Financial Performance - As of December 31, 2024, total loans held for investment (LHI) amounted to $9.39 billion, representing 73.6% of total assets[30] - The gain on sale of USDA loans for 2024 was $2.286 million, compared to $13.190 million in 2022 and $10.731 million in 2023[27] - The book value of the available-for-sale (AFS) and held-to-maturity (HTM) debt securities portfolio totaled $1.55 billion, with an average tax-equivalent yield of 4.56%[36] - On January 28, 2025, the Company declared a quarterly cash dividend of $0.20 per share, reflecting strong performance and organic capital generation[81] - The Company reported a Common Equity Tier 1 (CET1) capital ratio of 11.09% and the Bank reported 12.52%, both above the required minimum of 4.5%[73] - The Company and the Bank maintained a total capital ratio of 13.96% and 13.49% respectively, exceeding the minimum regulatory requirements[73] - The Company has adopted the Current Expected Credit Loss (CECL) methodology, with a five-year transition period for regulatory capital impacts starting from January 1, 2020[70] Regulatory Environment - The company is subject to ongoing and comprehensive supervision, regulation, examination, and enforcement by the Federal Reserve and the Texas Department of Banking (TDB)[49] - The Dodd-Frank Act imposes significant regulatory and compliance requirements, including increased capital, leverage, and liquidity requirements[53] - The company must comply with the Volcker Rule, which generally prohibits banking entities from engaging in proprietary trading[58] - The Dodd-Frank Act requires bank holding companies to act as a source of financial and managerial strength to their banking subsidiaries[55] - The company is subject to periodic reporting requirements, including annual audit reports prepared by independent auditors[50] - The Dodd-Frank Act made permanent the general $250,000 deposit insurance limit for insured deposits[56] - The Federal Reserve's capital requirements for the Company include maintaining a CET1 capital of at least 4.5% of Risk-Weighted Assets (RWA) and a total capital ratio of at least 8%[68] - The company is subject to increased regulation as a banking organization with over $10 billion in total consolidated assets[121] Operational Strategy - The company focuses on organic growth and strategic acquisitions to expand its customer base and market share[28] - The company aims to improve operational efficiency and increase profitability through a scalable infrastructure[34] - The company actively pursues business checking accounts and offers competitive rates to attract small to medium-sized businesses[32] - The company intends to pursue strategic acquisitions of financial institutions, which require regulatory approvals that may not be granted on acceptable terms[193] Market Conditions - The primary market includes the Dallas-Fort Worth metroplex and the Houston metropolitan area, which are experiencing rapid population and job growth[37] - The company faces risks related to its business concentration in Texas, particularly in the Dallas-Fort Worth metroplex and Houston metropolitan area, which may magnify the impact of regional economic downturns[125] - The company operates in an uncertain economic environment, with direct exposure to the residential and commercial real estate markets in Texas, particularly in the Dallas-Fort Worth and Houston areas[126] - Recent bank failures in March and May 2023 have led to increased market volatility and decreased customer confidence in regional banks, impacting the company's operations[207] Credit Risk and Loan Portfolio - As of December 31, 2024, the company's allowance for credit losses (ACL) was $111.7 million, representing a significant portion of its total loan portfolio[143] - 28.3% of the company's loan portfolio, amounting to $2.69 billion, consists of commercial loans to businesses, which are subject to higher credit risk due to their reliance on ongoing business operations[137] - The loan portfolio has grown to $9.51 billion as of December 31, 2024, with organic growth and acquisitions contributing to this increase[154] - As of December 31, 2024, 33.2% of the loan portfolio, or $3.16 billion, consisted of commercial real estate (CRE) loans, and 13.7%, or $1.30 billion, consisted of construction and land loans[156] - 71.6% of the loan portfolio, amounting to $6.81 billion, consists of loans secured by real estate as a primary or secondary component[158] - The financial condition of small to medium-sized businesses, which are the primary focus of the company's lending strategy, may be more vulnerable to economic downturns, impacting their ability to repay loans[141] Compliance and Risk Management - The company incurs significant costs related to compliance with banking statutes, regulations, and policies[44] - The company has dedicated significant resources to its BSA/AML programs to comply with regulations, and deficiencies could lead to liability and restrictions on