Cullen Frost 2Q16 Earnings Call Notes

Cullen/Frost Bankers’ (CFR) CEO Phil Green on Q2 2016 Results

The current level of problems in the energy space remains manageable

“At Frost, our typical energy borrower has spent his entire career in the business and many are second or third generation in the energy industry. They have been through cycles before and will go through them again. Our energy customers continue to execute their plans and strategies and they are communicating well with us. The current level of problems remains manageable. ”

Non-accrual book had a hospital loan which was resolved

“The one non-energy credit was commercial real estate. It was a hospital that has some problems. It was in bankruptcy foreclosure and it was sold. We recovered all of our balances, all our principal and interest, all our expenses, attorney fees, etcetera. It was sold for much more than what we had looked for or the – it was sold for a great price. The other two were energy credits. ”

Energy portfolio continues to improve, and we did stress these loans down to $30 oil

“I don’t know the exact price point. I would say that the portfolio though has been – is continuing to improve. You have got – we did stress it before with oil prices down to $30 a barrel. And so we recognize that part of it. The energy customers that we have remember, been working through problems and we are beginning to see as I mentioned earlier, deals get done, lot of capital go into the business. And the fact that this has happened isn’t just a recent phenomenon, our customers have been working on these plans for the last year.”

Jerry Salinas

Houston’s economy is softer but still formidable

“Houston’s economy is softer, but still formidable given the energy setbacks. Despite shedding 20% of its energy jobs since employment peaked 18 months ago, Houston continues to add jobs in refining and petrochemicals and healthcare services. Houston overall employment is down about 1.2% year-to-date, although its 4.7% unemployment rate it’s still lower than the national average.”

Our portfolio is stable at $40. There are opportunities to make good returns

“At $45 oil, our portfolio is stable. As it relates to the oil piece of the portfolio, we are actually seeing some customers who are increasing drilling. We are seeing rig counts increase particularly in the Permian Basin at $45. I think our portfolio is probably stable at $40, say $40 to $45 as it relates to oil. Given the technology that’s happened and the improvements in technology, improvements in efficiencies and drilling, $40, $45 you can make the decent return if you are in the good plays.”

We have begun to see sales of properties at these prices

“Another thing we have seen at these price levels is we have begun to see sales of properties. Just some of our customers, just anecdotally one of them had $400 million sale of public company. Once – some things that are working right now, either have been done or pending, once got a $50 million sale.”

BB&T 2Q16 Earnings Call Notes

BB&T (BBT) Kelly S. King on Q2 2016 Results

We’re focusing on expenses at a more intense rate

“I do want to reinforce that we are intensely focused on expenses. We’ve been focusing for a number of years, as you heard me describe about reconceptualization of our business, that continues, but I would say to you, it continues at a much more intense rate.”

The economy is relatively slow, yield curve will be flat for a period of time

” The economy is relatively slow. We project a relatively low flat yield curve for a period of time. And as a result, we are accelerating our focus on expense reductions.”

The economy is ok, Brexit is over exaggerated

“Speaking of the economy, we think the economy is okay, still growing at about 2% to 2.5%. It’s been an interesting six months as we came out of the first of the year when everybody thought the world was coming to an end with changes in China and so forth, and then it settled down, more recently everybody has gotten very, very excited about Brexit. We think the Brexit change is serious, but it’s been over exaggerated in terms of its impact on the world and certainly on us.”

Pre crisis we were running at 15% ROE, normalized we think that falls to 13% based on increased capital and 11.5% based on the economy

” Pre-crisis we and the other good banks were operating at about 15%. You got to start from kind of the top. Way I think about it is about 2% kind of right off the top because of higher capital. And then, you’ve got about 1% to 1.5%, which is just the economy, margins, et cetera, and then the difference really is in increased regulatory costs and some technological cost. So from the capital point of view, we’re going to continue to try to manage our capital efficiently, but it’s going to stay high compared to past period. So that 2% at least for the short run is kind of non-retrievable, but that gets us to, say, 13%. So the 1% to 1.5% in terms of economy, obviously, can come back, and come back quickly, depending on the growth rates in the economy and the margins. ”

I think the flat rate scenario is overstated

“I personally think the flat rate scenario that everybody projecting is overstated. The underlying strength of our economy is not great, but it’s good. Fed, I believe, clearly knows they need to raise rates, and I think they will the minute they see a window, which could still easily happen at least one rate increase towards the fall.”

