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]