Financial Data and Key Metrics Changes - Consolidated net revenues for Q1 2025 were $2.8 billion, an increase of 2% year-over-year [6] - Total adjusted EBITDAR for the quarter was $884 million, up 4% year-over-year [6] - Same store adjusted EBITDAR in Las Vegas was $433 million, essentially flat compared to the prior year [6][8] - Las Vegas EBITDA margins improved to 43.2%, up 50 basis points year-over-year [8] Business Line Data and Key Metrics Changes - The Regional segment delivered adjusted EBITDAR of $440 million, up 2% year-over-year [10] - Caesars Digital reported net revenue of $335 million, a 19% increase year-over-year, with adjusted EBITDA of $43 million, up $38 million year-over-year [12] - Sports Betting net revenue increased by 9%, while iCasino net revenue grew by 53% year-over-year [12][13] Market Data and Key Metrics Changes - Convention room nights accounted for 20% of the Las Vegas mix, with the Forum Convention Center achieving a Q1 EBITDA record [8] - The New Orleans and Danville projects contributed positively to the Regional segment despite weather disruptions [10][19] Company Strategy and Development Direction - The company is focused on capital projects in Las Vegas, which are yielding better-than-expected returns [9] - There is a commitment to enhancing guest experiences through significant capital investments over the past four years [10] - The company is in a free cash flow harvesting mode, with plans to use operating free cash flow primarily for debt paydown [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Las Vegas market outlook despite economic uncertainties [9][22] - Forward bookings remain strong, with expectations for continued growth in digital segments [22] - Management noted that they have not observed any significant consumer softness, with rated play showing mid-single-digit growth [44][46] Other Important Information - The company repurchased $100 million of its stock at an average price of $23.84 [16] - Full-year CapEx for 2025 is expected to be approximately $600 million, with interest expenses projected to decrease significantly [16] Q&A Session Summary Question: Las Vegas outlook and group-related bookings - Management indicated that group bookings were about 20% of the first quarter room base and expect 2025 to be a record year for group bookings [29][30] Question: Clarification on last year's revenue piece - Management confirmed a $6 million headwind on EBITDA due to skin revenues and World Series of Poker revenues declining [32] Question: Impact of weather and leap year on regional performance - Management estimated the net impact of weather and leap year to be in excess of $10 million [37] Question: Changes in customer behavior among different segments - Management noted that unrated play has been softer than rated play, but rated play is up mid-single digits [44] Question: Digital segment performance and future expectations - Management confirmed that iCasino is performing well, with a 70% increase in revenue in April compared to the previous year [21][84] Question: International customer exposure and trends - Management stated that they primarily operate as a domestic business, with some international high-end play continuing without significant changes [91] Question: Regional margins and future expectations - Management expects regional margins to improve as competitive pressures ease and new properties ramp up [97] Question: Buyback strategy and market conditions - Management indicated they would remain active in stock buybacks if the stock dislocates as it did in early April [100]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss of $6.9 million or a loss of $0.27 per diluted share on total revenue of $63.2 million, compared to a net income of $26.4 million or $1 earnings per diluted share for the same period in 2024 on total revenue of $67.6 million [7] - Net Operating Income (NOI) for Q1 2025 was $37.8 million on 35 properties, down from $41.1 million for Q1 2024 on 37 properties, reflecting a decrease in same store revenues of 1% and a decrease in same store NOI of 3.8% compared to Q1 2024 [7][8] - Core Funds from Operations (FFO) for Q1 2025 was $19.1 million or $0.75 per diluted share, compared to $0.74 per diluted share in Q1 2024 [7] Business Line Data and Key Metrics Changes - The company completed two full and partial upgrades during the first quarter, leasing 201 upgraded units with an average monthly rent premium of $62 and a 16.1% return on investment [7] - Since inception, the company has completed 8,558 upgrades, resulting in an average monthly rental increase of $172 and a 20.7% return on investment [8] Market Data and Key Metrics Changes - Occupancy at the end of Q1 2025 was 94.4%, with significant growth in Nashville and Phoenix, which finished at 95.4% and 96.6% respectively [11] - The company noted that national absorption was strong, with over 38,000 units absorbed in Q1, marking a record first quarter leasing performance [13] - Effective rents ended the quarter at $1,495, up 30 basis points from Q4 