Financial Data and Key Metrics Changes - The company reported a core EPS of $1.40, core return on assets of 1.40%, and core return on tangible common equity of 18.7%, all showing improvement compared to the second quarter [3][4] - Year-over-year, core net income increased by 21%, core PP&R grew by 6%, and core earnings per share rose by 30% [3][4] - Tangible book value per share increased by 12% [4] - Net interest margin expanded by two basis points to 3.91% quarter over quarter [4] Business Line Data and Key Metrics Changes - The wealth and trust business grew by 13% year over year [5] - Core fee revenue was flat quarter over quarter but grew by 5% when excluding strategic exits [4] - Client deposits increased by 1% linked quarter and by 5% year over year, with non-interest deposits growing by 12% year over year [5] Market Data and Key Metrics Changes - Total net credit costs were $8.4 million this quarter, down $5.9 million compared to the prior quarter [7] - Non-performing assets (NPAs) declined by over 30% to 35 basis points, with delinquencies down by 34% [7] Company Strategy and Development Direction - The company intends to maintain elevated levels of buybacks while adjusting the pace based on macroeconomic conditions and business performance [8] - The management is focused on organic growth and is actively recruiting talent in commercial and wealth sectors [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage margins through deposit repricing and hedging strategies despite potential rate cuts [9][56] - The company plans to provide a full-year 2026 outlook in January, indicating a commitment to high performance [9] Other Important Information - The company returned $56.3 million of capital, including buybacks of $46.8 million, representing 1.5% of outstanding shares [8] - The commercial pipeline remains strong at approximately $300 million [7] Q&A Session Summary Question: What is the base case scenario for achieving the CET1 target? - Management indicated that they are currently buying back approximately 100% of net income and have the capacity to continue this for the next two to three years [15] Question: How are reserve levels being managed amid macro volatility? - Management stated that they are conservatively maintaining reserves due to potential macroeconomic volatility, despite good asset quality trends [18] Question: What is the outlook for the wealth and trust business? - The wealth business is seeing growth in new accounts and transactions, with institutional services up 30% and The Bryn Mawr Trust Company of Delaware up 20% year over year [26][28] Question: How does Cash Connect revenue forecast with changing rates? - Management confirmed that while revenue may decrease with rate cuts, expenses would also reduce, leading to overall profitability benefits [36][37] Question: What is the expected pace of loan payoffs from the consumer partnership? - The company expects a runoff of approximately $15 million to $17 million per month from the Spring EQ portfolio, while home lending is experiencing double-digit growth [42][43]

Financial Data and Key Metrics Changes - The company reported a core EPS of $1.40, core return on assets of 1.40%, and core return on tangible common equity of 18.7%, all showing improvement compared to the second quarter [3] - Year-over-year, core net income increased by 21%, core PP&R grew by 6%, and core earnings per share rose by 30% [3][4] - Tangible book value per share increased by 12%, and net interest margin expanded by 2 basis points to 3.91% quarter over quarter [4] Business Line Data and Key Metrics Changes - The wealth and trust business grew by 13% year over year, with total client deposits increasing by 1% linked quarter and 5% year over year [5] - Core fee revenue was flat quarter over quarter but grew by 5% when excluding strategic exits in wealth and trust [4] - Loans decreased by 1% linked quarter, primarily due to the sale of the Upstart loan portfolio, but residential mortgage and WSFS-originated consumer loan portfolios saw increases of 5% and 3% respectively [5][6] Market Data and Key Metrics Changes - Non-interest deposits grew by 12% year over year, representing over 30% of total client deposits [5] - The commercial pipeline increased to approximately $300 million, indicating strong demand in both C&I and commercial real estate [7] Company Strategy and Development Direction - The company intends to maintain elevated levels of buybacks while being flexible based on macroeconomic conditions and business performance [8] - Management emphasized a focus on organic growth and potential acquisitions, particularly in the wealth and trust sectors [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in asset quality improvements, with total net credit costs decreasing to $8.4 million, down $5.9 million from the prior quarter [7] - The company plans to provide a full-year 2026 outlook in January, indicating a commitment to high performance despite uncertainties in the macro environment [9] Other Important Information - The company returned $56.3 million of capital during the quarter, including $46.8 million in buybacks, representing 1.5% of outstanding shares [8] - The CET1 ratio stands at 14.39%, well above the medium-term target of 12% [8] Q&A Session Summary Question: What is the base case scenario for achieving the CET1 target? - Management indicated that they are currently buying back approximately 100% of net income and have the capacity to continue this for the next two to three years, depending on balance sheet dynamics and growth rates [14][15] Question: How are reserve levels being managed amid macro volatility? - Management noted that while there is capacity to release some reserves, they are maintaining a conservative approach due to potential economic volatility [18] Question: What is the outlook for the wealth and trust business? - The wealth business is seeing growth in new accounts and transactions, with institutional services up 30% and Bryn Mawr Trust up 20% year over year [26][28] Question: How does Cash Connect revenue forecast with changing rates? - Management confirmed that while revenue may decrease with rate cuts, expenses would also reduce, leading to a net profitability benefit [36][37] Question: What is the expected pace of loan payoffs from the consumer partnership? - The company expects a runoff of approximately $15 million to $17 million per month from the Spring EQ portfolio, while home lending is experiencing double-digit growth [42][43]

Financial Performance - The company reported adjusted net income of $72.6 million and adjusted earnings per share of $0.76 for Q3 2025, resulting in an adjusted return on assets of 1.55% and a return on tangible common equity of 19.3% [3][6] - Tangible book value per share increased to $16.19, a rise of 5% from the previous quarter and 14% year-over-year, while tangible common equity ratio rose by 47 basis points to 8.87% [1][12] - The net interest margin remained strong at 4.02%, despite a slight decline from the previous quarter [4][8] Revenue and Income Streams - Total net revenue reached record levels, with adjusted non-interest income accounting for 31% of total net revenue for the quarter [2][3] - Fee income for the quarter was a record $73.6 million, driven by leasing and foreign exchange businesses, as well as higher syndication fees [10][12] Loan and Deposit Activity - Loan balances decreased by $72 million during the quarter, primarily due to lower production in specialty lending areas and increased construction originations [9][32] - Average deposit balances increased by $157 million, driven by higher broker deposits and money market accounts, despite a seasonal decline in public funds [4][9] Expense Management - Total non-interest expenses remained flat compared to the previous quarter, excluding performance-related incentives [2][5] - The company has successfully reduced its full-time equivalents by approximately 200 or 9% over the past two years as part of workforce efficiency efforts [2][49] Outlook and Future Expectations - The company anticipates mid-single-digit loan growth for Q4 2025, with expectations for strong deposit growth driven by core deposit balances and seasonal public fund inflows [14][15] - The net interest margin is expected to remain in the range of 3.92% to 3.97% for the next quarter, assuming a 25 basis point rate cut in both October and December [15][25] - The company is preparing for the integration of pending acquisitions, which are expected to enhance operational efficiencies and revenue growth [16][51]

Financial Data and Key Metrics Changes - Adjusted net income for Q3 2025 was $72.6 million, with adjusted earnings per share at $0.76, resulting in an adjusted return on assets of 1.55% and an adjusted return on tangible common equity of 19.3% [4][6] - Record revenue was achieved in Q3, driven by a robust net interest margin of 4.02% and record non-interest income, which represented 31% of total net revenue [4][7] - Tangible book value per share increased to $16.19, a 5% increase from the previous quarter and a 14% increase year-over-year [6][12] Business Line Data and Key Metrics Changes - Loan balances declined modestly by $72 million during the quarter, primarily due to lower production in specialty lending areas and an increase in construction originations [5][10] - Non-interest income reached a record high of $73.6 million, led by leasing and foreign exchange businesses, with higher syndication fees contributing to the increase [10][11] - Non-interest expenses increased due to higher incentive compensation tied to fee income, but overall expenses were well managed [5][11] Market Data and Key Metrics Changes - Average deposit balances increased by $157 million, driven by higher broker deposits and money market accounts, despite a seasonal decline in public funds [7][10] - The company maintained 21% of total balances in non-interest bearing accounts, focusing on growing lower-cost deposit balances [7] Company