Investing in technology is about getting to scale and being more efficient

” And then the whole thing about regulatory and technological cost is about becoming efficient; scale is part of that, and then they just need to settle in that we have put into place.”

I think we can definitely be in the 10% range

“I frankly think in the bottom line, Gerard, that it’s a material change, and that over the next couple of years, I certainly think we’ll be in the 10% range over the next couple of years, and covering cost of capital. I don’t have any concerns about that. From 10% to 12% or 13% is more difficult, as I’ve described, and somewhat circumstantial based on what’s going on in the world, but we will be in the top tier of the performing banks based on the then existing circumstances.”

Remember that the efficiency ratio is a ratio

“I know everybody likes to be hyper-focused on the efficiency ratio, and we’re willing to talk about it. But remember that it is a ratio, and so we have a lot of visibility in terms of the numerator, but we don’t have as much visibility in terms of the denominator, that is revenues. Obviously if we did nothing today with our expenses, and the economy got better and margins got better, our efficiency ratio would go down. I mean, you wouldn’t give us any credit for that, but that’s what would happen.”

Not doing M&A until they right size what they’ve already got

” Our shareholders understand we are not going to do M&A, until we feel good about executing on what we already have invested in. Recall we bought $35 billion worth of assets over the last year and a half, and we got plenty of work to do to right size that, and get the returns for our shareholders. So I think where we are, I think this is where we’re going to be, and is just really that simple.”

Daryl N. Bible – Chief Financial Officer & Senior Executive Vice President

Excluding energy, NPAs are stable

“NPAs decreased 1.9% to 40 basis points, with the majority of the loan portfolio showing improvement. If you look at the graph, excluding energy, NPAs have improved steadily in recent quarters.”

Cullen Frost 3Q15 Earnings Call Notes

Loan market remains competitive

“The loan market continues to be very competitive, our lost loan opportunities show more deals lost to structure the pricing we remain consistent in our underwriting standards and that credit discipline serves as well.”

Credit quality favorable but non performings up q/q

“I’m pleased to report that our credit quality remains favorable, traditional measures of credit quality are strong delinquencies continue to be well below 1% at 0.64%. Non-performing assets were $58.2 million down 8% from the $63 million reported in the third quarter of last year and up $5.8 million from the $52.4 million in the second quarter of 2015.”

Performing well in this oil environment because this is what was expected when we talked to our customers

“there’s a few key headlines and I think are very important they show why we are performing well in this significant decrease in oil price. We remain in close and continual contact with our energy customers. Current conditions align with what customers expected when we visited with them late last year and early this year. Customers are at executing their plans and strategies and are adjusting their business plans and cost structures in a prudent and practical manner.”

We’re underwriting to $50 in 2016 and $70 in 2019

“Regarding our production based borrowers, which is 72% of our portfolio, it is important to note that our current price deck has oil at $50 a barrel for 2016 with some escalation through 2019 topping out at $70 a barrel.”

Texas has slowed but still lower unemployment than rest of the US

“Looking at the Texas economy, well Texas economy growth has slowed in 2015, it is still projected to produce positive growth for the year along with an unemployment rate almost 1% lower than the nation”

Capex budgets could be down 40% depending on how close your are to the drill bit

“as I mentioned to you we are about 10% or 15% down now. And it could be as much as 30% to 40% and this stuff moves around depending on, you know how close you are to the drill bit. How much service work, you got but I would say to you that in my opinion you know you squeezed a lemon about as much as you can.”

You can’t get blood out of a turnip

“I think the service industry has been very aggressive I think they’ve done a great job of cutting cost. But you can’t get blood out of a turnip.”

