Financial Data and Key Metrics Changes - The company reported third quarter operating earnings of $0.83 per share, supported by solid underwriting performance and a 12% increase in investment income [8] - The total combined ratio improved to 85.1, down from 89.6 last year, largely due to a benign hurricane season [9] - Book value per share has grown 26% year to date, resulting in a 20%+ return on equity [4][12] Business Line Data and Key Metrics Changes - The property segment experienced an 11% decline in gross premiums, influenced by rate and exposure declines in ENS property, while Hawaii homeowners grew 33% in the quarter [9][13] - The casualty segment saw gross premiums advance 8%, with a combined ratio of 98 for Q3, benefiting from favorable prior year's reserve development [10][19] - The surety segment posted an 85% combined ratio, with premiums down modestly for the quarter [16][18] Market Data and Key Metrics Changes - The commercial property catastrophe market has softened significantly, presenting headwinds to current growth [4][5] - Increased competition and rate pressure have been noted in the property segment, particularly for catastrophe-exposed business [10][15] - The overall market environment is characterized by increased volatility, political uncertainty, and the entry of alternative capital providers [5][6] Company Strategy and Development Direction - The company emphasizes maintaining underwriting discipline and adaptability in a rapidly evolving market landscape [5][6] - Investments in technology and information for underwriters and claims specialists are prioritized to enhance decision-making and performance [6][24] - The company aims to achieve its 30th consecutive year of underwriting profits by focusing on long-term profitable growth [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic headwinds and maintaining a well-priced book with sustainable terms [16][18] - The company is focused on leveraging its unique culture and expertise to respond to market changes and opportunities [25][60] - Management acknowledged the potential for increased competition but remains committed to disciplined underwriting practices [36][50] Other Important Information - The company has doubled its premium in the last five years while significantly increasing its capabilities [23] - New product offerings are being introduced gradually to ensure adequate coverage at appropriate rates [24] - The company is exploring generative AI to enhance operational efficiency and decision-making [24] Q&A Session Summary Question: Impact of higher attachment points in personal umbrella book - Management noted that moving to a higher attachment point has improved loss trends and is expected to help with frequency [27][28] Question: Rate increase in personal umbrella - The substantial rate increase was influenced by state-specific filings, particularly in Florida [29] Question: Current state of the property market - The property market remains competitive with some softening, but the company is focused on maintaining adequate rates and terms [33][36] Question: Surety expense ratio outlook - The expense ratio is expected to remain elevated due to ongoing investments in technology and personnel [32] Question: Competitive environment in surety business - The company maintains its competitive advantage through strong relationships and service quality [47][50]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $1.04, an increase of $0.21 or 25.3% year over year and an increase of $0.07 or 7.2% from the linked second quarter [8] - Operating earnings per share were $1.09, compared to $0.88 one year prior and $1.04 in the linked second quarter [8] - Total operating revenues reached a record high of $206.8 million, increasing $7.6 million or 3.8% from the linked second quarter and $17.7 million or 9.4% from one year prior [9] Business Line Data and Key Metrics Changes - The pre-tax tangible returns for the quarter were 63% for insurance services, 62% for employee benefit services, 48% for wealth management services, and 25% for banking and corporate [5] - Net interest income was $128.2 million, representing a $3.4 million or 2.7% increase over the linked second quarter and a $15.4 million or 13.7% improvement over the third quarter of 2024 [9] - Operating non-interest revenues increased $2.3 million or 3% compared to the prior year's third quarter, reflecting revenue growth in all four business lines [10] Market Data and Key Metrics Changes - Ending loans increased $231.1 million or 2.2% during the third quarter and increased $498.6 million or 4.9% from one year prior [12] - Total deposits increased $580.7 million or 4.3% from one year prior and increased $355.1 million or 2.6% from the end of the linked second quarter [12] - The company's liquidity position remains strong with readily available sources of liquidity totaling $6.6 billion, or 240% of the estimated uninsured deposits [13] Company Strategy and Development Direction - The company is focused on diversified, higher growth, subscription-like revenue streams in insurance, benefits, and wealth management, while also pursuing strong funding and liquidity in attractive high-priority markets [5] - The company anticipates closing on the