Financial Data and Key Metrics Changes - The company reported a 42% growth in diluted earnings per share as adjusted compared to the previous year [5] - Revenue increased by 9.6%, driven by broad-based volume growth, improved payer mix, and additional revenue from Medicaid supplemental programs [5][10] - Adjusted EBITDA increased by approximately $240 million due to Medicaid state supplemental payments [12][15] Business Line Data and Key Metrics Changes - Same-facility equivalent admissions increased by 2.4% year-over-year [10] - Same-facility inpatient surgical volume grew by 1.4%, while outpatient surgical volume increased by 1.1% [10] - Same-facility visits rose by 1.3% compared to the prior year [10] Market Data and Key Metrics Changes - Commercial and Medicare visits combined increased by 4.1%, while Medicaid and self-pay visits declined [10] - Same-facility total commercial equivalent admissions rose by 3.7%, with exchanges growing by 8% [11] - Medicare admissions increased by 3.4%, and Medicaid admissions grew by 1.4% [11][72] Company Strategy and Development Direction - The company is focused on enhancing care through increased access, advanced digital tools, and staff training [6][8] - There is an emphasis on improving operational efficiency and service offerings through strategic investments [8] - The company plans to maintain high performance levels and has strengthened its management team and systems [8] Management's Comments on Operating Environment and Future Outlook - Management expects solid demand for healthcare services, with volumes anticipated to grow within a long-term range of 2%-3% [7] - Operating costs are expected to remain stable, with some pressures in certain areas [7] - The company is well-positioned to sustain performance levels and navigate future challenges [8][99] Other Important Information - Cash flow from operations was $4.4 billion, with $1.3 billion in capital expenditures and $2.5 billion in share repurchases [14] - The company updated its full-year guidance, expecting revenues between $75 billion and $76.5 billion and adjusted EBITDA between $15.25 billion and $15.65 billion [15] Q&A Session Summary Question: Can you remind us what states are still pending for grandfathered programs? - Management mentioned Florida, Georgia, and Virginia as states with pending applications, but they do not expect approvals during the current shutdown [20][22] Question: Are you seeing early scheduling for elective surgeries? - Management noted that it is too early to size the potential impact of upcoming enrollment periods and that they are prepared to assist patients with coverage navigation [26][27] Question: Can you provide a bridge from Q3 into Q4 guidance? - Management indicated that the implied growth rate for Q4 is expected to be in the high single-digits, considering hurricane impacts and state supplemental payment declines [32] Question: How much did you recognize in the fourth quarter for Tennessee specifically? - Tennessee was the largest driver of net benefit in Q3, with Texas and Kansas also contributing to the overall increase [36][38] Question: How do you expect professional fees to trend going into 2026? - Professional fees increased by 11% year-over-year, with expectations for continued financial improvement as integration efforts mature [82][84] Question: How is the company preparing for potential volume growth in Q4? - Management expressed confidence in their capacity to handle increased demand, citing improved staffing and operational initiatives [88][90] Question: What is the outlook for hurricane-impacted facilities? - Management expects to recover approximately $100 million of the $250 million headwind from hurricanes in 2025, with ongoing challenges in North Carolina [95][96] Question: What gives you confidence in achieving long-term volume growth? - The company has experienced 18 consecutive quarters of volume growth and anticipates continued demand driven by capital investments and outpatient facility expansions [99]

