Financial Data and Key Metrics Changes - The company reported net income of $65.6 million and diluted earnings per share of $1.20, representing an 18% increase from the same quarter last year [9][10] - Pre-provision net revenue was $88.3 million, with a return on average assets of 1.47% and a return on common equity of 14.9% [9][10] - The book value grew by an annualized 14% from the previous quarter, ending at $32.37 per share [10] Business Line Data and Key Metrics Changes - Loan growth was below expectations, with loan paybacks increasing by $500 million over the prior two quarters [3][4] - The loan pipeline increased by over 10% in October compared to September and is 40% higher than a year ago [3][4] - Non-performing assets rose to $930 million, an increase of approximately $96 million during the quarter [8] Market Data and Key Metrics Changes - The company experienced a reduction in high-cost municipal deposits, offset by large corporate deposit inflows [4][5] - All markets are now profitable, a first for the company since its inception [5] Company Strategy and Development Direction - The company aims to manage down total deposit costs as the Federal Reserve reduces the Fed Funds rate [4][5] - There is a focus on organic loan and deposit growth, with competitive and profitable pricing strategies [14] - The company is exploring opportunities in Texas, emphasizing the importance of local relationships in that market [48] Management's Comments on Operating Environment and Future Outlook - Management noted that lending activity softened in the third quarter but has been robust moving into the fourth quarter [7] - The company expects continued margin expansion due to anticipated rate cuts by the Federal Reserve [11][26] - Management expressed confidence in resolving several material credits in the near future [8] Other Important Information - The company recognized a loss of $7.8 million on the sale of bonds and invested in a solar tax credit, benefiting from a reduced tax provision [9][10] - The efficiency ratio improved from 36.90% in the third quarter of 2024 to 35.22% in the third quarter of 2025 [13] Q&A Session Summary Question: What pushed the borrower to non-performing status? - Management indicated that substantial additional collateral was taken, and a large payment expected before quarter-end did not materialize, leading to the non-accrual status [21] Question: What is the loan-to-value on the loans? - The loan-to-value is currently below one-to-one, with adequate security to cover the loans [23] Question: What is the expectation for margin improvement? - Management expects a 7 to 10 basis points improvement in margin each quarter, with a normalized spot rate for September at 3.28% [25][47] Question: Where is loan demand currently? - Loan demand is described as "okay," with a desire for more commercial and industrial loans rather than commercial real estate [31] Question: What is the effective tax rate going forward? - The effective tax rate is expected to remain around 18.9% for the year, with a goal to keep it below 20% [40]