Financial Data and Key Metrics Changes - The company reported a net income of $24.7 million or $0.46 per diluted share, with an annualized return on average assets of 94 basis points and an annualized return on average tangible common equity of 11.48% [10] - Net interest income for the quarter was $99.3 million, a decrease from $103 million in the previous quarter, resulting in a net interest margin of 4.2% compared to 4.25% in the fourth quarter of 2024 [11][12] - Non-interest expense decreased to $70.2 million from $75.3 million in the previous quarter, reflecting a focus on managing expenses [13] Business Line Data and Key Metrics Changes - The company experienced a provision for loan losses of $3.6 million, with minimal net charge-offs of $163,000, bringing the allowance for credit losses on loans to $83.7 million or 1.15% of loans [13] - Non-interest income increased to $5.5 million from $5 million in the previous quarter, benefiting from small gains on asset sales [13] Market Data and Key Metrics Changes - The company noted a competitive market for deposits, with a focus on new account origination, onboarding more accounts in both number and dollar amount compared to the previous quarter [30][31] - The company maintained a strong proportion of non-interest bearing deposits, representing over 37% of the deposit base, and achieved a 14 basis point improvement in the cost of funds [12] Company Strategy and Development Direction - The company aims to build a strong foundation for growth while managing capital to benefit shareholders, including share repurchases totaling 1.4 million shares at an average price of $27.99 [15][17] - The management expressed a cautious but optimistic outlook for growth, expecting it to be pushed to the latter half of the year due to current economic uncertainties [9][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainty introduced by the administration but noted no immediate signs of impact on their communities [7] - The company remains focused on customer acquisition and is optimistic about the growth potential in the second half of the year, despite challenges [9][28] Other Important Information - The total risk-based capital ratio was 15.94% at the end of the first quarter, slightly down from 16% at the end of 2024, but the regulatory capital ratios at the bank increased year-over-year [14] - The Board of Directors authorized a new share repurchase program allowing up to $65 million in shares to be repurchased through May 2026 [15] Q&A Session Summary Question: What is the current sentiment from clients regarding loan growth? - Management indicated a cautious optimism about potential loan growth, noting that the pipeline is building positively and that payoffs have been significant, around $275 million to $300 million per quarter [22][27] Question: Can you elaborate on the competitive deposit market? - Management confirmed that the market is intensely competitive, but they have successfully onboarded new accounts, with a significant portion being new customers [30][31] Question: What are the current trends in credit quality? - Management noted some migration in non-accruals, particularly in owner-occupied commercial real estate, but emphasized a cautious approach to credit evaluation [34][37] Question: What are the company's plans regarding capital management? - Management stated they are considering various options for capital utilization, including potential debt redemption and continued share buybacks, while remaining open to M&A opportunities [44][46] Question: How do you see the interest margin evolving? - Management expressed a goal to achieve a core net interest margin of over 4%, while acknowledging that improvements may be incremental due to current economic conditions [56][58]

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]

Image source: The Motley Fool.Wednesday, Apr 23, 2025CALL PARTICIPANTSDavid A. Brager: President and Chief Executive OfficerAllen Nicholson: Executive Vice President and Chief Financial OfficerNeed a quote from one of our analysts? Email [email protected]Net Earnings: Reported net earnings of $51.1 million, or $0.36 per share, for Q1 2025, representing the 192nd consecutive quarter of profitability Net Interest Margin: Expanded by 13 basis points to 3.31% in Q1 2025, up from 3.18% in Q4 2024Total Loans: $8. ...