Financial Data and Key Metrics Changes - The company reported FFO as adjusted of $0.46 per share and AFFO of $0.42 per share, with year-to-date portfolio same-store growth of 3.8% [12][18] - Cash NOI increased by 9.4% for the quarter [13] - The company ended the third quarter with a net debt to adjusted EBITDA ratio of 5.3x and $2.7 billion of liquidity [17] Business Line Data and Key Metrics Changes - CCRC portfolio delivered strong performance with NOI up more than 50% since acquiring the joint venture interest, including double-digit growth this year [9] - Outpatient medical executed 1.2 million sq ft of leases during the quarter, achieving 3% escalators or above on executions and positive cash releasing spreads of 5.4% [14] - Lab leasing saw 339,000 sq ft of leases executed, with total occupancy at 81% and positive 5% releasing spread on renewals [16] Market Data and Key Metrics Changes - The leasing pipeline has doubled to 1.8 million sq ft since the beginning of the year, with a favorable mix of new and renewal leases [16][22] - The company is experiencing increased demand from tech and AI-based companies, contributing to a strengthening demand profile [17][43] Company Strategy and Development Direction - The company aims to recycle outpatient sale proceeds into higher return lab opportunities, with a focus on strategic investments and disciplined capital allocation [7][18] - The internalization of property management allows for quicker deployment of technology and deeper tenant relationships, enhancing growth opportunities [5][11] - The company is focused on maintaining a tech-enabled platform to streamline operations and expand tenant services [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the outpatient sector, citing positive leading indicators and a strong pipeline for leasing [4][7] - The company anticipates a decline in occupancy in the short term but expects to reach a bottom and begin recovery thereafter [8][17] - Management highlighted the importance of the recent positive regulatory environment and its impact on tenant sentiment and capital raising [64] Other Important Information - The company has completed $158 million of asset sales and loan repayments year-to-date, with an additional $204 million of dispositions under a purchase and sale agreement [18][19] - The company is exploring various opportunities for capital recycling, including outpatient medical, life science investments, and potential share repurchases [57] Q&A Session Summary Question: Can you elaborate on the lab leasing pipeline and what's changed? - Management noted that the pipeline has doubled, with a favorable mix of new and renewal leases driven by improved sentiment in the sector [22][23] Question: What are the potential opportunities for the $1 billion in outpatient medical sales? - Management indicated that outpatient medical has been a strong business, and they plan to take advantage of strong demand for assets while exploring higher return opportunities in life sciences [25][26] Question: How does the company view tenant risk and the current tenant base? - Management reported a meaningful reduction in tenant exposure and expressed confidence in the ability of tenants to raise capital in the current environment [38][41] Question: What is the expected timeline for occupancy recovery? - Management expects occupancy to trend down to the high 70% range before beginning to recover, with a focus on maintaining strong tenant relationships [76][77] Question: How does M&A activity impact tenant space needs? - Management indicated that M&A can lead to increased demand for space, depending on the nature of the acquisition [96]

Financial Data and Key Metrics Changes - The company reported net earnings of $6.8 million and earnings per share of $0.28 for the third quarter, compared to core income of $2 million and $0.08 per share in the same quarter of 2024 [4] - Return on Assets (ROA) improved to 70 basis points, and Return on Tangible Common Equity (ROTCE) improved to 9.45% [4] - Core ROA adjusted for certain non-permanent items is closer to 90 basis points, aligning with the target of 1% ROA [5] - Net interest margin for the third quarter was 3.18%, up from 2.86% in the previous quarter and 2.97% year-over-year [19] Business Line Data and Key Metrics Changes - The mortgage division's production increased from approximately $20 million per month to $100-$120 million per month over the past few years, with pre-tax earnings of about $1.9 million in the current quarter [10] - The Mortgage Warehouse division showed average balances of about $210 million, ending balances of about $327 million, and pre-tax earnings of about $1.6 million [11] - Panacea's loan balances increased to $530 million, with deposits growing to about $132 million, a 50% increase year-over-year [12] Market Data and Key Metrics Changes - Non-interest-bearing checking accounts grew by about 16% compared to a year ago, improving the deposit mix and reducing the cost of deposits by almost 20% [7] - Average earning assets increased by 10% annualized in the third quarter, positioning the company to replace earning assets sold a year ago [18] Company Strategy and Development Direction - The company is focused on increasing the proportion of