Alerus Financial Corp (ALRS) 2023 Q4 法說會逐字稿

Good morning, afternoon, evening. And welcome to the Alerus Financial Corporation earnings conference call. (Operator Instructions)

早安，下午好，晚上好。歡迎參加 Alerus Financial Corporation 的財報電話會議。（操作員說明）

Please note this event is being recorded. This call may include forward-looking statements and the company's actual results may differ materially from those indicated in any forward-looking statements. Important factors that could cause actual results to differ materially from those indicated in the forward-looking statements are listed in the earnings release and the company's SEC filings.

請注意此事件正在被記錄。本次電話會議可能包含前瞻性陳述，本公司的實際結果可能與任何前瞻性陳述中所示的結果有重大差異。可能導致實際結果與前瞻性聲明中所示結果存在重大差異的重要因素已在收益報告和公司向 SEC 提交的文件中列出。

I would now like to turn the conference over to Alerus Financial Corporation President and CEO, Katie Lorenson. Please go ahead.

現在我想將會議交給 Alerus Financial Corporation 總裁兼執行長 Katie Lorenson。請繼續。

Thank you. Thank you, Harry. And thank you to everyone joining our call today. We appreciate your interest and your investment in Alerus. Joining me today is Alerus's CFO, Al Villalon, who will discuss our financial performance and results for the quarter. Also on the call is Karin Taylor, our Chief Risk Management Officer; and Jim Collins, our Chief Banking and Revenue Officer.

謝謝。謝謝你，哈利。感謝今天加入我們電話會議的所有人。我們感謝您對 Alerus 的興趣和投資。今天與我一起的是 Alerus 的財務長 Al Villalon，他將討論我們本季的財務表現和業績。我們的首席風險管理官 Karin Taylor 也參加了電話會議。以及我們的首席銀行和收入官吉姆·柯林斯 (Jim Collins)。

This morning, I will provide some commentary on an excellent quarter of execution in key areas of the company. We've been working with incredible urgency over the past two years to strategically transform the commercial wealth bank. We began with assembling a new executive leadership team in addition to putting the right people in the right seats across the company.

今天早上，我將對公司關鍵領域的出色季度執行情況進行一些評論。過去兩年來，我們一直在極為迫切地努力對商業財富銀行進行策略轉型。我們首先組建了一個新的執行領導團隊，並將合適的人安排在公司的合適位置上。

Over the course of the past 18 months, we have completed five restructurings and added over 120 new team members of the company while managing to reduce overall headcount to nearly 10%. The resulting transformation of our commercial wealth bank is evident with exceptional deposit growth supporting high-quality loan growth during the quarter.

在過去的 18 個月裡，我們完成了 5 次重組，增加了 120 多名公司新團隊成員，同時設法將總人數減少到近 10%。我們的商業財富銀行由此產生的轉型是顯而易見的，存款的出色成長支持了本季高品質的貸款成長。

In addition, the well-executed balance sheet repositioning in December provided additional flexibility and continued momentum to improve financial performance heading into 2024 and beyond. We believe this quarter marks the normal milestone in turning the corner on our return to top-tier financial performance with improving PPNR.

此外，12 月執行良好的資產負債表重新定位為改善 2024 年及以後的財務表現提供了額外的靈活性和持續動力。我們相信，本季標誌著我們透過改善 PPNR 重返頂級財務表現的正常里程碑。

The ongoing execution of our One Alerus strategy resulted in continued key talent wins, including adding four commercial bankers in Arizona, as well as success in taking market share of well-established commercial businesses in the form of full banking relationships with lending and treasury management throughout all of our footprint.

我們「One Alerus」策略的持續執行導致了關鍵人才的持續贏得，包括在亞利桑那州增加了四名商業銀行家，並以與整個貸款和財務管理部門建立全面銀行關係的形式成功地佔據了成熟商業企業的市場佔有率。我們所有的足跡。

In addition, we decreased leverage on the balance sheet and paid down FHLB advances, our highest cost source of funding, as we have yet to tap into any brokered CDs or brokered funds market. We finished the year with a loan to deposit ratio ticking down to 89%.

此外，我們還降低了資產負債表上的槓桿率，並支付了 FHLB 預付款，這是我們成本最高的資金來源，因為我們尚未進入任何經紀 CD 或經紀基金市場。年底，我們的貸存比率下降至 89%。

The culmination of the efforts of our team members and our Board's strategic prioritization of bringing long-term value to our shareholders, our clients and communities led to net interest margin expansion in the quarter. Net interest margin expansion is another milestone and a critical turning point in our return to top-tier performance.

我們團隊成員的努力和董事會為股東、客戶和社區帶來長期價值的策略優先事項的最終結果導致了本季度淨利差的擴大。淨利差擴張是我們回歸頂級績效的另一個里程碑和關鍵轉折點。

Our uniquely diversified revenue mix is a differentiator in the industry with a robust contribution of 54% of total revenue. During the quarter, we restructured and integrated the stand-alone mortgage division into our private wealth banking franchise. And we are already seeing the benefits of the synergies of these teams and backrooms working together to serve clients throughout the Twin Cities, Arizona, and North Dakota.

我們獨特的多元化收入組合在業界獨樹一幟，貢獻了總收入的 54%。本季度，我們重組了獨立的抵押貸款部門，並將其整合到我們的私人財富銀行業務中。我們已經看到了這些團隊和後台共同努力為雙城、亞利桑那州和北達科他州的客戶提供協同效應的好處。

Outside of the mortgage business, the majority of our diversified revenue mix or approximately 90% of our fee income is highly annuitized recurring and noncyclical revenue with minimal capital allocation or balance sheet risk.

