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Equity Bancshares, Inc. (EQBK 4.14%)
Q4Â 2019 Earnings Call
Jan 24, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 Equity Bancshares Incorporated Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference to your speaker today, Chris Navratil. Please go ahead, sir.
Chris Navratil -- Senior Vice President of Accounting and Finance
Good morning and thank you for joining Equity Bancshares' conference call, which will include discussion and presentation of our fourth quarter 2019 results. Joining me today are Equity Bancshares' Chairman and CEO, Brad Elliott; Equity Bancshares' Executive Vice President and Chief Financial Officer, Greg Kossover; and Equity Bancshares' Executive Vice President and General Counsel, Brett Reber.
Presentation slides to accompany our call are available via PDF for download at investor.equitybank.com by clicking the presentation tab. You may also click the Event icon for today's call posted at investor.equitybank.com to view the webcast player. If you are viewing this call on our webcast player, please note that slides will not automatically advance.
Please note slide 2 including important information regarding forward-looking statements. From time to time, we may make forward-looking statements within today's call and actual results may vary. Following the presentation, we will allow time for questions and further discussion. Thank you all for joining us.
With that I'd like to turn it over to Brad Elliott.
Brad S. Elliott -- Chairman and Chief Executive Officer
Good morning. Thank you for joining the Equity Bancshares' fourth quarter 2019 earnings call. I'm joined today by Greg Kossover, our Chief Financial Officer; and our General Counsel, Brett Reber. I'm pleased to announce Equity Bancshares' has reported $0.64 per diluted share in earnings for the fourth quarter of 2019 and $10 million in earnings. We also finished the year strong with net interest margin expansion, which will -- which we will elaborate on shortly.
2019 was an interesting year for Equity Bank and are proud of our entire team for working on -- working as hard this past year than in any year since our inception. It is easier to work hard with the tailwind, but it shows more character and fortitude when our teams accomplished what they did in 2019 with a headwind. As I look back on the year, we put up a new digital platform for our customers. We introduced our Trust and Wealth Management division. We closed our MidFirst Bank acquisition and attracted several key leaders to Equity Bank and helped in the personal development of many others.
We added aircraft and healthcare financing to our lines of business and now offer a full line of credit card services, including purchase and commercial credit cards. We work diligently on non-interest income and non-interest expense initiatives in the past four quarters. And I'm proud to report our ratio of adjusted non-interest expense to average assets of 2.46%, is the lowest, it has been at any year end since we became public.
Our non-interest income grew every quarter in 2019 and is 22% higher in the fourth quarter of 2019 compared to the fourth quarter of 2018. This is a huge accomplishment for the operating teams here at Equity Bank. Greg?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
We were also pleased with our improvement in net interest margin. Last spring, the interest rate environment went from rising to falling and what felt like a minute. We were able to react quickly and take advantage of our liability sensitivity and have reduced our cost of deposits 29 basis points from March 31, 2019 to 1.32%, and our overall cost of funds has decreased 28 basis points for that same timeframe to 1.43%.
This improvement in cost of funds has led to an adjusted net interest margin of 3.52%, a 4 basis point improvement quarter-over-quarter from our adjusted Q3 NIM. Margin and growth of non-interest bearing deposits is an area we will continue to focus on in the upcoming quarters. We also worked out our classified assets ratio to a very respectable 21.2% and 15.9% without our one-off credit we have previously discussed. I credit the hard work of Craig Mayo in a special assets group for this improvement.
OREO increased slightly during the year, as assets we have acquired are running their course through the disposition processes. This two will continue to be a focus for us in 2020. Our stock price was above our price point to repurchase shares in the fourth quarter and as such, there were no EQBK shares repurchased. However, our stock buyback program is still in place and we expect to execute on it when appropriate. Brad?
Brad S. Elliott -- Chairman and Chief Executive Officer
With the headwinds in 2019 and what becomes of difficult events, is often times more important than the event itself. We followed our first quarter loan loss provision with outstanding results for the balance of 2019, including a reduction in our classified assets to regulatory capital as previously stated. There has been plenty of press given to the Boeing 737 Max and the delay in its recertification. Wichita has a long history of producing aircraft and parts for the aviation industry. As such, our OEMs and their sub-manufacturers have diversified and are good at managing tough times. They had built for many different aviation companies and for many different airplane models, and we believe they will manage this environment without significant issues. Brett, can you please give us an update on the pizza credit we've been working on.