Strategy and Development Direction - The company expects loan growth to return to mid-single digits in Q4 2025, driven by strong commercial lending and seasonal public fund inflows [13][34] - The integration of pending acquisitions, including Westfield and BankFinancial, is anticipated to enhance operational efficiency and expand market reach [15][64] - The company aims to maintain an industry-leading net interest margin and is preparing for potential rate cuts while managing deposit costs [13][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong performance in Q4 2025, with expectations for continued growth in fee income and stable credit costs [14][43] - The company anticipates that credit costs will remain steady, with net charge-offs expected to be in the mid-20 basis points range [43] - Management highlighted the competitive deposit environment but indicated that proactive measures have been taken to manage deposit costs effectively [52] Other Important Information - The company recorded $9.1 million in provision expense during the quarter, driven by net charge-offs, with an allowance for credit losses (ACL) coverage of 1.38% of total loans [8][12] - The company is committed to providing attractive returns to shareholders, with 33% of earnings returned through dividends during the period [12] Q&A Session Summary Question: NDFI loan exposure details - The company has approximately $434 million in the NDFI portfolio, which is conservatively managed and primarily consists of traditional REITs [17][20] Question: Impact of rate cuts on net interest margin - Each 25 basis point rate cut is expected to create about 5 basis points of margin pressure initially, with recovery as deposit costs adjust [21][22] Question: Loan growth expectations and verticals driving growth - Strong commercial lending is expected to drive growth, with specific contributions from Summit funding and commercial real estate [32][34] Question: Fourth quarter fee and expense guidance - The increase in fourth quarter expenses is primarily driven by higher forecasts from Bannockburn and other business segments [40][41] Question: Credit cost outlook - Credit costs are expected to remain steady, with a run rate of mid-20 basis points anticipated [43] Question: Capital management and buyback considerations - The company plans to assess capital ratios post-acquisitions before considering buybacks, especially if trading below tangible book value [45][46] Question: Deposit competition and funding growth - The company expects to manage deposit costs effectively despite competitive pressures, aided by liquidity from acquisitions [52][54]

Financial Data and Key Metrics Changes - Adjusted net income for Q3 2025 was $72.6 million, with adjusted earnings per share at $0.76, resulting in an adjusted return on assets of 1.55% and an adjusted return on tangible common equity of 19.3% [3][5] - Record revenue was achieved in Q3, driven by a robust net interest margin of 4.02% and record non-interest income, which represented 31% of total net revenue [3][6] - Tangible book value per share increased by 5% from the previous quarter to $16.19, and tangible common equity increased by 47 basis points to 8.87% [5][11] Business Line Data and Key Metrics Changes - Loan balances declined modestly by $72 million during the quarter, primarily due to lower production in specialty businesses and a higher percentage of construction originations [4][9] - Non-interest income reached a record high of $73.6 million, led by leasing and foreign exchange businesses, with higher syndication fees contributing to the increase [6][10] - Non-interest expenses increased due to higher incentive compensation tied to fee income, but overall expenses were well managed [4][10] Market Data and Key Metrics Changes - Average deposit balances increased by $157 million, driven by higher broker deposits and money market accounts, despite a seasonal decline in public funds [6][9] - The company maintained 21% of total balances in non-interest bearing accounts, focusing on growing lower-cost deposit balances [6] Company Strategy and Development Direction - The company expects loan growth to return to mid-single digits in Q4 2025, with strong commercial lending as the primary driver [12][32] - The integration of pending acquisitions, including Westfield and BankFinancial, is anticipated to enhance operational efficiency and expand market reach [14][63] - The company aims to maintain an industry-leading net interest margin and expects it to range between 3.92% and 3.97% in the next quarter [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong performance in Q4 2025, with expectations for increased origination volumes and strong deposit growth [12][14] - Credit costs are expected to remain stable, with annualized net charge-offs projected at 18 basis points [7][42] - The company anticipates a continued focus on expense management while evaluating capital actions to support shareholder returns [11][44] Other Important