David Feaster • Raymond James

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CEO Thomas Shafer clarified that the primary focus remains on reducing the commercial real estate (CRE) concentration and exiting the HFS portfolio, with no plans to accelerate sales of other assets. Regarding private banking, Mr. Shafer expressed strong optimism, noting a program has been in development for four months and they are actively recruiting a new leader. While some early cross-sell success has occurred, he indicated that the new leader would finalize the strategy's details.

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CEO Thomas Shafer stated his initial focus is on reviewing methodologies and establishing high standards appropriate for the bank's size to ensure long-term sustainability. Executive Jamie Britton outlined a multi-pronged funding strategy, including continued sales of held-for-sale loans, investments in new commercial bankers to drive core deposit growth, and expected runoff from multifamily loan rate resets. Britton also confirmed strong demand for the held-for-sale portfolio, with over 30 parties under NDA. Shafer clarified the small multifamily loss was an isolated incident in San Francisco involving unique property management issues after the owner's death and is not indicative of a broader trend.

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Executive Jamie Britton explained that the company will be methodical with the loan sales to ensure best execution, noting a ~$500 million securitization is planned for Q4 2024, with other sales and securitizations possible in 2025. Executive Scott Kavanaugh confirmed that ongoing sales conversations are at better pricing than the initial discount. Regarding ECR deposits, Kavanaugh and Executive Christopher Naghibi stated that rate adjustments are instantaneous with Fed moves, with 100% betas on both increases and cuts. Naghibi added that the C&I growth engine is a priority, with growth expected to accelerate into mid-2025 as new bankers are onboarded in key markets.

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President & CEO Gregory Garrabrants responded that new business verticals are providing favorably priced deposits, but acknowledged that very strong loan growth could put some pressure on funding costs. He identified the securities business as the main driver for fee income growth but noted it would be challenging for it to grow at the same pace as net interest income. Regarding capital, Mr. Garrabrants stated that organic growth is the top priority, followed by evaluating synergistic M&A opportunities in specialty finance and fee-income businesses, and opportunistic share repurchases.

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President and CEO Greg Garrabrants noted strong originations of $3.5 billion and improving pipelines in single-family and multifamily due to competitive exits and a better yield curve environment. He stated that expense growth must be managed with discipline until sustainable asset growth returns, highlighting productivity gains from technology like low-code platforms and AI. Regarding M&A, Garrabrants mentioned a preference for specialty finance businesses that add a unique niche, clarifying that the new ATM shelf is a proactive measure for potential opportunities and not an indication of an imminent deal.

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President and CEO Greg Garrabrants highlighted C&I verticals as key drivers for deposit growth and noted that while there was some consumer attrition from repricing, the category still grew. He provided updates on new verticals, stating that tech/VC and middle market teams are new but already bringing in deposits, while entertainment and marine floor plan are gaining traction. He confirmed the white-label banking platform is helping drive deposit growth through advisers and that feedback is being used to refine new products like the 'Axos One' account.

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President & Group Chief Risk Officer Michael Schrum and Group CFO Craig Bridgewater explained that the bank is reinvesting maturities into a mix of 15-year mortgage-backed securities and a 2-5 year U.S. Treasury ladder, shortening duration while capturing higher rates. Bridgewater confirmed some non-core deposits remain but inflows have offset some outflows, with Michael Schrum noting that FX movements masked some of the underlying activity. Chairman & CEO Michael Collins clarified that the capital priority is dividends, followed by M&A and then buybacks, highlighting a recent dividend increase as a rebalancing effort after years of significant share repurchases.

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Michael Schrum, President and Group Chief Risk Officer, addressed credit, noting pressure in Bermuda and London is manageable due to low LTVs and is primarily related to debt service ratios and policy changes, not systemic credit issues. Michael Collins, Chairman and CEO, highlighted successful growth in the Channel Islands and the smooth integration of the Credit Suisse trust business in Singapore. On M&A, both executives emphasized a disciplined focus on private trust businesses with high AML standards. Craig Bridgewater, Group CFO, explained that while recent rate cuts pressure loan yields, reinvestments into higher-yielding securities should support continued, albeit slower, NIM expansion.

