19 August 2025 China Banks Equities 1H25 results preview: three key variables China 2Q25 preview: We expect 2Q25 net profit growth for our covered mainland China banks to improve from 1Q25, driven by smaller-than-expected NIM compression, stable credit costs, and effective cost control. Of the key aspects we monitor, we expect three positive, one negative, and two mixed trends in the coming quarter: Investment thesis: Overall, we expect net profit growth for 2Q25 to be better than that of 1Q25, thanks to in ...

Financial Data and Key Metrics Changes - The company generated net income of $2,500,000 or $0.26 diluted share in Q2 2025, which was lower than the prior quarter due to one-time gains in Q1 and a higher provision recorded due to strong loan growth [6][7] - Pre-provision net revenue increased during the quarter, amounting to approximately $5,100,000, down slightly from Q1 but up about 36% year over year [8] - Tangible book value per share increased by about 1% this quarter [8] Business Line Data and Key Metrics Changes - Loans held for investment increased by $114,000,000 from the end of the prior quarter, with new loan production of $167,000,000 in Q2 [9][10] - Average rate on new loan production was 6.35%, or 6.67% excluding loans secured by trust and investment management assets [10] - Total deposits were slightly up from the end of the prior quarter, with a decline in non-interest bearing deposits offset by an increase in interest-bearing deposits [10][11] - Assets under management increased by $320,000,000 in Q2, driven largely by favorable market performance, with a nearly 7% increase over the past year [11][12] Market Data and Key Metrics Changes - The market remains competitive in terms of pricing on loans and deposits, but the company successfully generated new loans and deposits by offering superior service rather than competing on rates [5] - The company expects deposit balances to build back up over the second half of the year following typical seasonal outflows related to tax payments [11] Company Strategy and Development Direction - The company maintains a conservative approach to new loan production with disciplined underwriting and pricing criteria, while also focusing on expense control despite inflationary pressures [5][6] - There is a focus on enhancing trust and investment management services, with new leadership brought in to drive growth in this area [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted healthy economic conditions in their markets, with strong loan and deposit pipelines expected to result in solid balance sheet growth for the second half of the year [16] - Positive trends in net interest margin, net interest income, and fee income are anticipated, with no indications of meaningful deterioration in asset quality [16][17] Other Important Information - The company successfully lowered deposit costs and redeployed cash from the sale of two OREO properties into new loan production and securities purchases, contributing to the expansion in net interest margin [6][13] - Non-interest income decreased by approximately $1,000,000 from the prior quarter due to one-time gains recorded in Q1, partially offset by an increase in gains on the sale of mortgage loans [13][14] Q&A Session Summary Question: Borrowings at the end of the quarter - Management confirmed that borrowings were overnight with a mid-four percent rate, and they plan to pay them off as deposits come in during Q3 [21] Question: Cost of interest-bearing deposits - The spot rate at June was 3.07%, with expectations for continued repricing down on the CD portfolio and a relatively flat NIM in Q3, expanding in Q4 [23] Question: Expense run rate - Management expects the expense run rate to remain in the range of $19.5 million to $20 million for the back half of the year [25] Question: NIM outlook sensitivity to rate cuts - Management indicated that a 25 basis point reduction would impact net interest income by about $1 million, with some sensitivity taken off the balance sheet [29] Question: Trust fees and profitability - Management emphasized the importance of building trust fees and noted that new leadership is focused on growth in this area, with expectations for positive results going forward [34][36] Question: Customer mindset and loan growth - Management observed a shift from caution to increased demand and larger pipelines, indicating a more confident client base [55]

Financial Data and Key Metrics Changes - The company achieved record revenue of $226.3 million, a 5% increase year-over-year, with adjusted earnings per share of $0.74, a return on assets of 1.54%, and a return on tangible common equity of 20% [4][5][14] - The net interest margin increased to 4.05%, a 17 basis point increase from the previous quarter, while funding costs declined by 12 basis points [9][10][14] - Adjusted noninterest income was $67.8 million, an 11% increase from the previous quarter and a 10% increase year-over-year [5][17] Business Line Data and Key Metrics Changes - Loan growth was 2% on an annualized basis, with broad-based growth in most portfolios except for commercial real estate, which declined due to higher payoffs [5][15] - Noninterest income growth was driven by double-digit increases in mortgage, bank card, leasing, and foreign exchange income [5][11] - Adjusted noninterest expenses increased by 1% compared to the first quarter, with core expenses rising primarily due to higher incentive compensation and marketing expenses [6][17] Market Data and Key Metrics Changes - Average deposit balances increased by $114 million, primarily due to a seasonal influx in public funds and higher noninterest-bearing deposits [10][15] - The