- Outstanding Loan Growth: Strong loan growth with expected monthly payoffs of $25 million, driven by disciplined underwriting.
- Net Interest Margin Stability: Maintained NIM at 4.45%, with historical lows at 4.35% if interest rates decline further.
- Capital Strength: Capital ratio reached 18%, prioritizing organic growth over share buybacks for long-term value.
- Deposit Cost Management: Controlled cost of funds at 2.40% despite competitive deposit market pressures.
Loan Growth and Asset Quality
Loan growth was a key highlight, with the company expecting payoffs of around $25 million a month. The company's asset quality is better than ever, with a low provision for loan losses. CEO Thomas L. Travis praised the team's performance, citing their discipline in underwriting and growth. The company's disciplined approach to lending has paid off, with a strong loan growth trajectory.
Deposit Competition and Capital Management
Deposit competition remains tough, with depositors keenly aware of interest rates. However, the company is managing deposit costs effectively, with a focus on maximizing loan dollars while maintaining margins. The company is building capital at a nice clip, with an 18% capital ratio. Management is not focused on share buybacks, instead prioritizing top-tier results and long-term shareholder value.
Valuation and Outlook
With a Price-to-Tangible Book Value (P/TBV) ratio of 1.69, the company's valuation appears reasonable. The Dividend Yield is 2.28%, providing a stable source of return for shareholders. Analysts estimate revenue growth at 7.0% next year, which suggests that the company's strong performance is expected to continue. The company's guidance on expenses and fee income is focused on controlling expenses, with a expectation of $9.1 million in core expense, and $1 million in core fee income related to oil and gas. The oil and gas segment is expected to decline gradually over the next three to four years, with no significant impact on the bank's finances.