Yahoo Finance Stellar Bancorp Inc (STEL) Q1 2024 Earnings Call Transcript Highlights: Robust Financial ...
Net Income: $26.1 million for Q1 2024.
Earnings Per Share (EPS): $0.49 per diluted share for Q1 2024.
Annualized Return on Average Assets (ROAA): 0.98% for Q1 2024.
Annualized Return on Average Tangible Common Equity: 11.47% for Q1 2024.
Net Interest Income: $102.1 million for Q1 2024.
Net Interest Margin: 4.26% for Q1 2024.
Credit Provision: $4.1 million for Q1 2024.
Allowance for Credit Losses: 1.22% of total loans for Q1 2024.
Non-Interest Income: $6.3 million for Q1 2024.
Non-Interest Expense: $71.4 million for Q1 2024.
Total Risk-Based Capital Ratio: 14.60% at the end of Q1 2024.
Core Deposit Intangible Assets: $110.5 million at the end of Q1 2024.
Loan Discount: $98.2 million remaining at the end of Q1 2024.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What are some of the drivers behind the decline in loan balances? A: (Ramon Vitulli - President, CEO of the Bank) The decline in loan balances is attributed to healthy payoffs totaling $256 million for the quarter, which offset the $335 million of new loans originated. The balance between new loans and payoffs, particularly in construction and development lending, has led to a net decrease in loan growth.
Q: How are core deposit trends, particularly non-interest-bearing (NIB) deposits, evolving? A: (Ramon Vitulli - President, CEO of the Bank) The trend in NIB deposits has been influenced by new account onboarding, which supports historical NIB levels. However, the dollar amount was lower than previous quarters. Additionally, the mix of interest-bearing deposits has been impacted by brokered deposits, affecting the overall NIB percentage.
Q: Can you discuss the asset quality and what drove the increase in nonaccruals? A: (Joe West - Senior EVP, Chief Credit Officer) The increase in nonaccruals was mainly due to two C&I credits with management issues and a few smaller construction loans facing unexpected cost increases. Additionally, two older CRE loans also contributed to the rise in non-performing assets.
Q: What are the recent trends in core loan yields and the outlook for these yields? A: (Paul Egge - CFO, Senior EVP) New loans have been priced at higher yields, with recent loans coming in at 8.49%. The renewal of loans also reflected higher yields, averaging 8.05%. This trend is expected to continue, supporting a positive outlook for core loan yields despite broader market challenges.
Q: How is the securities portfolio expected to evolve, and what impact does it have on the bank's strategy? A: (Paul Egge - CFO, Senior EVP) The securities portfolio is being increased to enhance liquidity, with a target of reaching 15% of assets. This strategy focuses on cash flow-oriented securities to maintain strong yields and liquidity.
Q: What is the guidance on expenses for the upcoming periods? A: (Paul Egge - CFO, Senior EVP) The first quarter expenses were aligned with expectations, but there is potential pressure on the previously guided $280 million due to new projects. The bank is actively managing expenses to align with strategic goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