It’s tough for a bank under $1B to survive after Dodd Frank

“Bank M&A, you know those continues to be a lot of dating in the little banks under a billion dollars because you know regulation has made it or they can survive, which is a shame…I think you are going to see the little guys get together to try to get over $1 billion I don’t blame them their survivors and work hard but it’s a shame what Dodd Frank and all the stuff did to the industry in America.”

Redeterminations starting, but we’re so close to our customers that we’ve got a good idea of what’s going on

“It’s just starting, but from our standpoint I gave you some color which we believe what the results will be already because we spent, we are so close to our customers, we got pretty good understanding so we will know more by year end exactly what’s going on.”

Competition has increased from “stupid bankers.” The Fed is creating bubbles.

“It’s just stupid bankers, and there are both big and little ones. You get all this pressure, that’s one of the benefits of the Feds getting out of keeping interest rates low for ever as they are creating some other bubbles. You know where they are, and hedge funds, and all kinds of private equity investments. And so what happens, the math is pretty simple you’re sitting there want to go loans because the yield better and so you start doing stupid things and lowering your standards now.”

The Permian basin is one of the best honey hole in the world

“It’s surprising with oil down end up from 100 take a number 45, 43 wherever it is – one of the things that if you are out there, but people will kind observe is how much traffic and there are still lot of traffic. I think you know its going to slowdown a lot, its got to but what’s you can’t forget is that the Permian basin is one of the best honey holes that you’ve got for all in the world. And so you are going to continue to have some activity.”

Historically it takes 80 months to get through an energy cycle so we’re probably in the first 3-4 innings of this

“people out there tell us that it historically when they go a down cycle there it usually takes 80 months to get through it and you can pick your starting point of this down cycle but we’re certainly in that I would say probably in the first three or four innings of that cycle.”

Banco Popular 2Q15 Earnings Call Notes

Thoughts on the Puerto Rico fiscal situation

“The government of Puerto Rico continues to face multiple fiscal challenges in the coming weeks and months. In order to address the challenges the government formed a working group task with creating a five year fiscal stability plan and started discussions over debt renegotiations.

The government has also proposed the creation of our financial control [ph] as detailed [indiscernible] we will continue to assist every way we can to enhance the execution of this plan. We hope that the political leadership will arrive at solutions that will achieve fiscal balance and more importantly put the economy back on the growth track. We will do everything in our power to support this result. However as a result of the work done in the last few years we shift the risk profile of our credit profile, enhance operations, increase profitability and grow our capitals. We’re prepared to manage through a variety of potential scenario.”

We are pleased that asset quality continues to improve

“While operating in a challenging economic environment, we are pleased to report that asset quality continues to improve during the second quarter as non-performing assets, non-performing loans, and NPR inflows improved over the previous quarters.”

Most Puerto Rico exposure is municipal loans

“As we have discussed in the past, more than Popular’s direct Puerto Rico government exposure is in the form of municipal loans, and not security. Having said that, we do have a small portfolio Puerto Rico government securities with a fair value of $44 million, which is totally quality with a corresponding on realized gains and often reflected in multi-year. ”

Central government exposure is nominal

“We believe our total exposure to the central government and public corporation is nominal representing only 4.6% of total Q1. Our municipality exposure is more than diversified portfolio of senior priority loans to a select group of municipality whose revenues are independent of the central government.”

We do recognize that our fate is tied to Puerto Rico

“Our story is to a large extent linked to Puerto Rico, its economy and future. We are aware of that and remain committed to working to improve the island’s prospects. But Popular is also a story of a solid organization that has navigated through a complex environment and has emerged as a stronger, better capitalized, and more diversified institution.”

SVB Financial Group 2Q15 Earnings Call Notes

Highest quarter of VC investment since 2000

“The innovation markets remained strong in the second quarter saw continued robust investment in exit activity. Venture capitalist invested $17.5 billion in nearly 1,200 deals, a 30% increase in terms of dollars and a 13% increase in the number of deals compared to the first quarter. This was the sixth consecutive quarter of more than $10 billion of venture capital invested in a single quarter and the highest quarter of investing since 2000.”