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Michael Schrum, President and Group Chief Risk Officer, explained that deposit levels are a 'business as usual' story, though he identified two specific large deposits totaling a few hundred million that are expected to flow out in the first half of the year. Michael Collins, Chairman and CEO, added that the deposit base is now less concentrated and stickier. Regarding the margin, Craig Bridgewater, Group CFO, projected a slow expansion of NIM in the coming quarters, driven by active management of deposit costs and reinvesting in the securities portfolio at significantly higher yields. On capital, Michael Schrum outlined priorities as the dividend, supporting organic growth, and M&A, noting that buybacks are a 'risk-free trade' at current valuations and the bank is not holding capital for an imminent deal.

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Group CFO Craig Bridgewater explained that while some at-risk deposits remain, balances have held up better than expected, partly due to FX tailwinds and new deposit gathering in the Channel Islands. President and Group Chief Risk Officer Michael Schrum addressed credit, noting a legacy hospitality facility is working through a sale process and some London loans have delayed repayments, but the portfolio remains well-collateralized. Chairman and CEO Michael Collins added that property valuations in their key island markets remain strong due to supply shortages. On the trust business, Collins highlighted the successful integration and growth of the Singapore operations acquired from Credit Suisse.

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CEO H. Palmer Proctor confirmed that increased activity is a reflection of customers becoming more active and competition intensifying beyond just pricing to include structural terms. CFO Nicole Stokes clarified that the $3.60-$3.65 NIM guidance is a longer-term (approx. 18-month) outlook in a flat-rate environment, not an expected near-term drop. For the mortgage segment, Stokes anticipates Q3 will be consistent with Q2 and affirmed that the team has the capacity to handle a refinancing boom without adding staff.

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CEO Palmer Proctor attributed the production surge to improved consumer sentiment and successful hiring, while emphasizing a focus on controlled, profitable growth over volume. CFO Nicole Stokes affirmed that consensus expense growth estimates of 4.5% to 5% for 2025 are reasonable, though Q1 may be seasonally higher. Proctor added that the bank maintains expense discipline by replacing underperforming bankers with new hires, rather than just adding headcount.

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Executive Nicole Stokes noted the blended rate on new deposits was under 3% and that pricing is managed via weekly meetings and market feedback. CEO H. Proctor emphasized the "human touch" in client retention and described the premium finance vertical as a stable "bright spot." He added that while margin expansion is conceptually possible, the primary focus is maintaining the current strong margin.

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Arnold Martines, Chairman, President & CEO, and David Morimoto, Vice Chairman & COO, addressed growth, noting that while H1 was muted as expected, a healthy pipeline of CRE and construction loans is expected to drive low single-digit growth for the full year. Morimoto added that competition remains stable and the bank is focused on relationship-based core deposit growth. EVP & CFO Dayna Matsumoto provided near-term expense guidance of $43.5M to $44.5M per quarter. Senior EVP & Chief Risk Officer Ralph Mesick clarified that recent credit metric upticks were from a low base and the quarter's large charge-off was an idiosyncratic event, not indicative of a systemic trend.

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David Morimoto, Vice Chairman and COO, reiterated the full-year guidance of low to mid-single-digit loan growth, focused on commercial and construction lending. Ralph Mesick, SEVP and Chief Risk Officer, noted that impacted industries represent about 10% of the loan book and expressed confidence in customers' ability to handle short-term turbulence. Dayna Matsumoto, EVP and CFO, stated that deposit costs should continue to trend down gradually and that the bank is evaluating how to best optimize and deploy its strong capital, with priorities including the dividend, organic growth, and share repurchases.

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Chairman, President and CEO Arnold Martines confirmed the positive loan growth outlook, driven by proactive efforts in the commercial and CRE segments. SVP & CFO David Morimoto detailed the deposit growth, noting a seasonal DDA benefit, and provided expense guidance aimed at positive operating leverage. SVP & Chief Risk Officer Ralph Mesick clarified that recent C&I losses were idiosyncratic and that overall credit trends are positive. Morimoto also outlined capital priorities, including the dividend, buybacks, and organic growth, emphasizing the bank's strong capital position.

