Stellar Bancorp, Inc. (NYSE:STEL) Q3 2023 Earnings Conference Call October 27, 2023 9:00 AM ET Company Participants Courtney Theriot - Chief Accounting Officer Bob Franklin - Chief Executive Officer Paul Egge - Chief Financial Officer Ray Vitulli - President and Chief Executive Officer of the Bank Conference Call Participants Eric Spector - Raymond James Will Jones - KBW Graham Dick - Piper Sandler John Rodis - Janney Matt Olney - Stephens Operator Good day, and thank you for standing by. Welcome to the Ste ...

Second Quarter 2023 Earnings Presentation Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the me ...

Financial Data and Key Metrics Changes - The company reported a net income of $35.2 million for Q2 2023, with diluted earnings per share of $0.66, a slight decrease from $37.1 million or $0.70 in Q1 2023, primarily due to rising funding costs [7][9] - The annualized return on average assets (ROAA) was 1.31% and return on tangible common equity was 17.05% [7] - Net interest margin (NIM) contracted from 4.80% in Q1 to 4.49% in Q2, and from 4.38% to 3.97% when excluding purchase accounting accretion [9] Business Line Data and Key Metrics Changes - The company experienced modest loan growth of just over $182 million, with an allowance for credit losses to total loans at 1.24% [11] - Non-interest income normalized to a lower level, while non-interest expenses decreased due to lower merger expenses [20] Market Data and Key Metrics Changes - The company maintained a strong base of non-interest bearing deposits at around 43% of total deposits, which helped manage funding costs [8] - Wholesale funding sources increased significantly, with FHLB advances rising from $239 million to $370 million and brokered CDs from $203 million to $538 million in Q2 [21] Company Strategy and Development Direction - The company aims to concentrate on capital, liquidity, and credit management, tightening credit underwriting while still achieving modest loan growth [5] - The management believes the industry will continue to consolidate, and the company intends to position itself to benefit from this trend [19] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges from rising interest rates and economic uncertainty but expressed optimism about stabilizing deposit costs and attracting new deposits [4][5] - The company is focused on efficiencies through technology and expense control as it integrates operations post-merger [17] Other Important Information - Total risk-based capital increased from 12.39% at year-end 2022 to 13.03% at June 30 [10] - The company is optimistic about its future prospects, citing a strong team and successful rebranding efforts [12] Q&A Session Summary Question: Trends in deposits and stabilization - Management noted that most deposit migration occurred earlier in the quarter, with encouraging signs of net new core deposits being attracted [33] Question: Loan growth outlook - The company expects moderate loan growth, focusing on good margins and safe loans, with a cautious approach to commercial real estate [68][70] Question: Capital priorities and M&A - The management indicated a focus on building capital for potential M&A opportunities while balancing dividends and share repurchases [113][114] Question: Tax rate expectations - The weighted average tax rate year-to-date is expected to be more reflective of future performance [122]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________ FORM 10-Q _______________________________________________ S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023 OR £ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 001-38280 ____________________ ...