acquisition of seven Santander branches, which will accelerate its retail strategy in the banking services business [16] - A minority investment in Leap Holdings Inc. was announced, complementing the insurance services business [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, particularly in insurance and wealth businesses, and highlighted strong capital deployment opportunities [5][6] - The company expects to maintain a strong earnings growth foundation due to its diversified revenue profile, strong liquidity, and stable core deposit bank [16] - Management noted that the effective tax rate increased to 24.7% from 23% in the prior year's third quarter, driven by increases in certain state income taxes [12] Other Important Information - The company recorded a $5.6 million provision for credit losses during the third quarter, down from $7.7 million in the prior year's third quarter [10] - Non-performing loans totaled $56.1 million or 52 basis points of total loans outstanding at the end of the third quarter, a decrease from $62.8 million or 61 basis points one year prior [14] Q&A Session Summary Question: On the minority investment into Leap - Management indicated that the investment is seen as a first step and is expected to be roughly neutral in financial impact for 2026 [19][20] Question: On deposit costs and legacy footprint - Management noted no dramatic difference in deposit costs between legacy and De Novo markets, with expectations for overall deposit costs to trend down [21] Question: On spread compression on incremental CRE loans - Management discussed current CRE loan yields and indicated a trend towards lower rates due to market evolution and competition [22][24] Question: On loan growth and pipeline - Management remains optimistic about loan growth, with the commercial pipeline at its highest level ever and expectations for a strong fourth quarter [28][30] Question: On NIM and investment portfolio - Management explained that the investment portfolio yield decreased due to timing of dividends and provided cash flow projections for future years [38][40]

Financial Data and Key Metrics Changes - For Q3 2025, GATX reported net income of $82.2 million or $2.25 per diluted share, compared to $89 million or $2.43 per diluted share in Q3 2024, reflecting a decrease in earnings [2][3] - Year-to-date 2025 net income was $236.3 million or $6.46 per diluted share, up from $207.7 million or $5.68 per diluted share for the same period in 2024 [3][4] - The 2025 results included a net positive impact of $5.3 million or $0.15 per diluted share from tax adjustments, while 2024 results had a net negative impact of $9.9 million or $0.27 per diluted share from tax adjustments [3][4] Business Segment Data and Key Metrics Changes - In North America, fleet utilization remained high at 98.9% with a renewal success rate of 87.1%, and renewal lease rates increased by 22.8% for the quarter [4][5] - GATX Rail Europe's fleet utilization was 93.7%, indicating ongoing market challenges, but lease renewals were at rates higher than expiring leases [5][6] - In India, fleet utilization was maintained at 100%, with strong demand for railcars and the delivery of 600 new cars during the quarter [6][7] Market Data and Key Metrics Changes - The North American secondary market showed strong demand for GATX assets, generating over $60 million in remarketing income during the quarter [5][6] - The company expects to finish the year with a strong fourth quarter, supported by a robust pipeline of assets for sale [10][11] - The overall North American railcar market is holding up well despite macro uncertainties, with lease rates remaining at healthy levels [25][26] Company Strategy and Development Direction - GATX continues to pursue the acquisition of Wells Fargo's rail operating lease assets, expecting to close in Q1 2026 or sooner, which is anticipated to be modestly accretive [5][6] - The company is focusing on increasing its direct investment in aircraft spare engines, acquiring seven additional engines for $147.1 million during the quarter [7][8] - GATX is exploring opportunities for similar transactions in Europe, as demonstrated by the agreement to acquire approximately 6,000 railcars from DB Cargo [6][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the secondary market and the resilience of demand for railcars, despite macroeconomic uncertainties [11][25] - The company expects full-year earnings guidance for 2025 to be in the range of $8.50 to $8.90 per diluted share, excluding impacts from tax adjustments and the Wells Fargo transaction [8][10] - Management noted that the North American railcar market remains balanced, with no significant changes expected in the cyclical backdrop [70][71] Other Important Information - The company has made substantial investments in its maintenance capabilities, which have resulted in a marginal cost advantage [29][30] - The operating income from the Rolls-Royce and Partners Finance joint venture was approximately 85% of total income for the quarter, with remarketing contributing about 15% [32][50] - GATX's investments in aircraft spare engines have exceeded $1 billion year-to-date, with strong returns expected [41][43] Q&A Session Summary Question: How