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Arnold Martines, Chairman, President and CEO, attributed the loan decline to a market-wide demand issue caused by high interest rates, not a change in the bank's lending appetite, and noted that rising building permits signal future pent-up demand. David Morimoto, SVP and CFO, added that the bank is open to share repurchases as its capital ratios are healthy. Morimoto detailed that new loan yields were approximately 7.75% in Q3, significantly higher than the portfolio yield of 4.90%, with future growth expected in commercial real estate and C&I. He also stated the balance sheet is now neutral to interest rate risk and sees a path for the NIM to return to the 3.30% range.

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President, CEO & Director Clint Stein and President - Commercial Banking Torran Nixon attributed loan activity to strong banker productivity and new market momentum, which is offsetting runoff. Nixon detailed significant year-over-year growth in fee income lines like commercial card (14%) and international banking (50%), driven by deliberate initiatives. Stein confirmed that while some securities have been pre-purchased for the combined entity, major balance sheet moves for Pacific Premier will wait until post-close to capture favorable accounting marks.

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Executive Christopher Merrywell reported high retention (mid-80s) and growing average balances from past small business campaigns, with a new one recently launched. Executive Torran Nixon attributed strong loan growth to a combination of some increased demand, momentum from an evolving sales culture, and contributions from new hires across the footprint. CFO Ron Farnsworth quantified recent deposit outflows and noted customer conversations on repricing have been well-received, with Merrywell adding that significant CD maturities provide further repricing opportunities even without Fed rate cuts.

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EVP & Chief Commercial Banking Officer Christopher Merrywell explained the deposit campaigns are broad-based, relationship-focused, and will continue. President Torran Nixon highlighted successful de novo market entries and noted Southern California as a key growth area. CEO Clint Stein stated the immediate focus is on organic performance rather than M&A, pending clarity on the election and Fed policy. Nixon added the loan pipeline is stable with a healthy mix.

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President and CEO Clint Stein detailed that reinvestments focus on people, facilities, and technology to drive long-term revenue, including new branches in Phoenix and attracting talent. He also noted that while the bank is open to selling more transactional loan portfolios, it depends on market rates and there are no immediate plans. President of Commercial Banking Torran Nixon described the loan pipeline as steady, with a shift from CRE to C&I, but overall demand remains benign. He anticipates low single-digit loan growth for the remainder of the year.

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CFO Walt Phifer explained that higher payoffs were driven by a few specific, non-thematic loans and reiterated a 12-20% annual growth outlook. He also noted potential for further deposit rate reductions. President William C. Losch III attributed strong originations to consistency and brand strength in SBA lending, particularly as competitors pull back. Chief Credit Officer Michael Cairns cited improving metrics like past dues, defaults, and non-accruals as the basis for confidence in the credit cycle's end.

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Chief Credit Officer Michael Cairns noted a holistic portfolio review, with skepticism on new transactions in auto dealerships and government contracting, but highlighted encouraging signs like low past dues. William C. (BJ) Losch III added that the bank is proactively building reserves. Regarding innovation, Losch stated that while the main focus remains on core lending and deposits, the bank continues to incubate long-term projects like Simply and its next-generation technology platform.

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Chairman and CEO James Mahan provided an example of creative assistance, where the bank connected a struggling business with an expert to advise on implementing price increases. Executive BJ Losch discussed hiring, but emphasized scalability through AI to automate manual processes. He noted they can do 'far better' than the current 35% deposit attachment rate for new loans and would be disappointed if the small-dollar loan program didn't more than double its $125 million 2024 production in 2025, aided by new technology.

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Executive William C. (BJ) Losch III reported that the small dollar SBA program (Live Oak Express) surpassed $100 million in production and could reach $130 million by year-end, primarily driven by people, with significant technology enhancements expected next year. He projected it could become a $0.5 billion to $1 billion annual business. On embedded banking, Losch described it as a 'moonshot effort,' highlighting the first partnership with Anatomy Financial and plans for a second. He framed the Simply partnership as an example of successful internal incubation. Chairman and CEO James Mahan emphasized that the bank's proprietary fintech core is a critical advantage for its embedded banking ambitions.

