Financial Data and Key Metrics Changes - The company reported net income of approximately $163 million or $0.28 per diluted share, up from $133 million or $0.22 in the previous quarter, marking the highest quarterly profitability since the end of 2022 [4] - The annualized return on average assets is above 1%, achieving many profitability goals ahead of schedule [4][10] - Core customer deposits grew by about $1 billion during the quarter, contributing to a total of nearly 10% core deposit growth over the past year [11][7] Business Line Data and Key Metrics Changes - Gross loans decreased modestly due to targeted runoff in transactional C&I and the C&I commodity subsegment, with average loans increasing by 0.5% during the quarter [12][13] - Non-interest income has grown at an annual rate of 15% since 2017, significantly outpacing publicly traded peers [8] - The company experienced a second consecutive quarter of 3% net interest income growth, with net interest margin (NIM) improving for the sixth consecutive quarter [14] Market Data and Key Metrics Changes - The company has added nearly 110,000 new deposit accounts over the past 12 months, reflecting strong market demand [7] - Brokered deposits now comprise 11% of the total deposit base, the lowest level since Q3 2022 [11] - The pipeline for C&I and CRE loans stands at $3.3 billion, indicating strong market activity [59] Company Strategy and Development Direction - The company is focused on enhancing its commercial and consumer banking sectors, with new leadership in place to drive growth [5][6] - There is a strategic emphasis on expanding into the healthcare C&I and capital call areas, which are seen as having compelling risk-adjusted return profiles [9] - The company aims to grow its small business and retail banking segments, leveraging its existing branch network [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, citing strong customer growth, talent acquisition, and profitability [10] - The competitive environment remains challenging, particularly in C&I and CRE, but the company is well-positioned to capitalize on opportunities [22] - Management anticipates continued stability in non-accrual loans and expects to maintain low credit costs moving forward [16][36] Other Important Information - The company repurchased approximately $12 million worth of shares during the quarter, reflecting confidence in its capital position [17] - Adjusted non-interest expenses declined modestly, driven by lower compensation and occupancy costs [15] - The efficiency ratio continues to improve, with expectations for further progress in the upcoming quarters [15] Q&A Session Summary Question: Could you speak to the competitive backdrop regarding the decline in C&I loans? - Management noted that while spot deposit costs have declined, the competitive environment for new deposit relationships remains strong, with opportunities for repricing existing deposits [20] Question: How are you thinking about the buyback opportunity against conserving capital for longer-term growth? - Management indicated a near-term CET1 target of around 11%, with buybacks being considered as a source of capital deployment going forward [24] Question: Do you expect to continue to have more business coming from outside the Northeast? - Management confirmed that originations are evenly split among the Southeast, Northeast, and specialty businesses, with strong contributions expected from Florida [27][30] Question: Can you provide more color on the increase in non-accrual loans? - Management clarified that the increase was primarily driven by a construction loan, with a significant portion of non-accrual loans being current on payments [34][36] Question: What areas are you most focused on for growth? - Management highlighted opportunities in the Florida franchise, upmarket C&I, and small business banking as key areas for growth [44][46] Question: How do you think about the impact of lower rates on loan growth? - Management indicated that while lower rates could accelerate payoffs, they believe their portfolio is somewhat insulated from this risk [57] Question: What is the outlook for NIM expansion? - Management expects NIM to normalize between 3.20% and 3.40%, with confidence in achieving above 3.1% in the fourth quarter [66] Question: How are you quantifying the potential boost in growth from new hires? - Management anticipates significant momentum in upmarket C&I and business banking growth as new hires are onboarded [68][70]

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]