Financial Data and Key Metrics Changes - The company reported net income of $26 million or $0.84 per diluted share, with core net income at $27 million or $0.88 per diluted share, reflecting solid performance [18] - Net interest income grew by 3.3%, reaching approximately $72.9 million, while the net interest margin held steady at 3.55% [18][19] - Tangible book value per share increased by $0.82 or 3.5% to $24.33, representing an 18% growth over the past four quarters [20] - Core return on average equity declined to 14.61% from 15.23% in the prior quarter, while core return on average assets decreased to 1.28% [20][21] Business Line Data and Key Metrics Changes - On-balance sheet deposits increased by $321 million or 4.3% to $7.7 billion, excluding $112.3 million of temporary pension funding deposits [22][24] - Loan growth was balanced at over $60 million across growth mode portfolios, with total loans receivable at $4.7 billion, reflecting a 0.8% increase compared to the previous quarter [25] - The multifamily loan portfolio increased by $34.2 million, while consumer loans and residential loans decreased by $11 million and $11.8 million, respectively [25] Market Data and Key Metrics Changes - Political deposits increased by $137 million or 13% to $1.2 billion, driven by fundraising activities ahead of midterm elections [7] - The not-for-profit segment also saw deposit growth of over $100 million, indicating a strong market presence [7] Company Strategy and Development Direction - The company is focused on organic growth in California, with plans to expand its presence in the state, particularly in the East Bay area [35][36] - A digital transformation initiative is underway, with a new platform expected to go live in the third quarter, aimed at improving productivity and customer insights [13] - The company aims to maintain a core efficiency ratio at approximately 52% while preparing for future growth beyond $10 billion in assets [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of 2025, citing a strong level of new customer acquisitions and a healthy pipeline of potential relationships [15] - The company maintains its full-year 2025 guidance for core pre-tax pre-provision earnings and net interest income, indicating confidence in achieving targets despite market challenges [31] Other Important Information - The company executed the largest share repurchase in its history, repurchasing approximately 327,000 shares worth $9.7 million [21] - The board authorized a dividend of $0.14 per common share to be paid in August, reflecting a commitment to returning capital to shareholders [21] Q&A Session Summary Question: Will the expansion in California be organic or involve M&A? - Management indicated that the expansion will primarily be organic, with opportunities in the LA area and East Bay [35][36] Question: What industry is the syndicated C&I credit related to, and what is the resolution timeline? - The credit is part of the commercial solar portfolio, and management is actively working on sourcing credit bids for resolution, but a timeline is uncertain [38][40] Question: Will provisioning run at a higher level due to pressures in multifamily or green energy? - Management stated that provisioning will be assessed on a case-by-case basis, and they feel comfortable with current reserves despite potential future pressures [41][42] Question: What is the outlook for net interest margin (NIM) and loan yields? - Management expects loan yields to improve in the upcoming quarters, with a potential for margin expansion in Q4 as political deposits ramp up [46][48] Question: What is the expected run rate for next quarter's expenses? - Expenses are expected to increase by approximately $3.5 million due to new hires and digital transformation costs, but management remains optimistic about revenue capabilities [50][52] Question: What are the long-term thoughts on dividend payout ratio? - The company targets a payout ratio of 20% to 25% and aims to increase dividends more frequently, reflecting a growth-oriented approach [53][54]