2024, with six out of ten markets showing flat to positive rent growth [16] Company Strategy and Development Direction - The company is focusing on driving internal growth and recycling capital as supply continues to be absorbed later in the year, with an emphasis on rent growth initiatives in most markets [20] - The management is optimistic about the inflection of new lease growth, which is seen as a positive sign for the company's assets after several quarters of softness [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the leasing environment, noting that same store NOI is expected to improve over the remainder of the year despite a 3.8% decline in Q1 [12] - The company is monitoring the impacts of tariffs but has not seen a material effect on operations thus far, with most suppliers maintaining stable prices [18][19] Other Important Information - The company declared a quarterly dividend of $0.51 per share, which was 1.4 times covered by core FFO with a 68.3% payout ratio [8] - The company has initiated a share buyback program, purchasing 223,109 shares totaling approximately $7.6 million at an average price of $34.29 per share [10] Q&A Session Summary Question: Are there markets where cap rates are softer? - Management indicated that Atlanta and some areas in DFW are on the weaker side of the NAV guidance due to ongoing supply [25][26] Question: Could the company sell more assets to repurchase stock? - Management confirmed the intention to maintain a steady buyback program while being opportunistic in recycling capital [28] Question: Is the increase in core FFO guidance driven by share buybacks and swaps? - Management confirmed that the increase is primarily due to favorable swap rates and share buybacks [31][32] Question: What is the outlook for new lease growth? - Management expressed optimism about achieving a 2% growth in new leases for the year, driven by strong demand and limited supply [50][51] Question: What is the CapEx guidance for the year? - Management indicated a stable run rate for recurring and nonrecurring CapEx, with a target of around 300 interior upgrades in Q2 and Q3 [53][54]

Financial Data and Key Metrics Changes - The adjusted return on assets (ROA) improved to 1.1%, a 25 basis point increase from the previous quarter [4] - Net interest income increased by 7.5% over the prior quarter, reaching a record level of $41.2 million, while fee income decreased by 18.4% [12][14] - The net interest margin rose by 21 basis points to 3.41% [14] Business Line Data and Key Metrics Changes - Organic loan growth was 2.3% over the prior quarter, with commercial loans now comprising over 70% of total loans [17] - Non-interest income from banking was $4.6 million for the first quarter, with a decline in mortgage revenues due to a 20% decrease in overall mortgage originations [20] - The wealth management group generated revenues 13% higher than a year ago, despite a 1.5% decrease in revenues on a linked quarter basis [7][23] Market Data and Key Metrics Changes - The company experienced a 2.4% organic growth in deposits from the prior quarter, with a loan-to-deposit ratio remaining steady at 91.1% [18] - Synergistic deposits in the retirement business grew 8.8% over the prior quarter [23] Company Strategy and Development Direction - The company is focused on enhancing its commercial bank by targeting mid-market and business banking clients, aiming for organic growth and maintaining a diversified balance sheet [5] - The "One Aleris" strategy emphasizes a unified approach to leverage a diversified business model for growth [4] - The company is engaging a consultant to optimize processes and improve efficiency as part of its ongoing integration efforts [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future success, highlighting the importance of proactive risk management and maintaining robust reserves [7][10] - The guidance for 2025 includes expectations for mid-single-digit loan growth and low-single-digit deposit growth, with a net interest margin forecast of 3.2% to 3.3% [28][30] Other Important Information - The adjusted efficiency ratio improved to 66.9%, reflecting ongoing expense management efforts [9] - The company remains well-capitalized, with a common equity Tier 1 capital ratio of 10% [27] Q&A Session Summary Question: Margin expectations - Management expects core margin to improve from the current level of 2.94%, driven by strong loan growth and favorable spreads [35][36] Question: Update on non-accrual loans - Progress on a non-accrual construction loan is positive, with the borrower ahead of benchmarks and expected to list the project for sale soon [38][39] Question: Fee income timing - Approximately 40% of retirement assets are market-sensitive, assessed on an average daily balance, while wealth fees are built at quarter-end [40] Question: Opportunities in growth areas - The company is focusing on commercial C&I growth, particularly in Arizona, Minnesota, and North Dakota, while being cautious about investor CRE [43][44] Question: Capital deployment and M&A appetite - The company is prioritizing organic growth and selective acquisitions in the retirement space, alongside maintaining dividends [46] Question: Credit quality and provision levels - Credit quality is normalized with no significant risk of loss, and provision levels are expected to be in the $1 million to $2 million range [62]