Information - The company has received regulatory approval for the Westfield transaction, expected to close in early November 2025 [14] - The company is committed to providing attractive returns to shareholders, with 33% of earnings returned through common dividends [11] Q&A Session Summary Question: NDFI loan exposure details - The NDFI portfolio stands at approximately $434 million, conservatively managed with no adversely rated credit, primarily consisting of traditional REITs [16][19] Question: Impact of rate cuts on net interest margin - Each 25 basis point rate cut is expected to create about five basis points of near-term pressure on the margin, with a potential recovery as deposit costs adjust [20][22] Question: Loan growth expectations and verticals driving growth - Strong commercial lending is expected to drive growth, with specific verticals like Summit funding projected to perform well in Q4 [31][32] Question: Fourth quarter fee and expense guidance - The increase in fourth quarter expenses is primarily driven by higher forecasts from Bannockburn and other commission-based businesses [40][41] Question: Credit cost outlook - Credit costs are expected to remain steady, with a run rate of 25 to 30 basis points anticipated [42] Question: Capital management and buyback considerations - The company plans to assess capital ratios post-acquisitions before considering buybacks, particularly if trading below tangible book value [44]

Financial Performance - The company reported a net income of $100 million for Q3 2025, a 25% increase from $80 million in Q2 2025, with normalized earnings per share growing 13% year-over-year [4][11] - Return on average assets for the quarter was 2.1%, significantly higher than the previous quarter [11] - Net interest income reached $217.9 million, an 8% increase compared to Q3 2024, with a net interest margin of 4.57%, up 32 basis points over the last four quarters [14][15] Loan and Deposit Growth - Total loans grew by $181 million, or 5.6% annualized, surpassing $13 billion for the first time since 2010 [5] - Core franchise deposits increased by $140 million, with favorable trends in market flows despite higher competition [7] - The company experienced a slowdown in consumer credit demand, particularly in the auto industry, which saw a 7% decline in total retail sales year-to-date [6][9] Asset Quality and Credit Trends - Non-performing assets decreased by 7% with a reduction in charge-offs and stable credit trends [7][19] - The allowance for credit losses decreased to 1.89% of loans, reflecting improved loss severities in the residential mortgage portfolio [20][21] - Net charge-offs for the quarter were $19.9 million, representing 0.62% of average loans, slightly up from the previous quarter [20] Strategic Outlook and Market Conditions - The company plans to strategically deploy excess capital to support organic growth, particularly in commercial and residential mortgage lending [9][10] - The operating environment remains stable, with potential impacts from evolving trade dynamics and inflationary pressures being monitored [8] - The company expects loan growth for the year to be in the range of 3% to 4%, down from previous guidance of 5% [10][64] Management Commentary - Management expressed confidence in the resilience of the labor market in Puerto Rico and the positive impact of federal disaster funds on local economies [9] - The company is optimistic about the ongoing expansion of the manufacturing sector and its potential benefits for the franchise [9] - Management noted that competitive pressures in the deposit market are primarily from smaller players, with expectations for some reduction in deposit costs due to rate cuts [38][41] Other Important Information - The board authorized an additional $200 million share buyback program, continuing the strategy of returning 100% of annual earnings to shareholders [8][22] - The effective tax rate for 2025 is estimated to be around 22.2%, reflecting some expected improvements [84] Q&A Session Summary Question: Is the tax situation a one-time benefit? - Management confirmed that while there will be no further reversals of deferred tax assets at the same level, there will be ongoing benefits from normal operating losses [26] Question: What is the health of the consumer in Puerto Rico? - Management indicated that auto sales are normalizing and credit demand has been lower, but overall consumer credit trends remain stable [30] Question: What are the expectations for deposit costs with upcoming rate cuts? - Management expects some reduction in deposit costs, but noted that the timing of these reductions may lag behind floating asset products [41] Question: What is the outlook for loan growth into Q4? - The company maintains a loan growth guidance of 3% to 4% for the year, with a strong pipeline in commercial lending [64] Question: Can you elaborate on competitive pressures in the deposit market? - Management noted that competitive pressures are primarily from smaller players and that they are managing this by offering additional services beyond just deposit products [39]