company maintained 21% of total balances in noninterest-bearing accounts, focusing on growing lower-cost deposit balances [10][15] - Adjusted uninsured deposits were $3.8 billion, representing 27% of total deposits, with a comfortable concentration level [16] Company Strategy and Development Direction - The company expects loan growth in the low to mid-single digits for the third quarter, with a strong loan pipeline and easing payoff pressures anticipated [21][22] - The Board of Directors approved a 4.2% increase in the common dividend to $0.25, reflecting the company's commitment to delivering shareholder value [7][20] - The company is actively engaged in the integration process following the announcement of the acquisition of Westfield Bank, expecting regulatory approval and closing within the year [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about asset quality, expecting net charge-offs to remain in the 20 to 25 basis points range for the remainder of the year [6][22] - The company anticipates continued strong performance in the second half of 2025, driven by solid loan production and effective expense management [21][23] - Management highlighted ongoing efficiency initiatives aimed at improving processes and reducing costs across the organization [36] Other Important Information - The company recorded a decline in net charge-offs to 21 basis points of total loans, with stable asset quality trends [6][12] - Tangible common equity increased to 8.4%, with tangible book value per share rising to $15.4, a 4% increase from the previous quarter [7][19] Q&A Session Summary Question: Outlook on funding costs and deposit rates - Management indicated that deposit costs are expected to decrease slightly, with a potential rate cut in September influencing future costs [28][29] Question: Impact of seasonal deposit outflows - Seasonal deposit outflows are expected to average around $100 million, primarily related to public funds [32] Question: Efficiency initiatives and cost-cutting focus - The company is reviewing all functions and departments to improve processes and drive operating leverage, with significant progress made [35][36] Question: Loan growth normalization excluding payoffs - Management anticipates long-term loan growth of 6% to 7%, with expectations for improved production in the upcoming quarters [38][39] Question: Asset quality concerns and nonaccruals - A quarter-over-quarter increase in nonperforming assets was attributed to downgrades of two commercial borrowers, with expectations for resolution by year-end [44][46] Question: Integration of Westfield Bank and asset sensitivity - The acquisition is expected to slightly improve asset sensitivity, bringing the company closer to a neutral position [47][50]

Financial Data and Key Metrics Changes - The company reported an EPS of $0.83 and net income of $32 million, with a return on assets (ROA) of 1.32% and a pre-provision net revenue (PPNR) of 1.73% [8][19] - Net interest income increased by $3.3 million, or 3.9%, compared to the first quarter, with a net interest margin (NIM) expansion to 3.88%, up seven basis points [14][18] - Total assets exceeded $9.8 billion, driven by a 5% increase in loans [6][8] Business Line Data and Key Metrics Changes - Annualized loan growth was just over 5%, amounting to $98 million in Q2, primarily driven by commercial real estate balances, which increased by $58 million [9][10] - The mortgage and home equity businesses contributed a combined net growth of $26 million [10] - Customer deposit growth was $28 million, or 1.42% annualized, with non-interest bearing deposits representing 28% of total deposits [11][12] Market Data and Key Metrics Changes - The company maintained a stable allowance for credit losses at 1.24% of total loans, with non-performing assets (NPAs) remaining low [12][39] - The competitive landscape varies geographically, with the company maintaining significant market share in its core markets while being a disruptor in Ohio [64] Company Strategy and Development Direction - The company is focused on organic growth, with a clear path to reach $10 billion in total assets through loan growth and strategic initiatives [6][19] - There is an ongoing emphasis on improving asset quality and maintaining a solid deposit mix, with a disciplined approach to potential inorganic growth opportunities [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future loan growth, expecting to maintain a mid to high single-digit growth rate for the remainder of the year [25][50] - The company is actively monitoring the impact of economic changes and tariffs but has not seen significant adverse effects on growth [12][39] Other Important Information - The company added four new commercial bankers to enhance its commercial and industrial (C&I) lending efforts [10][53] - The tangible common equity (TCE) ratio increased by 18 basis points, positioning the company well for growth opportunities [18][19] Q&A Session Summary Question: What is the outlook for funding costs and loan growth? - Management indicated that successful deposit raising efforts could offset some pressure on margins, but growth might be slightly lower than the current NIM of 3.88% [23] Question: Can you clarify the potential upside in a higher for longer interest rate environment? - Management noted that benefits from repricing on loans and securities could yield a couple of basis points of upside, but it would not be significant [24] Question: What is the company's strategy regarding M&A? - Management confirmed that building long-term relationships is critical, and they are optimistic about participating in M&A as market uncertainty decreases [29] Question: How does the company view its credit quality and reserves? - Management aims to stabilize non-performing loans (NPLs) and maintain low charge-offs, with reserves currently at 1.24% of loans [39][42] Question: What is the expected impact of crossing the $10 billion asset threshold? - The Durbin hit is estimated between $6 million and $7 million annually, but the company has built infrastructure to manage this without significant additional expenses [43][56] Question: What are the primary drivers of loan growth in the second half of the year? - Management highlighted consistent growth across various business lines, particularly in commercial real estate and home equity, with a focus on maintaining strong pipelines [50][51]