Financial Data and Key Metrics Changes - The company reported net earnings of $64 million or $0.49 per share, with an annualized adjusted return on average assets of 1.11% and an adjusted return on average tangible equity of 16.15% [6][15] - The tangible book value per share grew by $0.69 to $14.15, and the tangible common equity ratio expanded to 7.9% [7] - The average cost of total deposits decreased by 14 basis points to 2.11%, while the net interest margin increased by 6 basis points to 3.34% [8] - Core net interest margin grew by 9 basis points, and total revenue increased to $208.8 million for the quarter [16] Business Line Data and Key Metrics Changes - The commercial lending team closed approximately $600 million in new loans, with the commercial loan portfolio increasing by 3.8% [9] - Provident Protection Plus experienced a 19% organic growth in new business compared to the same period last year, with income up 23% [12] - Beacon Trust assets under management and fee income decreased by approximately 4% due to market conditions [13] Market Data and Key Metrics Changes - The total loan pipeline increased to approximately $2.8 billion, with a weighted average interest rate of 6.31% [10] - Nonperforming loans increased to 0.54%, primarily due to two well-secured loans [11] - The provision for loan losses decreased to $325,000, reflecting stable-specific reserve requirements [21] Company Strategy and Development Direction - The company aims to maintain momentum throughout 2025, focusing on core businesses and creating value for stockholders and customers [13] - There is a targeted growth of about 5% in the commercial real estate (CRE) space, with a focus on diversifying the commercial portfolio [50][52] - The company is cautious about potential macroeconomic impacts but remains optimistic about its strong loan pipeline [33][40] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is uncertainty in the macroeconomic environment, they have not seen significant negative impacts on their portfolio [34][40] - The effective tax rate for the quarter increased to 30.3%, with expectations of approximately 29.5% for the remainder of 2025 [23] - Projected financial performance for 2025 includes a return on average assets of approximately 1.15% and a return on tangible equity of approximately 16% [23] Other Important Information - The Board of Directors approved a quarterly cash dividend of $0.24 per share payable on May 30 [7] - Noninterest income increased to $27 million, driven by strong performance from the insurance agency [22] Q&A Session Summary Question: Update on integration and hiring in wealth management - Management confirmed that integration is complete and there have been new hires in Pennsylvania and Westchester markets, contributing to pipeline growth [27][29] Question: Customer conversations regarding macro outlook and tariffs - Management indicated that there is uncertainty but no significant pullback from clients; they are monitoring the portfolio for potential impacts [34][40] Question: Details on nonaccrual loans - Management is working with borrowers on two nonaccrual loans, with favorable loan-to-value ratios providing some comfort [45][47] Question: Future M&A activity and characteristics of potential candidates - Management expressed that buying back stock is a priority over M&A, emphasizing the importance of culture in any future acquisitions [57][59] Question: Expense guidance for the year - Management expects expenses to be in the range of $112 million to $115 million, with a conservative approach to forecasting [62] Question: Insurance commissions and seasonality - Management noted that insurance business is seasonal, with strong first-quarter performance expected to continue [66]

Financial Data and Key Metrics Changes - WSFS Financial Corporation reported core earnings per share of $1.13, core return on assets (ROA) of 1.29%, core pre-provision net revenue (PPNR) of $104.6 million, and core return on tangible common equity of 16.97%, all showing improvements from the prior quarter [5][6][14] - The core net interest margin expanded by 8 basis points to 3.88%, with total funding costs reduced by 15 basis points to 1.77% [6][7] - Year-over-year, the net interest margin increased by 4 basis points despite absorbing 100 basis points of interest rate cuts [7] Business Line Data and Key Metrics Changes - Core fee revenue grew by 6% year-over-year, driven by a 19% increase in Wealth and Trust services [7] - Institutional Services and Bryn Mawr Trust Company of Delaware showed strong year-over-year growth, attributed to higher deal flow [8] - Client deposits declined by 1% linked quarter but increased by 4% year-over-year, with