Private bank is area of accelerated growth

“Our private bank is another area where we’re seeing accelerated growth. Thanks to our continued focus on delivering a differentiated client experience. Average balances of private bank loans grew at an annualized rate of 44% in the second quarter, fueled by healthy mortgage lending and significant new client growth. We expect the private bank to remain a long term growth driver for SVB.”

The competitive environment remains heated

“The competitive environment remains heated. Strong funding and exit markets have increased the amount of liquidity in the markets and borrowers have money options. As a result some vendors up here are willing to go to any length to win business regardless of whether that risk justifies that return.”

Regulatory hurdles remain high

“Finally the regulatory burden for banks of our size is significant. While we had and we’ll continue to invest our regulatory and compliance infrastructure, we expect the regulatory bar will continue to rise.”

Two loans went non-performing, but we classify as anomalous. ONe is sponsor led buyout

“the credit quality does remain solid and nonperforming loans remain we think within our normal operating range at the 70 basis points of total loans. Turning to the two loans specifically, I’d start by characterizing both of them as anomalous. As Mike mentioned, one of them is a sponsor led buyout loan. It’s the first of its kind that has become impaired, since we began the business in 2006, 2007 timeframe, that’s the first thing. The second is an asset based loan and that too is a rare event at SVB.”

Sponsor led buyouts have been a key part of our growth. It’s gotten a lot more competitive though

“the sponsor-led buyout as you know has been a key part of our growth for the last few years and it continues to be part of our growth, it will be a little bit lumpier for a lot of different reasons. But the growth will be slower than what it has been in the last couple of years, mainly for reason, which is the competitive landscape. And unlike the other business, with sponsor-led buyout you’ve competition from banks, but more increasingly you see competition from non-banks, which don’t have the same, both regulatory requirements and have quite honestly lower yield hurdles and can be even more flexible.”

BB&T 1Q15 Earnings Call Notes

1.18% ROA but 9% ROE

Our fee income ratio is up to a very strong 45.8% versus 43.6% in the first quarter of 14. ROA was 1.18%, ROE was 9.05%, and important our return on tangible common was 14%. With regard to loans which I’ll give you a little bit more detail on in just a moment, excluding residential mortgage they did grow 5.4% which is pretty good in this environment. It was led by C&I, direct retail and sales finance.”

We think multi-family is overheated

“we are being careful in multifamily. We think it is kind of peaking, and so we are being careful in underwriting and certainly in some markets we have really curtailed lending, because we think it is overheated.”

Multi-family is improving, but kind of at a top. It’s not a problem today but we need to be careful

“The market we think in multifamily is improving, but again, we think it’s kind of at the top. So it’s not a problem today, but we just think we need to be careful where we’re going. We expect income producing to be seasonally stronger in the second which will be good.”

Prime auto is another area of concern

“We mentioned last time that this is an area also in prime auto where there’s a lot of money chasing these assets and spreads are getting to be really, really tight, so we are just not willing to take growth at unacceptable spreads. And so we can expect that to be a little slower in the second.”

I think the Fed is going to raise because they need to start moving away from zero

“I tell you what I personally think. I think the Fed is going to raise short-term rates in the June to September time frame in spite of all their rhetoric about the recent changes and so forth. The reason is because I think they believe they need to get started on moving off the zero-based level.

The economy is not great, but it’s not bad. They really need to begin getting to psychology for a movement in rates, because at some point you’ve got to get rates up so when you go down you have some cushion.”

It’s a very challenging environment to be a money lender

“everybody is experiencing the same environment Eric the interest rate you just alluded to has challenges in terms of technological costs going up a lot. Regulatory costs are going up, and you can’t beat that environment by making poor quality loans and low priced loans. It is a very challenging environment.”

It’s a cost control game, you need to add scale

“In to be honest, in this kind of environment it is a cost control game. You can’t do so much in – that looks like adding scale. Do as much as you can organically but you can’t push that because you might get scale and expenses but you lose it on net income as a provision. Our answer is mergers make more sense for us.”

