Financial Data and Key Metrics Changes - The company reported a first quarter net income of $43.6 million or $0.26 per share, reflecting continued momentum in core earnings drivers [13] - Net interest income was $232 million, slightly down from the prior quarter, with a net interest margin increase of four basis points to 3.08% [13][14] - The average loan yield decreased by 11 basis points to 5.9%, while the average rate on new loan production was 7.2% [15][19] Business Line Data and Key Metrics Changes - Loan production, including unfunded commitments, was $2.6 billion, up from $1.8 billion in the previous quarter, resulting in a loan portfolio growth of 6% on an annualized basis [7] - Strong loan growth was noted in warehouse lender finance and fund finance areas, although there was a decline in construction loans due to payoffs and completed projects [7][10] - The company adjusted its 2025 outlook for loan growth to mid-single digit growth due to uncertainties in the current environment [8] Market Data and Key Metrics Changes - The company maintained a disciplined pricing and underwriting criteria while growing its loan portfolio, with a focus on lower risk and lower duration loan categories [18] - The economic coverage ratio is substantially higher at 1.66% of loans, incorporating unearned credit marks and coverage from credit-linked notes [12][18] Company Strategy and Development Direction - The company is capitalizing on its strong market position to add attractive commercial relationships, evidenced by loan growth and new non-interest-bearing (NIB) business relationships [20] - The management is cautious in loan production, evaluating the portfolio for direct tariff impacts, with minimal and indirect exposure [21] - The company aims to achieve a target of 30% non-discretionary deposits by the end of the year, currently at 28% [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue executing for clients while maintaining healthy capital and liquidity positions despite market volatility [12][22] - The management noted that while there is more dialogue regarding potential slowdown among clients, they did not observe a meaningful change in borrower behavior in the first quarter [21] - The company remains optimistic about growth opportunities in the Southern California market, despite the economic uncertainties [21][107] Other Important Information - The company announced a share buyback program of $150 million, which was upsized to $300 million, covering both common and preferred stock [6] - Total non-interest income was $33.7 million, in line with the normalized run rate, while total non-interest expense increased to $183.7 million due to seasonally higher compensation-related expenses [16] Q&A Session Summary Question: Outlook on credit and profitability amid uncertainty - Management acknowledged the positives in margin expansion and loan growth but noted concerns about increasing classified loans and lower allowance coverage ratios [26][27] - The management expressed confidence in the health of their coverage ratios and the conservative approach taken in risk rating loans [30][32] Question: Changes in underwriting and risk management - Management clarified that while they have not tightened the credit box, they are exercising more discipline in credit management and selection processes [115] - They emphasized the importance of core principles in underwriting, especially in uncertain times [116] Question: Expense management and outlook - Management discussed potential levers available to manage expenses, including adjustments to bonus accruals and project spending [122][124] - They reiterated their guidance for non-interest expenses to return to normalized levels in the upcoming quarters [17]