Brian Martin • Janney Montgomery Scott LLC

Answer

CFO Keene Turner projected the margin would be down slightly in Q3 but has an upward bias long-term. President Scott Goodman described the new Texas team as a team of three with no non-competes, already building a pipeline. CEO James Lally noted that an expanding market should allow for both growth and pricing discipline. Turner characterized SBA sales as an opportunistic tool being tested this year. Lally confirmed the priority is the branch integration, though they benefit from M&A disruption in their markets.

Ask Fintool Equity Research AI

Answer

CFO and COO Keene Turner confirmed the long-term margin outlook is accurate and projected the pro forma TCE ratio would be around 8.5%. Executive James Lally clarified that the tax credit loan decline was a normal seasonal paydown, not a sale. Turner explained the reserve build was a conservative move to be prudent amid economic turbulence and take advantage of a strong earnings quarter.

Ask Fintool Equity Research AI

Answer

CFO & COO Keene Turner explained that the impact of the September rate cut on deposit expenses will begin in Q4. He projected that with five more cuts, NII dollars would see a slight near-term decline before recovering, but pretax income could remain neutral due to offsetting expense reductions. CEO James Lally confirmed that given the new talent being onboarded, the company expects to return to mid-single-digit loan growth in 2025.

Ask Fintool Equity Research AI

Answer

CEO Charles Reeves stated that $418 million in fixed-rate loans are repricing in the next 12 months and projected about $2 million in SBA gain on sale for 2025. He identified wealth management as the fee business with high potential. On M&A, Reeves outlined a focus on the I-35/I-80 corridors for targets between $500 million and $2 billion in assets that would add density or accretive business lines.

Ask Fintool Equity Research AI

Answer

CFO Barry Ray reiterated the full-year 2025 expense guidance of $145 million to $147 million. President and COO Len Devaisher highlighted treasury management and interest rate swaps as other key fee income drivers, projecting mid-to-high single-digit growth for total fee income. CEO Charles Reeves stated the company is targeting a Return on Average Assets (ROA) in the 1.10% to 1.15% range as an exit rate for 2025, driven by gradual margin expansion.

Ask Fintool Equity Research AI

Answer

Chief Credit Officer Gary Sims identified the downgraded credits as a $17 million relationship in higher education and a $21 million relationship in gasoline retail/wholesale. CEO Charles Reeves and EVP/CFO Barry Ray stated that they expect margin expansion even in a flat curve environment due to asset repricing. Ray noted ~$375 million in loans are repricing from an average rate of 4.38% over the next year. President and COO Len Devaisher expects SBA income to be a sustainable contributor. Barry Ray projected a 2025 ROA of above 1%, potentially ending the year near 1.10%.

Ask Fintool Equity Research AI

Answer

CFO John Stewart indicated that while expenses would likely see a normal uplift in 2026, the approach would remain disciplined. Management noted the provision will be driven by loan growth and economic forecasts. CEO Thomas Prame stated that M&A remains a key part of the strategy, with a focus on contiguous markets in Indiana and Michigan, likely targeting banks in the $500 million to $1 billion+ asset range.

Ask Fintool Equity Research AI

Answer

EVP & Chief Commercial Banking Officer Lynn Kerber stated the commercial loan growth forecast remains in the mid-to-high single digits, supported by a steady core pipeline and a lift from the equipment finance division. Executive Thomas Prame explained the deposit mix shift is due to clients locking in attractive CD rates, not a loss of relationships. EVP & CFO John Stewart recapped that the company paid down $330 million in borrowings, exceeding its $200 million plan and getting ahead of schedule.

Ask Fintool Equity Research AI

Answer

John Stewart, EVP and CFO, confirmed the new mid-teens tax rate would be ratable after a step-up in Q1. Executive Thomas Prame stated M&A is 'definitely on the radar,' focusing on culturally aligned banks of an appropriate size in their core Michigan and Indiana markets. Lynn Kerber, EVP and Chief Commercial Banking Officer, noted the loan portfolio focus is on organic growth in core segments, not further remixing. She projected the equipment finance division would produce $150M-$175M in 2025 and said the overall commercial annualized run rate is the best predictor for future growth.

Ask Fintool Equity Research AI

Answer

Lynn Kerber, EVP and Chief Commercial Banking Officer, described the commercial pipeline as steady and noted the equipment finance division had reached over $85 million in footings, meeting expectations. Executive Thomas Prame estimated the indirect auto portfolio would continue to run off by $30-$35 million per quarter. He also indicated that mortgage income would likely see a seasonal decline in Q4 and Q1 before recovering, following a strong Q3 driven by new leadership and improved productivity.

Ask Fintool Equity Research AI

Answer

EVP & CFO Nick Anderson indicated that expanding NIM into 2026 would be challenging without Fed rate cuts. He also detailed plans to call and replace $70 million in subordinated debt in September at a favorable rate. President & CEO Todd Gipple added that loan growth will be driven by the LIHTC business and that while the company is open to M&A, its 'strike zone is very tight,' with a focus on strong organic growth.