does GATX plan to close the gap on revenue and margin drivers to meet EPS guidance? - Management indicated a strong pipeline of assets for sale in the secondary market, expecting solid remarketing income in Q4 to drive results [10][11] Question: Will the Wells Fargo deal be accretive or dilutive? - Management clarified that the deal is expected to be modestly accretive, with no SG&A synergies reflected in the initial financials [14][18] Question: What is the outlook for the DB Cargo deal in Europe? - Management stated that the DB Cargo deal is a long-term investment and not expected to be materially impactful in the first year [20] Question: Are lease rates in North America showing any signs of weakening? - Management noted that lease rates remain healthy, with only slight quarter-over-quarter changes, and the market is not overbuilt [25][26] Question: What is the expectation for maintenance expenses going forward? - Management indicated that maintenance expenses have increased due to volume and mix, but they are on track to control costs through in-house capabilities [29][30] Question: Is there any hesitancy from customers regarding engine leasing due to tariffs? - Management reported no hesitancy from customers, with strong demand for engines expected to continue [41][42] Question: How does the company view the balance of supply and demand in the railcar market? - Management expressed that the market remains balanced, with no significant overbuilding expected, and scrap rates are holding up well [38][39]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong year-over-year growth [8] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the same period of 2024 [8] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [7][8] Business Line Data and Key Metrics Changes - Annualized deposit growth for Q3 2025 was 9%, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated loan paydowns, but commitments to make loans totaled $307 million, an all-time high [5][6] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [9] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from Q3 2024 [11] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong and stable net interest margin, with a current margin of 3.5% despite a decline in the SOFR rate [3] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact net interest margin and overall financial metrics [7][20] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on net interest margin [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions, highlighting strong asset quality and a commitment to excellence in underwriting [22] - The company projects loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from federal funds rate cuts [21] - Management anticipates that net interest margin will remain steady, supported by strategic initiatives and the upcoming acquisition [30] Other Important Information - The company recorded a provision expense of $0.2 million for Q3 2025, reflecting strong credit quality and net recoveries [16] - Non-interest expenses increased by $2.4 million in Q3 2025, primarily due to higher salary and benefit costs [18] - The effective tax rate for Q3 2025 was 13%, influenced by the acquisition of transferable energy tax credits [19] Q&A Session Summary Question: Inquiry on credit quality and normalized charge-off ratio - Management noted a conservative approach to charge-offs and a typical budget of 5% to 10% for net charge-offs [26][27] Question: Discussion on net interest margin and future rate cuts - Management acknowledged that while rate cuts may pose a headwind, the acquisition will provide benefits to net interest margin [28][30] Question: Clarification on loan paydowns and growth guidance - Management explained that paydowns were recognized in Q3 and indicated that loan growth guidance remains at 5% to 7% for Q4 [38][41] Question: Inquiry on expense expectations and acquisition costs - Management confirmed that the guidance for Q4 includes about $1 million in acquisition costs, with other expenses expected to stabilize [42][70] Question: Discussion on fee income growth and commercial card programs - Management highlighted strong growth in debit and credit card income, driven by increased transaction volumes [71][73]

Financial Data and Key Metrics Changes - As of September 30, 2025, the company reported a market capitalization of $425 million, total assets of $7.7 billion, loans of $5.8 billion, deposits of $5.7 billion, and capital of $700 million [9] - The tangible book value per share was reported at $9.77 [9] - Net interest income (NII) increased from $32 million to nearly $36 million, with net interest margin growing from 1.8% to 2% [12][10] - Pre-tax, pre-provision net revenue rose from approximately $7.2 million in the first quarter to $9.9 million by the fourth quarter, while pre-tax, pre-provision EPS per share increased from $0.12 to $0.16 [13] Business Line Data and Key Metrics Changes - The company is focusing on organic growth and cross-selling within its existing client base, aiming to deepen wallet share [15] - The investment services group has generated total sales of $486 million and gross revenue of $8.7 million, with assets under management at $369 million [20] Market Data and Key Metrics