Financial Data and Key Metrics Changes - The company reported net income of $24.2 million, or 63 cents per diluted share, impacted by a $9 million charge-off due to suspected fraud [9][10] - The return on average tangible assets was 1.1%, despite the charge-off [6][10] - Fully taxable equivalent net interest margin was 3.93%, with net interest income totaling $88.6 million [11][12] - Noninterest income for the first quarter was $15.4 million, with mortgage banking income increasing by $1 million over the linked quarter [15][16] Business Line Data and Key Metrics Changes - Loan balances decreased by $105 million due to clients delaying funding needs amid economic uncertainty [10] - New loan originations had a weighted average yield of 7.3%, contributing positively to net interest margin [12][88] - Deposit balances grew by $186 million during the quarter, benefiting from seasonal tax inflows [13][21] Market Data and Key Metrics Changes - The nonperforming loan ratio ended the quarter at 45 basis points, below peer averages [13] - Past due loans decreased to 24 basis points of total loans, marking the lowest level in the last twelve months [14] - The company experienced a slower start to the year, with economic uncertainty causing clients to pause capital investments [20] Company Strategy and Development Direction - The company is focused on credit quality and expense control, operating in a risk-off mode [7][8] - There is a commitment to disciplined expense management, with total noninterest expense for the first quarter at $62 million [16][17] - The company aims for mid-single-digit loan growth for the year, despite geopolitical and economic uncertainties [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed caution among business clients regarding capital projects and M&A due to economic uncertainty [7][20] - The company believes it has built a strong balance sheet and is well-positioned to navigate volatile markets [24] - Management is optimistic about future loan growth, citing improving trends in credit quality [20][40] Other Important Information - The company maintains strong liquidity levels, with a tangible common equity ratio of 10.1% and a common equity tier one ratio of 13.6% [18] - The allowance to total loans ratio ended the quarter at 1.2%, with additional marks against the acquired loan portfolio [15] Q&A Session Summary Question: Regarding the fraud item, what are the expectations for recoveries? - Management stated they cannot comment further as the matter is under investigation by appropriate authorities [28][30] Question: How did the fraud impact the margin in the quarter? - The fraud incident had a slight impact on the margin, estimated at about two basis points [31][32] Question: What caused the additional charge-offs beyond the fraud case? - The additional charge-offs were not systemic or industry-specific, with most already reserved for in the CECL allowance modeling [38][39] Question: How does the company view tariff exposure? - Management noted that clients are assessing potential impacts, but it is too early to make a macro call on tariffs [45][46] Question: What are the thoughts on capital and buybacks? - Management is giving buybacks more attention than in the past, indicating a focus on repurchasing shares [52] Question: What does operating in a risk-off posture mean? - It involves increased scrutiny around underwriting new clients and being more cautious in taking market share [60][61] Question: What are the expectations for expenses and fee income? - Expenses are expected to rise due to investments in Unifi, while fee income is anticipated to recover as loan production increases [74][78]