non-interest-bearing deposits to around 20% of total deposits, which is currently about 20% in the core bank [34] - The strategy emphasizes driving low-cost deposits and maintaining competitive rates for checking accounts to support growth and profitability [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 1% ROA goal, citing substantial tailwinds and improved profitability ratios [23] - The company is optimistic about the potential for loan growth in the fourth quarter and into 2026, with expectations of 6%-8% growth in the core bank [31] Other Important Information - The company noted limited impacts on net interest margin from the consumer program and expects continued improvement in margins due to new loans repricing [20] - The company has a strong focus on managing operating expenses, with core non-interest expense slightly higher than the year-ago quarter [22] Q&A Session Summary Question: Thoughts on overall loan growth for the fourth quarter and into 2026 - Management indicated potential for more runoff in the Mortgage Warehouse but expects to sustain levels around $210 million, with Panacea loans potentially reaching $150 million in annual production [29][31] Question: Timing for reaching a 3.30% margin - Management anticipates reaching a 3.30% margin by the first quarter of next year, focusing on increasing non-interest-bearing deposits [32][34] Question: Impact of interest rates on deposit costs - Management noted that while competition may drive rates down, the company's growth in checking accounts allows for competitive positioning without sacrificing margins [42] Question: Evidence of sticky customers from the digital banking platform - Management confirmed that digital customers are stickier than expected, with over 90% having multiple accounts or referring others [44][49] Question: Resolution of asset quality issues - Management expressed optimism about resolving certain loans in the next few quarters, particularly a C&I property that could improve margins [50][52]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $0.53 per share compared to a loss of $0.29 in Q2 2025 [5] - Book value increased to $7.33 as of September 30 from $7.21 on June 30 [5] - Total return for Q3 was 6.7%, a significant improvement from negative 4.7% in Q2 [5] - Average portfolio balance rose to $7.7 billion in Q3 from $6.9 billion in Q2 [5] - Liquidity improved to 57.1% at September 30, up from 54% at June 30 [5] Business Line Data and Key Metrics Changes - The average coupon of the portfolio increased from 5.45% to 5.53% [30] - Effective yield rose from 5.38% to 5.51% [30] - Net interest spread expanded from 2.43% to 2.59% [30] - 20% of the portfolio is now backed by credit-impaired borrowers, with significant exposure to Florida and New York pools [30] Market Data and Key Metrics Changes - The Treasury curve steepened slightly during the quarter, reflecting market expectations of Federal Reserve rate cuts due to labor market deterioration [7][9] - The current coupon mortgage spread to the 10-year Treasury halved from 200 basis points in May 2023 to 100 basis points [11] - The mortgage market remains attractive, with strong demand despite tight credit spreads [10] Company Strategy and Development Direction - The company maintains a conservative leverage posture while focusing on high coupon specified pools to enhance income stability [30][43] - The strategy includes a heavy tilt towards call-protected specified pools to insulate against adverse payment behavior [30] - The company is positioned to benefit from potential Federal Reserve rate cuts and the anticipated end of quantitative tightening [44] Management's Comments on Operating Environment and Future Outlook - Management noted a potential crossroads for the economy, with labor market weakness prompting possible Federal Reserve rate cuts, while also observing resilience in consumer spending and government stimulus [45][46] - The company expects to adjust hedges to lock in lower funding costs and prepare for potential rate hikes following expected cuts [47] Other Important Information - The company raised $152 million in equity capital during the quarter, which was fully deployed into high-quality specified pools [28][41] - The weighted average price of the portfolio was over $101, indicating a premium position [72] Q&A Session Summary Question: Any macro factors that might change overall risk positioning? - Management indicated that if the Federal Reserve continues to cut rates, they might consider increasing leverage to benefit from the low-rate environment [50][52] Question: View on payouts upside potential with refi momentum? - Management