Financial Data and Key Metrics Changes - The company reported $92.5 million of adjusted EBITDA for Q3 2025, marking the strongest quarter in several years [21] - Operating costs were reduced by $24 million compared to the same quarter last year, with a year-to-date reduction of $60 million [5][21] - The company reduced its restricted group debt by over $40 million during the quarter [21] Business Line Data and Key Metrics Changes - The specialty products and solutions segment generated $80.2 million of adjusted EBITDA, with production volume gains of 8% compared to the prior year [23] - The Montana Renewables segment generated adjusted EBITDA with tax attributes of $17.1 million, an increase from $14.6 million in the prior year [26] - The performance brand segment remained flat year-over-year despite the divestment of the Royal Purple Industrial Business [25] Market Data and Key Metrics Changes - The industry saw weakness in renewable diesel margins, with realized margins lower than the normal index margin formula [9] - Biomass-based diesel production remains cut back at roughly 60% utilization, with industry production volumes stabilizing just above 350 million gallons a month [10] - European SAF prices increased approximately 60% over the past six months, indicating a tightening market [19] Company Strategy and Development Direction - The company is on track for its max SAF expansion in the first half of 2026, with approximately 75% of the expanded volume either contracted or in the final review process [12][14] - The focus remains on driving operational improvements and reducing costs per barrel, with a strategic priority on deleveraging [21][24] - The company aims to leverage its integrated model to optimize crude slate and product deals, capturing market opportunities [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the renewable diesel market, anticipating improved margins once the RVO is finalized [38] - The company is confident in its ability to navigate feedstock volatility and expects to benefit from a strong operational environment in 2026 [41] - Management highlighted the importance of regulatory clarity and the potential for increased demand in the SAF market [28][19] Other Important Information - The company successfully monetized $25 million of PTCs during the quarter, with expectations for further monetization at improving price levels [22][27] - An error in the reported Q1 and Q2 2025 cash flow statements will result in an approximate $80 million increase to cash flows from operations for the first quarter [20] Q&A Session Summary Question: What are the gating items for the max SAF expansion? - Management indicated that there are very few gating items, with some tactical constraint removals planned during the scheduled turnaround [31] Question: Can you discuss the off-take agreements for SAF? - Management stated that they are well above halfway through signing customers for the increased SAF production, with a mix of executed and in-service contracts [32][33] Question: What is the primary feedstock being used for Montana Renewables? - Management explained that they utilize a dynamic approach to feedstock, broadly using one-third vegetable oil, one-third corn oil, and one-third tallow and cooking oils [36] Question: How does the small refinery exemption impact financials? - Management noted that they have reduced their outstanding RIN obligation by over $320 million due to favorable rulings on small refinery exemptions [40] Question: What are the expectations for monetizing PTCs? - Management expects to monetize PTCs closer to 95% over time, with initial monetizations around 90% [46]

Financial Data and Key Metrics Changes - F&G reported adjusted net earnings of $165 million, or $1.22 per share, in the third quarter, with alternative investment income at $67 million, or $0.48 per share, below management's long-term expected return [14][15] - Adjusted return on assets (ROA) on a last 12-month basis was 92 basis points, stable compared to the previous year and sequential quarters [16] - Adjusted return on equity (ROE), excluding AOCI, was 8.8%, consistent with the sequential quarter [17] Business Line Data and Key Metrics Changes - F&G achieved record assets under management (AUM) of $71.4 billion before Flow Reinsurance, a 14% increase year-over-year [5] - Gross sales for the third quarter reached $4.2 billion, with core sales at $2.2 billion, slightly above previous quarters [6] - Indexed annuities contributed $1.7 billion in sales for the quarter, while Pension Risk Transfer (PRT) sales exceeded $500 million [7][8] Market Data and Key Metrics Changes - The company reported strong demand for retirement savings products, particularly fixed annuities, driven by demographic trends and macroeconomic volatility [10] - The investment portfolio remains diversified and high quality, with 96% of fixed maturities being investment grade [11] Company Strategy and