Core Insights - S&T Bancorp reported strong Q1 2025 results with earnings per share (EPS) of 87¢, net income of $33 million, and growth in customer deposits and loans, exceeding previous quarters and consensus estimates [2][3][8] - The company experienced a 7.23% annualized growth in customer deposits, marking the seventh consecutive quarter of expansion, primarily driven by consumer activities [4][9] - Loan growth was recorded at 4.89% annualized, with significant contributions from commercial real estate and construction sectors, while C&I loan balances declined by $20 million [5][9] Financial Performance - Net interest margin expanded by 4 basis points to 3.81% in Q1 2025, supported by a decrease in funding costs [2][10] - The allowance for credit losses decreased by approximately $2.5 million, ending the quarter at 1.26% of total loans, indicating improved asset quality [2][9] - The company completed $193.6 million in bond restructurings, projected to increase net interest income by about $5 million in 2025 [5][11] Growth Outlook - Management expressed confidence in mid-single-digit loan growth for the first half of 2025, with potential acceleration to high mid-single digits in the second half as newly hired bankers' pipelines materialize [3][4][9] - The commercial loan pipeline increased by nearly 40% since year-end 2024, indicating strong future growth potential [4][9] - The company anticipates crossing the $10 billion asset threshold organically in the second half of 2025 [5][14] Market Positioning - The company has been recognized for strong financial performance and superior employee engagement by organizations like Forbes and S&P [7][8] - The management team is focused on maintaining top-tier asset quality and profitability while navigating market uncertainties [8][29] - The company is actively recruiting C&I bankers to support pipeline expansion and organic growth [28][29]

Financial Data and Key Metrics Changes - Total loan balances decreased by $37 million in Q1 due to elevated payoffs and prepayments, with loan yields at 5.45%, down 2 basis points from the previous quarter [4][5] - Total deposits increased by $160.7 million, primarily in non-maturity deposits, with a significant growth in money market accounts [5][6] - Net interest margin increased to 3.44% from 3.36% in the prior quarter, driven by decreases in the cost of deposits and borrowings [8][9] - Regulatory capital ratios remain above well-capitalized thresholds, with the TCE ratio rising to 9.3% from 9% in the prior quarter [10] Business Line Data and Key Metrics Changes - Commercial lending closed $183 million in new loan commitments, down from $316 million in the previous quarter, with a commercial loan pipeline of $460 million [17][18] - The average interest rate for new commercial loans was 6.83%, up 20 basis points from the previous quarter [19][20] Market Data and Key Metrics Changes - The cost of interest-bearing deposits decreased to 1.92% from 1.98% in the prior quarter, with expectations for further decreases due to repricing of CDs [6][9] - Non-performing loans improved to 0.09% of total loans, down from 0.11% at year-end [12][13] Company Strategy and Development Direction - The company aims to leverage its solid balance sheet and strong capital position to navigate economic uncertainties and pursue growth opportunities [20] - There is a focus on maintaining a balanced loan mix, particularly between commercial and industrial (C&I) loans and real estate [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about core profitability due to strong deposit growth and prudent risk management, projecting continued benefits through 2025 [3][20] - The company is closely monitoring emerging economic risks, including tariffs and federal funding changes, which could impact credit quality [15][55] Other Important Information - A pretax loss of $3.9 million was recognized on the sale of $61 million of securities as part of a strategic repositioning of the balance sheet [7] - The company has 990,000 shares available for repurchase under the current plan, with potential future buybacks depending on market conditions [10][33] Q&A Session Summary Question: Perspective on Heritage's position among independent banks in the Northwest - Management believes the bank is well-positioned with specific goals for 2025 and is ready for potential M&A opportunities [25][26] Question: Details on the new team in Spokane - The team was acquired from a larger regional bank, and the decision was based on a thorough assessment of fit and market opportunity [29][30] Question: Comments on stock buyback activity - The decision on buybacks is made quarterly, with no repurchases in Q1 due to stock price increases, but future activity may resume depending on conditions [32][33] Question: Spot cost on total deposits and NIM in March - The NIM in March was 3.45%, with the cost of interest-bearing deposits at 1.92% [37][41] Question: Opportunities for further growth in loan commitments - Management expects a balanced mix of C&I and real estate loans, with a strong focus on deposit growth [49][50] Question: Anticipated loan growth and appetite for credit - The company projects an annualized growth rate of 5% to 8% for Q2, with a strong pipeline but acknowledges uncertainty in the market [58][62]