在抵押貸款業務之外，我們多元化收入組合的大部分或約 90% 的費用收入是高年金化的經常性和非週期性收入，資本配置或資產負債表風險最小。

Alerus is top 25 ranked National Retirement Services business delivers most of the fee income. The business ended the year with record level of sales and new revenue. And the retirement business remains highly valuable, and we are committed to extracting this embedded value by achieving net revenue growth in our scaled and highly profitable product line in this business.

Alerus 是前 25 名的全國退休服務企業，提供大部分費用收入。該業務以創紀錄的銷售額和新收入結束了這一年。退休業務仍然具有很高的價值，我們致力於透過在該業務中實現規模化和高利潤的產品線實現淨收入成長來提取這種內在價值。

The synergies between the commercial wealth bank and the retirement remain as the source of deposits as well as wealth management assets. In the fourth quarter, we commenced a nationwide search for a Chief Retirement Services Officer, and we are incredibly proud of the caliber of deeply experienced professionals we are attracting to the organization.

商業財富銀行和退休金之間的綜效仍然是存款和理財資產的來源。第四季度，我們開始在全國範圍內尋找首席退休服務官，我們為我們吸引到該組織的經驗豐富的專業人士的能力感到無比自豪。

Shifting over to the next highest contributor to our 54% of fee income is our wealth management business. Again, most of our wealth management businesses is full relationship advice-based business. Less than 10% of our business is transaction or brokerage. The milestone I would highlight for wealth management this quarter is another great one of Alerus success. This one in our Arizona market in partnership between the commercial teams and the wealth advisors and capturing business owner liquidity opportunities.

占我們 54% 費用收入的第二大貢獻者是我們的財富管理業務。同樣，我們的財富管理業務大多是完全基於關係建議的業務。我們的業務中只有不到 10% 是交易或經紀業務。我要強調的本季財富管理的里程碑是 Alerus 成功的另一項偉大成就。這是我們亞利桑那州市場中商業團隊和財富顧問合作的一個項目，旨在捕捉企業主的流動性機會。

Moving over to provision expense in the quarter, it was driven by loan growth as credit quality remained strong with low levels of past dues and nonperforming loan. Alerus experienced another quarter of net recoveries to loan losses remained robust at 1.3% of total loans. We remain highly selective in our lending and are committed to franchise building full banking relationship.

轉向本季的撥備支出，這是由貸款成長推動的，因為信貸品質仍然強勁，逾期未付款和不良貸款水平較低。Alerus 又經歷了一個季度，貸款損失淨回收率仍然強勁，佔總貸款的 1.3%。我們在貸款方面保持高度選擇性，並致力於透過特許經營建立全面的銀行關係。

Capital levels also remain robust, with TCE of 7.96% and CET1 of 11.81%. During the quarter, we grew tangible book value of 8% and returned $5.8 million to shareholders through dividends and share repurchases.

資本水準也保持強勁，TCE 為 7.96%，CET1 為 11.81%。本季度，我們的有形帳面價值成長了 8%，並透過股利和股票回購向股東返還 580 萬美元。

This was a breakout quarter for the team and the company after implementing significant change throughout the banking division. We are building a stronger-than-ever franchise with the best in the business talent.

在整個銀行部門實施重大變革後，這個季度對團隊和公司來說是一個突破性的季度。我們正在與最優秀的商業人才建立比以往更強大的特許經營權。

We are prudently adding new client relationships and improving profitability through infrastructure, rightsizing, and optimization. Each move is purposeful and strategic in positioning layer to bring expertise to our clients in a fast, frictionless, and highly responsive manner while delivering value which we believe will directly translate into value creation for our shareholders.

我們正在謹慎地增加新的客戶關係，並透過基礎設施、規模調整和優化來提高獲利能力。每一步舉措都是有目的和策略性的定位層，以快速、無摩擦和高度響應的方式為我們的客戶帶來專業知識，同時提供我們相信將直接轉化為為股東創造價值的價值。

With that, I will turn it over to Al to talk about the financial performance for the quarter.

接下來，我將把這個問題交給 Al 來談談本季的財務表現。

Thanks, Katie. I'll start my commentary on page 14 of our investor deck that is posted in the Investor Relations part of our website.

謝謝，凱蒂。我將從我們網站投資者關係部分發布的投資者資料的第 14 頁開始我的評論。

Let's start on our key revenue drivers. On a reported basis, net interest income increased 5.7% on a linked-quarter basis. The increase was driven primarily by strong organic loan and deposit growth. Net interest income represented 45.9% of revenues when excluding the loss on investment securities.

讓我們從我們的主要收入驅動因素開始。根據報告，淨利息收入季增 5.7%。這一成長主要是由強勁的有機貸款和存款成長所推動的。扣除投資證券損失後，淨利息收入佔收入的45.9%。

Switching to fee income, noninterest income, excluding the loss on investment securities decreased 10.5% on a linked-quarter basis, primarily driven by the gain recognized by the profession for our ESOP trustee business being recognized in the prior quarter. Excluding ESOP trustee gain, non-interest income was relatively stable on a linked-quarter basis. I'll go into the detail about each of our fee income statements in later slides.

轉向費用收入，非利息收入（不包括投資證券損失）環比下降 10.5%，這主要是由於上一季我們的 ESOP 受託人業務得到了專業人士的認可。排除員工持股計畫受託人收益，非利息收入較上季相對穩定。我將在後面的投影片中詳細介紹我們每份費用損益表。

Turn to page 15, net interest income was $21.6 million in the fourth quarter. Net interest margin was 2.37%, an increase of 10 basis points from the prior quarter. While some of our indexed liabilities repriced in October due to last Fed hike in July, we saw the loss quarterly increase interest expense. During the quarter, we had gradual net interest margin improvement and our balance sheet continues to remix towards higher-yielding assets, and strong organic deposit growth helped lower borrowings.

