Core Viewpoint - Oak Ridge Financial Services, Inc. reported significant growth in earnings and financial metrics for the second quarter of 2025, driven by strong net interest income and noninterest income growth, marking a successful quarter in its 25th year as a community bank [3][4]. Financial Highlights - Net interest income for Q2 2025 was $6.8 million, up from $5.8 million in Q1 2025 and $5.3 million in Q2 2024, reflecting a growth of 7.6% and 16.0% respectively [4][5]. - Noninterest income increased to $1.2 million, a rise of 64.6% from Q1 2025 and 63.7% from Q2 2024 [3][9]. - Total loans receivable reached $537.5 million, an increase of 1.7% from Q1 2025 and 8.8% from Q2 2024 [5][6]. - Total deposits were $547.5 million, up 0.9% from Q1 2025 and 7.7% from Q2 2024 [5][6]. Earnings and Ratios - Earnings per share (diluted) rose to $0.81, compared to $0.57 in Q1 2025 and $0.46 in Q2 2024 [5][19]. - Return on average equity (annualized) improved to 14.13%, up from 10.04% in Q1 2025 and 8.57% in Q2 2024 [5][20]. - The efficiency ratio improved to 59.1%, significantly better than 66.8% in Q1 2025 and 70.0% in Q2 2024 [5][20]. Asset Quality - Nonperforming assets to total assets increased to 0.73% from 0.67% in Q1 2025, attributed to eight Small Business Administration (SBA) loans moving to nonaccrual status [5][8]. - The allowance for credit losses as a percentage of total loans was 1.10% at June 30, 2025, up from 1.05% at December 31, 2024 [8][20]. Dividend Announcement - A quarterly cash dividend of $0.14 per share is set to be paid on September 3, 2025, to stockholders of record as of August 19, 2025, reflecting the company's commitment to enhancing stockholder value [4].

Core Financial Performance - Mission Valley Bancorp reported net income of $1.2 million, or $0.37 per diluted share, for Q2 2025, a decrease from $2.0 million, or $0.60 per diluted share, in Q2 2024 [1] - For the six months ended June 30, 2025, net income was $2.8 million, or $0.84 per diluted share, compared to $3.7 million, or $1.10 per diluted share, for the same period in 2024 [1] Revenue and Income Breakdown - Net Interest Income for Q2 2025 was $7.5 million, an increase of $0.8 million, or 11.94%, compared to Q2 2024 [7] - Non-Interest Income decreased to $2.2 million in Q2 2025, down $0.7 million, or 24.14%, from Q2 2024 [7] - The company sold $14.3 million in SBA loans in Q2 2025, resulting in a gain on sale of $0.7 million, compared to $21.7 million in SBA loans sold and a gain of $1.1 million in Q2 2024 [7] Asset and Deposit Growth - Total Assets increased to $740.6 million as of June 30, 2025, up $63.3 million, or 9.35%, from December 31, 2024 [7] - Gross Loans rose to $594.9 million as of June 30, 2025, an increase of $47.9 million, or 8.76%, compared to December 31, 2024 [7] - Total Deposits reached $599.4 million as of June 30, 2025, up $48.1 million, or 8.72%, from December 31, 2024 [7] Asset Quality and Credit Losses - The company reported $35 thousand in net charge-offs in Q2 2025, compared to $12 thousand in net recoveries in Q2 2024 [7] - Past Due Loans decreased to $4.9 million as of June 30, 2025, from $5.3 million as of December 31, 2024 [7] - The Allowance for Credit Losses was $8.3 million, or 1.39% of Gross Loans, as of June 30, 2025, compared to $8.1 million, or 1.48% of Gross Loans, as of December 31, 2024 [7] Capital and Liquidity Position - The Common Equity Tier 1 Capital Ratio was 9.94%, Tier 1 Capital ratio was 10.85%, Total Risk Based Capital Ratio was 12.10%, and Leverage Ratio was 9.79% as of June 30, 2025 [10] - Available borrowing capacity decreased to $171.5 million as of June 30, 2025, down $37.2 million, or 17.82%, from December 31, 2024 [10] Strategic Initiatives - The company experienced core deposit growth due to initiatives started last year and plans to open a new full-service branch in Arcadia, California, targeting late Q3 or early Q4 2025 [2]

Financial Data and Key Metrics Changes - Net income for the quarter was $25,200,000, a record excluding one-time sales of PPP loans [5] - Total revenue for the quarter was $62,700,000, also a record when excluding PPP loan gains [10] - Net interest margin was strong at 5.1%, with a return on equity of 20.73% and return on assets at 2.38% [8][9] - Earnings per share were $3.06 basic and $3 fully diluted [8] - The allowance for credit losses over gross loans increased to 1.28% from 1.23% in the previous quarter [9] Business Line Data and Key Metrics Changes - The loan portfolio grew by 36% overall, with purchased loans up 40%, originated loans up 27%, and SBA loans up over 200% [12] - For the quarter, $362,600,000 in total loan originations and purchases were recorded, with $216,600,000 in originated loans [5][6] - SBA loan originations for the quarter were $107,300,000, totaling $408,500,000 for the year [7][14] Market Data and Key Metrics Changes - The company noted increased competition in the purchased loan market, with more capital and cheaper leverage available [13] - The SBA tightened eligibility requirements, which is expected to temporarily reduce loan volumes by up to 50% in the coming quarters [14] Company Strategy and Development Direction - The company plans to remain active but disciplined