the credit changes noted this quarter, particularly in the C&I book?
A: (John R. Ciulla - Chairman & CEO) The increase in classified and nonaccrual loans was broad and somewhat idiosyncratic, with no concentrated problem areas. Negative risk rating migration was noted, consistent with industry trends. Specific pressure was seen in healthcare services, but overall, the issues were mostly one-offs across various industries.
Q: How do you view the current environment in terms of normalized charge-offs?
A: (John R. Ciulla - Chairman & CEO) Charge-offs were primarily related to liquidated charge-offs this quarter, not asset sales. We anticipate that anything below 40 to 50 basis points in commercial is absorbable by our cash flows and earnings power. We expect a shallow credit correction, with provision levels consistent with industry expectations.
Q: What is your strategy for managing the office loan book, given the current challenges in the office real estate sector?
A: (John R. Ciulla - Chairman & CEO) We focus on shorter-term extensions with credit enhancements such as debt service reserves and guarantees. Over 75% of our office loans now have some form of credit enhancement. We aim to work with borrowers to maintain solid performing secured loans.
Q: What are your expectations for deposit growth and composition in the coming periods?
A: (Glenn I. MacInnes - Executive VP & CFO) We forecast $3 billion to $4 billion in deposit growth, driven by Ametros, HSA, InterLINK, and potentially wholesale channels. DDA balances are expected to stabilize, and we anticipate growth in areas like CD and money market accounts.
Q: Can you discuss the plans for capital management, particularly regarding buybacks and the target CET1 ratio?
A: (John R. Ciulla - Chairman & CEO) Our target CET1 ratio is around 11% for the near to medium term, given current uncertainties. We do not anticipate buybacks in 2024 but may consider them as we approach 2025, depending on capital levels and internal uses of capital.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