Financial Data and Key Metrics Changes - Total loan balances decreased by $37 million in Q1 due to elevated payoffs and prepayments, with loan yields at 5.45%, down two basis points from the previous quarter [4][5] - Total deposits increased by $160.7 million, with 95% of this growth in non-maturity deposits, primarily in money market accounts [5][6] - Net interest margin increased to 3.44% from 3.36% in the prior quarter, driven by decreases in the cost of deposits and borrowings [8][10] - Noninterest expense increased by $1.8 million, primarily due to higher benefit costs and payroll taxes, with guidance for quarterly noninterest expenses in the range of $41 million to $42 million [9][10] - The tangible common equity (TCE) ratio improved to 9.3%, up from 9% in the prior quarter, indicating strong capital ratios [10] Business Line Data and Key Metrics Changes - Commercial lending closed $183 million in new loan commitments, down from $316 million in the previous quarter, with a commercial loan pipeline of $460 million [18][19] - The average interest rate for new commercial loans was 6.83%, up 20 basis points from the previous quarter [19][20] - The bank experienced total charge-offs of $376,000, with net charge-offs of $299,000, representing 0.03% of total loans on an annualized basis [15] Market Data and Key Metrics Changes - The bank's credit quality remained strong, with non-accrual loans totaling just over $4.4 million, representing 0.09% of total loans [12][13] - Criticized loans declined by $1 million during the quarter, with substandard loans consistent with prior year-end levels [13][14] Company Strategy and Development Direction - The company is focused on maintaining a solid balance sheet and is open to potential mergers and acquisitions, particularly with attractive banks in their footprint [25][27] - The bank aims for annualized loan growth of 5% to 8% in the second quarter, with a strong pipeline and ongoing monitoring of economic uncertainties [57][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about core profitability due to strong deposit growth and prudent risk management, despite emerging economic risks [3][20] - The company is closely monitoring developments around tariffs and federal funding, which could impact credit quality [15][53] Other Important Information - The bank did not repurchase any shares in Q1 but may consider it in the future depending on market conditions [10][32] - The Spokane team was acquired from a larger regional bank, reflecting the bank's strategy to expand its talent pool while managing expenses [28][30] 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 is ready for potential M&A opportunities [25][27] Question: Details on the Spokane team acquisition - The team was sought out due to a good fit with Heritage's customer base and market presence [28][30] Question: Comments on stock buyback activity - The decision on stock buybacks is made quarterly, with no repurchases in Q1 due to stock price increases [32] Question: Spot cost on total deposits and NIM in March - The NIM in March was 3.45%, with the cost of interest-bearing deposits at 1.92% [37][38] Question: Loan growth opportunities - Management sees balanced growth opportunities in commercial real estate and C&I, with a focus on deposit-rich clients [48][49] Question: Anticipated loan growth and economic uncertainty - The bank expects annualized loan growth of 5% to 8% in Q2, with ongoing monitoring of the economic environment [57][61]

Financial Data and Key Metrics Changes - Core earnings per share was $0.88, supported by net interest income of $70.6 million, which was within the guidance range of $70 million to $71 million [8][14] - Net income was $25 million or $0.81 per diluted share, while core net income was $27.1 million or $0.88 per diluted share [14] - Total deposits increased by $446 million to $7.6 billion, with on-balance sheet deposits rising by $231 million or 3.2% [19][20] Business Line Data and Key Metrics Changes - Political deposits increased by $103 million or 11% to $1.1 billion, following historical patterns post-election [9][19] - Net loans receivable were $4.6 billion, a slight increase of $7 million or 0.2% compared to the previous quarter, driven by increases in multifamily and commercial