noted that payouts have increased sharply recently, but they do not expect to return to the high levels seen in 2020 or 2021 [54][55] Question: Scenarios for dollar roll specialness returning? - Management expressed skepticism about the return of dollar roll specialness, citing the Federal Reserve's focus on buying Treasuries and bills rather than mortgages [61] Question: Supply and availability for longer-dated repo? - Management mentioned that spreads for longer-dated repo are currently too wide, but they are opportunistically looking to lock in favorable terms [63][64] Question: Percentage of portfolio covered with call protection? - Almost 100% of the portfolio has some form of call protection, which is expected to mitigate risks in a declining rate environment [71]

Financial Data and Key Metrics Changes - The company reported total assets under management (AUM) of $169 billion as of September 30, which is slightly below the previous quarter level due to net outflows despite favorable market performance [8][10] - Earnings per share (EPS) increased to $6.69 from $6.25 in the second quarter, marking a 7% increase sequentially, although it decreased 3% year-over-year due to lower average assets [10][19] - The operating margin improved by 170 basis points to 33%, or 33.4% excluding discrete items, with an incremental margin above 50% [10][18] Business Line Data and Key Metrics Changes - The ETF business saw significant growth, with AUM reaching $4.7 billion, up 79% year-over-year, and achieving the highest quarterly sales and net flows of $0.9 billion each [5][14] - Total sales increased by 12% to $6.3 billion, driven by higher sales in fixed income and alternative strategies, while net outflows remained unchanged at $3.9 billion [8][15] - Institutional sales rose to $2 billion from $1.3 billion in the previous quarter, primarily due to fixed income and multi-asset strategies [15] Market Data and Key Metrics Changes - The company experienced positive net flows in fixed income and alternative strategies, while equity strategies faced net outflows primarily due to a focus on quality-oriented strategies [9][16] - In October, flows across products and asset classes continued to trend similarly, with strong ETF sales and net flows, although U.S. retail mutual fund headwinds persisted [9][10] Company Strategy and Development Direction - The company aims to increase retail separate account offerings, expand ETF availability in key channels, and grow the wealth management business [4][5] - The management emphasized a disciplined approach to inorganic growth, focusing on opportunities that are financially and strategically compelling [7][28] - The company is actively exploring opportunities to enhance capabilities and scale, particularly in private markets and international client access [28][60] Management's Comments on Operating Environment and Future Outlook - Management noted that quality-oriented strategies have underperformed in a market favoring momentum, but they expect a reversion to favor quality strategies in the future [27][33] - The company remains optimistic about the potential for positive flows in fixed income and alternative strategies, despite the current challenges in equity strategies [32][33] Other Important Information - The company completed a debt refinancing, increasing financial flexibility with a new $400 million term loan and a $250 million revolving credit facility [11][20] - The quarterly dividend was raised by 7% to $2.40 per share, marking the eighth consecutive annual increase [11][20] Q&A Session Summary Question: What are the key strategies attracting interest in ETFs? - Management indicated that both the ETF wrapper and specific strategies are driving interest, with a focus on expanding access and building track records in various strategies [24][25] Question: Any updates on inorganic opportunities? - Management reiterated that the environment remains favorable for inorganic growth, focusing on high-performing capabilities and private market expansion [26][28] Question: How to improve net flows moving forward? - Management highlighted positive flows in fixed income and alternative strategies, while addressing the need to grow non-quality correlated strategies to offset net outflows [32][33] Question: What is the outlook for operating expenses following office consolidation? - Management confirmed that the benefits of office consolidation are reflected in the current run rate, with expectations for lower operating expenses moving forward [37][38] Question: What is the status of discrete expenses and buybacks? - Management stated that discrete expenses related to inorganic activities may persist, and buybacks remain a critical part of the capital strategy, although no specific plans were announced [43][45]

