Financial Data and Key Metrics Changes - Loans held for investment increased by $83 million, or 0.6% linked quarter, and $448 million, or 3.4% year-over-year [5] - Deposit base grew by $550 million, or 3.4% linked quarter, with non-interest-bearing deposits increasing by 5.9% linked quarter [5] - Net income for the third quarter was $56.8 million, representing fully diluted EPS of $0.94, up 2.2% from the prior quarter and 11.9% from the prior year [5][6] - Return on average assets was 1.21% and return on average tangible equity was 12.84% [6] - Net interest income expanded by 2.4% to $165.2 million, with a net interest margin of 3.83%, an increase of two basis points from the prior quarter [6] Business Line Data and Key Metrics Changes - Credit quality remained solid with net charge-offs of $4.4 million, representing 13 basis points of average loans [7] - Non-interest income totaled $39.9 million, up 0.1% linked quarter and 6.3% year-over-year [6] - Non-interest expense increased by $5.8 million, or 4.7% linked quarter, including approximately $2.3 million in non-routine items [6] Market Data and Key Metrics Changes - The company reported diversified loan growth led by commercial and industrial loans, municipal loans, and other real estate secured loans [5] - The total cost of deposits increased by 1.84%, or four basis points linked quarter [5] Company Strategy and Development Direction - The company is focused on organic growth initiatives and enhancing financial performance through hiring in key markets [4][10] - The guidance for loans held for investment is expected to increase mid-single digits for the full year 2025, with low single-digit growth in deposits [9] - The company plans to maintain a disciplined approach to capital deployment, focusing on organic loan growth and potential market expansion [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining momentum and improving financial performance, particularly in key growth markets [10][28] - The company anticipates a continued trend of lower provisions for credit losses compared to the full year 2024 [9] - Management acknowledged the competitive landscape but sees M&A activity as an opportunity for growth [23][29] Other Important Information - The company repurchased $11 million of common stock during the quarter, with a total of $37 million repurchased in the first nine months of the year [8] - The board declared a quarterly cash dividend of $0.24 per share, payable December 15 [8] Q&A Session Summary Question: Can you provide details on recent hiring and future plans? - The company hired approximately 29 new associates in the third quarter, with a focus on key markets like Houston and Atlanta [13][14] Question: Will there be an increase in expenses due to hiring? - Yes, the company expects incremental expense growth related to recent hiring levels [14][15] Question: What are the opportunities for growth in light of recent M&A activity? - Management sees M&A as an opportunity for both hiring and customer acquisition, particularly in competitive markets [22][23] Question: Can you discuss trends in classified and criticized loans? - There was a positive trend with a decrease of about $49 million in criticized loans this quarter [42] Question: What are the expectations for net interest margin and deposit costs? - The company anticipates maintaining net interest margin in the range of 3.80% to 3.83% and expects deposit costs to decrease [36][50]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported a strong core deposit growth of 11.5% annualized, contributing to a steady net interest income growth [6][7] - Net interest income increased by $1.6 million during the quarter, with a net interest margin expansion of one basis point to 2.63% [7][14] - Tangible book value per share increased by 20% annualized in Q3 and is up 14% annualized year to date [8] Business Line Data and Key Metrics Changes - Loan growth was strong at 6.6% annualized in Q3, with significant contributions from various asset classes, including affordable housing [7][23] - Core deposits are now up 7.4% annualized year to date, indicating a solid deposit pipeline [21] - The company experienced a decline in fee income in Q3 due to a lack of swap fee income, although it expects a rebound in Q4 [18] Market Data and Key Metrics Changes - The company noted favorable trends in the Twin Cities market, which supports continued strong asset quality [12][27] - Nonperforming assets remained low at 0.19% of total assets, and net charge-offs were just 0.03% of average loans [29] Company Strategy and Development Direction - The company aims to grow to a $10 billion bank by February 2030, with a focus on loan and deposit growth driven by M&A opportunities in the Twin Cities [12][36] - The successful launch of a new online banking platform and the completion of a systems conversion from an acquisition are seen as strategic initiatives to enhance customer experience and operational efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan and deposit growth, anticipating continued opportunities from M&A disruptions in the Twin Cities [12][36] - The company expects net interest margin expansion to reach 3% by early 2027, driven by loan yield repricing and declining deposit costs [33][34] Other Important Information - The company has elevated several internal leaders to key positions, ensuring continuity in its credit culture and strategic direction [11] - The overall credit profile remains strong, with a conservative reserve level of 1.34% compared to peers [29][32] Q&A Session Summary Question: Margin path towards 3% - Management indicated that margin improvement is expected to be steady, with a potential increase of two to three basis points per month, assuming rate cuts occur as anticipated [41][42] Question: Impact of rate cuts on borrowers - Management noted that while they do not have quantified data, they are proactively addressing loans with repricing risk, which should improve with further rate cuts [44] Question: Merger costs and expense normalization - Management clarified that merger-related costs were highlighted separately and that they expect expenses to normalize following the systems conversion [46][47] Question: Loan growth outlook and hiring impact - Management expressed confidence in loan growth, emphasizing a strategy to align loan growth with core deposit growth for profitability [65][66] Question: Securities yield trajectory - Management indicated that securities yields increased due to opportunities in the market and that they remain active in redeploying funds to support loan growth [72] Question: Specific reserves on loans - Management confirmed that specific reserves for certain loans remain unchanged, with no planned charge-offs at this time [75]

