Q1 2025 Bridgewater Bancshares Inc Earnings Call

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Konstantinos: Good morning and welcome to the Bridgewater Bancshares 2025 first quarter earnings call. My name is Konstantinos and I will be your conference operator today. All participants have been placed in listen-only mode. After Bridgewater's opening remarks, there will be a question and answer session. To ask a question, please press star then 1 on your touchstone phone. If you're using a speakerphone, please pick up your handset before pressing the key. To restore your question, please press star then 2. Please note that today's call is being recorded.

Good morning, and welcome to the Bridgewater Fund shares 2025 first quarter earnings call.

My name is Constantino center will be your conference operator today.

Participants have been placed in a listen only mode.

Speaker Change: After rich waters opening remarks, there will be a question and answer session.

Speaker Change: Asked a question. Please press Star then one on you touched on phone.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two please.

Speaker Change: Please note that today's call is being recorded.

Justin Horstman: This time, I would like to introduce Justin Horstman, Vice President of Investor Relations, to begin the conference call. Please go ahead.

Speaker Change: At this time I would like to introduce Justin Horstman, Vice President of Investor Relations to begin the conference call. Please.

Speaker Change: Please go ahead.

Justin Horstman: Thank you, Konstantinos, and good morning, everyone. Joining me on today's call are Jerry Baack, Chairman and Chief Executive Officer, Joe Chybowski, President and Chief Financial Officer, Nick Place, Chief Banking Officer, and Jeff Shellberg, Chief Credit Officer. In just a few moments, we will provide an overview of our 2025 first quarter financial results.

Speaker Change: Thank you Konstantinos and good morning, everyone. Joining me on today's call are Jerry Bach, Chairman and Chief Executive Officer, Joe Schabowski, President and Chief Financial Officer, Nick place, Chief Banking Officer, and Jeff Shelburne, Chief Credit Officer.

Speaker Change: And just a few moments we will provide an overview of our 2025 first quarter financial results, we will be referencing a slide presentation that is available on the Investor Relations section of Bridgewater website investors that Bridgewater Bank M. N dotcom following our opening remarks, we will open the call for questions.

Justin Horstman: We will be referencing a slide presentation that is available on the Investor Relations section of Bridgewater's website, investors.bridgewaterbankmn.com. Following our opening remarks, we will open the call for questions.

Justin Horstman: During today's presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward-looking statement disclosure in the slide presentation and our 2025 first quarter earnings release for more information about risks and uncertainties which may affect us.

Speaker Change: During today's presentation, we may make projections or other forward looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward looking statement disclosure in the slide presentation, and our 2025 first quarter earnings release for more information about risks and uncertainties.

Justin Horstman: The information we will provide today is as of and for the quarter ended March 31st, 2025, and we undertake no duty to update the information.

Speaker Change: Which may affect us the information we will provide today is as of and for the quarter ended March 31, 2025, and we undertake no duty to update the information. We may also disclose non-GAAP financial measures. During this call. We believe certain non-GAAP financial measures. In addition to the related GAAP measures provide meaningful information to investors to help them.

Justin Horstman: We may also disclose non-GAAP financial measures during this call. We believe certain non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the company's operating performance and trends, and to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. Please see our slide presentation and 2025 First Quarter Earnings Release for reconciliations of non-GAAP disclosures to the comparable GAAP measures.

Speaker Change: Understand the company's operating performance and trends and to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. Please see our slide presentation. In 2025 first quarter earnings release are reconciliations of non-GAAP disclosures to the.

Jerry Baack: I would now like to turn the call over to Bridgewater's Chairman and CEO, Jerry Baack. Thank you, Justin, and thank you, everyone, for joining us this morning. I am pleased to report on Bridgewater's strong first quarter, with adjusted earnings per share of $0.32, excluding merger-related expenses. We saw a continuation of the momentum and trends that began in 2024. Our strong quarter was highlighted by robust balance sheet growth and net interest margin expansion. Generating strong loan growth has always been a strength of Bridgewater, but with our increased focus on core deposit growth over the past two years, including 8% annualized growth in this first quarter, we are well positioned to again be more offensive-minded on the loan front.

Speaker Change: GAAP measures I would now like to turn the call over to Bridgewater, as chairman and CEO Jerry Bock.

Jerry Bock: Thank you Justin and thank you everyone for joining us. This morning I'm pleased to report on Bridgewater strong first quarter with adjusted earnings per share of <unk> 32 cents. Excluding merger related expenses, we saw a continuation of the momentum and trends that began in 2020 for our strong quarter was high.

Jerry Bock: Alerted by robust balance sheet growth and net interest margin expansion.

Generating stronger loan growth has always been a strength of Bridgewater.

Jerry Bock: With our increased focus on core deposit growth over the past two years, including 8% annualized growth in this first quarter, we are well positioned to again be more offensive minded on the loan front.

