Financial Data and Key Metrics Changes - The company reported net income of $28.2 million or $0.64 per diluted share, with total revenue at $103 million, down slightly from the prior quarter but up 2% year on year [20][21] - Net interest income was $88.2 million, flat for the quarter, with a net interest margin (NIM) of 4.07%, up six basis points from the last quarter [20][21][28] - Total loans increased by $137 million or 8% annualized, standing at $7 billion, with strong origination activity of $310 million [24][26] - Total deposits increased to $7.6 billion, up 5.1% annualized from the prior quarter [26] Business Line Data and Key Metrics Changes - The company experienced excellent growth in both loans and deposits, with loan originations driven primarily by commercial banking and leasing [21][24] - Non-interest income totaled $14.9 million, lower than the previous quarter due to seasonality and lower gains on sales from the SBA business [29] - Non-interest expenses stood at $56.4 million, down 1.7% from the prior quarter, primarily due to lower salaries and benefits [30] Market Data and Key Metrics Changes - The company noted a shift in deposit mix from time deposits to money market accounts, with non-interest bearing deposits accounting for 23% of total deposits [26] - The company’s credit quality improved, with net charge-offs declining by 14.7% to $6.6 million and non-performing loans decreasing to 76 basis points [31] Company Strategy and Development Direction - The company aims to become the preeminent commercial bank in Chicago, with aspirations to cross the $10 billion asset mark [11][35] - The management emphasized a disciplined risk management approach while navigating through heightened uncertainty and volatility in the market [17] - The company is focused on organic growth and potential M&A opportunities, despite market disruptions [46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business model's resilience despite uncertainties in the economic environment, with robust capital and solid liquidity [18] - The company anticipates a cautious approach from clients regarding capital expenditures and new investments due to evolving trade policies [17] - Management remains confident in achieving mid-single-digit loan growth for the year based on current pipelines and activity [41] Other Important Information - The company received a credit rating upgrade from Kroll, highlighting its financial strength and sound risk management practices [8][32] - The integration of the First Security transaction was completed successfully, setting the company up for a full quarter of results in the next reporting period [19] Q&A Session Summary Question: Loan activity and organic growth outlook - Management noted strong credit demand and business development activity in Q1, with a healthy loan pipeline and guidance for mid-single-digit growth for the year [38][41] Question: Impact of SBA underwriting changes - Management welcomed tighter standards in SBA underwriting, stating their own standards remained consistent and could benefit them in the long run [42][44] Question: M&A landscape and acquisition opportunities - Conversations regarding potential acquisitions are ongoing, with management optimistic about the fundamental reasons for M&A remaining intact despite market volatility [46] Question: Credit quality and reserve levels - Management indicated that criticized and classified levels increased slightly but did not reflect any significant themes across portfolios [52][53] - The reserve levels are calibrated based on economic forecasts, with potential adjustments if the economic outlook deteriorates [55] Question: Pre-provision earnings power and risks - Management highlighted the importance of managing expenses, net interest income, and non-interest income to maintain a stable pre-provision ROA above 2% [58][64] Question: Sponsored finance portfolio approach - The company has a strong track record in its sponsored finance portfolio, focusing on lower middle market companies with conservative leverage [66][70] Question: SBA gain on sales outlook - Management expects average gains on sales to remain around $5 million per quarter, with current premiums close to 10% [74] Question: Securities portfolio growth outlook - Management does not anticipate significant growth in the securities portfolio, expecting it to remain flat or potentially decrease [78]