Financial Data and Key Metrics Changes - Woffett reported net income available to common shareholders of $56.9 million or $0.72 per diluted share for Q4 2025, a slight decrease from $0.73 per share in Q4 2024 [7][8] - For the full year 2025, net income available to common shareholders was $211.4 million or $2.63 per diluted share, compared to $2.50 per share in 2024 [8] - Total noninterest income increased slightly to $18.4 million, with Woffett Insurance contributing $4.6 million for the quarter and $19.5 million for the fiscal year, a 12.5% increase over the prior year [12][13] Business Line Data and Key Metrics Changes - Loans receivable decreased by $188 million during the quarter, primarily due to a decrease in inactive loan types, while loan originations increased to $1.4 billion, outpacing repayments for the first time this fiscal year [8][9] - Active loan types, including multifamily and commercial real estate, saw significant increases in production, with commercial real estate production rising from $44 million to $211 million [15][16] - The net loan to deposit ratio ended the quarter at 93.7%, with core deposits making up 78% of total deposits, up from 75% a year ago [10][11] Market Data and Key Metrics Changes - Deposits increased by $51 million during the quarter, with noninterest-bearing deposits rising by 3.2% [10] - The former Luther Burbank deposits decreased by $1 billion over the fiscal year, reflecting a strategic effort to lower the cost of funds [10] - The liquidity and capital profile remains strong, with all capital ratios exceeding regulatory well-capitalized levels [12] Company Strategy and Development Direction - The company is transitioning from a thrift to a commercial bank, focusing on becoming a digital-first bank and increasing transaction deposits [24][31] - The new strategic plan, "Build 2030," aims to increase noninterest-bearing deposits from 11% to 20% by the end of fiscal 2030 [31] - Woffett has reorganized its banking teams to better serve commercial credit needs and has expanded its product offerings, including SBA loans [33][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising interest rates and economic uncertainty but expressed confidence in the company's strategic direction and technology investments [21][24] - The company expects to see 8% to 12% growth in its active loan portfolio in the next year, while anticipating a runoff of $200 million to $300 million in inactive loans per quarter [56][57] - Management highlighted the importance of maintaining a disciplined approach to credit risk as the company grows [37] Other Important Information - The company successfully launched Woffett Wealth Management, aiming to grow assets under management to $1 billion within two years [42] - The company is actively involved in advocating for deposit insurance reform to create a more level playing field in the banking industry [45][46] Q&A Session Summary Question: Expectations for net growth in fiscal 2026 - Management anticipates 8% to 12% growth in the active loan portfolio, with an expected runoff of $200 million to $300 million in inactive loans per quarter [56][57] Question: Update on margin and rate sensitivity - The margin at the end of the quarter was 2.82%, and management expects it to expand with future rate cuts, although there is typically a lag in recognizing the benefits [58][60] Question: Core loan yields and impact of nonaccrual loans - The decrease in core loan yields was primarily driven by an increase in nonaccrual loans, which had a three basis point impact on the margin [66][67] Question: Outlook on deposit costs and client reactions to rate cuts - Management plans to be more aggressive with rate cuts now that the loan-to-deposit ratio is lower, and clients have not shown significant pushback against recent rate changes [89][90] Question: Plans for improving profitability and technology offerings - The focus will be on enhancing business accounts and continuously improving technology offerings based on client feedback [100][103]

Financial Performance - The company reported a net loss of $1,200,000 in Q2 2025, driven by higher provision expenses and write-downs on loans measured at fair value, compared to a net loss of $335,000 in Q1 2025 [3][7] - Loans held for investment increased by $41,000,000 (3.8%) during Q2 2025, totaling $1,130,000,000, and increased by $117,500,000 (11.7%) year-over-year [7][8] - Deposits increased by $35,500,000 (3.1%) in Q2 2025, totaling $1,160,000,000, with a year-over-year increase of $121,400,000 (11.6%) [8] - Net interest income rose to $12,300,000 in Q2 2025, an increase of $1,300,000 from Q1 2025 and $3,200,000 from the same quarter last year [9] - The net interest margin improved by 29 basis points to 4.06% in Q2 2025 [4][9] Business Line Performance - The company originated $157,000,000 in loans during the quarter and sold $66,800,000 of government guaranteed loan balances [8][10] - The government guaranteed loan origination platform originated $106,400,000 in new loans, with $67,900,000 being BOLT loans, showing stability from the previous quarter [6] - The trendsetter deposit portfolio has over 2,100 accounts, representing more than $200,000,000 in balances, with a growth of 60 households year-to-date [5] Market Performance - Nonperforming assets were 1.79% of total assets as of June 30, 2025, down from 2.08% as of March 31, 2025 [14] - The ratio of allowance for credit losses to total loans held for investment was 1.65% as of June 30, 2025, slightly up from 1.61% in Q1 2025 [15] Company Strategy and Industry Competition - The company is undergoing a comprehensive strategic review aimed at derisking unguaranteed SBA seven balances and positioning for long-term growth [3] - Management has increased collections and portfolio management staff to proactively manage credit quality amid economic challenges [16] - The company is evaluating its small loan program and related underwriting processes, with further announcements expected [17] Management Commentary on Operating Environment and Future Outlook - Management noted that asset quality trends in the SBA seven small loan program continue to decline due to rising interest rates and inflation [16] - The company remains committed to building household relationships and enhancing its community banking presence in Tampa Bay and Sarasota [18] - Future growth is expected to be supported by a strong community bank model in a desirable market [18] Other Important Information - The board has suspended common and preferred stock dividend payments and board of director fees to offset the impact of charge-offs [4] - The company is well-capitalized but is exploring strategic alternatives to enhance shareholder value [28] Q&A Session Summary Question: How would a 25 basis point cut in Fed funds affect NIM? - Management indicated that the company is asset sensitive and expects a slight temporary compression in NIM, but stability should return by the end of the next quarter [26][27] Question: Is there a probability of raising additional capital? - Management stated that the bank is currently well-capitalized and exploring options, but no imminent actions have been decided [28][29] Question: Is the company still making small SBA loans? - Management confirmed that they are focusing on core loans and evaluating the credit losses and profitability of the small loan program [76] Question: What is the current status of the BOLT loans? - Management noted that BOLT loan volume has been steady, but additional credit underwriting has been instituted to manage risks [52] Question: Are there geographic concentrations in credit issues? - Management clarified that credit issues are broad and not concentrated in specific geographic areas, although certain NAICS codes have been identified as problematic [55]