Development Direction - F&G is transitioning to a more fee-based, higher margin, and capital-light business model, leveraging its position as a leading distributor of annuities and life insurance [20] - The company aims to grow AUM by 50% and expand adjusted ROA to 133 to 155 basis points by 2026 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong returns and achieve long-term shareholder value [13][62] - The competitive landscape remains active, particularly in the PRT market, with expectations for continued momentum [48] Other Important Information - F&F, the majority owner, plans to distribute approximately 12% of F&G's outstanding shares to its shareholders, increasing F&G's public float from 18% to 30% [24] Q&A Session Summary Question: Capital allocation priorities amidst stock pressure - Management emphasized the focus on growing the fixed index annuity business and owned distribution, with share buybacks being a low priority due to the upcoming share distribution [26][28] Question: Variable investment income expectations - Management indicated that variable investment income is expected to fluctuate, with a near-term run rate in the high single digits [30] Question: Exposure to private letter-rated assets - Management reassured that their portfolio is well-positioned and comfortable, with minimal exposure to private credit concerns [32] Question: Alternatives performance breakdown - Management noted that alternative investments had mixed performance, with LPs performing better than direct lending [35] Question: Operating leverage and expense management - Management expects continued improvement in the operating expense ratio, aiming to reduce it from 60 to 50 basis points by year-end 2025 [56] Question: Comments on F&F's share distribution - Management viewed the increase in free float as a positive development, enhancing institutional ownership and confidence in F&G's future [59]

Financial Data and Key Metrics Changes - The company reported third quarter revenues of $165 million and year-to-date revenues of $532 million, indicating strong underlying fundamentals despite not being record figures compared to the previous year [4] - The adjusted compensation margin remained at 67% of revenues, with adjusted non-compensation expenses of $37 million for the quarter, down from last year [8] - The adjusted tax rate for the first nine months was 4%, with a potential adjusted tax rate of 32% excluding stock-based compensation benefits [8][9] Business Line Data and Key Metrics Changes - The European business saw an increase of over 50% from the previous year, with a record number of active engagements and overall pipeline [4] - The company added 25 senior bankers across sectors and regions, representing 18% of the total partner base, which is expected to drive future revenue growth [5][6] Market Data and Key Metrics Changes - The secondary market is expected to exceed $200 billion this year, with private equity showing signs of increased activity and a substantial exit backlog building for 2026 [5] - The liability management and capital-raising businesses are showing good growth, contributing positively to the overall pipeline [14] Company Strategy and Development Direction - The company is focused on scaling its operations and has made significant investments to expand client coverage and capabilities in strategically active industries [6] - The acquisition of Devon Park is seen as a game changer, providing new capabilities and expanding the addressable market and revenue potential [5][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scaling strategy and the potential for significant revenue growth, particularly with the new capabilities from the Devon Park acquisition [6][19] - The company is optimistic about the setup for 2026, with expectations of continued growth in the liability management business despite some isolated issues in the credit markets [26][27] Other Important Information - The company returned an additional $12 million to equity holders in the third quarter, with a year-to-date total of over $157 million returned through various means [9] - The company closed the quarter with $186 million in cash and no debt, and declared a quarterly dividend of $0.07 per share [9] Q&A Session Summary Question: Pipeline commentary and mix of activities - Management noted that the pipeline is currently more geared towards non-traditional M&A activities, but there is a significant increase in traditional M&A business expected [13][14] Question: Recruiting environment and future contributions - Of the 25 senior bankers added, nine are already contributing to revenue, with expectations for the new hires to ramp up in 2026 [17][18] Question: Restructuring activity and client engagement - The company is experiencing steady activity in its liability management business, with expectations for it to be a higher contributing business this year compared to last [26][27] Question: Contribution from the Devon Park acquisition - Management expects the Devon Park business to be a significant contributor to overall revenue, similar to other groups within the company [28][30]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $767 million, slightly up sequentially but down 1.8% year-over-year from $781 million in Q3 2024 [11][12] - Adjusted EBITDA for the quarter was $40 million, up from $32 million in Q3 2024, with an adjusted EBITDA margin of 5.2%, up 110 basis points year-over-year [12][14] - The net leverage ratio increased to 3.2 times due to cash flow items, with total cash on the balance sheet at approximately $264 million [15][16] Business Line Data and Key Metrics Changes - The commercial segment adjusted revenue was $367 million, down 4.7% year-over-year, primarily due to volume declines from the largest client [12][13] - Government segment adjusted revenue decreased by 6.7% to $238 million, attributed to implementation impacts and a client canceling an implementation [13] - Transportation segment adjusted revenue increased by 14.9% year-over-year to $162 million, driven by strong equipment sales in the international transit business [14] Market Data and Key Metrics Changes - New business Annual Contract Value (ACV) was $111 million, consistent with the prior year, while Year-to-date new business ACV was up 5% compared to the same period in 2024 [10] - The qualified ACV pipeline remains strong at $3.4 billion, up 9% year-over-year, driven by opportunities in the federal space [11] Company Strategy and Development Direction - The company is focused on portfolio rationalization and enhancing its technology capabilities, particularly in AI initiatives [8][22] - A new board member with significant industry experience was added to strengthen the company's strategic direction [8] - The company is revising its commercial go-to-market strategy to improve client penetration and sales execution [21][40] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown has created uncertainty but has not significantly impacted revenue streams [20][33] - The company expects to achieve an adjusted EBITDA margin between 5% and 5.5% for the year, with adjusted revenue guidance between $3.05 billion and $3.1 billion [18] - Management expressed optimism about future growth, citing pent-up demand and ongoing sales pipeline expansion [20][23] Other Important Information - The company completed refinancing of its revolving credit facilities, simplifying its balance sheet [15][22] - Adjusted free cash flow for the quarter was negative $54 million, impacted by timing issues related to contract approvals [16] Q&A Session Summary Question: How much of the pipeline actually closed this quarter? - Management indicated that the government shutdown affected the timing of deal closures, but they expect some acceleration once the situation eases [28] Question: How is productivity or quality gains from GenAI being measured? - The primary pilot in the government space focuses on fraud reduction, with expectations of revenue and expense opportunities from AI initiatives [29][30] Question: Are there specific costs left to tackle from stranded cost areas? - Management stated that they are through the initial phase of stranded costs and are continuously optimizing costs [32] Question: Are there changes to contract clauses to reduce churn risk? - Management confirmed that the revenue stream remains unaffected by the government shutdown, and no changes to the contract model are being made [33] Question: What does the client mix look like for AI endeavors? - The healthcare sector represents a significant portion of opportunities in both commercial and government spaces, with a focus on fraud reduction and efficiency [38] Question: What is the timeframe for adding sales talent? - Management indicated that new sales talent needs to be in place by Q4 2025 to impact performance in 2026 [43]

Financial Data and Key Metrics Changes - The company reported fee-related earnings of $1.15 per share, total operating earnings of $1.55 per share, and adjusted net income of $1.41 per share, all of which are among the highest in its history as a public company [3][6] - Management fees reached $1.1 billion, up 19% year over year, with a healthy growth of 16% excluding catch-up fees [3][4] - Total operating earnings were $1.55 per share, a record quarter and 17% ahead of the previous quarter [5][6] - Adjusted net income was $1.3 billion, or $1.41 per share, reflecting an 8% increase year over year [6][7] Business Line Data and Key Metrics Changes - The insurance segment reported operating earnings of $305 million, maintaining a run rate around $250 million [5] - Strategic Holdings operating earnings were $58 million for the quarter, significantly ahead of the previous year [5] - Realized performance and investment income totaled $935 million within the asset management segment [6] Market Data and Key Metrics