翻到第 15 頁，第四季淨利息收入為 2,160 萬美元。淨利差為2.37%，較上季上升10個基點。雖然由於上次聯準會在 7 月升息，我們的一些指數負債在 10 月重新定價，但我們看到季度虧損增加了利息支出。本季度，我們的淨利差逐步改善，我們的資產負債表繼續向高收益資產重新組合，強勁的有機存款成長有助於降低借款。

Based on the recent Fed commentary on a potential pause, we do expect our net interest margin to improve even without any rate cuts. Should Fed cut rates later in the year, we anticipate our net interest margin to continue to improve faster. Any increase in funding costs will be related to competition and a shift from noninterest-bearing to interest-bearing.

根據聯準會最近對可能暫停降息的評論，我們確實預計即使不降息，我們的淨利差也會有所改善。如果聯準會在今年稍晚降息，我們預計我們的淨利差將繼續更快地改善。融資成本的任何增加都將與競爭以及從無息向有息的轉變有關。

Let's turn to page 16 to talk about the loan portfolio. Total loans grew 5.7% from the prior quarter, driven by organic growth in commercial real estate, C&I, and residential real estate. Excluding the impact of PPP, this was one of the highest organic loan growth that we have experienced.

我們翻到第16頁來談貸款組合。受商業房地產、工商業和住宅房地產有機成長的推動，總貸款較上一季成長 5.7%。排除購買力平價的影響，這是我們經歷過最高的有機貸款成長之一。

Growth across the board was driven by newly onboarded talent and legacy producers as well. We continue to attract high-quality talent in our growth market and they've been able to drive growth quickly for Alerus. For 2024, we continue to expect see modest loan growth.

新加入的人才和傳統製作人也推動了全面成長。我們繼續在成長市場中吸引高素質人才，他們能夠推動 Alerus 的快速成長。2024 年，我們繼續預期貸款將出現溫和成長。

Turning to page 17, on a period ending basis, our deposits increased 7.8% from the prior quarter. Just like loans, this is one of the highest organic deposit growth for Alerus. Non-interest-bearing deposit balances increased 1.4% and represented 24% of total deposits. Client retention remains very high, and we continue to attract new clients, especially in the mid-market commercial space.

翻到第 17 頁，以期末計算，我們的存款比上一季增加了 7.8%。就像貸款一樣，這是 Alerus 有機存款增長最高的項目之一。無利息存款餘額增加1.4%，佔存款總額的24%。客戶保留率仍然很高，我們繼續吸引新客戶，特別是在中端市場商業領域。

For 2024, we expect deposit levels to remain stable. We also expect the usual seasonality in deposits with public fund outflows occurring in the second and third quarters.

2024 年，我們預計存款水準將保持穩定。我們也預計第二季和第三季存款與公共資金流出將出現通常的季節性。

Turning to page 18, you could see a further breakdown of our strong deposit base. Our synergistic deposits, those fund sourced from our wealth and the retirement businesses, grew 23% over the prior year and 11.5% from the prior quarter. The continued growth and synergistic deposits was driven mainly by strong organic client growth within our retirement and wealth segments.

翻到第 18 頁，您可以看到我們強大的存款基礎的進一步細分。我們的協同存款（來自財富和退休業務的資金）比上年增長 23%，比上季度增長 11.5%。存款的持續成長和協同存款主要是由我們的退休和財富領域強勁的有機客戶成長所推動的。

Synergistic deposits sourced from retirement and wealth businesses now account for over 27% of our deposit base. As you can see here, continued growth on our synergistic deposits shows the strength of our unique and differentiated business model.

來自退休和財富業務的協同存款目前占我們存款基礎的 27% 以上。正如您在這裡所看到的，我們協同存款的持續成長顯示了我們獨特且差異化的業務模式的實力。

Turning to page 19, you'll see details about our investment portfolio. Currently, almost 62% of our securities are available for sale versus approximately 30% in health to maturity. Excluding the loss rate, we did see improvement in unrealized losses as the bond markets rallied given recent Fed commentary. We continue to remix the balance sheet towards commercial lending relationships that will add higher-yielding loans and treasury management relationships.

翻到第 19 頁，您將看到有關我們投資組合的詳細資訊。目前，我們有近 62% 的證券可供出售，而約 30% 的證券處於健康到期狀態。排除損失率，鑑於聯準會最近的評論，隨著債券市場反彈，我們確實看到未實現損失有所改善。我們繼續將資產負債表重新調整為商業貸款關係，這將增加高收益貸款和財務管理關係。

On page 20, I'll start talking about our fee income businesses. On this page, I'll provide some highlights on our retirement business. Excluding the impact of the ESOP trust services gain and nonrecurring ESOP trustee revenues in the prior quarter, revenues increased 1.6%.

在第 20 頁，我將開始談論我們的費用收入業務。在此頁面上，我將重點介紹我們的退休業務。剔除上一季 ESOP 信託服務收益與非經常性 ESOP 受託人收入的影響，營收成長 1.6%。

End-of-quarter assets under management and administration increased 6.2%, mainly due to improved equity and bond markets. Participants within retirement have grown 4.4% over the prior year. For the first quarter of 2024, excluding any market impact, we expect fee income for our retirement business to be stable.

季末管理資產成長 6.2%，主要得益於股票和債券市場的改善。退休人員的數量比上一年增長了 4.4%。2024年第一季度，排除任何市場影響，我們預期退休業務的費用收入將保持穩定。

Turning to page 21, you could see highlights of our wealth management business. On a linked-quarter basis, revenues increased 12.7%, while end-of-quarter assets under management increased 7.9%, again, due to improved equity and bond markets.