Financial Data and Key Metrics Changes - The company reported net income of $14.5 million for Q2 2025, with earnings per share of $0.068, a return on average assets of 1.37%, and a return on average equity of 14.17% [4] - Net interest margin expanded by 8 basis points to 3.53%, while the cost of total deposits declined by 2 basis points to 2.46% [5] - The efficiency ratio was reported at 41.03% for the second quarter [5] - Total assets increased by $168.4 million, driven by loan portfolio growth, particularly in commercial real estate [6] Business Line Data and Key Metrics Changes - Loans held for investment grew by $136.2 million, or 15% on an annualized basis, while deposits increased by approximately $158.3 million, or 17% on an annualized basis [5] - Non-interest income rose to $1.8 million from $1.4 million in the previous quarter, primarily due to improved earnings from investments in venture-backed funds [9] Market Data and Key Metrics Changes - Non-interest bearing deposits made up 26% of total deposits as of June 30, 2025, an increase from 25% at the end of the prior quarter [8] - Approximately 59.9% of deposit relationships total more than $5 million, indicating a stable funding base for future growth [8] Company Strategy and Development Direction - The company announced the expansion of its food and agribusiness vertical and the opening of a new office in Walnut Creek in September 2025 [11] - The focus remains on building a strong presence in the San Francisco Bay Area, with plans for future expansion into the South Bay [25][26] - The company aims to balance its loan portfolio by reducing concentrations in commercial real estate through the new agribusiness vertical [61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to changing economic conditions while executing its long-term strategic plan [12] - The management team highlighted the importance of maintaining strong relationships with clients and community partners as a foundation for future growth [66] Other Important Information - The company recorded a provision for credit losses of $2.5 million during the quarter, with non-performing loans representing only 6 basis points of total loans held for investment [6][7] - The company is well-capitalized, with all capital ratios above regulatory thresholds [6] Q&A Session Summary Question: Impressive core deposit growth - Management attributed success to having 40 motivated business development officers driving growth across all verticals and geographies [18] Question: Bay Area business environment - Management noted a positive change in the Bay Area's business environment and expressed excitement about the Walnut Creek opening and future expansion [24][25] Question: Efficiency ratio and investments - Management indicated a commitment to continue investing in the business while acknowledging the potential for achieving a sub-40% efficiency ratio [29][30] Question: Run rate for expenses with Walnut Creek office - Management estimated an increase of $500,000 to $750,000 in expenses for the next quarter due to the new office [33] Question: Sustainability of non-interest bearing deposit growth - Management believes the growth in non-interest bearing deposits is sustainable due to the addition of new relationships [34] Question: Loan growth outlook - Management remains comfortable with a loan growth target of 10% to 12% for the full year, supported by a strong pipeline [59] Question: New food and agribusiness vertical - Management highlighted the potential for growth in the agribusiness sector, led by an experienced team targeting underserved markets [60][61]

Financial Data and Key Metrics Changes - The first quarter earnings increased by 35% compared to the first quarter of the previous year [6] - Net income for Q1 2025 was $7.8 million, up from $5.8 million in Q1 2024 and $7.1 million in Q4 2024 [21][22] - Net interest margin improved by 30 basis points compared to Q4 2024, with a cost of deposits decreasing by 38 basis points [22] Business Line Data and Key Metrics Changes - The loan portfolio remained relatively flat at just over $3 billion, with approximately $100 million in payoffs from asset sales and refinance activity [13][14] - The commercial real estate portfolio is performing well, although there are concerns regarding office property vacancies [10][11] Market Data and Key Metrics Changes - Deposit levels decreased slightly due to ordinary cash flow fluctuations, not due to loss of relationships [14] - Retail deposit growth was significant in Minnesota, with a focus on high-value retail deposits from business owners and executives [18] Company Strategy and Development Direction - The company emphasizes building comprehensive banking relationships rather than just lending, focusing on providing a range of services [41][42] - There is a commitment to maintaining strong credit quality and conservative underwriting practices despite economic uncertainties [12] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about economic uncertainty affecting customer profitability and potential supply chain issues due to tariffs [11][36] - The company remains confident in its ability to create and maintain positive relationships with customers in a competitive market [15] Other Important Information - A dividend of 25% per share was declared, payable on May 21 to shareholders of record as of May 7 [7] - The company has completed all building construction projects, which are designed to enhance client engagement [19] Q&A Session Summary Question: Is there more challenge in bringing down deposit costs without rate cuts? - Management indicated that deposit costs have likely been optimized for the current environment and may remain static until market changes occur [25] Question: What rates were new loans added at compared to those rolling off? - New loans replacing older ones were added at higher rates, with a significant portion starting with a six or seven [26][27] Question: Will growth accelerate in the second quarter? - Management noted that while there are planned payoffs, the opportunities for new loans are expected to exceed the payoffs [29] Question: How are expenses expected to trend moving forward? - Management expects first quarter performance to be indicative of future quarters, with no significant items anticipated [31] Question: What concerns exist regarding tariffs or immigration policy? - Management highlighted concerns about tariffs affecting manufacturers, but noted that their seasoned customers typically have strong balance sheets to weather such issues [36] Question: What does the "lift out strategy" refer to? - The strategy refers to successfully recruiting key personnel from other financial institutions to enhance the company's capabilities [44] Question: How does the company retain core deposits despite low rates? - The company negotiates rates based on relationships rather than advertising retail specials, allowing for flexibility in deposit pricing [46]