William Jones

William Jones from Keefe, Bruyette & Woods inquired about USCB Financial Holdings' Q4 2025 deposit trends, specifically addressing the year-end shrinkage and any associated seasonality or strategic decisions. He also asked about the optimal loan-to-deposit ratio, the strategic expansion of the SBA lending vertical, and the company's broader capital allocation priorities for 2026, including recent share repurchases, dividend increases, and bond structures.

Answer

Chairman and CEO Luis Aguilera explained that deposit shrinkage was due to two isolated events: a long-term client's planned business move of over $100 million and a $50 million swing in correspondent banking deposits, largely recovered in January. CFO Robert Anderson stated an optimal loan-to-deposit ratio is 90-95% and emphasized deposit building as a top priority for 2026. Aguilera detailed the SBA vertical as an extension of existing efforts, targeting established businesses in specific Florida markets with annual volume goals of $40-$50 million. Anderson confirmed that 2026 capital priorities are to earn and return capital, with no significant plans beyond producing strong earnings and building capital, following the 25% dividend increase and prior buyback/sub debt actions.

William Jones from Keefe, Bruyette & Woods inquired about USCB Financial Holdings' deposit trends, specifically year-end shrinkage and any strategic or seasonal factors. He also asked about the optimal loan-to-deposit ratio, the bank's new SBA vertical, and an update on USCB's capital strategy and 2026 priorities.

Answer

CEO Luis Aguilera explained that year-end deposit shrinkage was due to two isolated, expected events: a long-term client's business move (over $100M) and a correspondent banking swing ($50M) that has since recovered. CFO Robert Anderson stated an optimal loan-to-deposit ratio is 90-95%. Luis Aguilera detailed the SBA vertical as an expansion of an existing, prudently grown initiative, targeting $40-50M annual volume in specific Florida markets. Robert Anderson noted that 2026 capital priorities are to earn and return capital, with no significant plans beyond producing good earnings, following the recent 25% dividend increase and prior buyback/sub debt.

William Jones asked for an update on the U.S. asphalt business's winter fill process and the potential impact of oil price changes, and also inquired about business trends in Canada.

Answer

Executive Randy Lake stated the asphalt winter fill was a consistent year and provides a significant competitive advantage in securing supply. He noted the business is run on a margin basis and expects another year of margin progression. Executive Jim Mintern commented that the Canadian business, which is mainly Toronto-based, is seeing a good pricing environment and broadly similar trends to elsewhere as its season begins.

William Jones circled back to the loan growth discussion, asking for a framework on expected paydown levels and whether the anticipated second-half growth would be a gradual grind or a quicker return to historical levels. He also inquired about current pricing on new loans and the portfolio's fixed-versus-variable mix. Lastly, he sought clarity on the expense outlook for the remainder of the year, given the strong performance in the first quarter.

Answer

President Ramon Vitulli confirmed that quarterly loan payoffs are expected to remain in the $275-$300 million range and that growth in the second half of the year would be driven by originations exceeding this headwind. He reported that new loans were originated at a weighted average rate of 7.29% in Q1. CFO Paul Egge confirmed the new loan mix remains around 50/50 fixed-to-variable. Regarding expenses, Mr. Egge cautioned against annualizing the low Q1 figure, stating that about half of the beat was due to timing-related factors and that while they aim to beat prior guidance, investments in the business will continue.

William Jones inquired about the drivers behind higher professional fees, the necessity of M&A for achieving future operating leverage, and sought confirmation of the bank's neutral interest rate positioning and its impact on the net interest margin outlook for 2025.

Answer

CFO Paul Egge clarified that higher professional fees were due to the timing of outsourced auditing engagements. CEO Robert Franklin stated that while M&A could accelerate profitability goals, the bank can achieve them organically, albeit at a slower pace. Paul Egge reaffirmed the bank's strong, neutral margin position, noting they are well-positioned to benefit from continued repricing if rates remain high but would also welcome an upward-sloping yield curve.

William Jones of KBW asked about the company's strategy for deploying excess liquidity, questioning if the bond book would be utilized if loan growth disappoints. He also sought guidance on the expense run-rate for the remainder of the year and inquired about management's long-term target for Return on Assets (ROA).

Answer

Executive David Weber confirmed that investing in the bond book is an option for deploying liquidity, though the primary focus remains on growing banking relationships. Executive Scott Wylie reiterated the expense target of keeping costs under $20 million per quarter. Wylie also stated that the current target is to get ROA back to 1%, with the potential for it to go higher as operating leverage improves.

William Jones inquired about Trustmark's loan growth trends, the impact of loan paydowns, and client behavior in response to tariffs and economic uncertainty. He also asked for sensitivity analysis on the net interest margin (NIM) given potential interest rate cuts.

Answer

Chief Credit and Operations Officer Robert Harvey explained that CRE loan payoffs are expected to be a second-half 2025 event, as many clients are opting for extension options amid rate uncertainty. President and CEO Duane Dewey added that while loan pipelines remain strong, some clients are expressing caution post-April. CFO Thomas Owens clarified the Q1 NIM was impacted by a 3-basis-point seasonal decline in loan fees and that the bank expects low single-digit NIM accretion in coming quarters, assuming Fed rate cuts in June and September.