翻到第21頁，您可以看到我們財富管理業務的亮點。在環比基礎上，由於股票和債券市場的改善，收入增長了 12.7%，而季末管理的資產再次增長了 7.9%。

Over 83% of revenues in the segment are asset-based fees. For the first quarter, excluding any market impact, we do expect our fee income from our wealth business to be up slightly.

該領域超過 83% 的收入是基於資產的費用。對於第一季度，排除任何市場影響，我們預期財富業務的費用收入將小幅成長。

Turning to page 22, I'll talk about the mortgage business. Mortgage revenues decreased 49% from the prior quarter as originations decreased 41%. We saw our usual seasonal decline in mortgage production given that most of our production comes from the Twin Cities. For the first quarter, we expect mortgage originations to decrease 40% from the prior quarter as we enter again another seasonally weaker quarter for our mortgage business.

翻到第22頁，我會講抵押貸款業務。抵押貸款收入較上一季下降 49%，貸款發放量下降 41%。鑑於我們的大部分產量來自雙城，我們看到抵押貸款產量通常會出現季節性下降。對於第一季，我們預計抵押貸款發放量將比上一季減少 40%，因為我們的抵押貸款業務再次進入季節性疲軟的季度。

Page 23 provides an overview of our noninterest expense. During the quarter, noninterest expense increased 3.7%. Excluding one-time items such as severance and a donation to Minnesota housing, noninterest expense grew 2.4%.

第 23 頁概述了我們的非利息支出。本季非利息支出成長 3.7%。不包括遣散費和明尼蘇達州住房捐贈等一次性項目，非利息支出增加了 2.4%。

The increase in expenses is mainly due on inflationary pressures experienced in our technology contract renewal and due to higher audit examination fees. As we continue to deal with deflationary pressures, we do expect the overall expenses for 2024 to grow low single digit on a reported basis.

費用增加主要是由於我們的技術合約續約所經歷的通貨膨脹壓力以及審計審查費用的增加。隨著我們繼續應對通貨緊縮壓力，我們確實預計 2024 年的總體支出將按報告的低個位數增長。

Turning to page 24, credit continued to remain very strong. We had net recoveries of four basis points in the quarter. Our nonperforming assets percentage was 22 basis points compared to 23 basis points in the prior quarter. Our allowance for credit losses on loans to total loans was 1.3%. We had a provision during the quarter, mainly due to strong loan growth and unfunded commitments.

翻到第 24 頁，信用持續保持強勁。本季我們的淨復甦達四個基點。我們的不良資產百分比為 22 個基點，而上一季為 23 個基點。我們的貸款信用損失準備金佔貸款總額的1.3%。我們在本季有撥備，主要是由於強勁的貸款成長和無資金承諾。

I'll discuss our capital liquidity on page 25. During the quarter, we repurchased $2.1 million of outstanding stock at an average price of $17.65. Our capital remains well above regulatory minimum levels, which has been well above the 6.5% minimum threshold. On the bottom right, you'll see the breakdown of our sources of over $2 billion in potential liquidity. Overall, we continue to remain well positioned from both a liquidity and capital standpoint for future growth or whether any economic uncertainty.

我將在第 25 頁討論我們的資本流動性。本季度，我們以 17.65 美元的平均價格回購了 210 萬美元的已發行股票。我們的資本仍遠高於監管最低水平，即遠高於 6.5% 的最低門檻。在右下角，您將看到我們超過 20 億美元的潛在流動性來源的詳細資訊。整體而言，從流動性和資本的角度來看，無論是未來的成長還是經濟的不確定性，我們都將繼續保持良好的地位。

To summarize on page 26, we ended the year in a very strong note with great momentum going into the new year. We saw strong organic loan and deposit growth, a high since -- the highest in our history. Our net interest margin improved as the Fed [falling paused] and strong organic production helped continue to remix the balance sheet. We expect continued improvement or net interest margin going forward.

總結第 26 頁，我們以強勁的勢頭結束了這一年，並以強勁的勢頭進入新的一年。我們看到強勁的有機貸款和存款成長，創歷史新高。隨著聯準會[暫停下跌]和強勁的有機生產幫助我們繼續重組資產負債表，我們的淨利差有所改善。我們預計未來淨利差將持續改善。

Our fee businesses, which continue to be a differentiator for us, as over 54% of our revenues are non-spread base. Our capital remains strong and we remain committed to returning capital prudently. With that, I will now open it up for Q&A.

我們的收費業務仍然是我們的優勢所在，因為我們超過 54% 的收入來自非利差收入。我們的資本依然強勁，我們仍然致力於謹慎地返還資本。現在，我將打開它進行問答。

We will now begin the question-and-answer session. (Operator Instructions)

我們現在開始問答環節。（操作員說明）

Jeff Rulis, D.A. Davidson & Co.

傑夫·魯利斯，D.A.戴維森公司

Thanks, good morning. It's a question on the loan to deposit growth, just that it -- really strong, and wanted to get a sense for -- if there was anything kind of lumpy towards the end and/or did you pull forward looking at a little more muted growth in '24? Did you sort of cannibalize some activity? Just a really strong quarter. I wanted to see if there was some production that maybe have pulled into the Q4 versus what was maybe going to book in '24?