Financial Data and Key Metrics Changes - The company reported a 42% growth in diluted earnings per share as adjusted compared to the previous year [5] - Revenue increased by 9.6%, driven by broad-based volume growth, improved payer mix, and additional revenue from Medicaid supplemental programs [5][11] - Adjusted EBITDA margin improved due to strong performance in labor and supplies management [13][15] - Cash flow from operations was $4.4 billion, with $1.3 billion in capital expenditures and $2.5 billion in share repurchases [16] Business Line Data and Key Metrics Changes - Same-facility equivalent admissions increased by 2.4% year-over-year [11] - Same-facility inpatient surgical volume grew by 1.4%, while outpatient surgical volume increased by 1.1% [11] - Same-facility visits rose by 1.3%, with commercial and Medicare visits combined increasing by 4.1% [11][12] - Medicaid and self-pay visits both declined compared to the prior year [11] Market Data and Key Metrics Changes - The company experienced solid demand across its markets for healthcare services, expecting volumes to remain within a long-term growth range of 2 to 3% [8] - The respiratory season started slowly, impacting year-over-year growth rates in admissions and visits [11] Company Strategy and Development Direction - The company is focused on enhancing care for patients by increasing access, investing in digital tools, and training staff [7] - The management team has been restructured to improve enterprise capabilities and operational performance [9] - The company is advocating for the extension of enhanced premium tax credits for health insurance coverage [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high levels of performance, citing strong cash flow and a robust balance sheet [9] - The company anticipates stable operating costs and solid demand for healthcare services in the upcoming year [8] - Preliminary views for 2026 are cautious due to the fluid nature of federal policy [8][9] Other Important Information - The company raised its full-year guidance, expecting revenues between $75 billion and $76.5 billion and adjusted EBITDA between $15.25 billion and $15.65 billion [17] - The net benefit from Medicaid state supplemental payments is expected to be $250 million to $350 million favorable for the full year 2025 compared to 2024 [17][18] Q&A Session Summary Question: Can you remind us what states are still pending for grandfathered programs? - Management mentioned Florida, Georgia, and Virginia as states with pending applications, but they do not expect approvals during the current shutdown [21][23] Question: Are you seeing early scheduling for elective surgeries? - Management noted that it is too early to size the potential impact of upcoming enrollment periods and special enrollment provisions [27][28] Question: Can you provide a bridge from Q3 into Q4 guidance? - Management indicated that hurricane impacts and declines in state supplemental payments will affect Q4 growth rates, which are expected to be in the high single-digits range [34] Question: How much of the supplemental payment benefit is included in guidance for Tennessee and Texas? - Tennessee was the largest driver of net benefit in Q3, while Texas had a minor impact due to late approval [38] Question: What is the outlook for professional fees and their impact on EBITDA? - Professional fees increased by 11% year-over-year, primarily related to anesthesia and radiology [84] Question: How is the company managing capacity for incremental volumes? - Management stated there are no significant capacity constraints and that they have improved staffing to meet expected demand [90][91] Question: How should we think about the hurricane-impacted facilities' recovery? - Management expects to recover approximately $100 million of the $250 million headwind from hurricanes in 2025 [97] Question: What gives you confidence in achieving long-term volume growth? - Management highlighted 18 consecutive quarters of volume growth and the addition of more outpatient facilities as key factors [101]

Primis Financial (NasdaqGM:FRST) Q3 2025 Earnings Call October 24, 2025 10:00 AM ET Company ParticipantsChristopher Marinac - Director of Equity ResearchDennis Zember - President and CEOMatt Switzer - CFOConference Call ParticipantsRussell Gunther - Managing Director and Equity Research AnalystOperatorLadies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Primis Financial Corp. third quarter earnings ...