Financial Data and Key Metrics Changes - The company reported a net income of $100 million for Q3 2025, a 25% increase from $80 million in Q2 2025, with adjusted earnings per share growing 13% year-over-year [4][11] - Return on average assets for the quarter was 2.1%, significantly higher than the previous quarter [11] - Net interest income reached $217.9 million, an 8% increase compared to Q3 2024, and net interest margin was 4.57%, up 32 basis points over the last four quarters [14][15] Business Line Data and Key Metrics Changes - Total loans grew by $181 million, or 5.6% annualized, surpassing $13 billion for the first time since 2010 [5] - The company experienced a slowdown in consumer credit demand, particularly in the auto industry, which saw a 7% decline in total retail sales year-to-date [6][7] - Commercial and construction lending segments showed growth, helping to mitigate the slowdown in consumer lending [7] Market Data and Key Metrics Changes - The company noted a 17% decrease in auto sales compared to Q3 2024, impacting overall loan origination in that sector [6] - The competitive landscape for deposits remains challenging, with higher competition for new flows, particularly from affluent customers [7][8] Company Strategy and Development Direction - The company plans to continue executing a growth strategy focused on organic growth and regional diversification [9][10] - A new $200 million share buyback program was authorized, reflecting the strategy of returning 100% of annual earnings to shareholders [8][22] - The company is exploring potential M&A opportunities in the Florida market, seeking franchises that complement its existing operations [45][68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resiliency of the labor market in Puerto Rico and the ongoing expansion of the manufacturing sector, which is expected to support local economies [9] - The company anticipates loan growth guidance for the year to be in the 3%-4% range, influenced by the evolving rate environment and auto sales normalization [10][65] - Management highlighted the importance of monitoring trade dynamics and potential impacts from federal government actions on the business environment [8][9] Other Important Information - The company reported a 7% reduction in non-performing assets and stable credit quality trends [7][19] - The effective tax rate for 2025 is estimated at 22.2%, reflecting expected improvements from operational changes [85] Q&A Session Summary Question: Is the tax situation a one-time benefit? - Management confirmed that while there will be no further reversals at the same level, there will be ongoing benefits from normal operating losses offsetting revenues [26] Question: What is the health of the consumer in Puerto Rico? - Management noted that while auto sales are normalizing, credit demand has been lower, but overall consumer credit trends remain stable [30] Question: What are the expectations for deposit costs with upcoming rate cuts? - Management expects some reduction in deposit costs, but noted that the timing of these reductions may lag behind asset repricing [41] Question: How does credit performance at other banks influence reserving? - Management stated that they maintain a firm risk appetite and focus on their own portfolio performance rather than industry-wide trends [42] Question: What is the outlook for loan growth into Q4? - Management reiterated guidance of 3%-4% loan growth for the year, with a strong pipeline in commercial lending [65] Question: Can you elaborate on competitive pressures in the deposit market? - Management indicated that competitive pressures are primarily from smaller players and that they are focusing on operational accounts and additional services to maintain relationships [38] Question: What is the expected impact of onshoring on Puerto Rico's economy? - Management believes that while short-term impacts may be limited, long-term benefits from onshoring will support the economy [56]

Financial Data and Key Metrics Changes - The company reported a net loss of $67.5 million, or $2.22 per share, compared to a loss of $69.8 million, or $2.30 per share in the previous quarter [13] - Tangible common equity to tangible assets is at 10.39%, with Tier 1 leverage ratio slightly declining to 10.4% and CET1 at 13.58% [13] - Tangible book value per share decreased by $2.03 to $37, reflecting credit cleanup rather than core earnings erosion [13] Business Line Data and Key Metrics Changes - C&I loans increased by $105 million, representing the majority of loan originations for the quarter [6] - Average C&I deposits grew by 8.6%, or $134.2 million, indicating relationship growth and new account activity [6] - Non-interest income totaled $2.5 million, down from $6.4 million in the previous quarter, primarily due to loan loss sales [15] Market Data and Key Metrics Changes - Total criticized and