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    David Rochester • Compass Point Research & Trading, LLC

    David Rochester's questions to Cullen/Frost Bankers Inc (CFR) leadership

    David Rochester's questions to Cullen/Frost Bankers Inc (CFR) leadership • Q3 2024

    Question

    David Rochester of Compass Point asked about the bank's experience with down-rate deposit betas, the outlook for net interest income (NII) and expense growth, and the reason for the increase in the loan loss reserve ratio.

    Answer

    Incoming CFO Dan Geddes explained that the down-rate deposit beta is expected to be similar to the up-rate beta of ~45 bps, though the CD portfolio mix may cause a slight lag. He declined to give NII guidance but noted significant securities repricing opportunities in 2025. Geddes and outgoing CFO Jerry Salinas indicated expense growth would not decelerate due to continued investments in expansion and technology. The reserve ratio increase was attributed to strong loan growth and a specific credit, not a deteriorating economic outlook.

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    David Rochester's questions to Bread Financial Holdings Inc (BFH) leadership

    David Rochester's questions to Bread Financial Holdings Inc (BFH) leadership • Q3 2024

    Question

    David Rochester requested more specific guidance on the expected Q4 expense increase and asked if the net impact on Q4 net interest margin (NIM) could be stable or positive due to late fee mitigants.

    Answer

    EVP and CFO Perry Beberman advised looking at the historical Q3-to-Q4 expense increase over the past two years as the best guide. Regarding NIM, he stated that while he does not expect expansion, the benefits from CFPB rule mitigation actions will 'mute' the typical seasonal compression that occurs in the fourth quarter.

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    David Rochester's questions to East West Bancorp Inc (EWBC) leadership

    David Rochester's questions to East West Bancorp Inc (EWBC) leadership • Q3 2024

    Question

    David Rochester of Compass Point questioned the bank's capital management strategy, specifically regarding share buybacks, as the TCE ratio approaches 10%. He also asked about liquidity management, including whether excess cash from deposits would be used to grow the securities book and the preference for fixed versus floating-rate securities.

    Answer

    Chairman and CEO Dominic Ng stated that while the TCE ratio rose, the bank remains "patient and opportunistic" in its approach to capital. Regarding liquidity, he mentioned the bank might let some higher-cost deposits run off and is not looking to over-leverage the balance sheet. He added that they are thoughtful about the fixed vs. floating mix in the securities portfolio, noting recent rate backups have presented new opportunities.

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