Changes - The company raised $43 billion in capital during Q3, marking the second-highest fundraising quarter in its history [8][9] - Inflows from Global Atlantic within credit were $15 billion, significantly up year over year [9] - The private equity and real asset business lines raised $16 billion of capital in the quarter [10] Company Strategy and Development Direction - The company is evolving its insurance business to extend the duration of its book and leverage its global investment management capabilities [12][13] - There is a focus on raising more third-party capital across its IV Sidecar strategy to grow Global Atlantic in a capital-efficient manner [12][13] - The company aims to achieve $4.50+ in fee-related earnings per share and $7+ in after-tax adjusted net income per share by 2026 [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 guidance, citing strong fundraising momentum and a constructive monetization environment [26][27] - The company noted that while the monetization environment is currently favorable, it may delay some activities if conditions deteriorate [27] - Management highlighted the importance of maintaining a disciplined approach to investment pacing and portfolio construction [30][31] Other Important Information - The company has over $1 billion in monetization activity, indicating the strength and maturity of its portfolio [6] - The company has $126 billion of dry powder available for future investments, positioning it well for growth [10] - The company expects to see a significant increase in third-party capital capacity, which could translate to over $60 billion of additional fee-paying AUM [17][18] Q&A Session Summary Question: Can you summarize your international perspective, particularly regarding Asia? - Management noted increasing investor demand for Asia, with a broad understanding of opportunities in markets like Japan, India, and Southeast Asia [36][37] Question: What is the normalized level of ROE for the insurance business? - Management indicated that they expect to achieve an all-in ROE of over 20% as the portfolio matures and third-party capital contributions increase [49][50] Question: How do you see the capital markets business expanding? - Management highlighted the potential for significant annual opportunities in capital markets, driven by the capabilities built out in distribution and origination [54][55] Question: What are the expectations for fee-related earnings in 2026? - Management expressed confidence in achieving the $4.50+ target for fee-related earnings per share, driven by strong fundraising and operational leverage [46][47] Question: How will the changes in the insurance business improve client partnerships? - Management emphasized that owning an insurance company allows for a better understanding of client needs and enhances the quality of engagement with insurance CIOs and CEOs [62]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was $387.1 million, with free cash flow of $118.9 million, marking the 23rd consecutive quarter of positive free cash flow, totaling over $1.9 billion during this period [16] - The company reported a net loss of $129 million, reflecting a non-cash impairment charge of $319 million [16] - Oil production averaged approximately 72,000 barrels per day, up 2% from Q3 2024 but down 6% sequentially, while gas production reached record volumes of approximately 352 MMCF per day, up 15% from Q3 2024 [15][16] Business Line Data and Key Metrics Changes - Total average daily production for Q3 2025 was approximately 131,000 BOE per day, up 8% year-over-year but down 2% from Q2 2025 [14][15] - The company increased its annual production guidance to a range of 132,500-134,000 BOE per day due to expected net well additions in Q4 [15] Market Data and Key Metrics Changes - The Permian Basin accounted for about two-thirds of organic activity, with the Williston and Appalachia making up the remainder [8] - The company has seen a more balanced DNC list, with the Permian now representing 40% of wells in process, while Appalachia, Williston, and Uinta each account for roughly 20% [9] Company Strategy and Development Direction - The company remains focused on disciplined capital allocation, prioritizing long-term value creation over growth [4][5] - Recent acquisitions, including a minerals and royalty deal, are aimed at adding low-risk assets that are resilient to short-term commodity market fluctuations [5][11] - The company is actively managing risks such as commodity exposure through a well-structured hedge program [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the business and the potential for growth in the energy sector, emphasizing the importance of being return-driven [4][6] - The outlook for 2026 is expected to be stable, with potential growth in gas production, while oil activity remains flat [21][22] Other Important Information - The company has tightened its full-year CapEx guidance