Financial Data and Key Metrics Changes - First quarter GAAP earnings per common share were $0.47 while distributable earnings were a loss of $0.09 per common share [15] - Net interest income declined to $14.6 million, primarily due to the movement of non-core assets to nonaccrual status [15] - Book value per share remained flat at $10.61, with total leverage declining to 3.5 times [18] Business Line Data and Key Metrics Changes - The total CRE loan portfolio was bifurcated into $5.9 billion core loans and $1.2 billion non-core loans [7] - Core portfolio payoffs resulted in a 5% decline to $5.9 billion, with 78% concentration in multifamily [8] - Non-core portfolio was reduced by 6% to $740 million, with expectations to further reduce it to approximately $270 million in the second quarter [10] Market Data and Key Metrics Changes - The multifamily sector showed resilience with a 1% increase in rents in Q1 2025 despite macroeconomic pressures [5] - The twelve-month default rate for the SBA business was 3.2%, slightly better than the industry average of 3.4% [12] - Freddie Mac volume was down in Q1 due to tightened processes, with a more robust pipeline expected in Q2 [58] Company Strategy and Development Direction - The company initiated a balance sheet repositioning plan in Q4 2024, focusing on liquidating non-core assets to reinvest in the core portfolio [14] - The strategy aims to restore net interest margin (NIM) to peer group levels by 2025, with accretion expected in 2026 [14] - The company remains committed to supporting the Portland mixed-use asset project, aiming for stabilization and eventual exit of components [11][43] Management's Comments on Operating Environment and Future Outlook - Management noted that the recovery in the commercial real estate (CRE) market is affected by tariffs and recession risks, but the multifamily sector remains strong [5] - The company expects to maintain its current dividend level until the earnings profile warrants an increase [14] - Management expressed confidence in navigating the shifting policy landscape in the SBA business, despite anticipated moderation in volume [12][51] Other Important Information - The company completed the UDF merger, generating a bargain purchase gain of $102.5 million, which added $167.1 million of equity to the balance sheet [17] - Liquidity remains healthy with unrestricted cash over $200 million and $1 billion of total unencumbered assets [20] Q&A Session Summary Question: Impact of April's volatility on non-core book expectations - Management indicated that ongoing conversations with various parties are progressing well and do not expect material diversion from pricing or timing expectations [23][24] Question: Near-term expectations for distributable earnings trajectory - Management highlighted that the repositioning of assets is a key catalyst for future earnings improvement, with expectations for a gradual upward trend post-liquidation [30] Question: Current views on share repurchases versus liquidity - Management is balancing the benefits of share repurchases with the need to maintain liquidity given upcoming debt maturities [31] Question: Catalyst for CLO interest coverage issues - Management noted that elevated rates are impacting NOIs, leading to increased modifications and stress within CLOs [39] Question: Status of the Portland asset and future plans - Management confirmed that the asset is currently levered and will remain so, with plans to stabilize and sequentially exit components as they improve [43][44] Question: Expected moderation in SBA volumes - Management anticipates SBA volumes to be below the $1.5 billion mark for at least a couple of quarters due to policy changes and administrative delays [52]