non-interest bearing deposits up 6% year-over-year [11][12] Market Data and Key Metrics Changes - The loan to deposit ratio remained stable at 77%, providing flexibility for future growth [12] - Total net credit costs increased to $17.6 million, with net charge-offs at $24.6 million, primarily due to a charge-off of a non-performing office-related loan [12][13] Company Strategy and Development Direction - The company announced a 13% increase in the quarterly dividend to $0.17 per share and an additional share repurchase authorization of 10% of outstanding shares [15] - A medium-term target CET1 ratio of 12% was established, with a gradual glide path over two to three years [15][66] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are cautious about expansion due to macroeconomic uncertainties, leading to postponed investments [40][42] - The overall credit quality remains stable, with no significant red flags identified in delinquency metrics [45] - Management expressed confidence in the ability to manage net interest margin compression through various tools, including deposit beta management and wholesale funding optimization [56][60] Other Important Information - The company returned $62.6 million of capital in the first quarter, including $53.8 million in buybacks and $8.8 million in dividends [14] - The capital ratios remain strong, with a CET1 of 14.1% and a tangible common equity (TCE) of 8.63% [14] Q&A Session Summary Question: Why was there no updated guidance in the presentation? - Management stated that it is typical to update guidance after the second quarter due to the volatility of the environment [22][23] Question: What is the outlook for net charge-offs? - Management indicated that the increase in charge-offs was due to a one-off item and that the overall portfolio is performing as expected [24][26] Question: How should expenses be viewed going forward? - Management noted that the first quarter expenses were lower than the run rate, estimating a future run rate around $160 million [33] Question: What is the outlook for commercial growth? - Management observed that clients are cautious about expansion due to market volatility, but the pipeline remains consistent [40][42] Question: How are deposit beta expectations evolving? - Management exceeded their initial goal for deposit beta, reaching 38% this quarter, and will continue to push for higher rates [56][63] Question: What is the timeframe for the CET1 target? - Management indicated a two to three-year glide path for the CET1 target, depending on macroeconomic conditions [66][68] Question: How is the company addressing potential impacts from new tariff policies? - Management is monitoring the situation closely but has not made changes to underwriting criteria yet due to the uncertainty [78][79] Question: What needs to happen for net growth to resume? - Management emphasized that greater certainty in the macro environment would help spur net growth, as clients are currently in a holding pattern [83][84]

Financial Data and Key Metrics Changes - The company reported net income of $15.1 million and a return on average assets of 1% for Q1 2025 [8] - The core net interest margin increased by 10 basis points to 3.36% [24] - Total assets increased slightly, with shareholders' equity rising by $20 million to $579.6 million [22][23] Business Line Data and Key Metrics Changes - Loan growth was flat due to elevated payoffs, but C&I loan balances grew by 4.9% linked quarter annualized [9][16] - Wealth management fee income decreased from the linked quarter but increased from the year-ago quarter, with expectations for growth despite market volatility [19] - SBA gain on sale income rose by 52% year-over-year, and mortgage production increased by 23% [19] Market Data and Key Metrics Changes - Deposits were essentially flat, reflecting stability compared to the previous year [15] - Commercial originations were up 4% year-over-year and 37% from the linked quarter [17] Company Strategy and Development Direction - The company is focused on building talent and technology platforms to enhance performance [11] - Strategic investments include the Aperture commercial banking online platform and ServiceNow for operational efficiency [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to mid-single-digit loan growth rates in Q2 2025 [34] - There is caution regarding customer investment plans due to economic uncertainty, which may impact the latter half of the year [35][36] Other Important Information - The allowance for credit loss remains at 1.25% of loans, indicating a strong position [10] - Total non-interest expense decreased by $1.1 million from the linked quarter, with expectations for annual expenses between $145 million and $147 million [26][27] Q&A Session Summary Question: What are the upside and downside risks to the outlook? - Management noted economic uncertainty but expressed confidence in loan pipelines and fee business momentum for Q2 [34][35] Question: Can you discuss the medium-term opportunities to improve the efficiency ratio? - Management indicated a focus on expense control and projected an efficiency ratio between 55% and 59% [50] Question: What is the updated rate sensitivity regarding potential rate cuts? - Management expects rate cuts to benefit deposit costs and sees opportunities for margin improvement [52][53] Question: How do you view charge-offs for the balance of the year? - Management is proactive in managing nonperforming assets and does not foresee elevated charge-offs at this time [69] Question: What is the outlook for the agricultural portfolio? - Management expressed concerns about future pricing scenarios due to tariffs but sees stability in 2025 [85][86]