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CEO David Brager identified the 'fiercest' competition as coming from regional banks in the $100B-$250B asset range, not from private credit. He expressed confidence that originations can still outpace payoffs. Regarding the specialty banking group, he noted its performance is strong but below last year's record pace due to disciplined pricing on earnings credit rates (ECR). On M&A, Brager confirmed active conversations and acknowledged the bank may need to look 'further outside of our box' to secure a deal, noting a lack of recent in-market transactions in California.

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President and CEO David Brager explained that their disciplined underwriting approach remains unchanged, though debt yield assumptions are adjusted for the rate environment. He attributed strong deposit growth primarily to new relationships, especially within the Specialty Banking group. On capital, Mr. Brager and Executive E. Nicholson confirmed they have ample capacity for both share repurchases and M&A, with Mr. Brager noting ongoing M&A conversations and an improved position as a potential acquirer.

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President and CEO David Brager confirmed a sense of optimism among clients and improving loan pipelines, though not yet at desired levels. He stated that while M&A conversations have increased, there's a valuation gap with potential sellers. Brager emphasized a disciplined approach to capital, noting the bank has capacity for both M&A and opportunistic buybacks under its 10b5-1 plan. He also expressed confidence in growing low-cost deposits, citing strong new relationship generation.

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CEO David Brager acknowledged that loan demand is slow and competition is fierce, with a focus on growing C&I operating company relationships to position the bank for 2025. On credit, he stated that recent nonperforming loan issues were one-off situations unrelated to the rate environment, highlighting strong underwriting with low loan-to-values. He attributed strong deposit growth primarily to winning new relationships across key business lines like government services and title escrow, rather than from existing customer balances, which are at multi-year lows.

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Chairman & CEO Li Yu described the OREO situation as 'unlucky,' with a sale falling through, stating the bank will not 'fire sell' it and has no firm resolution timeline. He confirmed the new Manhattan branch is performing well in loan generation and announced plans to open a Silicon Valley branch in the second half of the year. On the economy, he noted that the bank is closely monitoring clients affected by tariffs and supply chain issues, but it's still too early to know the full impact.

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Executive Li Yu attributed higher Q4 payoffs to asset sales facilitated by lower rates and stated that clients are waiting for more significant rate cuts before becoming more active. On credit health, Executive Wellington Chen described the client base as "very healthy." Li Yu and Executive Nick Pi emphasized that the bank's underwriting focuses on strong sponsor guarantees, which ensures borrowers are motivated to work with the bank to resolve any issues, a key factor in maintaining portfolio stability.

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Chairman & CEO Li Yu and Executive Nick Pi clarified that the rise in criticized loans was due to a single relationship with payment irregularities, noting that several of the loans are now current and the underlying properties are strong. Li Yu discussed the competitive environment and the strategy of hiring new producers. Regarding the long-term margin, Executive Edward Czajka suggested that if the Fed Funds rate settles around 3-3.5%, the margin could stabilize north of 3.50% by mid-to-late 2025.

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EVP & Chief Credit Officer Jill Rice attributed the strong originations to seasonality and a catch-up from a slower Q1, reaffirming the mid-single-digit growth forecast for the year. EVP & CFO Rob Butterfield noted that deposit competition has not intensified recently, emphasizing the bank's relationship-focused strategy. He confirmed FHLB advances were a temporary funding plug and that the bank expects seasonal deposit inflows in Q3 to help fund growth, supplemented by approximately $60 million in quarterly securities cash flows.

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EVP & Chief Credit Officer Jill Rice noted that growth opportunities are diverse and that while uncertainty caused a pause, pipelines are rebuilding. She detailed a granular approach to monitoring tariff risks, believing small businesses will be most impacted. EVP & CFO Robert Butterfield discussed the stable funding cost environment and the strength of the bank's core deposit base. Regarding California, Jill Rice credited the growth to the successful hiring of talented bankers who have brought new clients to the bank.

