Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant narrowing compared to the previous quarter [4][19] - The net interest margin expanded for the third consecutive quarter, increasing by 10 basis points to 1.91% [5][20] - Operating expenses decreased by approximately $800 million on an annualized basis, reflecting effective cost control measures [5][16] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C and I) business experienced a breakout quarter with new loan originations of $1.7 billion and overall net loan growth of $448 million [5][9] - New commitments in the C and I sector increased by 26% to $2.4 billion, while originations grew by 41% [10] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [5][25] Market Data and Key Metrics Changes - The company reported a decline in criticized and classified assets, down $600 million or 5% quarter-over-quarter, and $2.8 billion or 20% year-to-date [5][30] - Total Commercial Real Estate (CRE) balances decreased by $9.5 billion or 20% since year-end 2023 [25] - The reserve coverage on the multifamily portfolio remains strong at 1.83%, the highest among peers [26] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [33] - Plans to diversify the loan portfolio into a mix of one-third CRE, one-third C and I, and one-third consumer loans [25] - The company aims to continue growing its C and I business, with expectations of funding between $1.75 billion to $2 billion per quarter going forward [17][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of profitability, citing improvements in key metrics and a strong pipeline for C and I loans [4][6] - The company anticipates continued net interest margin expansion driven by lower funding costs and growth in C and I and other portfolios [20][40] - Management noted that the fourth quarter is expected to be the low point for total assets, with growth anticipated in 2026 [58] Other Important Information - The company completed a holding company reorganization, simplifying its corporate structure and reducing regulatory burdens [33] - The CET1 capital ratio improved to 12.45%, ranking among the best capitalized regional banks [13][21] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet is expected to stabilize in Q4, with continued NIM expansion anticipated [39][40] Question: C and I loan growth sustainability - Management expects C and I loan originations to maintain a run rate of $1.7 billion to $2.2 billion per quarter, with ongoing hiring to support growth [45][61] Question: Regulatory relief from holding company elimination - The elimination of the holding company reduces regulatory burdens and streamlines examinations, freeing up resources [62][64] Question: Expense outlook and cost-saving opportunities - Management highlighted ongoing efforts to reduce FDIC expenses and vendor costs, with technology projects expected to drive further efficiencies [71][74] Question: Non-interest bearing deposit growth - Growth in non-interest bearing deposits is anticipated from new C and I relationships, private banking, and retail branches [78][79]

Financial Data and Key Metrics Changes - The CET1 capital ratio increased to 12.3%, ranking among the highest relative to peer groups [15][17][30] - Adjusted pre-provision, pre-tax net revenue was a positive $9 million, an improvement of $32 million from the previous quarter [18][27] - The net loss per diluted share narrowed to $0.19, with an adjusted loss of $0.14 compared to a loss of $0.23 in the first quarter [26][27] Business Line Data and Key Metrics Changes - New commitments in the C and I business increased by 80% to $1.9 billion, while originations rose by almost 60% to $1.2 billion [12][13] - The corporate, regional, commercial banking, and specialized industries portfolios increased by $422 million, or about 12% compared to the previous quarter [15] - Record CRE par payoffs reached approximately $1.5 billion, significantly reducing CRE exposure [31][32] Market Data and Key Metrics Changes - The overall cost of deposits decreased by 11 basis points quarter over quarter, and the overall cost of funds fell by 10 basis points compared to the prior quarter [20] - The multifamily portfolio has declined nearly $4 billion or 12% year over year, with a strong reserve coverage of 1.68% [32] Company Strategy and Development Direction - The company plans to merge its holding company into the bank to enhance corporate, legal, and regulatory structure, aiming for a reduction in operating expenses [9][10] - Focus areas for 2025 include improving earnings through margin expansion, fee income, and reducing operating expenses [11] - The strategy emphasizes growth in C and I and private banking, while proactively managing the CRE portfolio [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to grow C and I, which will diversify the loan portfolio and generate deposits and fee income [8] - The company anticipates further progress in the second half of the year, with a focus on returning to profitability [38] - Management highlighted the potential for stock price appreciation, indicating a valuation gap compared to peers [37] Other Important Information - The company has significantly improved its reserve coverage through a rigorous credit review process [18][22] - Approximately 50% of the criticized loans have already reset to a higher rate and are paying, with 40% expected to reprice by the end of 2026 [24][70] Q&A Session Summary Question: Can you provide details on the securities purchase and its impact on margin? - The company accelerated $2 billion in securities purchases to optimize NIM, with a weighted average coupon of about 5.25% [44] Question: Is stock repurchase still expected in mid-2026? - Currently, the focus is on investing excess capital in growth rather than stock buybacks, but this may be reconsidered if profitability is achieved [48][50] Question: What is the outlook for net charge-offs? - The company expects charge-offs to decrease as it moves into Q3 and Q4, supported by a significant reduction in criticized assets [94][95] Question: What is the health of the rent-stabilized multifamily landlords? - The multifamily portfolio is largely occupied, with a significant portion of loans rated as pass, indicating a stable outlook despite potential challenges [68][70] Question: Will the merger of the holding company into the bank have any downsides? - The merger is expected to reduce costs significantly and streamline regulatory supervision, with no major downsides anticipated [59][115]