Financial Data and Key Metrics Changes - The company reported a net income of $56.4 million for Q2 2025, an increase of $17 million or 43% from the previous year, with a return on assets of 1.23% and an efficiency ratio of 54% [4][5] - Year-to-date net income totaled $111.2 million, up $24.3 million or 28% from the first half of 2024, with earnings per share increasing by 30% to $1.92 [5] - The tangible common equity ratio stands at 8.92%, above the target level, providing optimal capital flexibility [5][18] Business Line Data and Key Metrics Changes - Commercial loan growth was strong, with $262 million for the quarter and $430 million year-to-date, reflecting over 10% annualized growth [8][19] - The consumer segment also contributed with $36 million in loan growth for the quarter, driven by residential mortgage and HELOC [9] - Total revenues in Q2 increased significantly, with net interest income rising by $2.7 million and non-interest income by $1.3 million [12] Market Data and Key Metrics Changes - The company experienced balanced loan growth across its portfolio, with a $298 million increase quarter-over-quarter, representing a 9.2% annualized growth [19] - The Midwest economies are expanding, contributing to the growth in client businesses and new relationships [8] Company Strategy and Development Direction - The company remains focused on commercial growth across its primary markets of Indiana, Michigan, and Ohio, with a strategy emphasizing organic growth before considering mergers and acquisitions [7][25] - The company has been selective in M&A, focusing on organic growth while monitoring potential acquisition opportunities [25][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining loan growth and increasing market share activities through the third quarter, despite competitive deposit dynamics [9][16] - The company anticipates modest margin compression in the latter half of the year due to rising deposit costs, but expects to continue growing net interest income [29][62] Other Important Information - The company repurchased $22.1 million worth of shares in the quarter, totaling $31.7 million year-to-date [5] - The total cost of deposits increased by seven basis points to 2.3%, reflecting competitive pressures in the market [16] Q&A Session Summary Question: Margin outlook and funding cost pressures - Management indicated that deposit costs have risen due to strong loan growth, leading to expectations of modest margin compression in the latter half of the year [29][62] Question: Loan growth sustainability - Management confirmed that the current loan growth is core and driven by direct client needs, with some pull-through from earlier in the year due to tariff considerations [30][31] Question: Wealth management fees and total fee income outlook - Management expects non-interest income to grow in the mid-single digits in the latter half of the year, with wealth management fees remaining a primary driver [38][39] Question: Technology upgrades benefits - Management highlighted improvements in internal technology that enhance operational efficiency and customer service, contributing to future growth [40][44] Question: Capital deployment strategy - The company plans to use a third of its earnings for balance sheet growth, a third for dividends, and the remaining third for other capital activities, including share repurchases and potential acquisitions [49][50] Question: Credit and provision outlook - Management indicated that the current provision level is appropriate for anticipated growth, with adjustments based on macroeconomic forecasts [85] Question: Fixed rate loan repricing - Management noted that approximately $200 million of fixed-rate loans will reprice in the back half of 2025, with expectations for similar levels in the following year [103][104]

Financial Data and Key Metrics Changes - Total assets reached $10.3 billion as of the close of the second quarter, with total investment securities increasing by $209.2 million to $2 billion [6][7] - Loan growth decreased by $30 million to $7.2 billion, primarily due to increased prepayments [7] - Total deposits increased by $151.6 million to $8.3 billion, driven by growth in core deposits [7] - Net interest income was $90.5 million, up $4.6 million, primarily driven by higher average balances of securities [10] - Provision for credit losses decreased to $6.1 million from $18.4 million in the first quarter [10] - Return on assets (ROA) improved to 0.90% and return on equity (ROE) improved to 10.1% [12] Business Line Data and Key Metrics Changes - Pre-provision net revenue (PPNR) increased to $35.9 million in Q2 2025 from $33.9 million in Q1 2025, with core PPNR rising by 17.7% [10] - Non-interest income was $19.8 million, while non-interest expense was $74.4 million, with a variance primarily driven by non-core expenses [10] Market Data and Key Metrics Changes - Customer deposits grew by $202.3 million, partially offset by a