```markdown PART I—FINANCIAL INFORMATION [Interim Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Interim%20Consolidated%20Financial%20Statements) The interim consolidated financial statements present the financial position, results of operations, and cash flows of Stellar Bancorp, Inc. for the periods ended March 31, 2023, reflecting the significant impact of the October 1, 2022 merger with CBTX, Inc., with Allegiance Bancshares, Inc. as the accounting acquirer, making post-merger results not directly comparable to prior periods - On October 1, 2022, Allegiance Bancshares, Inc. and CBTX, Inc. completed a merger of equals, with CBTX as the legal acquirer and Allegiance as the accounting acquirer. The combined company was renamed Stellar Bancorp, Inc. Financials for periods after this date are **not comparable** to prior periods[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets were $10.60 billion, a decrease from $10.90 billion at December 31, 2022, primarily driven by a reduction in deposits from $9.27 billion to $8.74 billion, while total loans, net, increased to $7.79 billion from $7.66 billion, and total shareholders' equity increased to $1.45 billion from $1.38 billion Consolidated Balance Sheets (Unaudited) | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$10,604,718** | **$10,900,437** | | Total cash and cash equivalents | $263,333 | $371,705 | | Available for sale securities, at fair value | $1,519,175 | $1,807,586 | | Loans, net | $7,789,856 | $7,661,571 | | Goodwill | $497,260 | $497,260 | | **Total Liabilities** | **$9,158,502** | **$9,517,261** | | Total deposits | $8,738,875 | $9,267,632 | | Borrowed funds | $238,944 | $63,925 | | **Total Shareholders' Equity** | **$1,446,216** | **$1,383,176** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2023, the company reported net income of $37.1 million, a significant increase from $18.7 million in the same period of 2022, driven by a substantial rise in net interest income to $115.8 million from $55.2 million, primarily due to the merger, while diluted EPS was $0.70, up from $0.64 year-over-year Consolidated Statements of Income (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Interest Income | $115,827 | $55,172 | | Provision for credit losses | $3,666 | $1,814 | | Total noninterest income | $7,498 | $4,018 | | Total noninterest expense | $72,598 | $34,517 | | Income Before Income Taxes | $47,061 | $22,859 | | **Net Income** | **$37,148** | **$18,657** | | **Diluted EPS** | **$0.70** | **$0.64** | | Dividends Per Share | $0.13 | $0.10 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the first quarter of 2023, comprehensive income was $67.1 million, a significant turnaround from a comprehensive loss of $63.2 million in Q1 2022, driven by net income of $37.1 million and other comprehensive income (net of tax) of $30.0 million from a favorable change in unrealized gains on available for sale securities Consolidated Statements of Comprehensive Income (Unaudited) | (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net income | $37,148 | $18,657 | | Other comprehensive income (loss), net of tax | $29,980 | $(81,860) | | **Comprehensive income (loss)** | **$67,128** | **$(63,203)** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased from $1.38 billion at year-end 2022 to $1.45 billion at March 31, 2023, primarily due to **$37.1 million** in net income and a **$30.0 million** positive change in other comprehensive income, partially offset by **$6.9 million** in cash dividends declared - Total shareholders' equity increased by **$63.0 million** during Q1 2023, reaching **$1,446.2 million**. Key drivers were net income of **$37.1 million** and other comprehensive income of **$30.0 million**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2023, cash and cash equivalents decreased by $108.4 million, with net cash provided by operating activities at $49.0 million, net cash provided by investing activities at $203.0 million largely from securities sales and maturities, and net cash used in financing activities at $360.4 million primarily due to a net decrease in deposits Consolidated Statements of Cash Flows (Unaudited) | (In thousands) | Three Months Ended March 31, 2023 | | :--- | :--- | | Net cash provided by operating activities | $49,017 | | Net cash provided by (used in) investing activities | $203,026 | | Net cash (used in) provided by financing activities | $(360,415) | | **Net Change in Cash and Cash Equivalents** | **$(108,372)** | | Cash and Cash Equivalents, Beginning of Period | $371,705 | | **Cash and Cash Equivalents, End of Period** | **$263,333** | [Condensed Notes to Interim Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial data, covering reverse merger accounting for the CBTX transaction, loan and securities portfolio composition, allowance for credit losses, fair value measurements, derivative instruments, borrowings, regulatory capital, and stock-based compensation [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q1 2023 financial results, highlighting the significant impact of the CBTX merger, which led to net income rising to $37.1 million driven by a 109.9% increase in net interest income, covering loan portfolio growth, deposit decreases, asset quality, and the company's strong liquidity and capital positions, with an efficiency ratio of 58.96% [Overview and Merger Impact](index=35&type=section&id=Overview%20and%20Merger%20Impact) The