classified office loans declined from $302 million at the end of March to $113.1 million at September 30 [9] - Non-performing loans decreased from $226.4 million to $118.6 million, reflecting transfers to held-for-sale status and charge-offs [10] - Total criticized and classified loans rose to $958 million from $875 million, with office loans declining while multifamily loans increased [11] Company Strategy and Development Direction - The company is focused on completing credit cleanup, deepening core relationships, and improving earnings performance to drive shareholder value [8] - The strategic plan includes diversifying the balance sheet, improving margins, and reducing reliance on wholesale funding [7] - The company anticipates loan growth in 2026 to be concentrated in C&I, with a disciplined approach to credit standards [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that they are nearing the end of elevated losses from decreased asset values and are addressing valuation stress in the office market [4] - The independent loan review confirmed the adequacy of current provisioning, supporting management's view of the portfolio [16] - Provisions are expected to be manageable moving forward, with improved earnings anticipated in 2026 [21] Other Important Information - The company announced the voluntary resignation of Chief Credit Officer Kevin Geoghegan, with interim replacements appointed [21][22] - The independent loan review covered over 400 loans, representing 84.9% of the commercial loan book, assessing potential losses over a 30-month horizon [16] Q&A Session Summary Question: Concerns about further losses on loan sales - Management indicated that they are implementing better valuation tools and placing carrying values at the lower end of ranges to avoid previous issues [25][26] Question: Timing for asset disposals - Management expects material actions to occur during the fourth quarter of 2025, with ongoing discussions about individual assets [28] Question: Future charge-offs and impact on provisions - Management does not anticipate significant charge-off activity impacting provision expenses in the upcoming quarter [29][30] Question: Clarification on multifamily loan performance - Management noted that while debt service coverage is stressed, the actual performance of many properties is at or above underwritten expectations [32] Question: Impact of government shutdown on government contracts - Management has not seen significant concerns in the government contracting space due to the shutdown, with ongoing communication with clients [38] Question: Future inflow of criticized and classified loans - Management expects a dramatic slowdown in the inflow of criticized and classified loans moving into 2026 [44][45] Question: Comments on Kevin Geoghegan's departure - Management expressed gratitude for Geoghegan's contributions and emphasized the continuity of credit risk management processes with interim appointments [52][53] Question: Potential for M&A activity and franchise value - Management is focused on strategic plans to build shareholder value through diversification and improving pre-provision net revenue [70][71]

Financial Data and Key Metrics Changes - Net income for Q3 2025 was $9.9 million or $0.18 per diluted share, with a return on assets of 0.56% and a return on average tangible common equity of 6.16% [4] - Excluding adjusting items, net income was $28.4 million or $0.53 per diluted share [5] - The net interest margin improved to 5.05%, a 20 basis point increase from the previous quarter and a 41 basis point increase year over year [7][19] - Common equity Tier one decreased to 12.44% from 13.77% in the previous quarter, but remains stable compared to the same period last year [7] Business Line Data and Key Metrics Changes - Total loans increased by $1.27 billion from the previous quarter, primarily due to the acquisition of Bancorp Financial [8] - Non-interest income increased by $2.1 million compared to the prior year, driven by a 26.1% increase in wealth management fees [13] - The allowance for credit losses on loans increased to $75 million, or 1.43% of total loans, reflecting the acquisition's impact [12] Market Data and Key Metrics Changes - The total cost of deposits rose to 133 basis points from 84 basis points in the prior linked quarter [8] - The loan to deposit ratio was 91.4% as of September 30, 2025, compared to 83.3% in the previous quarter [8] Company Strategy and Development Direction - The company is focused on the effective integration of Evergreen Bank and optimizing the balance sheet post-acquisition [15] - A 17% increase in the common dividend was announced, reflecting confidence in the company's performance [28] - The company aims to reduce reliance on wholesale funding and is interested in acquiring additional deposits [16][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the remainder of 2025 following the Evergreen acquisition and the onboarding of new team members [28] - The company