Loan growth of 2.1% sequentially was driven by sustained customer relationships in core C&I and a reversal of payoff trends in the energy sector.
Management attributed the significant expense decline to a late-2025 realignment and a focus on matching core cost structures with current market opportunities.
The energy portfolio saw a 4.3% increase as clients responded to higher short-term crude prices, though management noted a lack of appetite for new production capacity expansion.
Commercial Real Estate (CRE) growth of 3.7% remains governed by strict concentration limits, allowing the bank to be selective on deal structure and returns.
Fee-based revenue resilience was supported by record first-quarter syndication activity and sustained momentum in transaction card services.
Credit quality remains exceptionally high with net charge-offs at only three basis points, which management views as a result of disciplined underwriting rather than market tailwinds.
Full-year loan growth guidance is set near 10%, supported by solid pipelines and constructive business activity across the Texas, Oklahoma, and Arizona footprints.
Net Interest Margin (NIM) expansion is expected throughout 2026, primarily driven by the repricing of fixed-rate assets and loans into a higher-for-longer rate environment.
Updated 2026 guidance assumes no interest rate cuts, shifting the revenue mix slightly toward fee income as trading revenue dynamics adjust to the rate curve.
The bank expects to monetize 50% of its remaining Visa Class B shares in Q2 2026, potentially generating a $29 million pretax benefit for capital allocation or reinvestment.
Provision expense guidance of $15 to $35 million incorporates an expectation for credit normalization later in the year, despite no current tangible evidence of deterioration.
Management highlighted virtually zero exposure to private credit facilities, distinguishing their risk profile from broader industry trends.
The efficiency ratio improved to 63.2%, which management considers a ‘clean’ representation of the bank’s post-realignment expense profile.
Energy sector drilling activity is expected to remain muted until the three-year oil price strip exceeds the $70 threshold, regardless of spot price volatility.
Capital levels remain strong with tangible common equity at 9.3% and CET1 at 12.6%, while the company continues to see strong growth across its core C&I and commercial real estate portfolios.
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