planned reduction of $51 million in broker deposits [7] - Assets under management increased by $132.4 million to $3.1 billion, driven by higher market valuations and net new assets [7] Company Strategy and Development Direction - The company is focusing on improving asset quality and has made significant improvements in capital metrics [11][12] - Plans to open new banking centers in Miami Beach and Downtown Tampa, with a focus on expanding in the Greater Tampa marketplace [22] - The company is transitioning its mortgage business to focus solely on in-footprint mortgage lending [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to double-digit loan growth, emphasizing the importance of asset quality [32] - The company expects annual deposit growth of 14% to 15% by year-end 2025 and anticipates loan production growth of approximately 5% annualized [18] - Management is prioritizing ROA and expects to reach 1% in the second half of 2025 [19] Other Important Information - The company repurchased 275,666 shares at a weighted average price of $80.14 per share during the second quarter [11] - The efficiency ratio is expected to be in the mid-sixty range, with a focus on prudent capital management [19][29] Q&A Session Summary Question: Loan growth expectations moving forward - Management expects to return to double-digit growth, emphasizing the quality of organic deposit growth [32] Question: Asset quality and charge-offs - Management indicated that the charge-offs were already provisioned for, and they expect to manage realized losses effectively [36][38] Question: Loan loss reserve adequacy - Management confirmed that the loan loss reserve of approximately $120 million is appropriate for current conditions [42] Question: Net interest margin (NIM) outlook - Management expects NIM to normalize around 3.75% for the third quarter, with various factors influencing this projection [19][46] Question: M&A opportunities - While organic growth remains the top priority, management is open to M&A opportunities as their currency improves [90][92]

Financial Performance Highlights - KB Financial Group's 1H25 net profit reached ₩3.436 trillion, a 23.8% year-over-year increase[12, 17] - The Group's ROE for 1H25 was 13.03%, a 2.23%p increase year-over-year[8, 14] - Non-bank subsidiaries contributed 39% to the Group's net profit[16, 17] Shareholder Returns - The company plans a total shareholder return of ₩1.15 trillion, including a ₩850 billion share buyback and cancellation[8] - A proactive return of ₩300 billion was implemented in 2Q25[8, 11] - The CET-1 ratio as of June 2025 reached 13.74%[8, 11] Financial Analysis - Group net interest income slightly decreased by 0.4% year-over-year to ₩6.3687 trillion[24] - Group net non-interest income increased by 10.9% year-over-year to ₩2.7233 trillion[29] - Group G&A expenses increased by 4.1% year-over-year to ₩3.3553 trillion[35] Asset Quality - The Group's NPL ratio was 0.72%, with an NPL coverage ratio of 138.5%[48] - Provision for credit losses totaled ₩1.3107 trillion in 1H25, a 33.6% increase year-over-year[41] Subsidiary Performance - KB Kookmin Bank reported a net profit of ₩2.1876 trillion and an ROE of 11.63%[84] - KB Securities recorded a net profit of ₩338.9 billion and an ROE of 10.10%[87] - KB Insurance's net profit was ₩558.1 billion with an ROE of 20.51%[90]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $135 million, an increase of $23 million or 21% compared to $111 million in Q2 2024 [9] - Earnings per diluted common share rose to $1.42, up 21% from $1.17 in the same period last year [9] - Annualized return on average assets was 1.41% and return on average tangible common equity was 13.44%, compared to 1.17% and 12.34% respectively in Q2 2024 [10] - Net interest margin increased to 3.18% from 2.94% in Q2 2024 [10][17] - Noninterest income was $43 million for Q2 2025, compared to $46 million in Q2 2024 [17] Business Line Data and Key Metrics Changes - Total loans were $22.1 billion at the end of Q2 2025, a decrease of $123 million from $22.3 billion a year earlier [11] - Core commercial loans, excluding mortgage warehouse loans, increased by $73 million or 2.4% annualized [11] - Deposits decreased to $27.4 billion, down $459 million or 1.6% from $27.9 billion in Q2 2024 [12] Market Data and Key Metrics Changes - Nonperforming assets totaled $110 million, representing 33 basis points of quarterly average interest-earning assets, compared to $89 million or 25 basis points in Q2 2024 [12] - The allowance for credit losses on loans was $346 million, which is 3.47 times the amount of nonperforming assets [13] Company Strategy and Development Direction - The company announced a definitive agreement to merge with American Bank Holding Company, enhancing its presence in South Texas and Central Texas [7][9] - The focus remains on building core customer relationships, maintaining asset quality, and investing in technology [15] - The company is open to further mergers and acquisitions, indicating a strategy of growth through consolidation [13][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth in the second half of the year, citing improved monthly production numbers [11] - The company anticipates continued positive trends in net interest margin and net interest income [39][45] - Management noted that the Texas business environment remains favorable, contributing to the company's growth strategy [14] Other Important Information - The efficiency ratio improved to 44.8% from 51.8% in Q2 2024 [18] - The company expects noninterest expense for Q3 2025 to be in the range of $141 million to $144 million [18] Q&A Session Summary Question: Update on loan growth expectations - Management indicated that loan growth has started better than previous quarters, with a pipeline looking good for low single-digit growth for the rest of the year [27][31] Question: Margin momentum and factors affecting it - Management discussed that net interest margin continues to grow, with expectations of reaching 3.35% in six months under stable interest rates [35][39] Question: NII accretion from the acquisition - The acquisition of American Bank is expected to bring an annual NII of approximately $85 million to $90 million, with additional benefits from fair value adjustments [58] Question: Quality of American Bank's loans and deposits - Management expressed confidence in the quality of American Bank's loans and deposits, indicating minimal expected runoff post-acquisition [66][73] Question: Future M&A activity - Management confirmed that they remain active in pursuing additional M&A opportunities even with the pending acquisition [97] Question: Regulatory pressures and deal timelines - Management noted a hopeful return to quicker deal closures, estimating a timeline of three to four months for future acquisitions [102]

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted net income, excluding the ERC refund, would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the mortgage origination business, which originated $120 million in the second quarter [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the ERC refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth and deposit acquisition [36][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [28][31] - Management is optimistic about maintaining loan growth despite credit quality challenges, with a healthy pipeline of loans [31][40] - The company is enhancing credit quality control, particularly in bridge and gap financing, to mitigate risks [22][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of funding costs and potential increases in yields on earning assets, which could support margin improvements [5][9] - The company anticipates continued loan growth, albeit at a more moderate pace, and is actively managing its nonperforming assets [4][28] - Management acknowledged the competitive landscape for deposits and the need to balance loan growth with deposit acquisition strategies [40][42] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company expects noninterest expenses to normalize to an annualized run rate of about $18 million in future quarters [10][47] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support both the buyback program and credit workouts [20][21] Question: Asset quality and loan downgrades - Management provided details on loans downgraded to substandard and special mention, emphasizing a conservative approach to credit quality control [22][25] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while addressing asset quality issues, with a healthy pipeline and ongoing focus on resolving nonperforming loans [28][31] Question: Loan and deposit growth outlook - Management is actively managing the loan-to-deposit ratio and expects to see organic deposit growth, with potential loan sales to alleviate pressure [40][42] Question: Deposit cost expectations - Management anticipates stabilization of deposit costs, with a focus on maintaining competitive rates to attract deposits [43][44] Question: Tax rate outlook - The tax rate for the quarter was around 28%, and management expects this to be a reasonable run rate going forward, with minor impacts from changes in California tax law [69][70]

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted for the employee retention credit refund, net income would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the in-house mortgage origination business, which originated $120 million in mortgages [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the employee retention credit refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth relative to deposit growth [34][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [26][29] - Management expressed confidence in maintaining loan growth while addressing asset quality issues, with a healthy pipeline for future loan originations [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that absent rate cuts, funding costs are stabilizing, and there may be increases in yields on earning assets, supporting incremental margin increases [5][9] - The company expects to continue seeing loan growth, albeit at a more moderate pace than in the first half of the year [4][30] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company is actively managing its credit quality control processes, tightening oversight on certain loan categories [20][51] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support the buyback program while managing nonperforming loans [18][19] Question: Asset quality and loan downgrades - The increase in special mention loans is due to enhanced credit quality control, with a focus on bridge and gate loans experiencing delays in stabilizing income [21][22] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while resolving nonperforming loans, maintaining a healthy pipeline for future growth [26][29] Question: Loan and deposit growth outlook - Management is focused on quality in loan origination and is implementing promotional programs to attract new deposits [38][60] Question: Deposit cost expectations - Management anticipates some stabilization in deposit costs, with a potential lag in response to Fed rate cuts [41][42] Question: Tax rate outlook - The tax rate for the quarter was around 28%, which is expected to be a reasonable run rate going forward, with minor benefits from changes in California tax law [63][64]