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Executive Jill Rice described client optimism as 'tempered' and noted C&I growth was diversified across California and Washington. CFO Robert Butterfield and CEO Mark J. Grescovich stated that deposit cost reductions have been well-received by sophisticated clients without causing attrition, noting that total account numbers actually increased. Rice addressed credit, explaining that the ag portfolio is seeing some strain from lower commodity prices, leading to increased reserves, but emphasized it remains a small part of the overall loan book.

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EVP and CFO Robert Butterfield stated that while Q3 deposit growth was exceptionally strong, he expects loan growth to outpace deposit growth long-term, with small business relationships being a key source of core deposits. EVP, Commercial Banking Jill Rice projected continued low-to-mid-single-digit loan growth, potentially rising to mid-single-digits in 2025, and has not yet seen accelerated CRE payoffs. Robert Butterfield added that the margin could remain stable with gradual Fed cuts but would see initial compression with more aggressive cuts. He also noted that the math for a securities repositioning is currently challenging under their three-year earn-back target.

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President and CEO Jared Wolff described Q1 loan growth as broad-based and continuing into Q2, though the full-year forecast was tempered due to second-half uncertainty. He characterized the deposit market as "very, very competitive," with wins driven by new full-service relationships. He clarified that while the credit box hasn't tightened, they are re-emphasizing core principles like full recourse on construction loans.

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CEO Jared Wolff noted improving sentiment and loan demand across all segments, including C&I and real estate, though he expects growth to be more back-half weighted. He stated deposit growth will move in concert with loan growth. Wolff detailed investments in hiring business teams and systems like Encino, Salesforce, and data harmonization projects to support future growth and efficiency.

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CEO Jared Wolff explained that broad loan growth will likely remain muted until interest rates fall further, but the bank is well-positioned for a recovery. He identified warehouse lending, fund finance, and the newly reacquired lender finance business as near-term growth areas. Wolff stated that while loans typically grow faster than deposits, the bank is focused on building new deposit relationships now and expects to maintain a comfortable loan-to-deposit ratio, avoiding the high 90s.

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CEO Jared Wolff explained that the net interest margin is expanding as funding costs fall and loan yields rise, noting the deposit book is intentionally short-duration to benefit from future rate cuts. He attributed new client growth to market disruption from competitor mergers and the appeal of the bank's experienced relationship managers. Wolff highlighted tech initiatives like ServiceNow, Salesforce, nCino, and client-facing payment platforms as key priorities. CFO Joe Kauder added that approximately 40% of assets are floating rate or will reprice within a year.

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CEO Bob Harrison explained that the Q1 loan decline was due to normal course payoffs and participations, not weak demand, and that the pipeline remains strong despite uncertainty. CFO James Moses noted that while there's limited room to cut deposit costs without Fed rate cuts, CD repricing still offers a 20-30 bps spread. Moses also confirmed the full-year expense guidance, attributing the slow Q1 start to timing and stating that investments in projects with good ROI are being considered pending a clearer economic outlook.

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CFO Jamie Moses and CEO Bob Harrison attributed the broad-based deposit growth, especially in DDA, to the team's community engagement and technology investments. They noted that future deposit growth would first fund loans, with excess potentially going into short-duration securities. Harrison observed increased client activity and equity money coming off the sidelines, though construction loan payoffs are a headwind. Moses confirmed the margin guidance assumes two rate cuts in 2025 based on the forward curve.

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CEO Bob Harrison identified commercial real estate and dealer floorplan as primary growth areas, noting the consumer side remains soft. CFO Jamie Moses detailed that approximately $400 million in fixed-rate assets reprice quarterly, with new loans originating at 6.5-7%. Regarding deposits, Harrison emphasized transparent communication with customers on rate adjustments. Moses added that the bank currently favors share repurchases over a securities restructure, viewing it as a better way to return capital to shareholders.

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CEO Brett Pharr attributed growth in credit sponsorship directly to regulatory pressure causing competitors to misstep, which has driven new partners and volumes to Pathward. He clarified that growth in working capital finance stems from improved distribution capabilities, not economic shifts. Regarding the tax business, Pharr credited the experienced management team for gaining market share but deferred detailed comments until after the season concludes.