business plans[197] - The company must navigate significant operational risks, including employee fraud and data processing errors, which could lead to financial losses and regulatory sanctions[175] - The company is required to notify its primary federal regulator of significant computer security incidents no later than 36 hours after determining the incident has occurred[112] Economic and Environmental Risks - The company may experience increased credit losses due to natural disasters or significant climate change effects, impacting overall financial results[161] - Changes in laws, regulations, or policies could adversely affect the operating environment and profitability of the Company[118] - The company is exposed to risks from labor shortages and supply chain constraints that could affect operations[121] - Unfavorable economic trends, such as sustained high unemployment and declines in real estate values, could lead to increased loan delinquencies and nonperforming assets[128] Competition and Market Position - The company faces significant competition in pursuing acquisition targets, which may drive up acquisition costs and affect growth strategy realization[147] - The company faces strong competition from various financial services companies, which may lead to reduced loans, deposits, and profitability[170] - The company may experience difficulties in attracting and retaining experienced bankers, which is critical for maintaining customer relationships and business growth[151] Technology and Cybersecurity - Cybersecurity risks are evolving and increasing, posing significant threats to the company's data security and potentially harming its reputation and financial condition[183] - The company may experience operational challenges when implementing new technology, such as AI, which could hinder its ability to compete effectively[178] - The legal and regulatory environment regarding AI is rapidly evolving, which may increase compliance costs and risks for the company[179] Financial Obligations and Capital Management - As of December 31, 2024, the company had approximately $199.6 million in subordinated notes and $31.1 million in junior subordinated debentures, indicating significant debt obligations[217] - The company is subject to capital requirements that may restrict activities such as paying dividends or repurchasing shares if minimum capital levels are not maintained[203] - The cost of funding has increased, putting pressure on the company's net interest margin, which could lead to potential losses if securities need to be sold[208]

Veritex Holdings, Inc. Fourth Quarter and Full Year 2024 Results Use of Non-GAAP Financial Measures 2 Investor Presentation January 28, 2025 NASDAQ: VBTX A BETTER STATE OF BANKING © 2024 Veritex Bank Member FDIC Forward-Looking Statements This presentation includes "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and ...

Financial Data and Key Metrics Changes - The company reported a net operating profit of $2.98 billion or $0.54 per share for Q4 2024, with pre-tax pre-provisioned earnings at $41 million or 1.28% [4] - For the full year 2024, operating earnings were $11.94 billion or $2.17 per share, flat compared to 2023 [5] - The net interest margin (NIM) decreased during the quarter but is expected to increase moving forward [5][23] - The allowance for credit losses (ACL) coverage rose to 125 basis points when excluding the mortgage warehouse [16] Business Line Data and Key Metrics Changes - Funded loans saw a small decrease year-over-year, with expectations for positive loan growth in 2025 projected between low to mid-single digits [6] - Criticized loans declined by nearly 20% year-over-year, with total criticized loans at $36.56 million [12][13] - Operating non-interest income increased by $130,000 to $1.45 million, driven by strong performance in government-guaranteed loans [26] Market Data and Key Metrics Changes - The company experienced a 20% reduction in reliance on wholesale funding over the last year [14] - The loan-to-deposit ratio improved from 104% to 89% over the past two years [19] - The company has seen strong deposit growth, allowing for a reduction in brokered CDs and public funds [22] Company Strategy and Development Direction - The company is focused on disciplined loan growth and remixing its deposit portfolio to improve profitability [28] - Management aims to achieve a return on average assets (ROA) exceeding 1% by 2025, driven by loan growth and deposit repricing [5][33] - The company is engaging with a consulting firm to improve operational efficiency and leverage in various business areas [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit risk profile improving and expects net charge-offs to remain around 20 basis points for 2025 [66] - The company anticipates that 2025 will produce positive operating leverage, driven by improved NIM and stronger fee revenues [29] - Management noted that the pipelines for loan production are strong, particularly in