loans [22][23] - Core non-interest income decreased to $9.1 million from $9.5 million in the linked quarter, primarily due to lower commercial banking fees [25] Market Data and Key Metrics Changes - The average cost of deposits increased by 7 basis points to 1.59%, while interest-bearing deposit costs dropped by 9 basis points to 2.62% [20] - The not-for-profit deposit segment grew significantly, increasing from $285 million at year-end 2020 to $1.37 billion at the end of Q1 2025, representing 18.5% of on-balance sheet deposits [21][22] Company Strategy and Development Direction - The company plans to maintain a conservative approach while focusing on capital strength and liquidity to navigate uncertain environments [5][10] - A new $40 million share repurchase program was authorized, indicating a commitment to returning capital to shareholders [18][42] - The company is expanding its commercial PACE franchise to diversify volume and expects C PACE originations to ramp up in the latter half of the year [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the balance sheet and the ability to adapt to changing market conditions [5][6] - The company anticipates muted C&I loan growth in Q2, with reacceleration expected in the latter half of the year [11] - Management remains optimistic about net interest margin expansion and revenue growth for the remainder of the year [29] Other Important Information - Non-performing assets totaled $33.9 million or 0.41% of total assets, with an increase primarily due to commercial and industrial non-accrual loans [27][28] - The allowance for credit losses on loans decreased to $57.7 million, with a coverage ratio of 1.23% [28] Q&A Session Summary Question: Any color on the $8.3 million loan that went on non-accrual this quarter? - The loan had been classified for a while and has sufficient collateral value, allowing the company to maintain no increase in reserve coverage for it [31][32] Question: Are you seeing funding dry up for clean energy projects? - There is no observed impact; the company continues to have a strong pipeline for clean energy projects [34][36] Question: What can be done to protect the company from political risks? - The company focuses on maintaining strong capital and liquidity while continuing to operate effectively in core businesses [38] Question: Where are you willing to take the capital ratios down to with the buyback program? - The company is comfortable maintaining a Tier 1 leverage ratio above 9% while being aggressive with the buyback program [41][44] Question: Update on the political deposit franchise outlook? - The company is encouraged by the 11% growth in political deposits and expects this trend to continue [50][51] Question: Any tangible impact from the new administration on lending or deposits? - There has been no significant impact observed; the company remains cautious and adheres to strict credit standards [62][66]

Financial Data and Key Metrics Changes - The company reported net earnings of $51.1 million or $0.36 per share for Q1 2025, marking the 190th consecutive quarter of profitability [4] - Return on average tangible common equity was 14.51% and return on average assets was 1.37% for Q1 2025 [5] - Net interest margin expanded by 13 basis points to 3.31% compared to 3.18% in Q4 2024 [6] - Net interest income was $110.4 million in Q1 2025, unchanged from Q4 2024 but down from $112.5 million in Q1 2024 [17][18] Business Line Data and Key Metrics Changes - Total loans decreased to $8.36 billion, a decline of $173 million from Q4 2024 and a 4.6% decrease year-over-year [10] - Non-interest income increased to $16.2 million in Q1 2025 from $13.1 million in Q4 2024 [21] - Non-interest expense was $59.1 million, slightly up from $58.5 million in Q4 2024 [22] Market Data and Key Metrics Changes - Total deposits and customer repurchase agreements totaled $12.3 billion, an increase of $56 million from Q4 2024 [8] - Non-interest bearing deposits grew by $147 million or 2% compared to Q4 2024 [9] - The cost of deposits decreased to 87 basis points in Q1 2025 from 97 basis points in Q4 2024 [9] Company Strategy and Development Direction - The company continues to focus on maintaining profitability and returning capital to shareholders through dividends and share repurchases [5][16] - The management emphasized a disciplined approach to credit underwriting despite economic uncertainties [50][52] - The company is exploring opportunities for mergers and acquisitions while balancing share repurchases [61][63] Management Comments on Operating Environment and Future Outlook - Management noted that the economic forecast indicates slower GDP growth and a potential rise in unemployment [15] - Customers are generally optimistic despite some concerns about tariffs and economic