Changes - The company operates 43 branches across 12 counties in New Jersey and New York, with plans to close three branches, resulting in a network of 40 branches [9][10] - The company is positioned to benefit from a declining cost of funds and a more favorable yield curve, which is expected to enhance overall net income [10][17] Company Strategy and Development Direction - The company is shifting from a defensive posture to an offensive strategy focused on organic expansion and technology integration [10] - There is a strong emphasis on operational efficiency through technology, including the launch of an AI chatbot and a new HR timekeeping application for small and medium-sized businesses [11][12] - The company aims to strengthen core deposits and improve profitability through disciplined cost management and technology adoption [16][18] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by an inverted yield curve and high Fed Funds rates but expressed optimism about returning to growth [10] - The focus will be on relationship banking, optimizing loan portfolio performance, and enhancing community engagement [15][16] - The company is well-positioned for earnings growth in a declining rate environment due to its liability-sensitive structure [17] Other Important Information - The company has a strong track record of credit performance, with cumulative charge-offs of $39.8 million over nearly 20 years [14] - The company has been recognized for its investment services, ranking in the top 4% nationwide in gross revenue among peer institutions [21] Q&A Session Summary Question: Qualifications of elected directors - The qualifications of the directors being elected were addressed, with details available in the proxy statement [7][8] Question: Future growth strategies - Management discussed the focus on organic growth, technology integration, and enhancing client engagement as key strategies moving forward [15][16]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong performance [8] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [8] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [7][8] Business Line Data and Key Metrics Changes - Annualized deposit growth was 9% for Q3 2025, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated paydowns, but commitments to make loans totaled $307 million, an all-time high [5][6] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [9] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from the prior year [11] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong and stable net interest margin, which stood at 3.5% despite a decline in the SOFR rate [3][4] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact various financial metrics, including earnings accretion and tangible book value [7] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on its net interest margin [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions, highlighting strong asset quality and a robust pipeline for loan growth [22] - The company anticipates loan growth in the range of 5% to 7% annualized for Q4 2025, with expectations for continued strong performance in non-interest income [21][41] - Management noted that the effective tax rate for Q3 2025 was 13%, with projections for a similar rate in the future, depending on the acquisition of transferable energy tax credits [19][51] Other Important Information - The company recorded a provision expense of $0.2 million for Q3 2025, reflecting strong credit quality and net recoveries [16] - Non-interest expenses increased by $2.4 million in Q3 2025, primarily due to higher salary and benefit costs [18] - The total risk-based capital ratio was 14.3% as of September 30, 2025, indicating a well-capitalized position [20] Q&A Session Summary Question: Inquiry about credit quality and normalized charge-off ratio - Management noted a conservative approach to charge-offs and typically budgets between 5% and 10% in net charge-offs [26][27] Question: Discussion on net interest margin and future expectations - Management indicated that the acquisition will benefit the net interest margin, despite potential headwinds from rate cuts [28][30] Question: Clarification on loan paydowns and growth guidance - Management explained that paydowns recognized in Q3 were anticipated, and they expect continued mid-single-digit loan growth [39][41] Question: Inquiry about expense expectations and acquisition costs - Management confirmed that the guidance for Q4 includes about $1 million in acquisition costs, with no income statement impact from Eastern until the merger is finalized [44][70] Question: Discussion on fee income growth and expectations - Management highlighted strong growth in the commercial card program, attributing it to increased volume and customer engagement [71]