report details the October 1, 2022 merger of equals between Allegiance Bancshares, Inc. and CBTX, Inc., forming Stellar Bancorp, Inc., accounted for as a reverse merger with Allegiance as the accounting acquirer, resulting in historical financial statements prior to the merger reflecting only Allegiance's results and making direct period-over-period comparisons challenging - The merger was accounted for as a reverse merger, with Allegiance as the accounting acquirer and CBTX as the legal acquirer. Consequently, historical financial statements of Allegiance became the historical statements of the combined company for all periods prior to **October 1, 2022**[146](index=146&type=chunk) - Financial results for periods after the merger are **not comparable** to periods prior to the merger due to the significant impact on all aspects of the company's financial statements[147](index=147&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) For Q1 2023, net income increased to $37.1 million from $18.7 million in Q1 2022, primarily due to the merger, with net interest income growing **109.9%** to **$115.8 million** driven by higher asset balances and yields, expanding the tax-equivalent net interest margin to **4.80%** from **3.30%**, while noninterest expense increased **110.3%** to **$72.6 million** including **$6.2 million** in merger-related costs, resulting in an efficiency ratio of **58.96%** Key Performance Metrics (Q1 2023 vs Q1 2022) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Income | $37.1M | $18.7M | | Diluted EPS | $0.70 | $0.64 | | Net Interest Income | $115.8M | $55.2M | | Annualized ROA | 1.38% | 1.04% | | Annualized ROE | 10.62% | 9.40% | | Efficiency Ratio | 58.96% | 58.32% | Net Interest Margin Analysis (Q1 2023 vs Q1 2022) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 5.80% | 3.56% | | Average Rate on Interest-Bearing Liabilities | 1.91% | 0.51% | | Net Interest Rate Spread | 3.89% | 3.05% | | Net Interest Margin (Tax Equivalent) | 4.80% | 3.30% | - Noninterest expense increased by **$38.1 million** YoY, primarily due to a **$17.0 million** increase in salaries, a **$6.1 million** increase in amortization of intangibles, and **$5.7 million** in additional acquisition and merger-related expenses[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [Financial Condition](index=41&type=section&id=Financial%20Condition) As of March 31, 2023, total assets stood at $10.6 billion, with total loans growing by **1.7%** during the quarter to **$7.89 billion**, commercial real estate comprising **51.0%** of the portfolio, while total deposits decreased by **5.7%** to **$8.74 billion** due to seasonality and market pressures, and nonperforming assets remained stable at **0.41%** of total assets Loan Portfolio Composition (March 31, 2023) | Loan Type | Amount (in thousands) | Percent | | :--- | :--- | :--- | | Commercial real estate (including multi-family) | $4,014,609 | 51.0% | | Commercial and industrial | $1,477,340 | 18.7% | | Commercial real estate construction and land dev. | $1,034,538 | 13.1% | | 1-4 family residential (including home equity) | $1,008,362 | 12.8% | | Other | $351,195 | 4.4% | | **Total loans** | **$7,886,044** | **100.0%** | Asset Quality Metrics | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Nonperforming Assets (NPA) | $43.5M | $45.0M | | NPA to Total Assets | 0.41% | 0.41% | | Nonperforming Loans to Total Loans | 0.55% | 0.58% | | Allowance for Credit Losses to Total Loans | 1.22% | 1.20% | - Total deposits decreased by **$528.8 million** (**5.7%**) to **$8.74 billion** at March 31, 2023, from **$9.27 billion** at December 31, 2022. Noninterest-bearing deposits decreased by **$352.3 million** (**8.3%**)[226](index=226&type=chunk) - Estimated uninsured deposits, excluding collateralized deposits, totaled **$4.06 billion**, or **46.4%** of total deposits at March 31, 2023[226](index=226&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, with primary sources being deposits, borrowed funds, and asset maturities, with total immediate contingent funding sources at **$4.46 billion**, or **51.1%** of total deposits at March 31, 2023, and capital levels remaining robust and well above regulatory requirements, categorizing Stellar Bank as '**well-capitalized**' - Total immediate contingent funding sources, including unrestricted cash, unpledged securities, and total borrowing capacity, amounted to **$4.46 billion**, representing **51.1%** of total deposits at March 31, 2023[247](index=247&type=chunk) Consolidated Capital Ratios (March 31, 2023) | Ratio | Actual | Minimum Required + Buffer | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 10.39% | 7.00% | | Tier 1 Capital | 10.50% | 8.50% | | Total Capital | 12.72% | 10.50% | | Tier 1 Leverage | 9.01% | 4.00% | - As of March 31, 2023, Stellar Bank was categorized as '**well-capitalized**' under all regulatory measures[253](index=253&type=chunk)[255](index=255&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate volatility, managed by the Balance Sheet Risk Committee (BSRC) using simulation models to test the sensitivity of net interest income (NII) and economic value of equity (EVE) to interest rate shocks, with the balance sheet positioned to be slightly liability-sensitive in the short term, and the transition away from LIBOR substantially complete Interest Rate Sensitivity Analysis (As of March 31, 2023) | Change