Yahoo Finance First Merchants Corp (FRME) Q1 2024 Earnings Call Transcript Highlights: Key Financial Metrics ...
Total Assets: $18.3 billion
Total Loans: $12.5 billion
Total Deposits: $14.9 billion
Assets Under Advisement: $8.3 billion
Loan Yields: New and renewed loan yields at 8.15%
Earnings Per Share: Reported at $0.8, adjusted to $0.85 with noncore items
Share Repurchases: $30 million during the quarter
Sub-debt Redemption: $40 million
Deposit Growth: Total deposits grew by 1.7% on an annualized basis
Net Interest Margin: Reported stabilization of net interest margin
Pretax Pre-provision Earnings: Adjusted total of $60.2 million
Return on Assets: Adjusted pretax pre-provision return on assets at 1.31%
Return on Equity: Adjusted pretax pre-provision return on equity at 10.75%
Tangible Book Value Per Share: Increased to $25.7, up 9.3% year-over-year
Loan Portfolio Yield: Declined slightly by 3 basis points quarter-over-quarter
Cost of Deposits: Increased by 6 basis points to 2.64% this quarter
Noninterest Income: Increased by $200,000 on a linked quarter basis
Noninterest Expense: Totalled $96.9 million, including $3.5 million in non-core charges
Capital Ratios: Common equity Tier 1 at 11.25%
Dividend Payout Ratio: Over 40% over the last 12 months
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide insight into the expected margin cadence over the next few quarters, especially considering the focus on reducing funding costs and new loan production rates over 8%? A: Michele Kawiecki, CFO, noted that the margin for Q1 was 310, with a slight increase in March to 311. The expectation is for the margin to stabilize and potentially grow, depending on market conditions. Each 25 basis point rate cut is expected to decrease the margin by three basis points, but efforts to manage funding costs could mitigate this impact.
Q: What is the outlook for loan growth after the first quarter's results, and how does it compare to previous expectations? A: Michael Stewart, President, mentioned that despite a modest growth in the first quarter, the outlook remains positive with expectations of mid to high single-digit growth for the year, driven by strong C&I growth and ongoing investments in the Michigan market.
Q: How much buyback is remaining under the current authorization, and what are the future plans regarding capital management? A: Michael Stewart indicated that about $45 million remains under the current buyback authorization. The company plans to continue being active in buybacks, especially given the current stock price levels and strong capital ratios.
Q: Can you discuss the actions taken on the deposit side to help manage funding costs? A: Michael Stewart explained that the company is continuously evaluating and implementing modest rate reductions across various lines of business to manage funding costs effectively without compromising liquidity.
Q: What are the expectations for fee income and expense growth going forward? A: Michele Kawiecki projected a slight decrease in fee income expectations due to fewer anticipated rate cuts, which could affect mortgage-related revenues. On expenses, there was a strong discipline in Q1, and while some digital platform conversion costs are expected in Q2, overall expense growth might run lower than previously guided.
Q: Could you provide more details on the classified loans increase and its impact on asset quality? A: Michael Stewart noted that the increase in classified loans was a mix of C&I and CRE, describing it as normal inflows and outflows with individual issues, not indicative of systemic concerns across the portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