Financial Data and Key Metrics Changes - As of September 30, 2025, the company reported a market capitalization of $425 million, total assets of $7.7 billion, loans of $5.8 billion, deposits of $5.7 billion, and capital of $700 million [9] - The tangible book value per share was reported at $9.77 [9] - Net interest income (NII) increased from $32 million to nearly $36 million, with net interest margin growing from 1.8% to 2% [12][10] Business Line Data and Key Metrics Changes - The company is focusing on organic growth and has launched several technology initiatives, including an AI chatbot and a virtual agent for client transactions [11][12] - The investment services group has generated total sales of $486 million and gross revenue of $8.7 million, with assets under management at $369 million [20][21] Market Data and Key Metrics Changes - The company operates 43 branches across 12 counties in New Jersey and New York, with plans to close three branches, resulting in a network of 40 branches [9][10] - Kearny Financial is ranked as the 10th largest financial institution in the state in terms of deposits [9] Company Strategy and Development Direction - The company is shifting from a defensive posture to an offensive strategy focused on organic expansion and deepening client relationships [10][15] - There is a strong emphasis on technology to improve operational efficiency and client service, with ongoing investments in AI and automation [18][19] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by an inverted yield curve and high Fed Funds rates but expressed optimism about improved margins and net income as conditions normalize [10][11] - The focus will be on strengthening core deposits and enhancing operational efficiency through technology [16][17] Other Important Information - The company has a disciplined approach to mergers and acquisitions, having completed seven successful transactions since 1999 [10] - The company has maintained strong credit performance with minimal charge-offs over the years [14] Q&A Session Summary Question: Qualifications of elected directors - The qualifications of the directors were outlined in the proxy statement, confirming their suitability for election [7][8] Question: Future growth strategies - Management discussed the focus on organic growth, cross-selling, and enhancing client engagement through technology [15][16]

Financial Data and Key Metrics Changes - The company's market capitalization as of September 30, 2025, was $425 million, with total assets of $7.7 billion, loans amounting to $5.8 billion, deposits of $5.7 billion, and capital of $700 million [12][13] - The tangible book value per share was reported at $9.77 [12] - Net interest margin increased from 1.8% at the beginning of 2025 to approximately 2%, with net interest income rising from $32 million to nearly $36 million [19] Business Line Data and Key Metrics Changes - The company is focusing on organic growth and enhancing client relationships, aiming to deepen wallet share and optimize loan portfolio performance [23][24] - The investment services group has generated total sales of $486 million and gross revenue of $8.7 million, with assets under management at $369 million [33] Market Data and Key Metrics Changes - The company ranks as the tenth largest financial institution in terms of deposits in its operating states, New Jersey and New York [14] - The company has a minimal exposure to New York City office and rent-regulated multifamily properties, which is a fraction of its portfolio [26] Company Strategy and Development Direction - The company is shifting from a defensive posture to an offensive strategy focused on organic expansion and technology integration [16][24] - There is an emphasis on operational efficiency through technology, including the launch of an AI chatbot and a new HR timekeeping application [17][24][28] - The company plans to continue diversifying its lending and optimizing branch operations while enhancing community engagement [25] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by the inverted yield curve and high Fed fund rates but expressed optimism about improved margins and net income as conditions normalize [16][26] - The focus will be on strengthening core deposits and acquiring deposit-gathering teams to support growth [24] Other Important Information - The company has successfully completed seven M&A transactions since 1999, demonstrating a disciplined acquisition strategy [14] - The company has received advisory approval for its executive compensation and ratified the appointment of Crow LLP as its independent auditor for the fiscal year ending June 30, 2026 [36][37] Q&A Session Summary Question: Qualifications of elected directors - The qualifications and bios of the elected directors were referenced in the proxy statement, specifically on page seven [10]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong year-over-year growth [9] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [9] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [8] Business Line Data and Key Metrics Changes - Annualized deposit growth for Q3 2025 was 9%, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated loan paydowns, but commitments to make loans totaled $307 million, an all-time high [5][8] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [7] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [10] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from the prior year [12] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong net interest margin, which stood at 3.5%, despite a decline in the SOFR rate [3] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact key financial