in the purchased loan market, focusing on opportunities while managing competition [13] - There is an emphasis on expanding into new verticals and adjusting marketing efforts to attract suitable borrowers in the SBA segment [25] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the challenges posed by new SBA regulations and the overall market environment [25] - The company believes that New York City will continue to be a strong multifamily market, providing future opportunities despite potential rent control impacts [16] Other Important Information - The company is investing in new technologies and automation to drive efficiency gains, with a significant hire in the role of chief of innovation [44] - The effective tax rate is expected to stabilize between 33% to 34% going forward [37] Q&A Session Summary Question: When do you expect SBA volumes to snap back after the decline? - Management indicated it is hard to predict exactly, but they believe they will climb back as they adjust to new processes and market conditions [23][24] Question: How does the current pool of loans for purchase compare to last quarter? - There is a lot of activity in the market, with optimism about the volume and competition for larger transactions [27][30] Question: How much transactional income impacted the net interest margin this quarter? - Transactional income was $4,094,000, which contributed significantly to the margin [31][32] Question: Will there be any offset on the expense side as SBA volumes decrease? - A significant portion of costs is variable, so expenses would decrease with lower volumes, although some fixed costs would remain [41][42] Question: Are there any new technology investments planned? - The company is planning major investments in technology and workflow AI to enhance efficiency [44]

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.36 for the second quarter, an increase from $1.31 in the previous quarter and $1.19 year-over-year [4][23] - Adjusted return on assets was 1.31% and pre-provision ROAA was 1.72% [5] - Net interest income increased by $5.2 million to $153 million, with net interest margin expanding by six basis points to 4.21% [5][27] - Year-over-year core deposit base grew by nearly $800 million, maintaining a loan-to-deposit ratio of 86% [8][9] - Tangible book value per common share increased to $40.2, reflecting a 15% annualized quarterly increase [9] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $110 million, with a 4% annualized growth rate, driven primarily by C&I loans and investor-owned commercial real estate [6][13] - SBA loan production remained stable, with a decision to sell $25 million of SBA loans contributing $1.2 million in fee income [8][16] - Life insurance premium finance balances increased by 16% year-over-year, while tax credit balances rose by $30 million [17] Market Data and Key Metrics Changes - All geographic markets showed loan growth, with notable contributions from the Midwest and Southwest regions [18][19] - Client deposits grew by $73 million in the quarter, with a year-over-year increase of approximately 7% [19][20] - Specialty deposit verticals grew by $63 million for the quarter and $552 million or 18% year-over-year [20][21] Company Strategy and Development Direction - The company focuses on a diversified business model that capitalizes on higher growth markets while maintaining pricing discipline [4][5] - The strategic acquisition of a branch from First Interstate Bank is expected to enhance growth opportunities in 2025 and 2026 [9][10] - Management emphasizes a relationship-oriented approach to capitalize on additional opportunities while balancing quality and pricing [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued loan growth, anticipating a pickup in the second half of 2025 due to pent-up demand and improved economic clarity [11][58] - The company expects to navigate economic uncertainties while leveraging opportunities from ongoing M&A activity in the market [12][86] - Management remains focused on achieving loan and deposit goals while maintaining asset quality [10][29] Other Important Information - The company increased its dividend by $0.01 to $0.31 per share for 2025 [10][35] - Non-performing assets remained stable, with a slight decrease in non-performing loans [10][30] - The company is well-capitalized, with a tangible common equity ratio of 9.42% and a common equity Tier 1 ratio of 11.9% [9][34] Q&A Session Summary Question: Expectations for fee income in the second half of the year - Management expects fee income to be similar to the first quarter, with potential contributions from SBA sales and other line items [39][40] Question: Outlook on expenses and merit increases - Management indicated that the current expense levels are expected to grow, influenced by merit increases and legal expenses related to non-performing loans [42][44] Question: Capital levels and branch acquisition impact - Management confirmed that the branch acquisition will normalize capital levels and support growth, with plans to call subordinated debt in the near term [49][50] Question: Margin outlook and potential pressures - Management anticipates stable margins moving forward, with some near-term pressures due to securities purchases and floating rate debt [53][56] Question: Loan growth expectations for the second half of the year - Management expects loan growth to pick up, potentially reaching 5-7% as economic conditions improve [58][59] Question: Commentary on SBA loan sales strategy - Management is exploring SBA loan sales as a strategy to solidify fee income, with expectations for some level of gains in the upcoming quarters [80][81] Question: M&A activity and strategic priorities - Management emphasized the importance of onboarding new clients from the branch acquisition before considering further M&A opportunities [85][86]