Financial Data and Key Metrics Changes - The company reported net income of $15,100,000 for Q1 2025, with a return on average assets of 1% [5] - Core net interest margin increased by 10 basis points to 3.36%, while tax equivalent net interest margin increased by 1 basis point to 3.44% [17] - Total assets increased slightly, with shareholders' equity rising by $20,000,000 to $579,600,000 [15] Business Line Data and Key Metrics Changes - Loan growth was flat due to elevated payoffs, but C&I loan balances grew by 4.9% linked quarter annualized [11] - Wealth management fee income decreased from the linked quarter but increased compared to the year-ago quarter [13] - SBA gain on sale income rose by 52% year-over-year, and mortgage production increased by 23% [13] Market Data and Key Metrics Changes - Deposits were essentially flat, reflecting stability compared to a decline in the previous year [11] - The company noted strong performance in growth markets, particularly in Denver [12] Company Strategy and Development Direction - The company is focused on building talent and technology platforms to enhance performance, including the implementation of the Aperture commercial banking online platform [8] - Strategic investments in technology are ongoing, with a focus on operational effectiveness [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to mid-single-digit loan growth rates in Q2 2025, despite economic uncertainties [24] - There is a cautious outlook for the latter half of the year due to customer hesitance in making investment decisions [25] Other Important Information - The company anticipates total annual expenses to be in the range of $145,000,000 to $147,000,000 for 2025 [19] - The allowance for credit loss remains ample at 1.25% of loans, with charge-offs increasing to 29 basis points primarily due to a partial charge-off of a previously reserved loan [6][7] Q&A Session Summary Question: What are the upside and downside risks to the outlook? - Management indicated that while they feel positive about loan pipelines for Q2, uncertainty remains for the latter half of the year due to economic conditions [23] Question: Can you discuss the medium-term opportunities to improve the efficiency ratio? - Management expressed confidence in expense control efforts, with an efficiency ratio expected to be in the range of 55% to 59% [34] Question: What is the updated rate sensitivity regarding potential rate cuts? - Management noted that rate cuts could provide a tailwind to deposit costs, with expectations for continued margin improvement [36] Question: How do you view charge-offs over the balance of the year? - Management indicated that they do not foresee elevated charge-offs at this time, despite ongoing management of nonperforming assets [47] Question: What is the outlook for the agricultural portfolio given current economic conditions? - Management acknowledged concerns among farmers regarding tariffs and input costs, but expects stability in 2025 [59]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $25 million or $0.81 per diluted share, while core net income was $27.1 million or $0.88 per diluted share, reflecting the sustainability of earnings [24][25] - Core earnings per share was $0.88, supported by net interest income of $70.6 million, which was within the guidance range [12][24] - The tangible book value per share increased by 4% to $23.51, while core revenue per diluted share decreased by $0.10 to $2.57 [26] - The CET1 ratio improved by 43 basis points to 14.32%, indicating a strong capital position [28] Business Line Data and Key Metrics Changes - Total loans receivable increased by $7 million to $4.6 billion, driven by increases in multifamily and commercial industrial loans [38] - Political deposits grew by $103 million or 11% to $1.1 billion, consistent with historical patterns post-election [15][32] - Core non-interest income decreased to $9.1 million from $9.5 million, primarily due to lower commercial banking fees [42] Market Data and Key Metrics Changes - Total deposits increased by $446 million to $7.6 billion, with on-balance sheet deposits rising by 3.2% [31][32] - Non-interest-bearing deposits decreased to 39% of average ending deposits, while average cost of deposits increased by seven basis points to 159 basis points [33] Company Strategy and Development Direction - The company plans to maintain a conservative