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CFO Gregory Sigrist explained that the guidance incorporates two 25 basis point rate cuts and that while further cuts have a modest negative impact, they can be mitigated through balance sheet management. He noted strong pipelines are a key driver. CEO Brett Pharr clarified the guidance explicitly excludes the impact of the insurance premium finance sale and the subsequent securities restructuring, which is a 12-18 month process. Pharr confirmed the Partner Solutions pipeline strength is from both new and existing partners, with recent deal closures being a key development. He added that post-sale, the focus is on redeploying capital into higher-yielding assets and creating a flow business for SBA/USDA loans.

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CEO of Heritage Bank Bryan McDonald noted that while Q4 saw higher CRE activity, the goal is to balance it with C&I lending, with the current pipeline near a 50-50 split. Chief Accounting Officer Jennifer Nino projected the quarterly expense run rate to be in the $41 million to $42 million range for 2025, accounting for merit increases and new initiatives. She also guided for a 2025 effective tax rate of 15% to 16%, up from the normalized 12.5% in 2024.

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CEO Steven Gardner stated that the existing team is in place to drive organic growth and expects originations to meet or exceed payoffs within the next couple of quarters, with loan purchases used tactically. He noted new origination yields are attractive in the high 6% range and is constructive on the ability to reprice the portfolio up over time. Regarding capital, he reiterated that they are assessing a multitude of options, including share buybacks, to maximize shareholder value.

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CEO Steven Gardner stated that loan growth is focused on C&I, with some opportunities in construction and SBA, but not multifamily. He noted the loan pipeline has grown recently. On capital strategy, Gardner prioritized maintaining the dividend, followed by redeploying excess liquidity into loans. He confirmed the Board is also assessing balance sheet repositioning and a potential share repurchase plan. Regarding hiring, the focus is on acquiring talented individuals with strong client relationships rather than on specific geographies.

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CEO Steven Gardner explained that confidence stems from client conversations, seasonality in deposit outflows, increased loan origination, and anticipated economic certainty post-election. He noted good origination on the C&I side and a modest pickup in construction lending. Regarding capital deployment, Gardner confirmed they are considering all options, including M&A and balance sheet repositioning, but will remain thoughtful and analytical, acknowledging the uncertain regulatory environment.

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Executive Steven Gardner explained that the impact of rate cuts depends on the economic driver behind them, noting a soft landing could boost fee businesses and credit demand, though such an outcome is historically rare. He attributed weak originations to a deliberate slowdown since 2022 combined with muted client demand amid economic uncertainty. Regarding credit sales, Gardner stated there was no common denominator among the loans sold and that the bank will continue to use this proactive credit management tool.

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CEO Damian Kozlowski detailed that the credit sponsorship business is ramping up, primarily with Chime, and is expected to grow from approximately $280 million to $400 million in footings by year-end 2024, with a target of $900 million to $1 billion by the end of 2025. He projected a stable NIM for 2025 in the 4.90% to 5.00% range, assuming the Fed funds rate settles around 4%. Kozlowski explained that the transaction processing loss was a one-time event caused by a rare application glitch and that multiple new controls have been implemented to prevent a recurrence.

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Executive David Taylor described the U.S. reception as 'tremendous,' noting one partner is close to being operational with a larger pipeline expected over the next year. He explained that U.S. economics are roughly 1% better than in Canada due to lower funding costs. Taylor confirmed they can immediately raise U.S. deposits, highlighting a new partnership with Raymond James. He quantified Q3's direct acquisition-related costs at approximately $700,000 and noted an additional ~$600,000 margin impact from the lag in Canadian deposit rate adjustments.

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Executive David Taylor acknowledged seasonal softness but expects a resurgence in POS growth in H2, driven by new products and a potential U.S. market entry. Taylor explained that while partners see higher defaults, the bank's model results in faster repayments, protecting it from credit losses. He also highlighted that rising insolvencies are boosting low-cost deposit growth.

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