A lot of competing sources for funds too

“Money from everywhere is – higher-yielding assets in the U.S. ensure enough in private equity funds and hedge funds and business development corporations, all kinds of factors out there competing with us – this environment is tougher than it was before.”

It’s really hard to say when an acquisition will close in this environment

“You know, this environment is a different environment than any other we have played in. In the old days you could predict with a lot of positioned exactly when things could occur. It’s really not that predictable today. As I said in the opening remarks we have a lot of confidence that will close in the second half. In all honestly at think it will close in the third quarter but I can’t be precise enough whether it is July or August, I just can’t be that precise.”

Deposit growth has been extremely strong for the industry

“Core deposits, they are strong for the industry. Our core deposits growth and community bank and corporate banking has been phenomenal. If you go back six or seven years ago, the percentage of DDA to our funding was in the midteens. We are now over 30% DDA funded. That is just a completely different BB&T.”

Suntrust 1Q15 Earnings Call Notes

No meaningful delinquencies or defaults in energy

“With respect to our energy portfolio, we have not seen any meaningful delinquencies or defaults. During the quarter, we updated credit ratings, resulting in some migration, and we expect that to be ongoing, which is why we have proactively built reserves for this portfolio.”

Wholesale banking a key growth engine

“Turning to whole sale, whole sale banking continues to be a key growth engine for the company. Looking at the numbers on an adjusted basis, net income was up 18% year-over-year, driven by solid revenue growth and further asset quality improvement.”

Not focused on M&A right now

“Well, I think the continued investment right now is in our business. The bank that we like the most is SunTrust. We’ve got third biggest retail operation in our markets, the fourth largest mortgage company. We’ve got great momentum in our investment banking operations. So we are going to continue to invest in those things, funded by some of the expense savings and opportunities that we are creating.

I presume without the green light if we wanted to do something on the M&A side, where we think about things that are potentially accretive to a really strong franchise, yes, but those are not a lot of them. So, 12 and 18 months is a long time. Our focus right now continues to be highly and mostly focused on SunTrust.”

Hopefully regulators ease capital requirements at some point

“I would hope that over the course of the medium term, that the regulators would allow the industry to be able to shrink capital level overall. If I think about where we could end up in that type of environment, I think that we would likely end up as some kind of ratio below nine; something that starts with an eight probably seems like it would be certainly adequate for the need that we have as a company to support our client needs, and be able to withstand the rigorous CCAR stress test.”

BB&T 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Acquiring susquehanna

“We did announce an agreement to acquire Susquehanna Bancshares, as you probably know, very excited about this. It’s a significant merger, $18.6 billion in assets, $13.6 billion in deposits for 245 retail branches. I’ve had the opportunity over the last several weeks to visit a lot of their branches, visit a lot of their clients, a lot of their community leaders. I’ll tell you, it’s a really great company, strong culture, strong community focus, looks just like BB&T.”

Very low NPAs

“NPAs as a percentage of total assets remained at the lowest level since 2007 at 42 basis points.”

If the Fed takes the word “patience” out LIBOR will start to move

“The Fed impact will impact us more than what we are seeing on the long end of the curve. As Kelly said, we are still expecting the Fed to increase middle of the year. And if Fed with their announcement in March takes the word patience out, you’re going to see LIBOR rates start to increase in the second quarter. What you’re going to see that starting to flow through in the net interest income in the second quarter just by LIBOR rates increasing.”

The 10 year affects the mortgage market

“So I know lot of people focus on a 10-year, but the 10-year really just impacts more the mortgage market little bit in prepayments from that perspective. When we ran our models, we basically used current rates and what was in the forward curve and all that, and I will say that net interest income will be challenging to grow. But I still think depending how we grow our loans and our funding mix continues to improve. I think we still have a good chance of actually growing NII little bit.”