approach amid uncertain economic conditions, focusing on strong capital and liquidity [17][18] - A new $40 million share repurchase program was authorized, indicating a commitment to returning capital to shareholders [30][68] - The company is expanding its commercial PACE franchise, expecting C-PACE originations to ramp up to $15 to $20 million per quarter in the latter half of the year [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth and margin expansion for the remainder of the year, despite modest declines in core earnings and revenue [13][14] - The company anticipates C&I loan growth to remain muted in Q2, with reacceleration expected in the latter half of the year [18] - Management highlighted the importance of maintaining a strong credit profile and higher liquidity levels due to potential impacts from federal funding reductions [17][18] Other Important Information - The company is planning a move to a new headquarters in New York City by mid-2026, aimed at attracting and retaining top talent [21][22] - Nonperforming assets totaled $33.9 million, representing an increase driven by commercial industrial nonaccrual loans [46] Q&A Session Summary Question: Details on the $8.3 million loan that went on nonaccrual - Management indicated that the loan is in the solar sector and has sufficient collateral value, allowing them to maintain reserve coverage [54][56] Question: Impact of funding for clean energy projects - Management confirmed that there is no observed decline in funding for clean energy projects, with a strong pipeline continuing [58][60] Question: Concerns about political challenges affecting the bank - Management emphasized their focus on core business growth and maintaining strong capital and liquidity to navigate potential challenges [64][66] Question: Update on the political deposit franchise outlook - Management reported strong deposit performance with 11% growth in political deposits, consistent with historical trends [77][78] Question: Utilization of off-balance sheet strategies - Management explained that off-balance sheet strategies will be used as appropriate to manage balance sheet growth and maintain net interest income [84][86] Question: Expectations for expenses and digital transformation projects - Management confirmed that expenses are expected to ramp up throughout the year, with a focus on digital transformation and hiring plans [91][92] Question: Tangible impacts from the new administration - Management stated that they have not seen tangible impacts on lending or deposits but are closely monitoring potential risks [96][99]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.72, down from $0.96 in the linked quarter, with a notable $0.14 per share after-tax differential in the mortgage servicing rights fair value adjustment [21][24] - Net interest income remained unchanged at $38,500,000, while the net interest margin increased to 3.81% from 3.75% in the linked quarter, primarily due to a decline in the cost of deposits [21][22] - Deposits increased by $171,600,000 to $3,790,000,000, with the cost of deposits decreasing to 219 basis points from 229 basis points in the linked quarter [22][23] Business Line Data and Key Metrics Changes - Loans held for investment increased by $20,800,000 or 2.7% annualized to $3,080,000,000, driven by growth in commercial owner-occupied real estate loans and commercial goods and services loans [14] - The indirect auto loan portfolio grew by $7,000,000 to $243,000,000, with a decline in loans past due by more than 30 days to 41 basis points from 47 basis points [17][18] - Non-interest income decreased to $10,600,000 from $13,300,000 in the linked quarter, primarily due to a drop in mortgage banking revenues [19][20] Market Data and Key Metrics Changes - Loans in major metropolitan markets decreased by $18,000,000 to $1,040,000,000, with expectations of elevated early payments on loans in the first half of the year [15] - The company reported strong loan growth in the Permian market, achieving the strongest loan growth in a single quarter since entering the market in 2019 [16] - The company anticipates loan growth to trend towards the lower end of the low to mid-single digit range for the full year 2025 due to economic uncertainty [19] Company Strategy and Development Direction - The company is focused on organic growth and selectively adding to its team across major metropolitan and rural markets [10] - A $15,000,000 stock repurchase program was authorized, with $8,300,000 spent to repurchase 250,000 shares in the first quarter, indicating a strategy to return value to shareholders [11] - The company remains cautious regarding M&A activity due to current market uncertainty but is positioned to capitalize on opportunities as they arise [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's credit quality and its ability to perform well through economic downturns, despite potential recession risks [6][10] - The company believes it has the liquidity, capital, and team to take advantage of opportunities during