Brett A. Reber -- Executive Vice President and General Counsel
We continue to make progress on the pizza credit. The pizza business came out of bankruptcy in the fourth quarter and return to normal operations. The Company also sold two -- new franchises prior to year end. Regarding valuation of the asset, we have a specific allowance against this asset and have charged it down by that amount in the fourth quarter. After update to the impairment analysis for the fourth quarter, we believe the asset is being carried at a reasonable value. In addition, the remaining personal loan to one of the Company principles has returned to regular payments and the homes carrying this loan is on the market for sale.
While the teams have been working on these results, we have also been focusing on some very exciting 2020 goals. One of these goals is to push more accountability for results down to our eight region. We have a very diverse and attractive footprint and we want to better utilize talents of our regional leaders and their bankers as we believe they will perform well in 2020, both individually and as an overall company. Branch optimization will be a part of this goal as we look to deliver our financial services to our markets in the most cost effective manner possible.
The second goal is to continue to grow non-interest bearing deposits and reduce our cost of funds. Our retail and commercial teams worked hard in 2019 on this, and we expect to continue to grow these deposits in 2020. We also expect to expand our new credit card services program in early 2020 and continue the growth of our trust and wealth management operation.
Greg, please take us through the financial highlights of the quarter.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
We begin with our earnings performance and reconciliation of quarterly earnings per share back to core EPS. Stated diluted earnings per share is $0.64 for the quarter, higher than normal purchase accounting accretion of approximately $515,000 and early loan payoff fees of approximately $307,000 account for about $0.04 per share. There was also a reserve put in place related to the account reconciliation matter disclosed in our third quarter 10-Q of about $530,000 or about $0.03 per share. Other expense in a combination of reduced payroll benefits and bonus accruals and elevated professional fees for special assets and accounting on a net basis, helped EPS about $400,000 or approximately $0.02 per share. Income taxes were slightly higher as we concluded our annual review and true-up, which hurt about $0.01 per share. These adjustments leave our core EPS for the quarter as $0.62 per share, representing a beat of consensus EPS by $0.02 per share.
Brad S. Elliott -- Chairman and Chief Executive Officer
It is nice to exceed consensus earnings, especially when it is related to the core earnings of our bank. Adjusted for the items Greg just listed, we beat in margin, non-interest income and non-interest expense. This, I believe is a result of the focus of our operating teams from our previous discussed 2019 initiatives.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
As we unpack the quarter, let's first look at the income statement. Starting with margin, loan fees were about on our expectations but accretable loan yield was elevated about $515,000 more than expected. In addition, there were about $307,000 of higher prepayments. Adjusted for this, loan yields were 5.55%. Average coupon on loans was down about 13 basis points quarter-over-quarter following interest rate movements. Securities, balances and yields were essentially in line with our forecast and expectations. As we said earlier, the real story is the change in our cost of deposits, which decreased 24 basis points quarter-over-quarter and our total cost of funds declined 26 basis points from the third quarter, down to 1.43%.
Overall, net interest margin for the quarter is stated at 3.61% and would be 3.52% adjusted for the items noted earlier, a 4 basis point improvement from adjusted third quarter NIM. Provision for loan losses was $1.55 million in the quarter, returning to a more normalized level after several quarters of muted provision. Several older acquired loans were also charged down as they move through the special assets process and into OREO.
Non-interest income for the quarter was $6.6 million, $6.5 million normalized for elevated check commission charges and slightly better than consensus. The components of non-interest income were in line with our expectation.
Non-interest expense as stated was $24.9 million for the quarter and as adjusted is $24.6 million against consensus of $24.75 million. Adjusted salaries and benefits were down primarily due to a reduction in bonus accruals. Professional fees were slightly elevated due to work on special assets and modestly higher for third-party accounting expense, and OREO was a bit higher due to some losses of OREO sales.
Miscellaneous expenses adjusted as discussed earlier were normal to our expectations. We reported in our third quarter 10-Q an account reconciliation issue which we have addressed. We have developed a new account reconciliation team that was able to get the accounts current and are now resolving any remaining reconciling items.
Our estimate in the third quarter for potential expense was adequate for the exposure and in the fourth quarter we provided an allowance for these items of about $530,000 after reconciling much of it. Any adjustments made were immaterial and we have not entered the process of collection on many of the items from third parties. Our effective income tax rate year-to-date is 22.2% and includes a typical year end true-up. Brad?