謝謝，早安。這是一個關於貸款存款增長的問題，只是它 - 非常強勁，並且想要了解 - 到最後是否有任何不穩定的情況和/或你是否向前看一點更加柔和'24 的增長？你是否蠶食了某些活動？這是一個非常強勁的季度。我想看看是否有一些作品可能已經進入第四季度，而哪些作品可能會在 24 年預訂？

Jeff, this is Jim Collins. No, I would say we didn't pull anything forward. The real bone growth and deposit growth specifically in the fourth quarter was just the buildup of the talent that we acquired throughout 2023, and their pipeline is coming forward into production. I anticipate that those pipelines will continue through 2024. Typically, we will see a strong second quarter, strong third quarter. First quarter will be a little light, and then fourth quarter generally is a little light.

傑夫，這是吉姆‧柯林斯。不，我想說我們沒有任何進展。特別是在第四季度，真正的骨骼成長和存款成長只是我們在 2023 年全年收購的人才的積累，他們的管道正在投入生產。我預計這些管道將持續到 2024 年。通常情況下，我們會看到第二季和第三季的強勁表現。第一季會有點亮，然後第四季通常會有點亮。

So it usually goes second quarter, third quarter, first quarter, and fourth quarter. So I do anticipate that those pipelines will continue and there wasn't anything lumpy necessarily. All of what was getting booked are stronger, midmarket C&I loans, and again, our continued growth in commercial real estate. But the focus still is midmarket C&I, and we're pulling in the full relationship. And that's what I anticipate for the rest of 2024.

所以通常是第二季、第三季、第一季和第四季。因此，我確實預計這些管道將繼續下去，並且不一定會出現任何問題。所有被預訂的都是更強勁的中端市場工商業貸款，以及我們商業房地產的持續成長。但重點仍然是中階市場 C&I，我們正在拉動全面的關係。這就是我對 2024 年剩餘時間的預期。

Thanks, Jim. And just the -- was that growth also pretty even through the quarter thinking about margin and if it was back-end loaded on the loan side, or was it pretty steady throughout fourth quarter?

謝謝，吉姆。只是 - 考慮到利潤率以及是否在貸款方面後端加載，整個季度的增長是否也相當平穩，或者整個第四季度是否相當穩定？

Hey, Jeff/ We did see a little bit more pickup after October. So I'd say that was probably more when activity came as probably after October, November, December related.

嘿，傑夫/十月之後我們確實看到了更多的回升。所以我想說，當活動發生時，這可能會更多，因為可能在十月、十一月、十二月之後相關。

Got it. And Al, just to circle back on the margin. I am reminded of the coiled spring reference and just wanted to see if that's the beginning of this releasing. And so that's Part A. And Part B is when we do see those rate cuts -- I don't know if you've got sensitivity on either NII or margin bump per each 25-basis-point cut -- should we get this?

知道了。艾爾，只是為了回到邊緣。我想起了螺旋彈簧參考，只是想看看這是否是這次發布的開始。這就是 A 部分。而 B 部分是當我們確實看到這些降息時——我不知道你是否對 NII 或每次降息 25 個基點的保證金上漲敏感——我們是否應該得到這個？

Yeah. So Jeff, thanks for that. I mean, this is the beginning of our net interest margin to improve. So we're very optimistic here about the trajectory of our net interest margin given the pause now and the Fed and potential rate hike -- rate cuts. In terms of sensitivity, one thing you'll notice on our disclosures, if you look at our last 10-Q that you did see that little bit of that liability sensitivity decrease because we did put into effect a little bit of balance sheet swaps last year.

是的。傑夫，謝謝你。我的意思是，這是我們淨利差改善的開始。因此，考慮到現在的暫停以及聯準會和潛在的升息-降息，我們對淨利差的軌跡非常樂觀。就敏感度而言，您會在我們的揭露中註意到一件事，如果您查看我們最近的10-Q，您確實會發現負債敏感度有所下降，因為我們最後確實實施了一些資產負債表掉期年。

Those swaps will be rolling off during the course of 2024, and that liability sensitivity will begin to increase again. So you'll see more improvement on our net interest margin probably towards the back half of next year.

這些互換將在 2024 年期間逐步減少，責任敏感度將再次開始增加。因此，您可能會在明年下半年看到我們的淨利差進一步改善。

So with that being said, though, I'd probably have you look at probably our disclosures in terms of managed margin improve -- net interest income improvement probably mid to high single digits, which is drive to what our 10-K was last year prior to the swaps that we put on the balance sheet.

話雖這麼說，但我可能會讓您看看我們在管理利潤率改善方面的披露——淨利息收入改善可能是中高個位數，這推動了我們去年的 10-K 水平在我們將掉期計入資產負債表之前。

Okay. So just to your comments, as you think in Q1, steady state see some margin improvement, but cuts should accelerate that improvement.

好的。因此，就您的評論而言，正如您在第一季所認為的那樣，穩定狀態下的利潤率有所改善，但削減應該會加速這種改善。

That is correct.

那是對的。

And maybe one last one. Okay, thank you. One final point on the -- go ahead. I'm sorry. Go ahead.

也許還有最後一件事。好的謝謝。最後一點——繼續。對不起。前進。

No, the rate of -- also, the rate of the improvement will also be dictated by the deposits as well because we did have very strong deposit in the fourth quarter. So as we noted, a pretty much strong deposit demand out there right now. We continue to keep deposits stable. That would also dictate how much improvement we see.

不，改善率也將取決於存款，因為我們在第四季度確實有非常強勁的存款。正如我們所指出的，目前的存款需求相當強勁。我們持續保持存款穩定。這也將決定我們看到的改進程度。

Okay. And Katie, the -- just wanted to check in on capital. And the buyback appetite is pretty strong growth. But maybe if that ebbs -- so that front, but also hunting around on the M&A side. You mentioned looking for individual on the retirement front. But would you also consider M&A on the retirement side as well?