Ask Fintool Equity Research AI

Answer

Executive Larry Helling stated that a detailed portfolio review identified only two high-risk companies ($6 million total credit) exposed to China tariffs, as most clients diversified their supply chains years ago. Executive Todd Gipple reaffirmed that a 25 bps rate cut would boost NIM by 2-3 bps and noted strong deposit beta performance. He guided Q2 NIM to be static to up 4 bps, driven by funding cost reductions. Gipple indicated a securitization is dependent on LIHTC production pace, making a Q4 2025 or Q1 2026 timeline most likely, and confirmed a continued focus on core deposit growth.

Ask Fintool Equity Research AI

Answer

Executive Larry Helling stated that due to market uncertainty, the priority is to retain capital and focus on organic growth, making M&A and buybacks low priorities. Executive Todd Gipple quantified the balance sheet's liability sensitivity at approximately $600 million and noted strong deposit beta performance. Helling later projected modest 2-5% growth for the core commercial portfolio due to client caution and said the company aims to gradually lower its loan-to-deposit ratio to the low 90s over the next couple of years.

Ask Fintool Equity Research AI

Answer

Chairman & CEO John Allison specified M&A targets are in the $2-6 billion asset range. CEO of Centennial Bank, Stephen Tipton, quantified the sub-debt payoff benefit to NIM at 5-6 bps and detailed approximately $4.5 million in non-recurring Q2 expenses. President & Chief Lending Officer Kevin Hester confirmed a ~$12 million non-accrual loan resolution is now expected in Q3. Mr. Allison added that while comfortable with the current reserve, he aims to build it toward 2% when possible.

Ask Fintool Equity Research AI

Answer

Executive Kevin Hester projected another $12 million in NPA resolutions in Q2, with further significant reductions dependent on the performance of memory care credits, which could resolve in Q3 or Q4. He described the loan pipeline as 'pretty good' but noted elevated payoffs are a headwind. Executive John Tipton reported the core margin exited March at 4.38%, slightly below the quarterly average due to excess cash, and identified deposit competition as the biggest risk to maintaining the margin.

Ask Fintool Equity Research AI

Answer

Chairman John Allison confirmed that nothing is imminent on the M&A front after pausing a deal to be transparent, but the bank remains open to opportunities in Florida, Texas, and the Carolinas. He projected negligible provisioning in the short term, with a 12-18 month timeline to rebuild reserves to the 2% target. Chief Lending Officer Kevin Hester outlined expectations for $30-40M in NPA reductions over the next couple of quarters and noted that significant recoveries would occur monthly over several years.

Ask Fintool Equity Research AI

Answer

CEO Stephen Tipton noted about $3 billion in liabilities are indexed to benchmarks like the T-Bill or Fed Funds. Chief Lending Officer Kevin Hester added that while loan renewals should be in the 8% range, competition is emerging with fixed rates in the high 6s. Chairman John Allison said M&A targets include one in-market and one out-of-market, and that a $111 million quarterly expense level is a realistic run rate.

Ask Fintool Equity Research AI

Answer

CFO Harold Carpenter indicated that BHG's quarterly contribution would likely remain 'flattish' compared to the Q2 level for the remainder of the year. CEO Terry Turner explained that hiring is continuous everywhere, but new market entries are catalyzed by finding the right team. Carpenter reiterated that a near-term catalyst for significant NIM expansion would be a Fed rate decrease, while a steeper yield curve is necessary for longer-term margin improvement.

Ask Fintool Equity Research AI

Answer

M. Turner (Executive) clarified that while new market entry is always a possibility driven by talent availability, its mention was to reinforce the firm's ongoing hiring strategy, not to signal an imminent move. He and Harold Carpenter (Executive) explained that CRE concentrations are still being reduced and meaningful growth from that category is not expected until late in the year or early next year. Carpenter guided for the tax rate to remain similar to Q1's rate.

Ask Fintool Equity Research AI

Answer

Harold Carpenter (executive) projected that a steeper curve could lead to a 10-20 basis point NIM improvement over the year and identified about $1.5-2.0 million in lumpy fee income items in Q4. M. Turner (executive) detailed that deposit growth is driven by specialized verticals and a treasury management focus on operating accounts. He also noted that while recruiting is successful across the franchise, newer markets like Jacksonville and Washington D.C. yield higher percentage growth rates.

Ask Fintool Equity Research AI

Answer

Executive Harold Carpenter specified that about 14% of total loans are tied to prime and reprice daily with rate changes. He expects the loan mix to remain focused away from construction and CRE until the latter half of 2025. He attributed strong deposit growth to the success of specialized deposit verticals. For housekeeping, Carpenter confirmed the two non-recurring fee items mentioned earlier and stated that the firm's effective tax rate (ETR) should be around 20%.

Ask Fintool Equity Research AI