Brad S. Elliott -- Chairman and Chief Executive Officer
As we begin a review of the balance sheet, we start with loans, which were essentially flat during 2019. Although 2019 was not a growth year for our overall loan portfolio, I feel good about the quality of the new production we have been putting on. As I have said on previous calls, I do not believe we are at a stage in the cycle where aggressive growth is wise long term for our stakeholders.
In addition, 2019 marked a year where we saw irrational behaviour from some of our competition and we simply will not follow those competitors to the bottom. We received a large amount of pay-offs during the year because of competitors and the inverted yield curve. I also believe that the competitive environment has begun to level out the irrationality, and with our pipeline still very strong standing today at about $204 million, we are poised to deliver loan growth in the next few quarters.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Continuing on the balance sheet, securities balances were in line with our expectations and there was no significant changes in other assets. Deposit balances were down slightly in 2019 primarily from SEDAR's balances, which can be our most expensive form of deposits. Federal Home Loan Bank advances were down $60 million and we have continued to pay our bank stock lower down which we used in 2019 to repurchase EQBK stock when appropriate.
Brad S. Elliott -- Chairman and Chief Executive Officer
Our capital ratios at December 31 are 8.45% tangible common to tangible assets and our leverage ratio is backed over 9% at 9.02%, both up significantly from earlier in the year. The tier 1 risk ratio is 12.15%, our highest level since 2016. We finished the year with tangible book value per share of $20.75, up from $19.08 one year ago.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Although we will not be providing CECL guidance today, there will be an initial impact on capital as we record the CECL adjustment in the first quarter of 2020. For regulatory purposes, we will take advantage of the three year phase in. We have been actively testing our modelling and we'll be ready to disclose additional information in our Form 10-K to be filed in March.
Brad S. Elliott -- Chairman and Chief Executive Officer
I'm looking forward to 2020 as much or more than for any year we have operated Equity Bank. We completed our 18th Annual all employee meeting on Monday of this week, where every associate in the bank meets in Kansas City area for a day of outside motivational speakers, breakout sessions for Equity Bank initiatives and to hear last year's results and the current vision from bank leadership about our new year objectives and the future of Equity Bank. It is always my favorite day of the year for the bank and it is exciting to see everyone and for everyone to come away with our goals for 2020. We have also received several inbound calls on potential mergers, the past few months and we'll continue to look at deals that make sense for our stakeholders. It is my opinion, consolidation will continue to occur and I'm excited to see, how the new possibilities will play out.
Thanks for all your support in 2019 and I look forward to 2020 with excitement. At this time, we will entertain questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Our first question comes from Terry McEvoy with Stephens. Your line is open.
Terry McEvoy -- Stephens -- Analyst
Good morning, guys. How are you?
Brad S. Elliott -- Chairman and Chief Executive Officer
Good morning, Terry.
Terry McEvoy -- Stephens -- Analyst
I guess just start. You've made really good progress reducing the non-performing assets since the first quarter. I was wondering if you could just comment on the economic health in your markets especially given the Spirit AeroSystems and some of the stress there that's been in the headlines, as well as maybe your updated thoughts on the restaurant franchise portfolio.
Brad S. Elliott -- Chairman and Chief Executive Officer
So we'll take the 737 Max in visiting with our customers which we are in constant contact with them. Terry, it looks like they all have really good plans in place to be able to manage through this and not have it be a material. I mean, it's obviously a chunk of their volume, but it's not going to break their companies. So we don't see that there's going to be any stress in that portfolio directly related to this from the standpoint of, we don't see any of them going negative debt service coverage ratios or having issues in an operating basis.
So from that standpoint, it is an impact on our community, which will triple through our community if it sustains with another 12 months. The hope around town is that eventually this plane has to fly and it's a technology issue, not a structure issue. So when it gets back in the air that it should get in the back in the air fairly quickly, and they'll be able to generate production again. All of the signs are that they are going to -- that they're working on making sure that everything stays intact, so they can ramp this back up especially as they shut it down. So that's specific on that subject.
Second question was on the QSR restaurant lending. We don't see any stress in our QSR companies that we currently have. They're also operating very well. We did receive some pay-offs in 2019, and some of them it took blocks of restaurants out that had real estate associated with them and refinanced to other places. We got fixed rate financing. But the ones that we have in our portfolio today which we look at regularly all seem to be operating well, and don't seem to have any stress in them now. We are -- the most of the concentration lies in Papa John's, Freddy's Frozen Custard. And so those are really the two concentration buckets that, that we have. And so those restaurant doors seem to be doing really well.