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.36 for Q2 2025, an increase from $1.31 in the previous quarter and $1.19 year-over-year [4][23] - Adjusted return on assets was 1.31% and pre-provision ROAA was 1.72% [5] - Net interest income increased by $5.2 million to $153 million, with net interest margin expanding by six basis points to 4.21% [5][27] - Tangible common equity to tangible assets ratio was 9.42%, with a return on tangible common equity of 13.96% [9][34] - Non-interest income increased by $2.1 million to $21 million, driven by bank-owned life insurance and community development income [31] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $110 million, with a year-over-year increase of approximately 4% [6][13] - The largest portion of loan growth came from commercial and industrial (C&I) loans, with new loan originations up 23% year-over-year [13][14] - Life insurance premium finance balances increased by $160 million or 16% year-over-year [17] - Specialty deposit verticals grew by $63 million for the quarter and $552 million or 18% year-over-year [20][21] Market Data and Key Metrics Changes - All geographic markets showed loan growth, with notable contributions from the Midwest and Southwest regions [18][19] - Client deposits grew by $73 million in the quarter and $778 million or roughly 7% year-over-year [19][20] - The company maintained a total loan to deposit ratio of 86% [7] Company Strategy and Development Direction - The company focuses on a diversified business model that capitalizes on higher growth markets while maintaining pricing discipline [4][5] - The strategic acquisition of a branch from First Interstate Bank is expected to enhance growth opportunities [10][35] - The management anticipates that ongoing economic improvements and M&A disruptions will lead to strong financial performance in the coming quarters [12] Management's Comments on Operating Environment and Future Outlook - Management noted that most clients are performing well, with sales and profits in line with 2024 expectations [11] - There is optimism for loan growth to exceed 4% in the latter half of 2025 due to pent-up demand and improved economic clarity [12][60] - The company is prepared to guide clients through economic uncertainties while taking advantage of M&A opportunities [12] Other Important Information - The company increased its dividend by $0.01 to $0.31 per share for 2025 [10][35] - Non-performing assets remained stable at 71 basis points of total assets, with a focus on managing credit quality [30] Q&A Session Summary Question: Expectations for fee income in the second half of the year - Management expects fee income to be similar to the first quarter, with potential contributions from SBA sales and other line items [39][40] Question: Outlook on expense levels - Management indicated that the current expense levels are expected to grow, influenced by merit increases and legal expenses related to non-performing loans [42][43] Question: Capital levels and branch acquisition impact - The branch acquisition is expected to normalize capital levels, with a focus on supporting growth and evaluating dividend policies [49][50] Question: Margin outlook for the next quarters - Management is optimistic about maintaining stable margins, with potential growth in net interest income dollars [54][56] Question: Loan growth expectations for the back half of the year - Management anticipates loan growth to increase to 5-7% in the latter half of the year due to improved economic conditions [60] Question: Team integration in Texas and growth strategy - A new team in Texas has begun operations without non-compete restrictions, focusing on low to mid-sized C&I businesses [75] Question: SBA loan sales strategy - The company is exploring SBA loan sales as a strategy to solidify fee income, with expectations for some level of gain in the third quarter [80]

Earnings Performance - Net income reached $51.4 million, an increase of $1.4 million, resulting in an EPS of $1.36[7] - Net interest income increased to $152.8 million, up by $5.2 million, with a net interest margin (NIM) of 4.21%[7] - Pre-provision net revenue (PPNR) amounted to $68.1 million, reflecting a $2.0 million increase[7] - Adjusted return on average assets (ROAA) stood at 1.31%, compared to 1.29% previously[7] Loans and Deposits - Total loans amounted to $11.4 billion, an increase of $110.1 million[10] - Total deposits reached $13.3 billion, up by $283.1 million, or an increase of $72.9 million excluding brokered CDs[10] - Noninterest-bearing deposits accounted for 32% of total deposits[10] Asset Quality - Nonperforming loans represented 0.93% of total loans[8] - Nonperforming assets accounted for 0.71% of total assets[11] - The allowance coverage ratio was 1.27%, or 1.38% when adjusted for guaranteed loans[11] Capital and Dividends - The CET1 ratio was 11.9%, compared to 11.8% in the previous quarter[7] - Tangible common equity to tangible assets ratio was 9.42%, compared to 9.30%[7] - Tangible book value per common share increased to $40.02, compared to $38.54[7] - A quarterly common stock dividend of $0.30 per share was declared for the second quarter of 2025, representing a $0.01 increase[7]