Jerry Baack: In addition, we have seen increased loan demand in our market driving our pipelines to the highest level since 2022. As a result, first quarter loan balances increased 16% on an annualized basis. We're thrilled with our team's commitment to our solid client base. We saw net interest margin expansion accelerate during the quarter, climbing 19 base levels. This was driven by lower deposit pricing, the continued higher pricing of loan yields, as well as some accretion benefits. With our strong balance sheet growth coupled with the higher margin, we were able to execute on driving continued net interest income growth during the quarter.

Jerry Bock: In addition, we have seen increased loan demand in our market driving our pipelines to the highest level since 2022.

Jerry Bock: As a result first quarter loan balances increased 16% on an annualized basis, we're thrilled with our team's commitment to a solid client base.

Jerry Bock: We saw net interest margin expansion to accelerate during the quarter declined 19 basis points. This was driven by lower deposit pricing the continued higher pricing on loan yields as well as some accretion benefit.

Jerry Bock: With our strong balance sheet growth coupled with the higher margin, we were able to execute on driving continued net interest income growth during the quarter.

Jerry Baack: The overall asset quality of our loan portfolio remains superb as we had no net charge-offs during the quarter, while market trends in the Twin Cities remain favorable. Our credit and lending teams partner together to ensure our credit quality remains a focus independent of market fluctuation. We did move one Central Business District office loan to non-accrual, which increased non-performing assets to 0.20% of assets. This did not come as a surprise, as it was a loan we have been referencing in prior quarters. Jeff will provide some more details in a few minutes. Overall, we believe the superb asset quality track record we have demonstrated over the years remains intact and we feel good about the portfolio.

Jerry Bock: The overall asset quality of our loan portfolio remains superb as we had no net charge offs during the quarter, while market trends in the twin cities remain favorable.

Jerry Bock: Our credit and lending teams partnered together to ensure our credit quality remains a focus independent of market fluctuations.

Jerry Bock: We did move one central business District office loan to non accrual, which increased nonperforming assets to a 0.20% of assets.

Speaker Change: Did that come as a surprise as there was a loan we have been referencing in prior quarters.

Jerry Bock: Jeff will provide some more details in a few minutes.

Jerry Bock: Overall, we believe the superb asset quality track record, we have demonstrated over the years remains intact and we feel good about the portfolio.

Jerry Baack: Finally, we continue to focus on creating shareholder value. One of the ways we do this is by consistently growing tangible book value, as you can see on slide four. I want to note we saw our first decline in 8 years last quarter, all due to the first Minnetonka Citibank acquisition. But as expected, tangible book value bounced right back in the first quarter, up 12% annualized. In addition, given the valuation during the quarter, we opportunistically repurchased about $600,000 of common stock.

Jerry Bock: Finally, we can tenants continue to focus on creating shareholder value one of the ways. We do this is by consistently growing tangible book value as you can see on slide four.

Jerry Bock: I want to note we saw our first decline in eight years last quarter, all due to the first minnetonka Citibank acquisition, but as expected tangible book value bounced right back in the first quarter up 12% annualized.

Jerry Bock: In addition, given the valuation during the quarter, we opportunistically repurchased about $600000 of common stock.

Jerry Baack: I also want to take a moment to talk about the market volatility we have seen over the past several weeks. The concern over the effects of tariffs certainly create a more challenging operating environment by introducing uncertainty that can impact everything from the ability of our clients to do business to the path of interest rates. It is still early in the process, with nothing fully resolved, but we are actively reaching out to clients to understand any concerns or possible impacts. We also are reviewing our portfolio to identify potential areas of enhanced risk. We are continuing to operate a best-in-class organization with seasoned and emerging talent across the company.

Jerry Bock: I also wanted to take a moment to talk about the market volatility we have seen over the past several weeks the concern over the effects of tariffs certainly create a more challenging operating environment by introducing uncertainty they can impact everything from the ability of our clients to do business to the path of interest rates.

Jerry Bock: It is still early in the process with nothing fully resolved, but we are actively reaching out to clients to understand any concerns or possible impacts.

Jerry Bock: We also are reviewing our portfolio to identify potential areas of enhanced risk.

Jerry Bock: We are continuing to operate a best in class organization with seasoned and emerging talent across the company.

Jerry Baack: We see real opportunities, even as we operate business as usual, to gain market share by supporting existing clients and bringing new ones on board. We are expanding our market reach with a good example being the traction we continue to generate in our affordable housing vertical.

Jerry Bock: We see real opportunities, even as we operate business as usual to gain market share by supporting existing clients and bringing new ones on board. We are expanding our market reach with a good example would be in the traction we continue to generate in our affordable housing vertical.

Nick Place: which Nick will take a moment to talk about later.

Nick Place: Which Nick will take a moment to talk about later.

Joe Chybowski: With that, I will turn it over to Joe. Thank you, Jerry. Slide five shows the accelerated net interest margin expansion and net interest income growth we saw in the first quarter. The margin increased 19 basis points to 251, while the core margin, which excludes loan fees and purchase accounting accretion, increased 13 basis points to 237. Margin expansion was primarily driven by the continued decline in deposit costs as we saw the full impact of the fourth quarter rate cuts. Purchase-to-county accretion contributed eight basis points to the first quarter margin. When we combine this with the robust loan growth we had in the first quarter, we get a 12% increase in net interest income, which is what we are really focused on.