Texas, and expects to maintain robust activity in real estate [38][39] Other Important Information - The Chief Financial Officer, Terry Earley, will retire in June 2025 but will continue to assist in a consulting role [80] - The new CFO will be Will Hofford, who has been with the company for thirteen years [81] Q&A Session Summary Question: What are the expectations for achieving a 1% ROA in 2025? - Management believes that loan growth and deposit repricing will be the main drivers to achieve the 1% ROA target in 2025 [33] Question: What is the outlook for loan growth given the current payoffs? - Management indicated that while payoffs are expected to continue, the production side of the business is strong, and they are confident in achieving necessary loan growth [39][41] Question: Can you provide details on the dynamics of non-interest bearing deposits? - Management noted that seasonal fluctuations and intentional exits from expensive deposit relationships contributed to the decline, but they expect non-interest bearing deposits to stabilize between 21% and 23% [60] Question: What is the outlook for government guaranteed loans in 2025? - Management is optimistic about the government guaranteed loan business, citing strong pipelines and production [62][75] Question: What is the expected net charge-off ratio for 2025? - Management expects the net charge-off ratio to remain around 20 basis points for 2025, with confidence in continued credit improvement [66]

Core Insights - Veritex Holdings (VBTX) reported revenue of $106.2 million for the quarter ended December 2024, reflecting a year-over-year increase of 36.6% but a revenue surprise of -6.27% compared to the Zacks Consensus Estimate of $113.3 million [1] - The company's EPS was $0.54, down from $0.58 in the same quarter last year, with an EPS surprise of -3.57% against the consensus estimate of $0.56 [1] Financial Performance Metrics - Efficiency Ratio (GAAP) was reported at 67%, exceeding the two-analyst average estimate of 60.1% [4] - Net charge-offs to average loans outstanding were 0.2%, better than the two-analyst average estimate of 0.3% [4] - Net Interest Margin stood at 3.2%, slightly below the 3.3% average estimate from two analysts [4] - Total nonperforming loans (NPLs) were $54.44 million, lower than the two-analyst average estimate of $56.41 million [4] - Total nonperforming assets (NPAs) reached $79.17 million, higher than the two-analyst average estimate of $67.79 million [4] - Average Outstanding Balance of Total interest-earning assets was $11.95 billion, compared to the $12.14 billion average estimate based on two analysts [4] - Total Noninterest Income was $10.06 million, significantly below the two-analyst average estimate of $13.55 million [4] - Net Interest Income was reported at $96.14 million, also below the $99.68 million average estimate from two analysts [4] Stock Performance - Over the past month, shares of Veritex Holdings have returned -1.3%, while the Zacks S&P 500 composite has changed by +0.8% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Viewpoint - Veritex Holdings reported quarterly earnings of $0.54 per share, missing the Zacks Consensus Estimate of $0.56 per share, and showing a decline from $0.58 per share a year ago, indicating a -3.57% earnings surprise [1][2] Financial Performance - The company posted revenues of $106.2 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 6.27%, compared to $77.74 million in the same quarter last year [2] - Over the last four quarters, Veritex Holdings has surpassed consensus EPS estimates only once [2] Stock Performance - Veritex Holdings shares have decreased by approximately 1.7% since the beginning of the year, while the S&P 500 has gained 2.2% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $112.05 million, and for the current fiscal year, it is $2.24 on revenues of $456.35 million [7] - The trend of estimate revisions for Veritex Holdings has been favorable ahead of the earnings release [6] Industry Context - The Banks - Southeast industry, to which Veritex Holdings belongs, is currently ranked in the top 15% of over 250 Zacks industries, suggesting a positive outlook for stocks in this sector [8]

Financial Performance - Net income for Q4 2024 was $24.9 million, a decrease of 19.4% from $31.0 million in Q3 2024 and a decrease of 29.3% from $35.0 million in Q4 2023[3]. - Diluted EPS for Q4 2024 was $0.45, down from $0.56 in Q3 2024 and $0.06 from $0.51 in Q4 2023[3]. - Basic EPS for the quarter ended December 31, 2024, was $0.46, compared to $0.57 for the previous quarter[23]. - Diluted EPS for the year ended December 31, 2024, was $1.95, a decrease from $1.98 in the previous year[23]. - Net income for the quarter was $24.88 million, down 19.5% from $31.00 million in the previous quarter[28]. - Operating earnings for the year ended December 31, 2024, total $119,397,000, down from $142,114,000 for the year ended December 31, 2023[57]. Asset and Deposit Trends - Total deposits