to a range of $950 million-$1.025 billion, with $272 million spent in Q3 2025 [17][18] - Liquidity at the end of the quarter was approximately $1.2 billion, consisting of $32 million in cash and over $1.1 billion available on a revolving credit facility [18] Q&A Session Summary Question: Outlook for 2026 - Management indicated that the outlook for 2026 is stable, with expectations of maintaining similar oil volumes and substantial gas growth [21][22] Question: Update on Q4 well completions - Management confirmed that they are on track with well completions, with many late Q3 wells expected to contribute significantly to Q4 production [26][27] Question: Comparison of current M&A activity to previous years - Management noted that the current M&A landscape is broader and more diverse than in previous years, with opportunities across multiple basins [28][29] Question: Impact of oil and gas prices on activity - Management stated that oil activity remains stable while gas activity is growing, with no imminent changes expected due to current price levels [31][32] Question: Continued build in wells in progress - Management indicated that the number of wells in progress is expected to remain stable unless there is a significant change in commodity prices [45][46]

Financial Data and Key Metrics Changes - For the third quarter, the net asset value (NAV) per share was $11.10, reflecting a 0.7% decrease quarter over quarter [19] - Net investment income (NII) for the quarter was $0.32 per share, an increase from $0.28 per share in the previous quarter [21][24] - The net leverage ratio was 1.26 times at quarter end, down from 1.29 times as of June 30 [22] Business Line Data and Key Metrics Changes - Barings-originated positions now constitute 95% of the BBDC portfolio at fair value, up from 76% at the beginning of 2022 [8] - The weighted average yield at fair value was 9.9%, showing a slight reduction from the prior quarter due to lower base rates [9] - Interest coverage within the portfolio was 2.4 times, above industry averages and consistent with the prior quarter [16] Market Data and Key Metrics Changes - The private credit ecosystem has seen meaningful growth over the past decade, with increased activity across all market segments [10][13] - The competition for new assets remains aggressive, but the core middle market is experiencing less pressure compared to other segments [14] Company Strategy and Development Direction - The company focuses on core middle-market strategies, emphasizing sectors that perform resiliently across economic environments [7][10] - The leadership transition to Tom McDonald as the new CEO is expected to provide continuity and build on the existing foundation [4][5] Management's Comments on Operating Environment and Future Outlook - Management anticipates a moderate increase in deployment opportunities, benefiting from incumbency and deep private equity coverage [15] - The company remains confident in its credit quality and expects positive outcomes in the coming quarters [18] Other Important Information - The board declared a fourth-quarter dividend of $0.26 per share, consistent with the prior quarter, representing a 9.4% yield on NAV [9][24] - The company has spillover income of $0.65 per share, equating to more than two quarters of the regular dividend [25] Q&A Session Summary Question: Expectations on repayment activity with recent Fed cuts - Management noted that a significant portion of repayments is from sales to their joint venture and anticipates a moderate uptick in repayment velocity towards year-end [28][29] Question: Plans for share buybacks given stock trading at a discount - Management stated that share buybacks are consistently evaluated and there may be activity in the coming quarters [30]

Financial Data and Key Metrics Changes - The company has achieved a reduction in net debt by BRL 500 million, starting from an operational cash generation of BRL 4.2 billion, which is higher than the previous quarter [15][16][20] - EBITDA increased from 5.5% to 5.7%, reaching a margin of 7.6% [13][20] - Net income for the quarter was BRL 195 million, slightly down from BRL 198 million, reflecting the impact of financial results and tax credits [20][22] Business Line Data and Key Metrics Changes - The company has seen a performance difference between sectors, with classes A and B gaining volume while classes C, D, and E experienced a retraction in volumes [7][9] - B2B sales, which represent about 40-45% of total sales, showed a significant drop in volume, particularly in cash and carry formats [6][9] Market Data and Key Metrics Changes - Brazil's interest rates reached an all-time high of 15%, impacting consumer debt levels and spending behavior [7][9] - Retail formats serving classes A and B saw a volume increase of 2.7%, while cash and carry formats experienced an 8.3% drop in volume [8][9] Company Strategy and Development Direction - The company is