Financial Data and Key Metrics Changes - GrafTech achieved a 9% year-over-year increase in sales volume, reaching nearly 29,000 metric tons in Q3 2025 [4][14] - The company generated positive adjusted EBITDA of $13 million for the quarter, compared to a negative $6 million in the prior year [24] - Net cash from operating activities was $25 million, with adjusted free cash flow of $18 million, strengthening liquidity to $384 million as of the end of September [6][26] Business Line Data and Key Metrics Changes - Sales volume in the U.S. grew by 53% year-over-year in Q3, contributing to a total year-to-date increase of 39% [5][15] - The average selling price for the third quarter was approximately $4,200 per metric ton, representing a 7% decline compared to the prior year [16][24] - Cash costs per metric ton were $3,795, reflecting a 10% year-over-year decline [18][20] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 206 million tons in Q3 2025, up nearly 2% year-over-year [7][8] - In the U.S., steel production grew by 2% year-to-date compared to 2024, while EU steel output decreased by 4% year-to-date [8][9] - World Steel projects a 1.8% growth in U.S. steel demand for 2026 and a 3.2% growth in Europe [9][10] Company Strategy and Development Direction - GrafTech aims to increase sales volume and market share while improving average pricing by shifting geographic sales mix to higher price regions [29][30] - The company is focused on disciplined, value-focused growth rather than volume for volume's sake, especially in light of challenging pricing dynamics [15][16] - Long-term, GrafTech is bullish on the shift towards electric arc furnace steelmaking, which is expected to drive demand for graphite electrodes [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about early signs of recovery in the steel market, driven by infrastructure spending and trade actions [42][43] - The company remains committed to maintaining a culture of safety and achieving zero injuries [12][13] - Management highlighted the importance of trade protection measures and their potential positive impact on the steel industry and graphite electrode demand [10][32] Other Important Information - GrafTech's liquidity position includes $178 million in cash and $107 million available under its revolving credit facility [26][27] - The company is on track for a cumulative reduction of over 30% in cash costs per metric ton since the end of 2023 [6][21] Q&A Session Summary Question: Should we expect any other kind of deferred revenue benefits? - Management indicated that the recent deferred revenue recognition was a one-time event and no further benefits are expected [39] Question: What are the current demand and price environment dynamics? - Management noted that the market is oversupplied, making it challenging to push pricing, but there are signs of positive momentum in steel demand [41][42] Question: What is the status of GrafTech's engagement in the battery-related materials market? - Management stated that while there is excess capacity, the market is still developing, and they are positioned to support raw material supply for battery production [46][47] Question: Have the tariffs on Indian material had any impact on imports? - Management expressed confidence that the tariffs would support their market position and negotiations moving forward [54] Question: Any updates on public-private partnerships? - Management highlighted the importance of a healthy electrode industry to support steelmaking and expressed confidence in GrafTech's role in the domestic supply chain [58][60] Question: Has U.S. pricing improved sequentially from the prior quarter? - Management indicated that U.S. pricing is flat to slightly up compared to the prior quarter, with annual contracts limiting price movement [64]

Financial Data and Key Metrics Changes - GrafTech achieved a 9% year-over-year increase in sales volume, reaching nearly 29,000 metric tons, marking the highest sales volume performance in 12 quarters [6][19] - The company generated positive adjusted EBITDA of $13 million for the quarter, compared to a negative $6 million in the prior year [32] - A net loss of $28 million or $1.1 per share was reported, an improvement from a net loss of $36 million or $1.4 per share in the prior year [32] - Cash costs per metric ton decreased by 10% year-over-year to $3,795, with a full-year guidance for a 10% decline in cash COGS per metric ton [26][28] Business Line Data and Key Metrics Changes - Sales volume in the U.S. grew by 53% year-over-year, contributing significantly to overall sales volume growth [7][20] - The average selling price for the third quarter was approximately $4,200 per metric ton, reflecting a 7% decline compared to the prior year [22] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 206 million tons in 2025, up nearly 2% year-over-year, with a global utilization rate of approximately 66% [11] - In the U.S., steel production grew by 2% year-to-date compared to 2024, while the EU saw a 4% decrease in steel output year-to-date [12] Company Strategy and Development Direction - GrafTech is focused on increasing sales volume and market share, improving average pricing, reducing costs, and enhancing liquidity [38] - The company is strategically shifting its