Terry McEvoy -- Stephens -- Analyst
Thanks. And then a question for you, Greg. The 4Q margin had some moving parts. As you think what the first quarter, what are your thoughts on the core margin accretion and then loan fees just to give us a sense for a reported margin at least through the first couple of quarters of 2020, and maybe full year as well if you've got that?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. Projecting Q1 margin flat over Q4 in that 3.50% to 3.52% range. And fees, we had a nice fee quarter in Q4, maybe a little softer in Q1. The pipeline still looks very healthy. So, all said, I think that we are forecasting NIM Q1 flat to Q4, and NIM, as we move through 2020 up a little bit, not dramatic.
Terry McEvoy -- Stephens -- Analyst
Just one last question. I like the new slide, slide 12, just talking about the digital banking. And I know you're making investments in technology. Just overall, your thoughts on expenses in 2020 as you continue invest in technology growth and grow the franchise?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Ask the question again, Terry, I'm sorry.
Terry McEvoy -- Stephens -- Analyst
The expense outlook for 2020 given the ongoing investments in technology that you're showing here in the presentation?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. We've already made a big chunk of that investment in 2019. We've been, obviously been through our capital expenditures budget for 2020. It's actually a little bit less than it was in 2019 simply because a lot of the platform has been developed. So, you're not going to see a big spike either in capital expenditures or expense associated with technology. Will be up a little bit, I think very small percentages, but not dramatically.
Brad S. Elliott -- Chairman and Chief Executive Officer
So that list on slide 12, Terry, those are all things that are already implemented in our Company.
Terry McEvoy -- Stephens -- Analyst
Okay. Thanks, guys.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Thank you, Terry.
Operator
Thank you. Our next question comes from Andrew Liesch with Piper Sandler. Your line is now open.
Andrew Liesch -- Piper Sandler -- Analyst
Good morning, guys.
Brad S. Elliott -- Chairman and Chief Executive Officer
Good morning, Andrew.
Andrew Liesch -- Piper Sandler -- Analyst
Couple of follow-up questions from your prepared comments, Brad. You had mentioned that you've been getting some inbound calls from some prospective targets. Like, what's been the hang up on some of these deals? Is it pricing? Is it credit? What have you seen in these deals that maybe have given you some pause?
Brad S. Elliott -- Chairman and Chief Executive Officer
Well, the market has changed from early 2019, late 2018 to what the pricing is today, and I think some private companies are figuring out how to make that presentation to their Board of Directors. I don't think that they're not interested and aren't going to move forward with something eventually. But I think they are waiting for more data points to come out so that, that conversation easier for them to have. And as you know banks are sold and not bought. And so I think it's on their timeline that these things move forward. I do have a sentiment, Andrew that as CECL now moves to private company implementation over the next 20 months, I think there will be more opportunities over the next 20 months than there are today just driven by the fact that CECL implementation is complicated and I think there might be some guys that just say, I don't want to go through this in my shop. I'm going to -- we're going to find an exit strategy.
Andrew Liesch -- Piper Sandler -- Analyst
Got you. Okay. That's some good help, good color. And then earlier you mentioned about how branch optimization can be part of your goal in 2020. What does that really entail? Are there consolidation? Is it expanding to places where you want to have more of a presence? Can you just expand on that further?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. Andrew, what that really means for us right now is we've been working on emphasizing to the -- to our eight different regions, their responsibility for profitability in the organization, and as such have continue to not realign duties, but push accountability down to the regions. We have very talented people in our organization. And as we've grown and as we brought, merged organizations in we want to make sure that we're utilizing that talent well by giving them the correct amount of authority and the correct amount of responsibility.
And Brad and Patrick Salmans, our Human Resource Executive, and Julie Huber have worked pretty hard in the second half of 2019 to develop a new system of accountability and keeping our regions working, not independently, but working on their own as bankers, because they're very skilled and we want to take advantage of that.
Andrew Liesch -- Piper Sandler -- Analyst
Okay. That is very helpful that you heard [Phonetic] all my other questions.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Thank you, Andrew.
Operator
Thank you. [Operator Instructions] Our next question comes from Jeff Rulis with D.A. Davidson. Your line is now open.
Jeff Rulis -- D.A. Davidson -- Analyst
Hey, guys. Good morning.
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Hi, Jeff.
Brad S. Elliott -- Chairman and Chief Executive Officer
Good morning, Jeff.