increased by $414.4 million, or 4.0%, year-over-year, reaching $10.75 billion as of December 31, 2024[11]. - Total assets decreased to $12,768,341 from $13,042,976, representing a decline of approximately 2.1% quarter-over-quarter[25]. - Total deposits decreased to $10,752,592, down 2.6% from $11,036,011 in the prior quarter[25]. - Noninterest-bearing deposits fell to $2,191,457, a decrease of 17.1% from $2,643,894[25]. - Interest-bearing transaction and savings deposits increased to $5,061,157, up 20.4% from $4,204,708[25]. - Total assets as of December 31, 2024, were $12.75 billion, a slight decrease from $12.86 billion at the end of the previous quarter[30]. Loan and Credit Quality - Total loans held for investment decreased by $307.4 million, or 3.3%, year-over-year, totaling $8.90 billion at December 31, 2024[10]. - Nonperforming assets to total loans decreased by 15 basis points to 0.62% from 2023[3]. - Criticized loans decreased approximately $100 million during 2024[3]. - Nonperforming assets (NPAs) totaled $79,172,000 as of December 31, 2024, an increase from $67,299,000 in the previous quarter[40]. - Total nonperforming loans (NPLs) held for investment were $54,435,000, down from $58,265,000 in the prior quarter[40]. - The provision for credit losses was $2,300,000 for the quarter ended December 31, 2024, compared to $4,000,000 in the previous quarter[40]. Capital and Equity - Common equity tier 1 capital increased by 80 basis points to 11.09% as of December 31, 2024, compared to 10.29% as of December 31, 2023[3]. - Stockholders' equity decreased slightly to $1,601,069 from $1,608,014, a decline of 0.8%[26]. - Tangible common equity was reported at $1,177,873,000 as of December 31, 2024, slightly down from $1,182,380,000 in the previous quarter[46]. - Total stockholders' equity as of December 31, 2024, is $1,601,069,000, a slight decrease from $1,608,014,000 as of September 30, 2024[50]. Income and Expense Analysis - Noninterest income for Q4 2024 was $10.1 million, a decrease of $3.1 million, or 23.3%, compared to Q3 2024[6]. - Total noninterest expense increased to $71.19 million for the quarter, up from $70.10 million in the previous quarter, representing a rise of 1.5%[28]. - The efficiency ratio for Q4 2024 was 67.04%, compared to 61.94% in Q3 2024 and 77.49% in Q4 2023[3]. - Operating return on average tangible common equity was 10.69%, down from 11.74% in the previous quarter[59]. Interest Income and Margin - Total interest income for the quarter ended December 31, 2024, was $184.72 million, a decrease of 6.4% from $196.66 million in the previous quarter[28]. - Net interest margin for the quarter was 3.20%, down from 3.30% in the previous quarter[30]. - Average yield on interest-earning assets for Q4 2024 was 6.15%, compared to 6.51% in Q4 2023, indicating a decrease of 5.53% year-over-year[36]. - Net interest income for 2024 was $385.25 million, with a net interest margin of 3.26%, down from $399.11 million and 3.49% in 2023[33].

Core Viewpoint - Veritex Holdings, Inc. reported significant milestones in 2024, focusing on improving credit risk and profitability as it moves into 2025 [2]. Financial Highlights - For Q4 2024, net income was $24.882 million, down from $31.001 million in Q3 2024 and up from $3.499 million in Q4 2023 [3]. - Diluted EPS for Q4 2024 was $0.45, compared to $0.56 in Q3 2024 and $0.06 in Q4 2023 [3]. - The book value per common share remained stable at $29.37, consistent with the previous quarter and up from $28.18 in Q4 2023 [3]. - Return on average assets decreased to 0.78% in Q4 2024 from 0.96% in Q3 2024 and 0.11% in Q4 2023 [3]. - Return on average equity was 6.17% in Q4 2024, down from 7.79% in Q3 2024 and 0.92% in Q4 2023 [3]. - Net interest margin for Q4 2024 was 3.20%, down from 3.30% in Q3 2024 and 3.31% in Q4 2023 [3]. Operational Results - Net interest income before provision for credit losses for Q4 2024 was $96.1 million, a decrease of 3.9% from $100.1 million in Q3 2024 [5]. - Compared to Q4 2023, net interest income increased by $608 thousand, or 0.6% [6]. - Noninterest income for Q4 2024 was $10.1 million, a decrease of 23.3% from $13.1 million in Q3 2024 [9]. - Noninterest expense for Q4 2024 was $71.2 million, an increase of 1.6% from $70.1 million in Q3 2024 [11]. Credit Quality - Criticized loans decreased by approximately $100 million during 2024 [8]. - Nonperforming assets to total loans decreased to 0.62% from 0.77% in 2023 [15]. - The allowance for credit losses as a percentage of loans increased to 1.18% from 1.14% in 2023 [16]. Capital and Dividends - Common equity tier 1 capital increased by 80 basis points to 11.09% as of December 31, 2024 [8]. - A quarterly cash dividend of $0.20 per share was declared, payable on February 28, 2025 [17]. Financial Condition - Total loans held for investment were $8.90 billion at December 31, 2024, a decrease of 3.3% from the previous year [13]. - Total deposits were $10.75 billion, an increase of 4.0% year-over-year [14].