in Interest Rates (Basis Points) | Percent Change in Net Interest Income | Percent Change in Economic Value of Equity | | :--- | :--- | :--- | | +300 | (3.6)% | 0.0% | | +200 | (2.7)% | 2.7% | | +100 | (1.8)% | 4.4% | | -100 | (0.9)% | 0.0% | | -200 | (2.8)% | (7.5)% | - The company's transition away from LIBOR is **substantially complete**, with less than **1%** of loans indexed to LIBOR as of March 31, 2023[264](index=264&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2023, concluding that these controls were **effective** at a reasonable assurance level, with **no material changes** to the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[265](index=265&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[266](index=266&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to claims and litigation arising in the ordinary course of business, but management believes that the resolution of these matters will **not have a material adverse effect** on the company's financial condition or results of operations - The company is **not party to any legal proceedings** that management believes would have a material adverse effect on its business, financial condition, or results of operation[267](index=267&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) The company highlights adverse developments affecting the financial services industry, specifically citing recent bank failures in Q1 and Q2 2023, which have caused market volatility and concern over liquidity and soundness, posing potential risks including reputational damage, deposit outflows, increased FDIC assessment costs from special assessments, and heightened credit risk with counterparties - Recent bank failures (Silicon Valley Bank, Signature Bank, First Republic Bank) have caused significant market volatility and uncertainty, which could adversely affect the company's financial condition and stock price[268](index=268&type=chunk)[269](index=269&type=chunk) - Potential losses to the FDIC's Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, which could increase the company's FDIC insurance costs and adversely affect earnings[272](index=272&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a share repurchase program authorized in 2022, allowing for the repurchase of up to **$40.0 million** of its common stock through September 30, 2023, with **no shares repurchased** under this program during the three months ended March 31, 2023 - The company has a **$40.0 million** share repurchase program, which is effective through **September 30, 2023**[274](index=274&type=chunk) - There were **no stock repurchases** made by the company during the three months ended March 31, 2023[276](index=276&type=chunk) [Defaults upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were **no defaults** upon senior securities during the reporting period - **None**[277](index=277&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is **not applicable** to the company - **Not applicable**[278](index=278&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) There was **no other information** to report for the period - **None**[279](index=279&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents[281](index=281&type=chunk) ```

First Quarter 2023 Earnings Presentation These statements include, but are not limited to, statements about the benefits of the merger of equals (the "Merger") between Allegiance Bancshares, Inc. and CBTX, Inc. which became effective on October 1, 2022, including future financial performance and operating results, the Company's plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industr ...

Financial Data and Key Metrics Changes - The net income for Q1 2023 was $37.1 million, with diluted earnings per share of $0.70, an annualized return on assets (ROA) of 1.38%, and a return on tangible common equity of 19.32% [11] - The adjusted net interest margin (NIM) was stable at 4.38%, consistent with the previous quarter, despite industry pressures [12] - Tangible book value per share increased by 8.7% from $14.02 to $15.24, and tangible equity to tangible assets rose to 8.15% from 7.24% in the previous quarter [25] Business Line Data and Key Metrics Changes - Deposits decreased by $529 million or 5.8% from $9.3 billion at year-end to $8.7 billion, with a significant portion attributed to seasonal factors and government banking group activities [14] - The bank originated approximately $530 million in loans at an average rate of 7.59%, up nearly 100 basis points from the previous quarter [35] - The average account balance was $81,000, excluding government deposits, with uninsured deposits net of collateralized deposits at about $4.1 billion, representing 46.4% of total deposits [22] Market Data and Key Metrics Changes - The bank's liquidity position is strong, with immediate liquidity sources of $4.5 billion covering about 110% of uninsured deposits [23] - The bank's strategy has focused on maintaining core funding and managing liquidity effectively in a competitive deposit market [20][21] Company Strategy and Development Direction - The company aims to maintain strong margins and pre-tax pre-provision earnings power while prudently managing the liability side of the balance sheet [13] - The management emphasized a cautious approach to new credit, particularly in the commercial real estate sector, while seeking strategic opportunities [37][38] - The company is positioned