Financial Data and Key Metrics Changes - Operating net income declined by $1.1 million in the first quarter due to seasonal declines in noninterest income lines, particularly in SBSL [18] - Pre-provision net revenue increased by almost $1.5 million on an operating basis compared to the first quarter of 2024, indicating improvement in core earning fundamentals [19] - Net interest income increased by approximately $480,000 in the first quarter, driven by loan growth and a reduction in the cost of funds [19] - Cost of funds for the quarter was 2.07%, a decline of 12 basis points from the previous quarter and 25 basis points from the third quarter of 2024 [20] - Margin increased by 9 basis points to 2.93%, up from 2.84% in the prior quarter [20] Business Line Data and Key Metrics Changes - First quarter annualized loan growth was 17%, with expectations for future quarters to be in the range of 8% to 12% [7][8] - Operating non-interest income decreased by about $1.7 million, primarily due to decreased activity in the SBSL division [21] - Revenues in the mortgage division were slightly higher, and expenses were slightly lower, resulting in profitability for the division [22] - Non-interest expenses decreased around $1 million, attributed to lower variable expenses and advertising costs [23] Market Data and Key Metrics Changes - Total deposits increased by $54.6 million in the quarter, with a focus on a deposit-first culture [29] - The company is experiencing cooling deposit competition, which is expected to help keep cost pressures minimal [30] - Cash to assets was a little over 7% at the end of the quarter, providing room for continued funding of loan growth [31] Company Strategy and Development Direction - The company is excited about the acquisition of Ellerbee Agency, which is expected to be EPS accretive and enhance the Insurance division [10][11] - A credit card program for both consumer and commercial credit cards was launched, aimed at generating significant noninterest income over time [12] - The company is maintaining a proactive approach to monitor market volatility and its impact on customers, especially in sectors exposed to trade dynamics [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan growth pipeline for the rest of the year, despite seasonal fluctuations [9][28] - There are no indicators of large-scale disruptions affecting credit quality, with isolated issues in agricultural production and trucking loans [26] - Management remains optimistic about the M&A environment in banking, with ongoing discussions with potential targets [15] Other Important Information - The effective tax rate for the quarter was a little over 20%, consistent with previous guidance [24] - The company repurchased 38,000 shares at an average price of $16.45 as part of its stock repurchase program [32] - A quarterly cash dividend of $0.115 per share was declared [33] Q&A Session Summary Question: What are the trends and expectations for SBSL, loan growth, and asset quality as well as pricing for the rest of the year? - Management is vigilant about the impact of tariffs and trade policy on customers, noting that many have become more aware of their supply chains post-COVID [36][39] - There is good activity in SBSL, with expectations to return to previous levels of production [43][44] Question: What net interest margin impacts do you expect from a 25 basis point rate cut? - Management feels well-positioned for potential rate cuts, expecting improved margins from repricing of assets and reduced costs [45][46] - The loan portfolio yield is around 6%, with new weighted average rates in the mid- to high-7s, indicating favorable conditions for margin improvement [47][50]

Financial Data and Key Metrics Changes - The company reported a first quarter annualized loan growth of 17%, which was better than expected, with future quarters likely to normalize to a range of 8% to 12% [5][6] - Total deposits increased by approximately $54.6 million during the quarter, reflecting an annualized growth of about 8.5% [6][21] - Operating net income declined by $1.1 million in the first quarter, primarily due to seasonal declines in noninterest income [14] - Net interest income increased by approximately $480,000, driven by loan growth and a reduction in the cost of funds [15] - The net interest margin increased by 9 basis points to 2.93% from 2.84% in the prior quarter [15] Business Line Data and Key Metrics Changes - Noninterest income decreased by about $1.7 million, largely due to reduced activity in the SBSL division [16] - Revenues in the mortgage division were slightly higher, and the division remained profitable [16] - The company is optimistic about the SPSL division, expecting a return to previous levels of activity as the year progresses [32] Market Data and Key Metrics Changes - The company noted that it has not seen significant impacts on its loan portfolio from recent market volatility and trade dynamics [10][11] - Nonperforming assets were reported at $12.4 million, with classified loans at $26.4 million, indicating historically low levels [19] Company Strategy and Development Direction - The company is focused on growing its noninterest income through acquisitions, such as the recent acquisition of the LOB agency [7][8] - A new credit card program for both consumer and commercial markets was launched, aimed at generating significant interest income over time [9] - The company is actively monitoring market conditions and is prepared to engage in M&A activities as opportunities arise [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market conditions, emphasizing proactive communication with customers [10][11] - There is an expectation of continued loan growth, although it may not match the high levels seen in the first quarter [20] - Management remains optimistic about the long-term outlook despite short-term disruptions due to trade policies [31] Other Important Information - The company repurchased 38,000 shares at an average price of $16.45 as part of its stock repurchase program [23] - A quarterly cash dividend of 11.5¢ per share was declared by the board [23] - The company plans to establish an active shelf registration for future capital management flexibility [24] Q&A Session Summary Question: What are the trends and expectations for SPSL, loan growth, and asset quality? - Management noted that they are vigilant regarding the impact of tariffs and trade policies on customers, but customers have become more aware of their supply chains post-COVID, which is expected to mitigate disruptions [29][30][31] - There is good activity in the SPSL pipeline, and management expects a return to historical levels of production [32] Question: What net interest margin impact do you expect from a 25 basis point rate cut? - Management believes they are well-positioned for potential rate cuts, which could improve margins through repricing of assets and a reduction in the cost of funds [33][34] - The company anticipates that earning asset yields will increase while costs decrease, positively impacting overall margins [36]