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings of $1.15 per share, up 32% from the first quarter, driven by significant net interest margin expansion and increased contributions from SBA loan sales [6][11] - Pre-provision net revenue (PPNR) increased by 21% to $11,400,000 or $1.46 per share, with PPNR return on average assets rising to 143 basis points from 118 basis points in the previous quarter [11] - Net interest margin (NIM) improved to 310 basis points, a 29 basis point increase from the linked quarter, attributed to decreasing funding costs [11][12] Business Line Data and Key Metrics Changes - The SBA business is expected to deliver material growth to noninterest income, with SBA loan originations totaling $12,000,000 for the quarter, bringing year-to-date originations to $22,000,000 [7][13] - Noninterest income increased by 34% to $2,000,000, largely due to $1,100,000 from SBA gain on sale income [13] - Total noninterest expense rose modestly to $14,500,000, primarily due to increased salaries and employee benefits, reflecting ongoing investments in banking teams and risk functions [13][14] Market Data and Key Metrics Changes - Noninterest bearing deposits grew by $48,000,000 during the quarter, with a year-to-date increase of $75,000,000 or 23% since year-end [8][9] - The bank's funding profile improved with a significant reduction in brokered deposits, which have been decreased by over $400,000,000 from their peak [18] Company Strategy and Development Direction - The company is focused on expanding its SBA platform, attracting talented deposit teams, and investing in risk and technology platforms to prepare for technological evolution [16][17] - The strategic initiatives aim to improve asset quality, with nonperforming loans dropping significantly from $65,000,000 to just under $24,000,000 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about credit trends, expecting continued progress in reducing nonperforming assets (NPAs) [9][14] - The company anticipates continued margin expansion into 2026, driven by the contributions of new deposit teams and improved funding costs [9][12] Other Important Information - The company repurchased 14,626 shares at a weighted average price of $28.86 per share during the quarter, with 205,000 shares remaining on the authorization [15] - The consolidated common equity Tier one ratio increased to 10.17% from 10.04% in the prior quarter, indicating a well-capitalized and liquid balance sheet [15] Q&A Session Summary Question: Long-term target for DDAs to deposits - Management does not have a hard target but aims to expand the percentage and reduce the wholesale funding ratio [21][22][23] Question: Future of brokered deposits - Management expects brokered deposits to continue decreasing but acknowledges it will depend on market opportunities [24][25] Question: Update on health care customers - There are no significant concerns regarding new legislation affecting health care customers, and the health care book remains profitable [27] Question: Potential of new deposit teams - The new teams have significant potential based on their previous business volumes, but actual production is yet to materialize [32][33][34] Question: Timeline for resolution of nonperforming loans - One nonperforming loan is expected to resolve in the next couple of quarters, while another may take longer due to its complexity [40] Question: Impact of potential Fed rate cuts on margin - Management anticipates a potential 5 to 10 basis point increase in NIM even without rate cuts, based on current repricing opportunities [41][44] Question: Expense guidance for the back half of the year - Expenses are expected to remain relatively flat at around $15,000,000 per quarter in the second half of the year [49]

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings of $1.15 per share, up 32% from the first quarter, driven by significant net interest margin expansion and increased contributions from SBA loan sales [6][11] - Pre-provision net revenue (PPNR) increased by 21% to $11,400,000 or $1.46 per share, with PPNR return on average assets rising to 143 basis points from 118 basis points in the previous quarter [11] - The net interest margin (NIM) improved to 310 basis points, a 29 basis point increase from the linked quarter, attributed to decreasing funding costs [11][12] Business Line Data and Key Metrics Changes - The SBA business is expected to deliver material growth to noninterest income, with SBA loan originations totaling $12,000,000 for the quarter, bringing year-to-date originations to $22,000,000 [7][13] - Noninterest income increased by 34% to $2,000,000, largely due to $1,100,000 from SBA gain on sale income [13] - Total noninterest expense rose modestly to $14,500,000, primarily due to increased salaries and employee benefits, reflecting ongoing investments in banking teams and risk functions [13][14] Market Data and Key Metrics Changes - Noninterest bearing deposits grew by $48,000,000 during the quarter, with a year-to-date increase of $75,000,000 or 23% since year-end [8] - The bank's funding profile improved with a significant reduction in brokered deposits, which have been decreased by over $400,000,000 from their peak [18] Company Strategy and Development Direction - The company is focused on expanding its SBA platform, attracting talented deposit teams, and investing in risk and technology platforms to prepare for technological evolution [16][19] - The management emphasized the importance of improving asset quality, with nonperforming loans dropping significantly from $65,000,000 to just under $24,000,000 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued margin expansion into 2026, driven by the growth of noninterest bearing deposits and improved credit trends [8][12] - The company anticipates continued improvement in profitability and efficiency ratios, despite increasing noninterest expense guidance [14][19] Other Important Information - The company repurchased 14,626 shares at a weighted average price of $28.86 per share during the quarter, with 205,000 shares remaining on its authorization [15] Q&A Session Summary Question: What is the long-term target for DDAs to deposits? - Management indicated there is no hard target but aims to expand the percentage and reduce the wholesale funding ratio [21][23] Question: Should brokered deposits continue to decrease? - Management expects brokered deposits to decrease over time but acknowledges it will depend on market opportunities and deposit gathering efforts [24][25] Question: Update on health care customers? - Management reported that health care borrowers are not significantly impacted by new legislation, maintaining a positive outlook on the health care book [27] Question: Potential of new deposit teams? - Management highlighted the potential of new teams, noting their previous success in generating significant business, but emphasized that actual production will take time to materialize [32][34] Question: Timeline for resolution of nonperforming loans? - Management expects one nonperforming loan to be resolved in the next couple of months, while another may take longer due to its complexity [41] Question: Impact of a potential Fed rate cut on margin? - Management indicated that a 25 basis point cut would likely have a delayed impact on margins, but they remain optimistic about NIM improvements based on current repricing strategies [42][45]

Financial Data and Key Metrics Changes - The company reported net income of $10 million or 48 cents per diluted common share, with net interest income increasing by $2.5 million to $50 million compared to the linked quarter [13][14] - The tax equivalent net interest margin expanded by 13 basis points to 3.57% in the second quarter, driven by higher earning asset volumes and yields [14] - The consolidated CET1 ratio was 11.02% at June 30, 2025, up five basis points from March 31, 2025 [13] Business Line Data and Key Metrics Changes - Solid loan growth of 7.4% was reported, with commercial loan production reaching $215 million, the highest in the last six quarters [5][11] - Wealth management revenues increased by 5% linked quarter, and SBA fee income doubled compared to the same period last year [6][11] - Noninterest income was $10.2 million, slightly up from $10.1 million in the linked quarter, driven by increases in wealth management, card revenue, and mortgage origination fees [15] Market Data and Key Metrics Changes - Average deposits remained flat, while end-of-period deposits decreased slightly; however, noninterest-bearing balances were ahead of both the linked quarter and the year-ago quarter [10] - The loan pipeline showed strength, particularly in commercial and industrial lending, offsetting small declines in agricultural and commercial real estate lending [10][11] Company Strategy and Development Direction - The company continues to execute its 2025 strategic initiatives, focusing on disciplined balance sheet management and building a high-performing team [5][6] - There is a commitment to expanding talent in key markets, with significant new hires in commercial banking and wealth management [6][12] - The company is exploring M&A opportunities, focusing on geographic expansion and enhancing business lines that can add value [66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strength of the balance sheet and underlying earnings momentum, positioning the company well for the remainder of 2025 [8][73] - The expectation for mid-single-digit loan growth remains for the second half of 2025, with a focus on organic growth [5][11] - Management anticipates that credit loss expenses will normalize in the back half of the year, reflecting a more historical level [36] Other Important Information - A significant impact on asset quality and net