William Jones from Raymond James inquired about the drivers behind the strong net interest margin performance, the specifics of deposit pricing actions taken, and the expected impact of rate changes on loan yields. He also sought clarification on the 2023 baseline for adjusted continuing operations fees and expenses and the implied expense run rate for Q4.

Answer

CFO Thomas Owens explained that proactive deposit rate cuts were made to mitigate pressure from the Fed's rate reduction, and they are closely monitoring flows to maintain the deposit base and net interest margin. He also noted a natural lift in loan yields and benefits from a steepening yield curve. Chief Accounting Officer George Chambers provided the methodology for calculating the adjusted 2023 expense and income bases, referencing the 10-K and specific nonrecurring items, and confirmed an expected expense uptick in Q4.

William Jones asked if the gross margin impact from deflation was due to temporary inventory losses, whether operating margins are similar across business groups despite different gross margins, and if the company's medium-term financial framework from its Investor Day still holds.

Answer

CFO Bill Brundage clarified that the deflation impact is not from inventory losses but from increased pressure on bidding and quoting in a challenging market. CEO Kevin Murphy confirmed that operating margins are typically consistent across customer groups, but intentional growth investments in HVAC and Waterworks are currently impacting that dynamic. Regarding the long-term framework, Murphy stated that while the current market is unique, the company still believes in its growth algorithm of outperforming the market and driving margin expansion once a more normalized environment returns.

William Jones from Redburn Atlantic asked about the increase in the addressable market for large capital projects from $30B to $50B and questioned Ferguson's competitive positioning in serving the dual-trade contractor.

Answer

CFO Bill Brundage confirmed the addressable market for large projects has grown to $50B through 2030, driven by an expanding project pipeline, and stated they are in the 'early innings' of this opportunity. CEO Kevin Murphy described Ferguson's unique position as a nationwide player with strong plumbing and growing HVAC capabilities, offering a best-in-class, integrated service for dual-trade professionals that is difficult for smaller, local competitors to replicate.

William Jones asked for clarification on the Q4 increase in core operating expenses, the expected expense run rate for 2025, any updates on the merger rate marks with First, and the potential growth rate for the combined company.

Answer

Kevin Chapman explained the expense jump was driven by abnormally high operational fraud losses and health plan costs, and guided to a 2-3% expense growth rate for 2025. James Mabry noted that while merger rate marks have fluctuated, the net impact on the deal's earn-back is de minimis. CEO Mitchell Waycaster expressed optimism for the combined company's growth, citing strong momentum and complementary business models.

William Jones, subbing for Woody Lay, inquired about the characteristics of the wholesale deposits added in Q4, the competitive outlook for core deposit gathering in 2025, and the potential for achieving operating leverage.

Answer

CEO James Beckwith explained that the new wholesale deposits are short-term CDs structured to reprice every three months, positioning the bank to benefit from potential rate cuts. CFO Heather Luck specified the portfolio's weighted average rate is 4.59%. Beckwith acknowledged the competitive deposit landscape but stated the bank is targeting 8% annual growth in both core deposits and loans for 2025. He also affirmed that they anticipate operating leverage in the coming year, driven by slight margin expansion and returns on prior investments in personnel and technology.

William Jones from KBW questioned if Amerant could maintain its net interest margin (NIM) around the guided 3.60% level throughout 2025, considering its growth plans and a potential Fed easing cycle. He also asked how deposit betas might behave and how management balances franchise investment with driving profitability, probing if 2026 would be a year for harvesting profits.

Answer

Executive Sharymar Yepez stated that the NIM is expected to remain stable and above 3.60% for the year, supported by new loan production. She projected that after an initial quick repricing, deposit betas would normalize closer to 40 basis points in 2025. Executive Gerald Plush explained that major transformative investments are largely complete and embedded in the cost base, so future revenue growth should significantly outpace new spending. He reiterated the goal of a 60% efficiency ratio in the second half of 2025, with further improvements expected into 2026.

William Jones of Truist Securities inquired about the factors contributing to SmartFinancial's stable loan yields despite recent rate cuts and asked for the outlook for early 2025. He also questioned how competitive dynamics might affect the mid- to high-single-digit loan growth guidance and whether CRE concentrations could become a limiting factor.

Answer

CFO Ronald Gorczynski explained that loan yields were supported by new loan origination yields of 7.08%, excess loan prepayments, and draws on higher-rate credit lines, though he expects a slight downward trend in early 2025. CEO William Carroll affirmed the loan growth guidance, citing strong economic conditions in their markets and balanced growth that is not limited by CRE. Chief Credit Officer Rhett Jordan added that Q4 production was diversified, with CRE representing only 34% of the total.

William Jones of Truist Securities inquired about Ameris's strategy regarding the trade-off between Net Interest Margin (NIM) percentage and Net Interest Income (NII) dollar growth, the behavior of deposit betas in a potential easing cycle, and the timeline for more opportunistic capital deployment.

Answer

Executive Nicole Stokes confirmed the focus remains on NII growth, supported by a strong deposit base and an expected downside beta similar to the upside. CEO H. Proctor stated that while capital levels provide optionality, the bank will remain prudent and in a "capital building mode" until there is more economic clarity, likely post-election.