Financial Data and Key Metrics Changes - The company reported net income of $12.2 million, or $0.63 per share, with adjusted net income at $11.8 million, or $0.61 per share [11] - Net interest income increased to $36.4 million, up by $3.5 million or 11% on a linked quarter basis, with the margin at 229 basis points, reflecting a 34 basis point improvement [12] - Total loans decreased by $42 million or 1% from the previous quarter, including a 1% reduction in both residential and commercial loans [16] - In-market deposits reached an all-time high of $5.13 billion, up by $195 million or 4% [17] - Total equity increased to $522 million, up by $22 million from the end of Q4 [17] - The CET1 ratio improved by 56 basis points to 11.76% [18] Business Line Data and Key Metrics Changes - Wealth management revenues were $9.9 million, down by $158,000 or 2% [13] - Mortgage banking revenues totaled $2.3 million, down by $544,000 or 19% [13] - The mortgage pipeline at March 31 was $95 million, up by $35 million or 59% from the end of December [14] Market Data and Key Metrics Changes - Broker deposits decreased by $270 million, and FHLB borrowings were down by $275 million, reflecting increases in deposits and cash redeployment [17] - The loan-to-deposit ratio decreased from 105.5% to 100.7% [17] Company Strategy and Development Direction - The company is focused on deposit growth strategies, achieving results in both in-market deposits and new households [7] - Retail branches are competing effectively, supplemented by a team of retail sales officers dedicated to enhancing loan and deposit opportunities [8] - The company aims for low single-digit growth in loans, with a strong pipeline building [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low single-digit growth despite challenges in the residential mortgage portfolio and elevated payoffs [8] - The company remains committed to serving communities and stakeholders amid uncertain times [9] - Management indicated that the net interest margin is expected to rise gradually, with guidance for Q2 set at 235 basis points [35] Other Important Information - A pre-tax non-cash pension settlement charge of $6.4 million was recognized within non-interest expenses due to the termination of the qualified pension plan [14] - The effective tax rate for the first quarter was 22.3%, with an expected full-year rate of 22.4% [15] Q&A Session Summary Question: Impact of sale-leaseback and pension curtailment on operating costs - The sale-leaseback adds about $700,000 to occupancy and equipment costs annually, and there are no ongoing expenses related to the pension [24][26] Question: Size and complexion of loan pipelines - The commercial pipeline is a little over $100 million, with strong early-stage activity, while the residential side is expected to grow seasonally [30][32] Question: Expectations for net interest margin - The company anticipates a steady rise in net interest margin, with guidance for Q2 at 235 basis points [35] Question: Dividend payout ratio targets - The company aims to lower the dividend payout ratio, targeting the mid to low 80s by the end of the year [37] Question: Interest rate sensitivity and margin outlook - The company has moved closer to rate neutral due to recent restructuring, with less upside to future rate reductions for margin improvement [45] Question: Drivers of in-market core deposit growth - Good organic deposit growth was noted, with some growth attributed to a single relationship and targeted efforts by newly hired retail sales officers [48] Question: Details on non-accruing loans and credit quality - Management provided updates on specific non-accruing loans, indicating ongoing efforts to resolve issues and improve occupancy rates [66][74] Question: Consideration of stock buybacks - The board is considering stock buybacks as part of capital management, but no plan is currently in place [78]