好的。凱蒂，只是想檢查資本。回購意願成長相當強勁。但也許如果這種情況衰退——那麼前面，但也在併購方面四處尋找。您提到在退休方面尋找個人。但您是否也會考慮退休方面的併購？

Yes. Absolutely. So from a capital prioritization standpoint, they remain consistent in terms of our priorities. And so first and foremost, prudent and disciplined organic growth is our number one priority, being selective. But taking market share at a time as we're adding talent in our growth markets is the number one priority.

是的。絕對地。因此，從資本優先順序的角度來看，它們與我們的優先順序保持一致。因此，首先也是最重要的一點是，謹慎和有紀律的有機成長是我們的首要任務，是有選擇性的。但是，當我們在成長型市場中增加人才時，首先要考慮的是搶佔市場份額。

Returns to our shareholders remains a top priority as we saw with the activity this quarter with share buybacks and continued dividends, but continuing to also be, as we have in our history, very opportunistic with strategic lift-outs, market expansion as well as acquisitions in both the commercial wealth base as well as on the retirement side.

正如我們在本季度的股票回購和持續派息活動中看到的那樣，股東回報仍然是重中之重，但正如我們歷史上的那樣，我們仍然在策略退出、市場擴張和收購方面非常機會主義在商業財富基礎和退休方面。

Okay. Thank you.

好的。謝謝。

Thanks, Jeff.

謝謝，傑夫。

Thanks, Jeff.

謝謝，傑夫。

Nathan Race, Piper Sandler.

內森·雷斯，派珀·桑德勒。

Yes, hi, everyone. Good morning. Thank you for taking the question. I just wanted to clarify one question to your earlier response to Jeff's item on NII growth for this year, that mid to high single digit trajectory that I think you described, AI. Does that include maybe two or three rate cuts in the back half of this year?

是的，大家好。早安.感謝您提出問題。我只是想澄清你之前對 Jeff 關於今年 NII 成長的計畫的回應的一個問題，我認為你描述的是中高個位數的軌跡，人工智慧。這是否包括今年下半年可能的兩到三次降息？

Yeah, thanks for clarifying for that. That is on the plus 100 scenario that were -- I'm sorry, the minus 100 scenario, really clarifying it, the minus 100 scenario that we had in the 10-K last year.

是的，謝謝你的澄清。這是關於正 100 的情況——對不起，負 100 的情況，真正澄清一下，我們去年在 10-K 中遇到的負 100 的情況。

Got you. And perhaps supporting that outlook with rate cuts. The plan with some of the liquidity that you guys built with the repositioning play in the fourth quarter, is the plan to kind of keep borrowings where they're at just to provide -- at least the short-term debt where it's at just to kind of provide that installation to the floating rate loans to the extent Fed cuts occurred, do you kind of plan on maybe bringing down wholesale funding, to the extent deposit growth remains strong as it was in the fourth quarter, and loan growth also remains strong, albeit likely not to the level that we saw in the fourth quarter?

明白你了。也許透過降息來支持這個前景。你們在第四季度透過重新定位而製定的一些流動性計劃，是一種將借款保持在剛剛提供的水平上的計劃——至少是短期債務保持在剛剛提供的水平。如果聯準會降息的話，如果存款成長保持強勁，貸款成長也保持強勁，那麼你是否計劃減少批發融資？ ，儘管可能沒有達到我們在第四季度看到的水平？

Right. So from the restructuring we did in the fourth quarter, we did use that predominately to support loan growth as you saw that we had very strong loan growth. But on a go-forward basis, as you think about our borrowings, we'd like to decrease that, especially if we have more deposit growth there. I mean, we'd like to have pretty much eliminate that if we can potentially with -- and if we have continued strong deposit growth.

正確的。因此，從我們在第四季度進行的重組來看，我們確實主要用它來支持貸款成長，正如你所看到的，我們的貸款成長非常強勁。但從長遠來看，當你考慮我們的借款時，我們希望減少借款，特別是如果我們的存款成長更多的話。我的意思是，如果我們有可能的話，並且如果我們的存款持續強勁增長，我們希望幾乎消除這種情況。

Okay, great. And I apologize, I jumped down somewhat late. But just in terms of the loan growth outlook for this year, could you remind me what you guys are thinking there?

好的，太好了。抱歉，我跳得有點晚了。但就今年的貸款成長前景而言，您能提醒我你們的想法嗎？

So we're taking modest, but I'll let Jim also answer.

所以我們採取謙虛的態度，但我會讓吉姆也回答。

Yeah, I think we will have loan growth, obviously with the borrowing situation. It depends on how much deposit growth we have. But with the talent that we acquired in 2023, some of the processes and procedures that we have streamlined in 2022 and 2023 help our -- the entire higher commercial lending group, as well as the rollout of our private banking group, acquiring market share from some of the other banks that are not lending. We will definitely have some good, solid, profitable loan growth. That's my expectation.

是的，我認為我們的貸款將會成長，顯然是在藉貸情況下。這取決於我們的存款成長有多少。但是，憑藉我們在 2023 年獲得的人才，我們在 2022 年和 2023 年簡化的一些流程和程序有助於我們的整個高級商業貸款集團，以及我們私人銀行集團的推出，從其他一些銀行不提供貸款。我們肯定會出現一些良好、穩定、有利可圖的貸款成長。這是我的期望。

Got you. In terms of commercial real estate maturities expected this year, is that a meaningful headwind to growth -- net growth that is?

明白你了。就今年預期的商業房地產到期而言，這對成長（即淨成長）來說是否是一個有意義的阻力？

We do not have a meaningful amount that will be maturing in the next 18 months to have a headwind in that category.