economic difficulties [9] - Management expects the economic growth in Texas to remain resilient, although they are aware of the uncertainties created by external factors [19] Other Important Information - The allowance for credit losses to total loans held for investment ratio was 1.4%, with a recorded provision for credit losses of $420,000 in the first quarter [23] - Non-interest expense increased to $33,000,000 from $29,900,000 in the linked quarter, with expectations that this level will be a good run rate for the remainder of the year [24][25] - Tangible common equity to tangible assets ratio was 9.64%, with tangible book value per share increasing to $26.5 [26] Q&A Session Summary Question: On deposit costs and potential for further reduction - Management acknowledged that while significant progress has been made in reducing deposit costs, there is still room for further reductions in certain accounts [31][33] Question: Loan yields and margin expansion potential - Management indicated that while there may be some room for margin expansion, it will depend on overall liquidity and loan funding conditions [35][38] Question: Elevated loan payoffs and their impact - Management noted that payoffs were approximately $10,000,000 higher in the first quarter compared to the previous quarter, but they remain confident in their production and pipeline [41][42] Question: Current hiring landscape and mortgage hiring outlook - Management stated they are actively hiring but are selective, focusing on finding the right talent rather than increasing headcount indiscriminately [48][50] Question: Concentration of loan portfolio in energy and growth in the quarter - Management confirmed that approximately 4% of the loan portfolio is concentrated in energy, primarily driven by energy service businesses [60][63]

Financial Data and Key Metrics Changes - Total loan balances decreased by $37 million in Q1 2025 due to elevated payoffs and prepayments, with loan yields at 5.45%, down 2 basis points from Q4 2024 [7][12] - Total deposits increased by $160.7 million in the quarter, with 95% of this growth in non-mature deposits, primarily in money market accounts [9][27] - Net interest margin increased to 3.44% for Q1 from 3.36% in the prior quarter, driven by decreases in the cost of deposits and borrowings [12] - Non-interest expense increased by $1.8 million from the prior quarter, primarily due to higher benefit costs and payroll taxes [14] Business Line Data and Key Metrics Changes - Commercial lending closed $183 million in new loan commitments, down from $316 million in the previous quarter but up from $133 million in Q1 2024 [24] - The commercial loan pipeline ended Q1 at $460 million, up from $452 million in the previous quarter [25] - Investment balances decreased by $53.8 million, partly due to a pretax loss of $3.9 million on the sale of $61 million of securities [11] Market Data and Key Metrics Changes - The cost of interest-bearing deposits decreased to 1.92% in Q1 from 1.98% in the prior quarter, with expectations for further decreases due to repricing of CDs [10] - Non-performing loans improved from 0.11% of total loans at year-end to 0.09% [18] Company Strategy and Development Direction - The company aims to continue taking advantage of opportunities for growth and potential M&A, with a solid balance sheet and a strong loan pipeline [34][36] - The focus remains on prudent risk management and maintaining a strong capital position to navigate economic uncertainties [29][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about core profitability due to strong deposit growth and prudent risk management [5] - The company anticipates an annualized loan growth rate of 5% to 8% for Q2 2025, despite uncertainties in the market [77][82] Other Important Information - The company has 990,000 shares available for repurchase under the current plan, although no shares were repurchased in Q1 [15] - Credit quality metrics remained stable, with non-accrual loans totaling just over $4.4 million, representing 0.09% of total loans [17] Q&A Session Summary Question: Perspective on Heritage's position among independent banks - Management believes the bank is well-positioned with specific goals for 2025 and readiness for potential M&A opportunities [34][36] Question: Details on the new team in Spokane - The new team was sourced from a larger regional bank, and the decision was based on fit and market opportunity [38][40] Question: Comments on stock buyback activity - The decision on stock buybacks is made quarterly, with no repurchases in Q1 due to stock price considerations [43] Question: Margin and deposit costs - The NIM in March was 3.45%, with the cost of interest-bearing deposits at 1.92% [48] Question: Loan growth opportunities - The company sees balanced opportunities in commercial real estate and C&I, with a focus on deposit-rich clients [62] Question: Credit metrics and underwriting approach - Management is closely monitoring economic changes and adapting their credit management strategies accordingly [72]