sales mix towards the U.S. market, which has favorable pricing dynamics [8][19] - GrafTech is committed to maintaining a disciplined approach to growth, prioritizing value over volume [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about potential catalysts for a rebound in the steel market, including infrastructure spending and easing financing conditions [13][39] - The company remains bullish on the long-term shift towards electric arc furnace steelmaking, which is expected to drive demand for graphite electrodes [39][40] Other Important Information - GrafTech's liquidity position improved to $384 million as of September, consisting of cash and availability under credit facilities [36] - The company is actively engaging with customers to understand their needs for the upcoming year, positioning itself for continued market share growth [15] Q&A Session Summary Question: Should we expect any other kind of deferred revenue benefits? - Management indicated that no further deferred revenue is expected, as there is nothing left on the balance sheet [49][50] Question: What do you think about the current demand and price environment? - Management noted that the market is oversupplied, making it challenging to push pricing, but there are signs of positive momentum in the steel industry [52][54] Question: Is there any way to accelerate commercial applications in the battery-related materials market? - Management stated that they are developing capabilities and have a distinct advantage with vertical integration, but the market is still developing [58][62] Question: Have you seen any material impact from the 50% tariffs on Indian material? - Management expressed confidence in continuing to grow volume in the U.S. market, viewing the tariffs as an opportunity [66][67] Question: Any updates on public-private partnerships? - Management highlighted the importance of a healthy electrode industry to support steelmaking and expressed confidence in GrafTech's role in the domestic supply chain [70][74]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $37 million or $0.82 per diluted share on revenue of $116 million, reflecting a year-on-year revenue growth of 13.6% [13] - Profitability metrics remained strong with a pretax pre-provision ROA of 2.25%, ROA of 1.5%, and ROTCE of 15.1%, all above the cost of capital [13] - The net interest margin expanded by nine basis points to 4.27%, supported by an improved deposit mix and higher asset yields [13][21] Business Line Data and Key Metrics Changes - Total loans increased by 6% quarter-on-quarter and 11% year-to-date, reaching $7.5 billion, with loan originations of $264 million, up 25% year-on-year [14][17] - Noninterest income totaled $15.9 million, up 9.5% from the previous quarter, primarily due to a $7 million gain from loan sales [22] - Noninterest expense increased by 1.5% to $60.5 million, driven by higher salaries and employee benefits [23] Market Data and Key Metrics Changes - Total deposits were $7.8 billion, slightly up from the prior quarter, with non-interest bearing accounts increasing by $160 million or 9% linked quarter [19] - The company experienced a decline in time deposits due to lower brokered CDs and shifts to money market accounts [19] Company Strategy and Development Direction - The company aims to build a pre-M&A commercial banking franchise in Chicago and is focused on expanding its commercial payments business [28] - The company anticipates crossing the $10 billion asset threshold in Q1 2026, which will delay the impact of Durbin and higher insurance assessments until 2027 [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to continue executing for customers and delivering results for shareholders despite macroeconomic uncertainties [30] - The company remains vigilant over risks, including the federal government shutdown, which could impact SBA loan sales [30][51] Other Important Information - The company was recognized as one of Chicago's best workplaces and received the 2024 SBA 7504 Expert Lender of the Year award [9][10] - Capital levels continued to grow, with CET1 surpassing 12%, and tangible book value per share increased by 5% linked quarter [15][26] Q&A Session Summary Question: What are the assumptions built into the margin and net interest income? - Management indicated that they have been outperforming model assumptions due to competitive rates on deposits and improved analytical capabilities [34][36] Question: What are the thoughts on M&A activity given the recent pickup? - Management remains open to M&A opportunities that are financially and strategically attractive, focusing on transactions that deliver value for shareholders [44][45] Question: How has the government shutdown impacted the SBA business? - The company continues to originate SBA loans but cannot sell and settle loans during the shutdown, which may delay gain on sale income [50][51] Question: What is the expected impact of crossing the $10 billion asset threshold? - The estimated impact from Durbin is between $4.5 million to $5 million, effective in 2027 [46][48] Question: Can you provide insights on the commercial payments business? - The commercial payments business focuses on high-volume ACH transactions and payroll processing, with expectations to see growth in 2026 [71][73]