US Bancorp 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Economy isn’t ready to push loan growth quite yet

“tempting as it might be to tell you guys we’re going to move to 1.5% to 2% linked quarter or 8% to 10% year-over-year, the economy doesn’t warrant that yet and we’re going to continue to take market share on the pricing benefits and the quality benefits we’ve been using for the last five to seven years, and as the economy slowly improves so will our loan growth but not remarkably, and therefore in a few years you’ll be satisfied that we have remarkably high credit quality and a continued stability on what we promised through the entire cycle.”

We’re expecting hte fed to raise rates mid year, but it’s not going to break the company if they don’t

“I think like a lot of our peers, we’ve adopted the Fed’s interest-rate scenario which starts to move up in the middle of the year. If that happens, that’s awesome. But if it doesn’t, we’re not entirely related. It’s not going to make or break this Company on whether interest rates move up. We’re going to control a lot of other things”

Hold discretionary investments back a bit until the fed raises rates. Invest in operations

“So the first half of ’15, given Fed’s interest-rate scenario, it will a lot like all of ’14 where we’ll continue to invest where we have to, we’ll watch the discretionary investments and keep them perhaps, defer them a bit until we can see a stronger economy, we’ll add the compliance, operating risk areas, audit areas where we think we continue to need to make sure we’re at the right level of support, and then when interest rates hit, we’re ready to pop and move on to some of these more discretionary investments.”

Short end is what impacts banks

“The short answer, John, is no. The long rate is less impactful to us. We’re most impactful at the very short end and if you think about the middle then two to three years is where we have a lot of impact. We don’t have a lot of assets in our book that are at the 10 year and beyond mark, so that’s less impactful. Again the short end is the most impactful to us, both in net interest income as well as fee income because of the way we’re using our money funds.”

Stability of our credit portfolio is the best ever

“the stability of our credit portfolio right now is the strongest I’ve ever seen. It’s just extremely all the loaners are performing well.”

Big deal that mortgage is growing again y/y

“We should have had the applause because that is a long anticipated moment where we’re starting to grow mortgage again on a year-over-year basis. That is a big number, Eric, so if you do the math, you’ll see that it’s more than enough to accomplish that.”

[analyst comment] your bank is awesome–Richard Bove – Rafferty Capital Markets

“I got to ask as I think 30,000 feet high for a second, when I look at your bank, I can see absolutely nothing wrong. In my view it’s about as perfect as a company can get in this industry.”

Rates rising is our chance to show what we’ve got

“The next opportunity for us to perform is when the rates pick up because the markets picked up and to show that the Bank is repositioned now to be as strong as it ever was when it was on defense and be better than anyone else on offense”

Not going to try to reconcile low 10 year with strong growth

“I say that because the Fed and the Fed equivalent across the globe, they’ve done some behaviors that are certainly not [indiscernible] and they are not things that we all learned in school. To the extent that they are being motivated by I think non-financial, more political activities and more financial data that might be backwards looking not forward-looking, I’m not going to be able to correlate those two for you, and I don’t think our customers are sitting there thinking that way either.”

60-70% of mortgages are new purchase

“The third quarter was 70-30 new, and because the rate is coming down a bit, it’s closer to 60-40, 62-38. So it’s coming down a little bit more high on the refinancing side and we are also starting the year strong that way because of the low rate environment. So I would expect it to be somewhere between that 60% and 70% new.”

Efficiency ratio falls because revenue grows

“let’s talk about the efficiency ratio, it’s what everybody looks at, it’s a fraction, right, it’s a quotient. So one of the reasons I think we can do well is because our revenue grows. I mean there is a very basic fact, like you all know, that if you grow revenues faster than expenses, your efficiency ratio comes down. That’s a fact.”

We’ve never brought in a third party to tell us where to cut expenses

“So in other words we’ve never brought in an outside party to look at our Company and tell us how to run it or tell us how to cut expenses, where you impose on employees some oversight if they didn’t do themselves, because number one, it’s intrusive, number two it’s really unnerving because if I have to cut 10 people out of a room of a 100, the rest 90 don’t know if they’re safe or they’re in the next group to fall.”