to take advantage of opportunities as the Federal Reserve concludes its rate hikes, with a focus on building capital and maintaining liquidity [15][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the failures of Silicon Valley Bank and Signature Bank, but expressed confidence in their strong customer relationships [7][9] - The management believes that the current operating environment, characterized by rising interest rates, presents both challenges and opportunities for the bank [10][27] - The future outlook for Stellar Bancorp is positive, with expectations of continued growth and stability in a robust market [15][27] Other Important Information - The company completed a successful system conversion of merged banks, enhancing operational efficiency [6] - The management highlighted the importance of maintaining a favorable mix of non-interest bearing deposits, which accounted for 44.4% of total deposits [21] Q&A Session Summary Question: Deposit trends in the quarter - Management noted that outflows were primarily driven by rate peaking and seasonal factors, with no significant increase in account closures [33][34] Question: Loan pricing dynamics - The bank originated loans at higher rates, with new loans averaging 7.59% and renewed loans at 7.63%, indicating successful repricing opportunities [35][36] Question: Risk-adjusted returns and cautious areas - Management is cautious about new credit in commercial real estate but sees opportunities in C&I loans and residential construction [39][40] Question: Liquidity profile and securities sales - The bank is open to opportunistic sales of securities to improve liquidity but does not feel pressured to do so at this time [45][46] Question: Cost savings and expense management - Management is on track with cost savings from the merger and expects to maintain a stable expense base moving forward [47][48] Question: Capital accretion and buyback considerations - The management is considering buybacks but wants to navigate current uncertainties before making decisions [83]

Table of Contents 21 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 001-38280 | Stellar Bancorp, Inc. | | --- | (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

Financial Data and Key Metrics Changes - The company ended Q4 2022 with $10.9 billion in assets, reflecting the impact of the merger and purchase accounting adjustments [16] - Net income for the quarter was $2.1 million, translating to $0.04 in EPS, significantly impacted by merger-related and nonrecurring items [23] - The net interest margin (NIM) was reported at 4.71%, with an adjusted NIM of 4.38% after excluding purchase accounting accretion [24] Business Line Data and Key Metrics Changes - Loans increased by approximately $200 million over the quarter, ending at $7.75 billion [20] - Deposits decreased by $116.9 million, with a notable decline in interest-bearing deposits [21] - The cost of interest-bearing deposits has risen due to competitive market conditions [22] Market Data and Key Metrics Changes - The economic backdrop in Houston remains strong, with job growth expected to be around 150,000 for the year [39] - The company anticipates loan growth in 2023 to be in the low to mid-single digits, reflecting a cautious approach to lending [35] Company Strategy and Development Direction - The company is focused on solidifying the merger and enhancing its operational efficiency while navigating a challenging economic environment [6][12] - Management emphasized the importance of maintaining liquidity, capital, and credit quality as strategic priorities [8][12] - The merger is seen as a significant opportunity to enhance shareholder value and operational capabilities [11][13] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment and the Federal Reserve's actions to control inflation [12] - The company is optimistic about its long-term prospects, citing a robust economic backdrop and a strong franchise position [13] - There is a focus on protecting net interest income and margin while being prepared for potential economic challenges [81][95] Other Important Information - The company recognized $11.5 million in merger-related expenses during the quarter, impacting overall expenses [29] - The allowance for credit losses ended the year at $93.2 million, or 1.2% of loans, reflecting a conservative approach to credit risk [27] Q&A Session Summary Question: What is the outlook for loan growth given the economic backdrop? - Management indicated that while the economic environment is strong, loan growth is expected to be cautious, with a focus on maintaining credit quality [39][41] Question: Are there any updates on the timing of synergies from the merger? - Management confirmed that synergy targets remain unchanged and are on track to be realized by mid-year [43] Question: How is the company managing its interest margin in the current environment? - The company is focused on protecting its net interest margin while being optimistic about potential upside from loan repricing opportunities [80][81] Question: What are the expectations for capital actions moving forward? - Management emphasized the importance of capital build and flexibility, with no immediate plans for buybacks but valuing it as a future option [87][75]

Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this presentation which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors th ...