Special Questions

Special Questions

NOTES: 73 responses.

NOTES: 56 responses. This question was only posed to those who issued PPP loans.

NOTES: 55 responses. This question was only posed to those who issued PPP loans.

NOTES: 7 responses. This question was only posed to those who had PPP loans that were denied forgiveness. Average shown is the median.

NOTE: 74 responses.

This question was only posed to those expecting higher profitability over the next six months. These comments are from respondents’ completed surveys and have been edited for publication.

• Improvement in efficiency.
• Deployment of liquidity currently in Fed account, either through bond purchases or loans.
• Less-than-expected losses resulting in lower loan-loss provision. Expansion into new markets.
• Increased demand and liquidity in the economy.
• PPP [Paycheck Protection Program] fees.
• Additional income accretion of PPP loan fees. Recent increase in loan totals will generate more interest income.
• PPP fees and lower operating costs.
• Increased loan demand.
• Lower cost of funds.
• Have taken more dollars from overnight funds and purchased mortgage-backed securities and municipal bonds.
• Decline in COVID cases as more people get vaccinated, expiration of unemployment benefits that will get more people back to work and hopefully improvement in supply of computer chips.
• Lower cost of funds; better loan demand.
• Fee income.
• Alternative investments.
• PPP fees being recognized to income. Our bank is also growing, and that growth will bring in additional revenues.
• Reduction in some noninterest expense categories and deploying some of the excess liquidity in increased loan demand.
• Increase in asset size, increase in loans, decrease in deposits.
• Increased loan production.
• Higher loan volume, lower cost of funds. Accretion of PPP fees.
• Replacing lower-yielding assets with higher-priced ones and lowering our cost of funds.
• Continued increase in loan demand.

This question was only posed to those expecting lower profitability over the next six months. These comments are from respondents’ completed surveys and have been edited for publication.

• Interest margin squeeze, primarily due to lower-yielding assets.
• Stalling net interest income, tighter margins due to loan pricing competition as a result of excess bank system liquidity from excessive government stimulus.
• Smaller volume of loans forgiven and, therefore, smaller fees recognized.
• Compressed net interest margin.
• Investment repricing.
• Very low interest rate environment is making it difficult to keep margins at acceptable levels without extending duration.
• Decreased fees from PPP.
• Less PPP fee income.
• Net interest margin continues to decline.
• Tremendous rate pressure due to large banks and credit unions chasing deals.
• Continued low interest rate environment means repricing of loan and investment portfolios over time as higher-yielding assets mature, combined with expected return to "normal provision expenses" as credit risk returns to normal.
• We’ve felt the boost in earnings from the added PPP fee income we’ve been recognizing. Organic loans are not keeping pace to replace the PPP loans being forgiven.
• Three extraordinary factors inflated ROA [return on assets] for first half 2021.
• Margin squeeze continues as assets reprice.
• Lack of PPP fees, interest margin squeeze due to lower rates.
• No more PPP fees.
• Tight margins because of extremely low interest rates.
• Decreased rates, lower loan demand.

Special Questions Comments

These comments have been edited for publication.

• It will be difficult to replace the Paycheck Protection Program (PPP) loans as they continue to pay off through the remainder of the year. Loan demand is starting to trickle in, however, not at a pace of replacing paydowns and payoffs. With reinvestment rates continuing to decline within the investment and loan portfolios, income is anticipated to be less for the remainder of the year.
• We are very liquid at the current time, and it is difficult to find investments or loans with acceptable yields to deploy such excess liquidity. With the payoff of most of our PPP loans, this adds to excess funds held at the institution. We are hoping that rates will begin to increase in the next 12 months to help rein in inflation pressure. We have heard from businesses that they are being affected by supply-side price increases but are “holding tight” to see if these pressures will be sustained in the coming months.
• The Houston and Dallas commercial real estate markets are ripe for a cycle. Both markets have been superheated, and banks and private equity firms have lowered both credit standards and rates in order to attract business. I predict that the vacancy rate in Houston and subsequent credit quality issues will cause the private investor market to "dump" its assets, thus depressing the entire market. The bank will have collateral that will be severely discounted due to the intuitional exit from the commercial market. Just a community banker’s opinion.
• As stated, 2022 I believe will be a poor year due to federal government actions.
• I am a bit nervous about the increasing numbers of COVID cases in San Antonio.