我們沒有足夠的金額在未來 18 個月內到期，從而在該類別中遇到阻力。

Got it. And just changing gears, Al, I think you mentioned retirement and benefit service revenue should be kind of flat in the first quarter versus the 4Q level. I noticed in the release that retirement plan participants had some nice growth quarter over quarter. So just curious what you guys are seeing from an organic growth perspective in terms of adding new accounts on to that platform and just how you're thinking about growth in that line this year, assuming equity markets are relatively stable?

知道了。艾爾，只是換個話題，我認為您提到第一季的退休和福利服務收入應該與第四季度的水平持平。我在新聞稿中註意到，退休計劃參與者的季度環比增長良好。所以只是好奇你們從有機增長的角度看到了在該平台上添加新帳戶方面的情況，以及假設股市相對穩定，你們如何看待今年該領域的增長？

Hey, Nate, it's Katie. I'll take that one. From a new sales standpoint, from new plans, new revenue, new participants, it was a record-setting year in 2023. We continue to sustain headwinds as plans that leave through -- they either get acquired or move out for RFPs -- continues to be a headwind to that new business. And so considering stable markets, that's where we end up with a fairly flattish outlook for that revenue line item going forward.

嘿，內特，我是凱蒂。我會接受那個。從新的銷售角度來看，從新的計畫、新的收入、新的參與者來看，2023年是創紀錄的一年。我們繼續面臨阻力，因為那些留下來的計劃——要么被收購，要么因徵求建議書而退出——仍然是新業務的阻力。因此，考慮到穩定的市場，我們最終對該收入項目的前景相當平淡。

Okay. Katie, have you noticed just the natural headwind from that line of business in terms of the natural attrition there, that that's slowing relative to the past years, just as you guys have launched a number of initiatives and new sales efforts to offset what occurs with that attrition rate?

好的。凱蒂，你有沒有註意到該業務線的自然損耗，與過去幾年相比，這種自然損耗正在放緩，正如你們推出了許多舉措和新的銷售努力來抵消發生的情況一樣那個流失率？

It's slowing incrementally, and we're growing new revenue incrementally. But we think there's continued additional opportunity to improve that net revenue growth year over year. And there are initiatives being put in place that contractually will do some things for us. There's also some efficiencies and some process improvements that will be implemented in 2024 that will continue to help that net revenue paid higher.

它正在逐漸放緩，而我們正在逐步增加新收入。但我們認為，還有持續的額外機會來逐年提高淨收入成長。我們正在採取一些舉措，按照合約約定將為我們做一些事情。2024 年也將實施一些效率提升和流程改進，這將繼續幫助淨收入提高。

So I'm confident that we will see incremental continued growth, but it's going to take a little bit of time. And looking forward to having the Chief Revenue Services Officer and the executive team to help us guide through and prioritize some of those changes as well as help us build out that acquisition opportunity list.

因此，我相信我們將看到持續的增量成長，但這需要一些時間。並期待首席收入服務長和執行團隊幫助我們指導並確定其中一些變化的優先順序，並幫助我們制定收購機會清單。

Got you. And I know it's been an ongoing initiative for you guys in terms of increasing the capture rate from the retirements platform under wealth. We were just curious as to what extent maybe some progress on that front was evident in the wealth management revenue increase in the fourth quarter. Was that just more so a function of some of the private banking teams that you've added and also just given that equity markets were higher in the fourth quarter?

明白你了。我知道這對你們來說是一項持續的舉措，旨在提高財富下退休平台的捕獲率。我們只是好奇第四季度財富管理收入的成長在這方面取得了多大程度的明顯進展。這是否只是您添加的一些私人銀行團隊的職能，並考慮到第四季度股市走高？

We actually had one specific large win in that arena from capturing that terminated participant into wealth in the fourth quarter. It was a sizable number, but we continue to fine-tune and streamline that process. And over the years, we will continue to capture more of a percentage, and we will be adding additional wealth advisers in 2024 and '25 to capture more of that piece of the business.

事實上，我們在第四季度透過將終止的參與者納入財富中，在該領域取得了一場具體的重大勝利。這是一個相當大的數字，但我們繼續微調和簡化流程。多年來，我們將繼續佔據更多的份額，並且我們將在 2024 年和 25 年增加更多的財富顧問，以佔據更多的業務份額。

Okay, great. And Al, just to clarify on the expense growth outlook for this year, that low single-digit expectation that's of $151 million in reported expenses in '23?

好的，太好了。Al，只是為了澄清今年的費用成長前景，即 23 年報告費用為 1.51 億美元的低個位數預期？

Yeah, also $150.1 million or $150.2 million reported expenses.

是的，還有 1.501 億美元或 1.502 億美元的報告費用。

Okay. Got you. Then maybe one last one for Karin. Just curious if there's any additional sale to the recoveries that we saw in 2023. And if you've seen any major credit issues on the horizon, obviously, is not evident from the numbers that we can [claim] that you guys reported this quarter. But I'd just be curious on your outlook for charge-offs in 2024 and how you see the reserve trending relative to loans as well.

好的。明白你了。那麼也許是卡琳的最後一件事。只是好奇我們在 2023 年看到的復甦是否有任何額外的銷售。如果您已經看到即將出現的任何重大信用問題，顯然，從我們可以[聲稱]您本季報告的數字來看，這些問題並不明顯。但我只是想知道您對 2024 年沖銷的前景以及您如何看待準備金相對於貸款的趨勢。

Sure. Hi, Nate. Most of those larger recovery opportunities have been exhausted. And so I expect that as credit continues to normalize, we'll start to see some level of charge-off activity. Just in terms of the general outlook for asset quality, I don't see anything significant on the horizon. We're just continuing to see some normalization, no specific pattern shifts, just what we would expect as we return to a more normalized environment.