Jeff Rulis -- D.A. Davidson -- Analyst
Looking at the loan growth side of things, obviously, you had sort of a flat to modestly down year. And Brad, you mentioned, kind of working through some things and feeling good about not chasing credits. But I guess as you find your footing and look at '20, what's the growth outlook look like on net loans if we think about all the factors involved with payoff activity, but just trying to frame up '20 growth outlook?
Brad S. Elliott -- Chairman and Chief Executive Officer
So, I think mid single-digit loan growth is what we budgeted for. And so our planning for, Jeff, and I would tell you that, and we've talked about this before, we took a specific stands with our team and group in Tulsa, and Mike Bezanson's leadership down there with Craig Anderson has hired really high quality people. I think we have a really, really solid team in Tulsa now which we totally turned over in the last 12 months. Their pipelines are really strong. I'd say, we have one of our best experienced teams down there now. And so we're really excited about what we see out of that group. That group was a negative -- large negative loan growth last year. And we look for them to be a large positive loan growth this year.
And so, just that alone is going to help the bottom of the bucket. And the other thing is we had probably $100 million plus in payoffs of loans that were strictly tied to mostly the inverted yield curve, giving them a lot lower fixed rate loan for a long-term that we could offer or didn't want to offer on an internal basis. And so even with the swap products, we didn't want to compete with what they were being offered out there. And so, I will tell you that, that is -- that irrationality has seem to seized, and mostly I think driven by the yield curve. And so, I think with not having those payoffs coming at us and the team has been retooled, I think we have a really good opportunity of growing loan substantially.
Our community markets last year did a really solid job. I think they're poised to do even a better job this year and I think our metro market are poised to do a much better job this year as well. And so the combination of all that, I feel really good about our on-the-ground operating teams and we have the best group we've ever had. And so, we've been working a lot on sales training and process training. And so, I think those things, those initiatives are going to really show through this in 2020.
Jeff Rulis -- D.A. Davidson -- Analyst
Thanks, Brad. And Greg, I wanted to follow-up on the margin. Just to make sure we got an apples-to-apples. If you could maybe comment on reported, so, you got a 3.61% reported, 3.52% adjusted. What are those relative levels in the first quarter expectation?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yes. The relative levels in the first quarter would be the same as they were in the fourth quarter as adjusted. So we would expect after backing out $515,000 of tailwind and accretable yield, we would expect that number as adjusted to be the same in Q1. And we've also backed out early prepayment fees of $307,000 which should normalize our loan fees in Q1 as well.
Jeff Rulis -- D.A. Davidson -- Analyst
Okay. So, the 3.52% hangs in the 3.50%, 3.52% range and the 3.61% would come in to -- just help me on that level?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. The 3.61%, if we run a normal quarter, the 3.61% won't exist. It will just be 3.50% to 3.52%.
Jeff Rulis -- D.A. Davidson -- Analyst
Got it. Okay. Just converges into the core already connected. Okay. Helpful. And then, yeah -- then the last one, just the follow-up on the expense question I think. So 5.5%, I think growth in '19 you talked about the investments that you've already. You talked about the late Q4 kind of spend on the accounting issue. My guess is that points to a lower growth rate in '20, but I don't know if you got any specifics on growth rate that you'd say is a comfortable number in '20?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. We are below 1.5% on overall expense growth projected for 2020 relative to where we were at going into the fourth quarter of 2019. I'm happy to give you guys some guidance on -- at least on Q1. The -- I believe and as we stand here today, we are looking at margin being about the same. We think that provision and this is not CECL adjusted, we're trying to keep apples-to-apples. So provision under the old incurred loss method would be slightly less than what we experienced in Q4. Our non-interest income probably will be a little less in Q1 simply because of seasonality, Q1 being a softer quarter. And then our non-interest expense will go up in the first quarter. We will have salaries adjustments in the first quarter that we didn't have in Q4, plus our FDIC premiums are likely to return to normal, which will also increase non-interest expense.
So I'm calling for non-interest income in the first quarter of somewhere around $6.3 million to $6.4 million and non-interest expense to be somewhere between $25.3 million and $25.4 million, which is an increase from Q4 clearly. Effective tax rate, somewhere in the 22.2% range. And so, we had a great quarter in Q4 and we're proud of it. We're very likely to come down a few cents in our Q1 forecast and not from an operational health standpoint just from seasonality.
Jeff Rulis -- D.A. Davidson -- Analyst
All right. Good stuff, Greg. You're holding out on us, but you gave us all the details there. I guess, on the expense side then if you are looking at below 1.5% growth rate for 2020 and you step up in Q1 at something north of $25 million, that would mean that you'd certainly level off or source of decline for balance of the year?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
That is correct.