Core Viewpoint - Veritex Holdings, Inc. plans to release its fourth quarter and full year 2024 financial results on January 28, 2025, after market close, followed by an investor conference call on January 29, 2025, at 8:30 a.m. Central Time [1]. Group 1 - The earnings release will be available on the Company's website [1]. - Participants can access a live webcast of the conference call through the investor relations section of Veritex's website [2]. - Registration for the teleconference is required, and participants will receive a personalized conference code [2]. Group 2 - A replay of the conference call will be available approximately two hours after its completion and accessible for one week [3]. - Veritex Holdings, Inc. is headquartered in Dallas, Texas, and operates through its subsidiary, Veritex Community Bank [4]. - Veritex Community Bank is regulated by the Texas Department of Banking and the Federal Reserve System [4].

Financial Performance - Total interest and dividend income for the three months ended September 30, 2024, was $196,663,000, an increase of 5.8% from $187,115,000 in 2023[8] - Net interest income after provision for credit losses was $96,062,000 for the three months ended September 30, 2024, compared to $91,643,000 in 2023, reflecting a 4.4% increase[8] - Noninterest income totaled $13,106,000 for the three months ended September 30, 2024, up 35.5% from $9,674,000 in 2023[8] - Net income for the three months ended September 30, 2024, was $31,001,000, a decrease of 5% from $32,621,000 in 2023[10] - Basic EPS for the three months ended September 30, 2024, was $0.57, down from $0.60 in 2023[8] - The company reported a comprehensive income of $67,384,000 for the three months ended September 30, 2024, compared to $7,975,000 in 2023[10] - Net income for the nine months ended September 30, 2024, was $82,359,000, compared to $104,762,000 for the same period in 2023, reflecting a decrease of approximately 21.3%[18] Expenses and Provisions - Total noninterest expense increased to $70,100,000 for the three months ended September 30, 2024, from $59,414,000 in 2023, representing an 18% rise[8] - The provision for credit losses was $4,000,000 for the three months ended September 30, 2024, significantly lower than $8,627,000 in 2023[8] - The company experienced a provision for credit losses of $18,209,000 for the nine months ended September 30, 2024, down from $32,471,000 in 2023, indicating a decrease of approximately 44.0%[18] Assets and Equity - Total assets increased to $1,608,014,000 as of September 30, 2024, compared to $1,548,616,000 at the end of June 30, 2024[12] - Total stockholders' equity as of September 30, 2024, increased to $1,608,014,000 from $1,531,323,000 at December 31, 2023, representing a growth of about 5.0%[15] - Cash and cash equivalents at the end of the period were $1,100,790,000, up from $713,408,000 at the end of September 2023, indicating an increase of approximately 54.2%[18] Loan Portfolio and Credit Quality - The total loan held for investment (LHI) net as of September 30, 2024, was $9,542,063, an increase from $9,474,524 as of December 31, 2023[50] - Nonaccrual loans totaled $55,404 as of September 30, 2024, compared to $92,848 as of December 31, 2023, indicating a decrease in nonaccrual status[60] - Total loans 90 days past due and still accruing interest amounted to $65,273 million as of September 30, 2024, representing an increase from $39,357 million[62] - The company has modified loans totaling an amortized cost basis of $61,266 million to borrowers experiencing financial difficulty, with 2.4% of the NOOCRE loan class affected[68] Stock and Dividends - The company paid dividends totaling $32,680,000 in the nine months ended September 30, 2024, compared to $32,548,000 in the same period of 2023, reflecting a marginal increase[18] - Dividends paid by the Company during the three months ended September 30, 2024, amounted to $10,881, or $0.20 per outstanding share[154] Interest Rate Sensitivity - The company estimates that for a 100 bps shift in interest rates, net income at risk should not decline by more than 5.0% for the subsequent one-year period[294] - A 300 bps increase in interest rates is projected to result in a 10.27% increase in net interest income as of September 30, 2024[296] - A 200 bps increase in interest rates is expected to yield a 6.98% increase in net interest income as of September 30, 2024[296] - A 100 bps increase in interest rates is anticipated to lead to a 3.53% increase in net interest income as of September 30, 2024[296] Capital Ratios - The Company had total capital of $1,570,044, representing a capital ratio of 13.91% as of September 30, 2024, exceeding