metrics, including earnings accretion and tangible book value [8] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on its net interest margin [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions and highlighted a strong pipeline for loan growth [24] - The company anticipates loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from rate cuts [23] - Management noted that credit quality remains strong, with expectations for continued net recoveries [29] Other Important Information - The company’s total risk-based capital ratio was 14.3% as of September 30, 2025, indicating a well-capitalized position [22] - The effective tax rates for Q3 and year-to-date 2025 were 13% and 15%, respectively, benefiting from transferable energy tax credits [20] Q&A Session Summary Question: Credit quality and normalized charge-off ratio - Management noted net recoveries in seven of the past eight quarters and budgeted for net charge-offs between 5% and 10% historically [29][31] Question: Net interest margin outlook - Management indicated that the acquisition will benefit the net interest margin, despite potential headwinds from rate cuts [32][34] Question: Loan growth guidance and paydowns - Management clarified that paydowns recognized in Q3 were anticipated and that loan growth guidance remains at 5% to 7% for Q4 2025 [42][45] Question: Expense expectations - Management confirmed that the expense guidance for Q4 includes merger charges but not operational costs from the acquisition [46][75] Question: Tax rate expectations for 2026 - Management projected a tax rate of around 17.5% to 18% without additional energy tax credits, but closer to 16% if credits are maximized [57] Question: Credit trends and provision expectations - Management suggested that the provision for Q4 could be similar to earlier quarters, given strong credit quality [59]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong performance [12] - Year-to-date net income for 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [12] - The return on average assets was 1.5% and return on average equity was 14.7% for 2025, with a 20% quarter-over-quarter growth in earnings per share [10][11] Business Line Data and Key Metrics Changes - Loans contracted an annualized 7% in Q3 2025, attributed to anticipated paydowns, but commitments to make loans reached an all-time high of $307 million, exceeding the average of the prior four quarters by 32% [8][10] - Deposit growth for 2025 was annualized at 9%, with a compounded annual growth rate of 11.8% over the last six years [7] - Service charges on accounts increased by 18% during the first nine months of 2025, driven by growth in commercial deposit relationships [9] Market Data and Key Metrics Changes - The loan-to-deposit ratio improved to 96% as of Q3 2025, down from 102% a year prior, indicating better liquidity management [6] - Average loans increased to $4.6 billion in 2025, a growth of over 4% from $4.47 billion in 2024 [13] - Average deposits grew to $4.83 billion in 2025, up by $489 million or over 11% from the previous year [14] Company Strategy and Development Direction - The company is focused on maintaining a stable net interest margin, which stood at 3.5%, despite a decline in the SOFR rate [4][17] - The planned acquisition of Eastern Michigan Financial Corporation is expected to contribute positively to the company's financial metrics, including earnings accretion and tangible book value [11][22] - The company aims to manage its balance sheet effectively to minimize the impact of changing interest rate environments on its net interest margin [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions and highlighted a strong pipeline for loan growth [23] - The company projects loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from federal rate cuts [22] - The effective tax rate for 2025 is projected at 15%, with expectations for continued tax benefits from energy tax credits [20][56] Other Important Information - The company’s total risk-based capital ratio was 14.3% as of Q3 2025, significantly above the minimum threshold for well-capitalized status [21] - Tangible book value per common share increased by 13% during the first nine months of 2025, reflecting retained earnings growth [21][22] Q&A Session Summary Question: Credit quality and normalized charge-off ratio - Management noted net recoveries in seven of the past eight quarters and budgeted for net charge-offs between five and ten basis points [28][29] Question: Net interest margin outlook - Management indicated that the acquisition will benefit the interest margin, and despite rate cuts, they expect the net interest margin to remain steady [31][32] Question: Loan paydowns and growth guidance - Management confirmed that paydowns recognized in Q3 were anticipated and indicated that loan growth could be higher than the 5% to 7% guidance for Q4 [39][43] Question: Expense expectations for Q4 - Management clarified that the Q4 guidance includes acquisition costs but not operational expenses from Eastern Michigan [44][71] Question: Tax rate expectations for 2026 - Management projected a tax rate of around 17.5% to 18% without additional energy credits, but with potential credits, it could be closer to 16% [56][57]