anticipates a low to mid single-digit growth rate heading into 2026, supported by robust pipelines in various sectors [82] - Concerns about credit quality were downplayed, with management indicating that most classified assets are well-collateralized [50] Other Important Information - The company recorded $5.1 million in net loan charge-offs, primarily from the powersports portfolio [11] - Non-interest expense increased by $19.7 million compared to the prior linked quarter, largely due to acquisition costs [15] Q&A Session Summary Question: Potential runoff of exception price deposits - Management indicated there is about $200 million in market-priced funding, with a goal to replace it with more traditional deposits over the next 6 to 18 months [31][34] Question: Future originations in Power Sport - The focus will be on originating across all tiers, with a historical emphasis on the top two tiers [36] Question: Loan growth outlook - Management expects low to mid single-digit growth heading into 2026, with a strong pipeline in various sectors [82] Question: Charge-off trajectory - Charge-offs are expected to stabilize around 30 basis points, with management optimistic about credit quality [48] Question: Margin expectations - Management does not anticipate significant movement in margins, suggesting a stable outlook [95]

Financial Data and Key Metrics Changes - Year-to-date net income totaled $167.5 million, an increase of $31.9 million or 23.5% from the nine months ended 2024, while earnings per share totaled $2.90, an increase of $0.59 or 25.5% during the same period [6][13] - Return on assets (ROA) was 1.22%, and the efficiency ratio was 55% [3][6] - Total revenues in Q3 showed meaningful growth in both net interest income of $0.7 million and non-interest income of $1.2 million, resulting in overall pre-tax, pre-provision earnings of $70.5 million [13] Business Line Data and Key Metrics Changes - Commercial loan growth for the quarter was $268 million, over 10% annualized, with year-to-date growth of $699 million, over 9% annualized [8][9] - The consumer segment contributed $21 million of loan growth for the quarter, driven by residential mortgage, HELOC, and private banking relationships [9] - Non-interest income totaled $32.5 million, with customer-related fees of $29.3 million reflecting continued momentum [16] Market Data and Key Metrics Changes - Total deposits declined by $23 million in aggregate, but core relationship or operating account balances grew by 4.9% or $56 million [10] - Non-maturity deposit balances increased by $178 million, while maturity deposit balances decreased by $198 million year to date [9][10] Company Strategy and Development Direction - The company announced the acquisition of First Savings Financial Group, adding approximately $2.4 billion in assets and expanding its presence into Southern Indiana [3][4] - The strategy remains commercially focused across all business segments and primary markets of Indiana, Michigan, and Ohio [7] - The company aims to enhance fee income through SBA lending and HELOCs, leveraging the acquired portfolio [4][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth and increasing market share activities into the fourth quarter [8] - The company anticipates a mid-first quarter closing for the First Savings acquisition and a mid-second quarter integration [5] - Management expects to manage deposit costs effectively in response to anticipated rate cuts [28][36] Other Important Information - The tangible common equity ratio increased to 9.18%, providing meaningful capital flexibility [16] - The company repurchased 162,474 shares totaling $6.5 million during the quarter, bringing total share repurchases year to date to 939,271 shares, totaling $36.5 million [19] Q&A Session Summary Question: Expense outlook for Q4 and 2026 - Management expects Q4 core expenses to be relatively in line with Q3, with no meaningful increase anticipated [25][26] Question: Impact of potential rate cuts on margin - Management predicts a few basis points of margin compression in Q4 if rate cuts occur, with a historical model indicating a decline of about two basis points for each 25 basis point cut [27][28] Question: Deposit pricing and competition - Management noted that deposit costs increased due to competitive pressures, but they are hopeful for more rational pricing following recent rate cuts [29][36] Question: Future M&A ambitions - Management indicated that while they are focused on organic growth and the integration of First Savings, they are open to opportunities but do not prioritize additional M&A at this time [41][42] Question: Sustainability of loan growth - Management believes the current loan growth is sustainable, driven by normal business activity and a strong economic outlook in the Midwest [47][48] Question: Asset quality and reserves - Management explained that the reserve remains high due to a conservative approach in their quantitative model, despite positive credit migration [94][95]