volatility [84] - The company expects to see loan growth in the coming quarters, particularly in commercial real estate [34][56] Other Important Information - The company has authorized a new share repurchase program and has repurchased 2.05 million shares at an average price of $18.13 [5][16] - The allowance for credit loss was $78.2 million, or 0.94% of gross loans, with a recapture of $2 million in Q1 2025 [14] Q&A Session Summary Question: Impact of tariff policies on the agricultural portfolio - Management indicated it is too early to assess the impact, but customers feel relatively okay, and milk prices remain steady [29][30] Question: Pace of commercial real estate payoff activity - Management noted elevated prepayment penalties and strong loan activity, with more loans closed in April than in any month over the last 14 months [31][32] Question: Loan prepayment penalties impact on interest income - The impact was approximately $300,000 quarter-over-quarter [40] Question: Expectations around deposit cost reduction - Management believes there is some room for deposit cost reduction, particularly with new money market accounts [42][44] Question: Focus areas in credit management amid market uncertainty - Management stated that their disciplined approach to underwriting has not changed, despite increased scrutiny due to economic conditions [50][52] Question: Competitive landscape for deposits - Management reported strong core deposit growth, primarily from new relationships, and anticipates continued growth in the second and third quarters [55][56] Question: Appetite for increasing the multifamily portfolio - Management expressed a consistent appetite for multifamily loans, focusing on strong borrowers [88][89]

Financial Data and Key Metrics Changes - The company reported a net operating profit of $29 million, or $0.54 per share, with pre-tax, pre-provision earnings at $43.4 million, or 1.41% [7] - Total loans decreased by $125 million, or 5% annualized, with average balances down $135 million compared to Q4 [8] - The tangible book value per share increased to $22.33, up from $21.61 at year-end, representing a 13.8% year-over-year increase [19] Business Line Data and Key Metrics Changes - Gross loan production for Q1 was $750 million, with only 31% funded, while production over the last four quarters exceeded $2.8 billion, a 130% increase year-over-year [9][10] - Operating non-interest income increased by 2.4% to $14.8 million on a linked quarter basis, with fee income as a percentage of total revenue rising to 13.4% in Q1 2025 from 12.3% in Q1 2024 [37] Market Data and Key Metrics Changes - The loan-to-deposit ratio improved from 104% to 89% over the last two years, with a target to remain below 90% going forward [27] - Wholesale funding reliance decreased to 13.7%, down from over 24% in the same period last year [28] Company Strategy and Development Direction - The company aims to achieve a return on average assets (ROAA) exceeding 1% in the latter half of the year, focusing on disciplined loan growth despite current challenges [8] - The bank has increased its quarterly dividend by 10% to $0.22 per share, indicating confidence in its growth outlook and capital generation [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future loan growth, anticipating flat loan totals for the year but expecting significant growth in 2026 due to a strong pipeline [55][56] - The company is committed to managing its balance sheet and capital effectively amidst economic uncertainties, focusing on shareholder value [40] Other Important Information - Non-performing assets increased from $79 million at year-end to $97 million, primarily due to two loans in retail and office sectors [13] - The company repurchased 377,000 shares during the quarter, with $37 million remaining on the authorization for further buybacks [21] Q&A Session Summary Question: Insights on deposit growth and DDA stickiness - Management noted that deposit growth was influenced by seasonality and new customer attrition, with DDA showing some outflows during Q4 [46] Question: Future expense outlook - Management indicated that expenses are expected to rise slightly due to investments in new hires, but overall attention to expenses remains high [50][52] Question: Loan growth expectations - Management anticipates flat loan growth for the year, with a strong pipeline suggesting growth in 2026 [55][56] Question: Outlook on government guaranteed business - Management remains bullish on the government guaranteed business, particularly in the SBA space, with a strong pipeline expected to ramp up [90][91] Question: Trends in credit quality - Management confirmed that strategies are in place to address non-accrual loans, with confidence in resolving these issues by early third quarter [136]