Financial Data and Key Metrics Changes - The company reported net income of $133 million or $0.22 per diluted share, with adjusted net income of $134 million or $0.23 per share, compared to $106 million and $0.18 in the previous quarter, reflecting solid momentum in net interest income and non-interest income [5][15] - Profitability ratios, including return on average assets and return on tangible shareholders' equity, continue to trend higher and are on track to meet full year guidance [6][12] - The company expects approximately 3% loan growth for the year, with net interest income growth estimated at 8% to 10% [15] Business Line Data and Key Metrics Changes - Core deposit growth was $600 million, driven by growth in commercial non-interest bearing deposits and promotional CD offerings [16] - Commercial loan diversification has seen the C&I portfolio grow at a 19% compound annual rate since 2017, with nearly 15% growth over the last twelve months [9][12] - Non-interest income has grown at a 12% annual rate since 2017, with a significant improvement in the composition of that income [11][21] Market Data and Key Metrics Changes - The company added over 105,000 new deposit accounts, contributing to approximately 8% core deposit growth [7] - C&I loan growth was particularly robust, fueled by activity in fund finance and healthcare verticals, contributing roughly 60% of the quarter's net growth in C&I [18][48] - The CRE concentration ratio has declined to 349% from 474% at the end of 2023, surpassing year-end targets ahead of schedule [19] Company Strategy and Development Direction - The company is focused on deposit growth and funding transformation, with a significant reduction in reliance on indirect deposits [7][12] - Strategic imperatives include building durable high-quality fee income and enhancing treasury management offerings [11][12] - The company aims to close the valuation gap through continued execution of its strategy, despite recognizing a disconnect between franchise quality and share valuation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of credit quality and anticipates further normalization in credit metrics [23][36] - The company remains optimistic about the long-term growth potential in its markets, particularly in the healthcare and fund finance sectors [12][40] - Management highlighted the importance of maintaining a balance between organic growth opportunities and potential share buybacks [62] Other Important Information - The company has seen a 51 basis point reduction in average cost of deposits compared to the same period in 2024 [7] - Non-interest expenses grew modestly due to merit-based salary increases and higher incentive accruals, but the efficiency ratio improved to 55.2, the best level since Q1 2023 [22] Q&A Session Summary Question: Can you speak to the ability to maintain deposit pricing given competitive nature and growth outlook? - Management anticipates margin will increase as the year progresses, driven by asset repricing tailwinds and stability on the deposit side [29] Question: What drove the increase in past dues this quarter? - The increase in delinquencies was driven by three credits, with two already cleared and the remaining expected to be resolved soon [50] Question: How is the company adapting to the competitive landscape in the technology and software sector? - The company has built infrastructure and acquired a team to leverage opportunities in the technology sector, particularly with strong connectivity to the Israeli market [39] Question: What is the outlook for loan growth in 2026? - While specific guidance for 2026 has not been provided, management anticipates low single-digit growth in CRE and overall loan growth could be closer to 5% [74]