Jeff Rulis -- D.A. Davidson -- Analyst
Okay. That's it for me. Thanks.
Operator
Thank you. Our next question comes from Michael Perito with KBW. Your line is now open.
Michael Schiavone -- KBW -- Analyst
Good morning. This is Michael Schiavone stepping in for Mike Perito.
Brad S. Elliott -- Chairman and Chief Executive Officer
Good morning, Michael.
Michael Schiavone -- KBW -- Analyst
Good morning. Do you guys mind walking us through what your view of core earnings are for 4Q? And then any items we should think about as we try to use that exit run rate in 2019 and factoring it into our 2020 forecast?
Brad S. Elliott -- Chairman and Chief Executive Officer
You bet, Michael. Quickly stated EPS was $0.64. We walked that down through a series of adjustments to $0.62 for fully diluted share. The components of that are -- we were higher in accretable yield and loan fees of $0.04 in Q4. We were higher, because we had reduced non-interest expense. So that helped earnings $0.02. But we also put a $0.03 reserve on our account reconciliations, so that hurt earnings $0.03 and taxes were slightly higher in Q4 by about $0.01. So adjusted are $0.64 fully diluted stated EPS just down to $0.62. And again quickly, we're going to see -- we're calling for the same core NIM in Q1 and we're calling for about the same non-interest income a little bit lower in Q1 just because of seasonality.
But we will see a step up in non-interest expense in Q1 because of typical first quarter to fourth quarter adjustments. And so, although, we're stated at $0.62 in Q4, we're calling for the few cents below that in Q1. And if we have a run rate of somewhere between $0.60 and $0.63 in the rest of 2020, that would give us potential projected EPS on a normalized basis of somewhere in the high $2.40 to $2.50.
Michael Schiavone -- KBW -- Analyst
Okay, great. Thanks for that detail. And then for fees, you mentioned Q1, but can you talk about any other fee initiatives like wealth or anything like that and expectations for 2020?
Brad S. Elliott -- Chairman and Chief Executive Officer
Yeah. So we've implemented the wealth management and trust division. They have a really good pipeline and we're forecasting that that group would be in a breakeven state by the end of the year of 2020. And so, those initiatives, although we haven't specifically broken them out on expenses, they -- we aren't adding a lot of expense to that group this year. And hopefully they are generating revenue as they're continuing to book new assets onto the platform. So, all the technology has been invested. The people have been invested, and so, we're continuing to grow customer bases there and so they're doing a great job with that. We also have current services that we've invested in the technology in 2019. And so we already had a credit card division. It was very small on the retail side. And so, what we've really said is we don't want to grow the retail side, but we're focusing on the commercial side.
And so, purchasing cards and corporate credit cards really tie to our C&I customers. And so, we do think that, that will start ticking in this year. Although we have not specifically broken out that initiative. But you can see quarter-over-quarter we have had improvement in the deposit area. Some of that's point through from treasury sales. Some of that's point through from other initiatives we had on debit card spend. And so all those things have been working in 2019 to increase, and we'll continue to work hard with our teams to make sure those try to increase in 2020.
Michael Schiavone -- KBW -- Analyst
Great. Thank you. And I know you guys hit on M&A a little bit. But can you just talk about as a whole your capital priorities for 2020?
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Yeah. That's a great question actually. And frankly we're pretty proud of how capital ended 2019, our ratios are all very healthy. And so, we're looking at, and we're looking at with our board, proper utilization of capital right now. And it can -- it's a same thing, it's been really since we went at public. We'll look at each transaction individually and see what's best for the shareholders and react accordingly. But right now I think all capital options are available to the organization.
Brad S. Elliott -- Chairman and Chief Executive Officer
And we'll still focus on stock buyback, utilization as a capital deployment strategy as long as it's effective from a pricing standpoint.
Michael Schiavone -- KBW -- Analyst
Great. Thanks for taking my questions.
Brad S. Elliott -- Chairman and Chief Executive Officer
Thank you.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
Chris Navratil -- Senior Vice President of Accounting and Finance
Brad S. Elliott -- Chairman and Chief Executive Officer
Gregory H. Kossover -- Executive Vice President and Chief Financial Officer
Brett A. Reber -- Executive Vice President and General Counsel
Terry McEvoy -- Stephens -- Analyst
Andrew Liesch -- Piper Sandler -- Analyst
Jeff Rulis -- D.A. Davidson -- Analyst
Michael Schiavone -- KBW -- Analyst