Regions Financial 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Let me talk about energy

“I want to talk briefly about the recent declines in oil prices and its impact on our energy lending portfolio. We’re closely monitoring the price declines for direct and indirect impacts to our overall loan portfolio quality.
We’ve been doing this a long time
Our bank has extensive energy lending expertise dating back multiple decades and through numerous energy cycles. Our core exploration and production loans at present are well secured and provide a collateral cushion to withstand price declines.
We’re keeping a close eye, but not seeing any material weakness
In terms of broader impact, we have been monitoring markets such as Texas and the Gulf Coast for signs of weakness in employment and housing. However, we’re not seeing any material weakness past this point in time.

Continue to expect an increase in short term rates

“As we look ahead, we expect improved growth in the U.S. economy in 2015. Low energy prices should provide a tailwind to consumer spending and the manufacturing sector. However, an uncertain global growth environment does pose some risk. As a result, we continue to expect an increase in short-term rates in the latter part of 2015.

Net interest margin remained pretty stable

“Despite a continuation of low rate environment which exerted pressure on asset yields, both net interest income and net interest margin remained relatively stable with the previous quarter.

Expect mortgage production to be up vs. last year

“Based on what we know today, we expect mortgage production in 2015 to exceed that of 2014.

Expect favorable asset trends to continue but volatility is expected

“based on what we know today, we expect favorable asset quality trends to continue. However at this point of cycle, volatility and certain metrics can be expected.

If the 10 year yield stays here we would expect margin pressure

“with rates at current levels, the net interest margin would experience gradual pressure over the year.
For example, if the ten year treasury yield would remain in the 175% to 2% range throughout 2015, we would expect 10 to 12 basis points of margin pressure.

We still think the Fed is raising rates mid year

“ if you look at where we think the Fed’s going to be towards the middle of the year, we think you’ll start seeing some pressure to increase short term rates, and so we haven’t abandoned that, what we wanted to try to do is put some sensitivities and some extent that that does not happen.

Customers have a desire to borrow online

“all the things we’ve discovered through some of the product innovation we’ve had over the two last two or three years is that the desire for customers to also have the ability to borrow money online and also borrow money at point of sale and so we are introducing a number of new online capabilities as well as some partnership capabilities we have on a sale.
That’s an activity that we’ll be making announcements on as the year progresses and it’s just a way to extend our brand further into market places that we are as dominant today

Third party costs are easy to get rid of

“we think we can get that down and third parties are one of the easiest — third party expenditures are one of the easier ones to deal with because you don’t have to sign a contract.

Loan originations pristine credit quality

“I think what’s going on the books today is some of the most pristine, incredibly we’ve had in a long time

Deep water companies have longer to play out

“marine transportation companies that are serving the deep water, we think that those companies are operating in an environment that has a much longer to play out.

Small number of customers, good experience, good liquidity, good shape

“A lot of it has to do with where the price ultimately bottoms out and then the length of time that it will stay there, but based upon again good liquidity, good experience amongst our management teams, access to different forms of capital and just the credit profile and small number of customers that we have, we say, we feel pretty good about our exposure today.

Lower rates help refianance, but hurt servicing business

“We could see — we could see an opportunity for refinance activity helping our mortgage business, but also that negatively impacts us on the mortgage services rights.
So we have a little bit of a built in economic hedge to some degree there. We need to still see how that plays out over the course of the year.

Energy book is 41% hedged through 2015 and 17% through ‘16

“About 41% through 2015 and an additional 17% I think through 2016.

Having all your key processes in place to make acquisitions is important

“I think ensuring that you have all of your key processes in order to participate in acquisitions is important. BSA/AML has been imported to our country for a long time. It will continue to get the time and attention and it’s incumbent upon us to have all the controls in place.
We invest an awful lot of time and attention in ensuring that and we feel like we have a very robust program relative to BSA/AML and — but that mean we can’t stop here. We have to continue to invest and continue to be diligent in terms of those processes, but we think we have a solid program today.