當然。嗨，內特。大多數較大的復甦機會已經用盡。因此，我預計隨著信貸繼續正常化，我們將開始看到一定程度的沖銷活動。就資產品質的整體前景而言，我認為不會有任何重大變化。我們只是繼續看到一些正常化，沒有具體的模式轉變，這正是我們回到更正常化的環境時所期望的。

Okay, great. And just sorry, one last one. Just curious on the appetite for share repurchases continuing at this point. I'd imagine you guys are going to be fairly opportunistic, but still have a good amount of excess capital flexibility. But just curious to what extent you maybe want buybacks to be a more recurring component to your capital return to shareholder story.

好的，太好了。抱歉，最後一件事。只是對目前持續的股票回購興趣感到好奇。我想你們會相當投機，但仍然擁有大量的過剩資本彈性。但只是好奇您在多大程度上希望回購成為股東資本回報故事中更常出現的組成部分。

Yeah, this is Al. Hey, Nate, in terms of buybacks, opportunistic is a good word for it. We do look at buybacks to make sure that the earn-back on those any repurchases is still definitely under three years. So we definitely look at where our stock price is trading relative to our -- [that earn-back] scenario.

是的，這是阿爾。嘿，內特，就回購而言，機會主義是一個很好的詞。我們確實會考慮回購，以確保任何回購的收益仍絕對低於三年。因此，我們肯定會考慮我們的股價相對於我們的[回盈]情境的交易情況。

Okay. I will leave it there. I appreciate all the color. Thank you, everyone.

好的。我會把它留在那裡。我欣賞所有的顏色。謝謝大家。

Thanks, Nate.

謝謝，內特。

(Operator Instructions) Matthew Renck, KBW.

（操作員說明）Matthew Renck，KBW。

Hey, everybody. I hope everybody is doing well today. A lot of my questions have been asked and answered. But just as a follow-up to the loan growth discussion, are rate cuts baked into that outlook or do you think -- and if they're not, do you think we'll see a meaningful uptick in loan growth in the back half of the year, perhaps?

嘿，大家。我希望今天每個人都做得很好。我的許多問題都被問到並得到解答。但正如貸款增長討論的後續行動一樣，降息是否已納入這一前景，或者您是否認為——如果沒有，您認為我們會在下半年看到貸款增長出現有意義的上升嗎？年度最佳，也許？

We didn't anticipate the loan cuts in that loan forecast of growth. Like I said a little bit earlier, we should have a strong second quarter and third quarter. That's fairly natural when you see the business tax returns come in and business or businesses are planning for events. We had a strong fourth quarter this year, but that had more to do with the talent we brought on in 2023 and them getting their pipeline set and then starting flushing out -- and fleshing out their pipeline.

我們在貸款成長預測中沒有預料到貸款削減。正如我之前所說，我們應該有一個強勁的第二季和第三季。當您看到企業報稅表以及企業正在計劃活動時，這是自然的。今年第四季我們表現強勁，但這更多是與我們在 2023 年引進的人才有關，他們建立了管道，然後開始沖洗並充實他們的管道。

That could happen again in 2024. If we find additional talent, we're going to be very opportunistic to find good solid mid-market commercial bankers, specifically in Minneapolis and Arizona. So we do find that in the first half of this year. We might see similar results next year of a stronger fourth quarter than I'm anticipating, but that would be because of talent acquisition, not rate cuts.

2024 年這種情況可能會再次發生。如果我們找到更多的人才，我們將非常有機會找到優秀的可靠的中端市場商業銀行家，特別是在明尼阿波利斯和亞利桑那州。所以我們在今年上半年確實發現了這一點。明年我們可能會看到類似的結果，第四季的表現比我預期的要強勁，但這將是因為人才的引進，而不是降息。

Okay, great. Thank you. And I think that's all I had right now. So I'll step back.

好的，太好了。謝謝。我想這就是我現在所擁有的一切。所以我會退後一步。

(Operator Instructions) Okay. It seems we have no further questions in the queue, so this will conclude the question-and-answer session. I would like to turn the conference back over to Katie Lorenson for any closing remarks.

（操作員指示）好的。隊列中似乎沒有其他問題了，所以問答環節到此結束。我想將會議轉回凱蒂·洛倫森 (Katie Lorenson) 發表閉幕詞。

Great. Thank you, Harry. Thank you everyone for the questions. Thank you for everyone listening in today. As you can tell, we feel very confident as we move forward into 2024 about -- in regards to sustaining the momentum that we saw in the fourth quarter.

偉大的。謝謝你，哈利。謝謝大家的提問。感謝大家今天的收聽。如您所知，隨著我們進入 2024 年，我們對維持第四季度的勢頭非常有信心。

Our unique strength of this company's diversified business model continues to differentiate our ability to attract and retain clients as well as talented professionals. We remain absolutely laser focused on our strong and diversified balance sheet, our talent investments, fee income, and investments in those key business lines while optimizing our infrastructure to return this company to our long history of delivering strong profitability, tangible book value growth and top-tier returns to our shareholders.

我們公司多元化業務模式的獨特優勢繼續使我們吸引和留住客戶以及才華橫溢的專業人士的能力脫穎而出。我們仍然絕對專注於我們強大且多元化的資產負債表、我們的人才投資、費用收入以及對這些關鍵業務線的投資，同時優化我們的基礎設施，使這家公司恢復我們提供強勁盈利能力、有形帳面價值成長和頂級業績的悠久歷史。為我們的股東帶來分層回報。

Thank you to our investors, our analysts, and to everyone for joining our call today. Have a great day, everyone.

感謝我們的投資者、分析師以及今天加入我們電話會議的所有人。祝大家有個美好的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。