the required minimum of 8.0%[151] - The Bank's Tier 1 capital ratio was 12.33% as of September 30, 2024, above the required minimum of 6.0%[151] - The Company’s capital ratios as of September 30, 2024, exceeded those necessary to be categorized as "well capitalized"[149] Stock Compensation and Equity Plans - The company recognized no stock compensation expense related to the 2010 Incentive Plan for the three and nine months ended September 30, 2024, and 2023[120] - The company granted non-performance-based RSUs and PSUs under the 2022 Equity Plan during the nine months ending September 30, 2024, with annual graded vesting over a three-year period[122] - Stock compensation expense for the 2022 Equity Plan was $2,923,000 for the three months ended September 30, 2024, compared to $2,471,000 for the same period in 2023, representing a 18.2% increase[124]

Financial Data and Key Metrics Changes - The company reported operating earnings of $32.2 million or $0.59 per share, with pretax pre-provision earnings at $44.6 million or 1.38% [4] - Net interest margin (NIM) increased slightly, with CET1 capital now at 10.86% [4][9] - Deposits grew by $311 million or 11.6% annualized, indicating effective deposit gathering strategies [5] - Total capital grew approximately $132 million over the last six quarters, with a tangible book value per share increasing to $21.72, a 15.8% year-over-year increase [9] Business Line Data and Key Metrics Changes - Loan growth was impacted by large payoffs, resulting in a decrease of $126 million quarter-over-quarter [6] - Operating noninterest income increased by $2.5 million to $13.1 million, driven by higher treasury management fees and loan fees [17] - The company experienced a nominal charge-off of $269,000, with past dues remaining flat at 0.8% of total loans [7] Market Data and Key Metrics Changes - The loan-to-deposit ratio decreased from almost 95% a year ago to 88% as of September 30, 2024, with expectations to remain below 90% [10] - The average rate of time deposits is 5.14%, with $2.6 billion in ceding maturities over the next two quarters [11] - The company successfully reduced reliance on wholesale funding from 21% a year ago to 15.7% [12] Company Strategy and Development Direction - The company is focused on increasing profitability and efficiency, aiming to improve its return on average assets (ROAA) [4] - There is a strategic emphasis on disciplined loan growth and improving the credit risk profile [24] - The company is engaging a consulting firm to enhance operational processes and technology, aiming for improved efficiency [18][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by election uncertainty affecting loan growth expectations, with a focus on building pipelines in commercial and industrial sectors [21][22] - The company is optimistic about its credit metrics and overall balance sheet strength, despite ongoing challenges [19] - Future NIM is expected to remain stable in the range of 3.25% to 3.30%, with a focus on managing deposit costs effectively [15][33] Other Important Information - The company has a fixed pay hedge of $250 million at 42 basis points, maturing in March 2025, which is expected to impact net interest margin positively [16][27] - The company is not currently interested in share buybacks at current valuation levels, focusing instead on building capital [51] Q&A Session Summary Question: Loan growth expectations and pipeline trends - Management indicated that while payoffs have been strong, the pipeline remains healthy, particularly in commercial and industrial sectors, but mid-single-digit growth expectations may be overly optimistic due to high payoffs [21][22] Question: Margin outlook for 2025 - Management expressed uncertainty about margin expansion in 2025, suggesting that maintaining margins will depend on effective pricing strategies and managing excess cash [33][34] Question: USDA revenue outlook - Management noted the unpredictability of USDA revenue, emphasizing efforts to cross-pollinate USDA and SBA loan production to stabilize revenue streams [35][36] Question: Expense trends - Management indicated that expenses may remain elevated due to incentive accruals and OREO-related costs, but some reductions are expected as certain expenses normalize [39] Question: Deposit pricing strategies - Management highlighted the importance of executing effective deposit pricing strategies to maintain growth and reduce reliance on high-cost funding sources [40][41] Question: Classified criticized loans outlook - Management expressed confidence in maintaining stability in the criticized loan category, with ongoing strategies in place to manage risk effectively [47][48]