focused on deleveraging and maintaining a strong cash generation strategy, with plans to continue opening new stores selectively [15][22] - There is an emphasis on expanding private label offerings and enhancing digital channels, particularly through partnerships for last-mile delivery [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment but expressed confidence in the company's ability to maintain stability and continue deleveraging [4][20] - The company anticipates a potential recovery in the bar sector and expects strong sales initiatives during the end-of-year period [49] Other Important Information - The company has set a public goal to achieve zero landfill by 2035 and is actively working on sustainability initiatives [23][24] - The app has registered 21 million customers, with 16 million being contactable, indicating strong customer engagement [55] Q&A Session Summary Question: Financial services dynamic and core business expenses - Management discussed ongoing initiatives to control expenses and the potential for further efficiency improvements without compromising customer service [30][31][32] Question: Profitability and CapEx guidance - The company reinforced its guidance for margin improvement while managing working capital and maintaining discipline in supplier relationships [35][36] Question: Update on private label and cash and carry trends - Management highlighted the importance of the cash and carry model and its exposure to lower-income consumers, while also discussing the potential for private label growth [39][40][41] Question: CapEx and store expansion strategy - The company confirmed plans to open new stores with high return potential while being cautious about overall investment levels due to rising interest rates [42][43][46] Question: October sales performance and competition in hygiene and beauty categories - Management expressed optimism about October's strong sales and acknowledged competitive pressures in the beauty market, particularly from higher-income segments [47][48] Question: Self-checkout impact and labor challenges - The company noted that self-checkout has improved customer experience and efficiency, despite challenges in hiring and maintaining staff levels [50][51][52] Question: Updates on app and Black Friday initiatives - Management shared plans for Black Friday promotions and highlighted the app's strong customer base as a key growth avenue [54][55]

Financial Data and Key Metrics Changes - Quarterly fee-related earnings grew 17% year-over-year to $754 million, while distributable earnings increased 7% to $661 million [5][25] - Fee-bearing capital reached $581 billion, an 8% increase year-over-year, driven by record fundraising [5][24] - The company raised $30 billion in the third quarter, bringing total inflows over the past 12 months to more than $100 billion, marking the highest pace of organic fundraising ever [6][27] Business Line Data and Key Metrics Changes - The infrastructure and renewable power franchise raised $30 billion, deployed $30 billion, and monetized over $10 billion at approximately 20% returns over the past 12 months [11] - The company is launching an AI Infrastructure Fund, anticipating AI-related infrastructure investments to exceed $7 trillion over the next decade [13] - In the private equity business, the company launched its seventh vintage of its flagship strategy, focusing on essential service businesses [18][19] Market Data and Key Metrics Changes - Global M&A volumes increased nearly 25% year-over-year, with $1 trillion in announced deals in the third quarter, the highest level since 2021 [6][7] - The company noted improving transaction conditions and a resilient global economy despite trade uncertainties [6][7] Company Strategy and Development Direction - The company aims to double its business by 2030, with plans to expand product offerings and diversify its investor base [30][31] - A landmark partnership with the U.S. government to construct $80 billion of new nuclear power reactors was announced, positioning the company at the center of clean baseload power development [18] - The company is focused on capturing opportunities in AI infrastructure, energy transition, and essential real assets, aligning with global trends of digitalization, decarbonization, and deglobalization [23][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong fundraising year for 2026, expecting to exceed 2025 levels [34][35] - The company anticipates continued growth in fee-related earnings driven by acquisitions and new fundraising initiatives [36] - Management highlighted a solid balance sheet and a strong liquidity position, with $2.6 billion in liquidity at quarter-end [31][32] Other Important Information - The company declared a quarterly dividend of $43.75 per share, payable on December 31 to shareholders of record as of November 28 [32] - The company is actively monetizing stabilized assets, selling approximately $23 billion of properties over the past 12 months [20][22] Q&A Session Summary Question: Fundraising momentum into 2026 - Management expects fundraising in 2026 to exceed 2025 levels, driven by infrastructure and private equity flagships [34][35] Question: Credit business fee rates - The elevated fee rate in the credit business was driven by a mix shift and one-off transaction fees, with a positive trend expected [37][39] Question: Oaktree acquisition benefits - The acquisition of Oaktree will unlock operational synergies, enhance marketing capabilities, and improve client service [42][44] Question: Retail market momentum - The company is seeing robust momentum in the retail market, with new product launches expected to drive growth [45][46] Question: Corporate direct lending outlook - Management noted that while competition in corporate lending is intensifying, private credit remains a significant and growing component of global finance [49][52] Question: Private equity fundraising outlook - The company is optimistic about raising its largest private equity fund ever, focusing on essential assets that generate consistent results [56][57]

Financial Data and Key Metrics Changes - The company reported a GAAP loss from continuing operations of $0.13 per common share and distributable earnings were a loss of $0.94 per common share, with $0.04 per common share excluding realized losses on asset sales [13] - Net interest income declined to $10.5 million due to a $1.4 billion reduction in the CRE portfolio and $40 million of negative credit migration [13] - Book value per share was $10.28 at quarter end, down $0.16 from June 30, primarily due to the dividend covered shortfall [17] Business Line Data and Key Metrics Changes - The core portfolio totaled 1,120 loans with an unpaid principal balance of $5.4 billion, with delinquencies increasing to 5.9% of the total [5] - The small business lending platform originated $175 million of SBA 7(a) loans, 50% below the quarterly target, generating $11 million in net income [10] - The non-core portfolio had an $8 million drag on earnings, with $503 million liquidated in the quarter [7] Market Data and Key Metrics Changes - The Portland mixed-use asset represented 14% of quarter-end equity, with a net operating loss of $330,000 and occupancy of 48% [8] - The office and retail space in the Portland asset is currently 28% leased and has hit break-even [8] Company Strategy and Development Direction - The company is focused on returning to financial health and profitability through portfolio yield rehabilitation, growth in small business lending, and management of 2026 debt maturities [4] - The strategy includes reducing CRE loan exposure and accelerating sales of non-performing loans and REO positions [11] - The company plans to evaluate the dividend in December based on progress in the business plan and liquidity levels [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in refinancing pending debt maturities and emphasized a conservative approach to new investments and dividend policy [11][50] - The company expects to utilize unencumbered assets and additional senior and unsecured issuance to address liquidity needs [30] Other Important Information - The company completed two portfolio sales, netting $85 million and $24 million from the sales of loans [4][5] - The combined provision for loan loss and valuation allowance decreased by $140.2 million, with a net increase in provision for loan losses of $38 million [15][16] Q&A Session Summary Question: What is the right level of leverage for the company going forward? - Management indicated that the current gross leverage is around $3.5 million, with a target of less than that on a pro forma basis [19] Question: What is the target mix of secured versus unsecured debt? - The expectation is that the majority of debt will be secured for the immediate future, with potential access to unsecured markets as they open [20][21] Question: Can you explain the rationale behind continuing to pay dividends while reducing leverage? - The company is adopting an aggressive approach to repositioning the balance sheet and will evaluate the dividend in December based on liquidity and business progress [30] Question: Will the other assets category be evaluated at year-end as part of the audit? - Management confirmed that deferred tax assets will be reevaluated at year-end, with expectations of profitability growth as origination volume increases [34] Question: Is the Portland property being carried at fair value or at cost? - The property is carried at fair value for the condos held for sale, while the other components are held at cost [36][40] Question: How does the recent sale of a large office building in Portland affect property valuations? - Management clarified that the Portland asset is a luxury hospitality asset, which is not directly comparable to older office properties experiencing valuation declines [45]