Charlie Driscoll

Charlie Driscoll sought clarification on First BanCorp's efficiency ratio calculation, specifically whether it excludes OREO gains. He also inquired about the drivers behind the strong non-interest-bearing deposit flows observed this quarter, asking about any seasonality or changes in the go-to-market strategy.

Answer

Orlando Berges, EVP and CFO, First BanCorp, confirmed that the efficiency ratio is calculated on a GAAP basis, including OREO results, and the 50-52% guidance is also on a GAAP basis. He and Aurelio Alemán, President and CEO, First BanCorp, explained that strong non-interest-bearing deposit growth is a core strategic goal driven by multiple initiatives, including building core relationships, sales strategies, and product offerings, exemplified by opening new branch offices in underserved areas to grow customers and loans.

Charlie Driscoll asked about the strong non-interest-bearing deposit flows observed this quarter, seeking insights into any seasonality or changes in the company's go-to-market strategy that contributed to this growth.

Answer

Orlando Berges, EVP and CFO, confirmed that growing non-interest-bearing deposits is a core goal and a key value of the franchise, driven by multiple ongoing initiatives to build core relationships. Aurelio Alemán, President and CEO, added that it's a core strategy with emphasis across regions, citing the opening of a new branch in Boca Raton as a vehicle to grow customers, non-interest-bearing deposits, and loans in new regions through tactics, sales strategies, and products.

Charles Driscoll inquired about Southern Missouri Bancorp's specific preferences for M&A targets, including desired size and whether they prioritize opportunities within their existing footprint or in adjacent markets.

Answer

Chairman and CEO Greg Steffens stated a preference for M&A within their footprint but would also consider adjacent opportunities, emphasizing that each deal is evaluated individually based on the underlying performance, growth potential, and contribution to shareholder return.

Charlie Driscoll inquired about First Hawaiian Inc.'s capital priorities, including the approach to share buybacks and the M&A strategy given the heating market. He also asked for specifics on deposit betas in Hawaii's rational pricing environment, anticipating Fed rate cuts, and whether the margin expansion guidance assumes any loan purchases.

Answer

Jamie Moses, Vice Chairman and CFO, reiterated capital priorities focus on loan growth within credit parameters and noted the remaining share buyback authority, with future activity dependent on market conditions. He indicated no immediate dividend increase due to the relatively high payout ratio. Moses detailed deposit betas for rate-sensitive portfolios, expecting them to decrease from 90% for the next cut to 85% for subsequent cuts. He clarified that the margin expansion guidance for Q4 does not assume any loan purchases, relying instead on strong organic loan growth.

Charlie Driscoll inquired about Heritage Financial's capital priorities post-Kitsap Bank integration, specifically regarding stock buybacks, and the strategy for managing the loan-to-deposit ratio moving forward.

Answer

Don Hinson, Chief Financial Officer, stated it's premature to comment on future capital priorities or stock buybacks until the Olympic Bank Corp transaction is complete, though the company expects to earn back significant capital. Bryan McDonald, President and Chief Executive Officer, expressed a high-level goal to increase the loan-to-deposit ratio to 85% or slightly higher by deploying more assets into loans.

Charlie Driscoll inquired about Heritage Financial's capital priorities, specifically regarding stock buybacks, after the Kitsap deal closes and integrates, and the bank's high-level strategy for managing its loan-to-deposit ratio moving forward.

Answer

Don Hinson, CFO, stated it's premature to comment on capital priorities or buybacks until after the Olympic deal closes and its full impact is assessed, advising against modeling buybacks at this point. Bryan McDonald, President and CEO, expressed a high-level goal to increase the loan-to-deposit ratio to 85% or slightly higher, actively seeking loan opportunities to deploy more assets.