income was noted due to a single $24 million nonaccrual loan, which has been classified and is undergoing resolution [7] - The company revised its 2025 annual expense guidance to a range of $146 million to $148 million due to recent talent investments [16] Q&A Session Summary Question: Can you unpack the C&I growth for the quarter? - Management noted strong contributions across various regions and industries, with a mix of existing and new clients driving growth [18][19] Question: What are the expectations for net interest margin in the second half of the year? - Management expects continued margin expansion, albeit at a slower pace of 4 to 5 basis points per quarter [48] Question: What happened with the large CRE loan that impacted asset quality? - Management explained that the loan was a non-owner occupied office in suburban Minneapolis that moved to nonaccrual due to payment issues, but it is currently cash flowing [26][28] Question: How do you see the impact of recent hires on long-term growth? - Management indicated that seasoned bankers are expected to contribute immediately, with a more significant impact anticipated in 2026 [44][45] Question: What are the priorities for potential M&A targets? - The focus is on geographic expansion and enhancing business lines that can add value, with a preference for digestible-sized transactions [66]

Financial Data and Key Metrics Changes - In Q2 2025, interest income increased while interest expense decreased, resulting in a net interest margin on a tax-effective basis rising above 2% [6][22] - Diluted earnings per share for the quarter were reported at $0.02, attributed mainly to credit issues and changes in noninterest income [6][7] - Net interest income for Q2 was $28 million, up 11.5% from the previous quarter, with net interest margin improving to 1.96% [22][24] Business Line Data and Key Metrics Changes - The franchise finance portfolio saw $12.6 million of loans moved to nonperforming status, with specific reserves of approximately $4.5 million [9] - In the SBA lending business, the company has originated $1.8 billion in small business loans since 2020, with improvements noted in the portfolio as loans on nonaccrual decreased [13][15] - Noninterest income for the quarter was $5.6 million, which included a $1.6 million gain on the sale of SBA loans, down from the previous quarter [18] Market Data and Key Metrics Changes - The overall credit quality remains sound, with nonperforming loans to total loans at 1%, consistent with industry norms [8] - Delinquencies across loan portfolios improved to 62 basis points, a 15 basis point improvement over the last 90 days [8] - The company expects to see noninterest income increase to around $13.3 million in both Q3 and Q4, driven by an increase in loan sales [25] Company Strategy and Development Direction - The company is focused on improving net interest margin and income through higher loan yields and lower deposit costs, with expectations of continued growth in the loan portfolio [24][27] - The management is optimistic about the outlook for 2026, anticipating growth in income-generating loan verticals and small business lending [27] - The company has adjusted its underwriting criteria in response to economic conditions, particularly in the SBA lending space [14][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the economic uncertainty but expressed confidence in the strategies in place to drive net interest margin growth [24][98] - The company is taking a conservative approach to provisions for loan losses, expecting them to remain elevated compared to historical levels [26][56] - Management noted that the pace of new delinquencies has slowed, indicating promising signs for future improvement [11][56] Other Important Information - The company has a strong pipeline for SBA loans, with expectations to exceed previous lending goals [70] - The management highlighted the importance of maintaining capital ratios while considering share repurchase options [62][81] - The company has seen significant growth in fintech partnerships, contributing to deposit growth and overall revenue [78][80] Q&A Session Summary Question: Provision guidance for the back half of this year and next year - Management expressed hope that the provision levels would not be needed but maintained a cautious approach to avoid underestimating future credit stress [32][34] Question: Insights on SBA lending and industry changes - Management clarified that recent changes to industry standards have not negatively impacted demand for SBA loans, and they continue to see strong pipelines [36][38] Question: Breakdown of charge-offs and future expectations - Management indicated that charge-offs have been higher in the SBA portfolio, but they expect the charge-off trajectory to improve moving forward [50][56] Question: Willingness to lend and current lending goals - Management confirmed that they are on track to meet and potentially exceed their lending goals in the SBA space, focusing on high-quality loans [70][72] Question: Expense outlook and variability - Management noted that compensation, particularly related to SBA and construction commissions, is the most variable line item affecting expenses [86][88]