Jerry Bock: With that I'll turn it over to Joe.

Joe Schabowski: Thank you Gerry slide five shows the accelerated net interest margin expansion and net interest income growth. We saw in the first quarter. The margin increased 19 basis points to 251, while the core margin, which excludes loan fees and purchase accounting accretion increased 13 basis points to $2 37.

Joe Schabowski: Margin expansion was primarily driven by the continued decline in deposit costs as we saw the full impact of the fourth quarter rate cuts purchase accounting accretion contributed eight basis points to the first quarter margin.

Joe Schabowski: When we combine this with the robust loan growth we had in the first quarter, we get a 12% increase in net interest income, which is what we are really focused on.

Joe Chybowski: As we think about the margin outlook going forward, there is plenty of uncertainty given the market today. The margin will be dependent on future rate cuts and the shape of the YO curve. With no rate cuts in the first quarter, we would expect margin expansion to moderate in the second quarter as loan yields continue to reprice higher, but deposit costs start to stabilize. We would also expect to see less accretion impact over the remainder of the year. Any future rate cuts in 2025 would likely provide a further benefit to the market.

Joe Schabowski: As we think about the margin outlook going forward. There is plenty of uncertainty given the market today, the margin will be dependent on future rate cuts and the shape of the yogurt.

Joe Schabowski: With no rate cuts in the first quarter, we would expect margin expansion to moderate in the second quarter as loan yields continue to reprice higher but deposit costs start to stabilize.

Joe Schabowski: We would also expect to see less accretion impact over the remainder of the year.

Joe Schabowski: Any future rate cuts in 2025 would likely provide a further benefit to the margin.

Joe Chybowski: Given our outlook for additional margin expansion and loan growth, we believe we are well positioned to see continued net interest income growth going forward.

Joe Schabowski: Given our outlook for additional margin expansion and loan growth. We believe we are well positioned to see continued net interest income growth going forward.

Joe Chybowski: Slide six provides a closer look at the margin drivers, the biggest of which was the lower cost. With a large portion of our funding base tied to short term rates, we saw the full quarter impact of the November and December rate cuts. We also continue to reduce rates on other deposit accounts, resulting in deposit costs declining 22 basis points to 318. Loan yields also increased six basis points despite the lower rate environment due to our larger fixed rate portfolio. We saw the full impact of the ramp-up in loan originations in the fourth quarter. New origination volume remained strong in the first quarter as well, with a weighted average yield in the mid-to-high 60s.

Joe Schabowski: Slide six provides a closer look at the margin drivers the biggest of which was the lower cost of funds with a large portion of our funding base tied to short term rates. We saw the full quarter impact of the November and December rate cuts.

Joe Schabowski: We also continued to reduce rates on other deposit accounts, resulting in deposit costs declining 22 basis points to 318.

Joe Schabowski: Loan yields also increased six basis points, despite the lower rate environment.

Joe Schabowski: Due to our larger fixed rate portfolio we.

Joe Schabowski: We saw the full impact of the ramp up in loan originations in the fourth quarter, New origination volume remained strong in the first quarter as well with a weighted average yield in the mid to high sixes we.

Joe Chybowski: We would expect to see the portfolio loan yield continue to reprice modestly higher even if short-term rates continue to fall. We still have over $700 million of fixed and adjustable rate loans maturing or repricing over the next 12 months at yields below new origination level.

Joe Schabowski: We would expect to see the portfolio loan yield continued to reprice modestly higher even if short term rates continue to fall, we still have over 700 million of fixed and adjustable rate loans maturing or repricing over the next 12 months at yields below new origination levels.

Joe Chybowski: Turning to slide 7, you can see that profitability trends, including total revenue and pre-provision net revenue, continue to increase, primarily due to the stronger net interest income. In fact, total revenue was up 23% on a year-over-year basis. Non-interest income of $2.1 million remained elevated and included $325,000 of investment advisory fees from a new product we added through the first Minnetonka Citibank acquisition. The first quarter included some catch up from the fourth quarter, so a more normalized run rate for this line is in the range of $200,000 per quarter. On slide 8, expense growth to support the larger balance sheet continued to track in line with expectations as first quarter expenses included the full quarter run rate of the acquisition.

Joe Schabowski: Turning to slide seven you can see that profitability trends, including total revenue and pre provision net revenue continued to increase primarily due to the stronger net interest income in fact total revenue was up 23% on a year over year basis.

Joe Schabowski: Noninterest income of $2 1 million remained elevated and included 325000 of investment advisory fees from a new product we added through the first Minnetonka Citibank acquisition.

Joe Schabowski: The first quarter included some catch up from the fourth quarter. So a more normalized run rate for this line is in the range of 200000 per quarter.

Joe Schabowski: On slide eight expense growth to support the larger balance sheet continued to track in line with expectations as first quarter expenses included the full quarter run rate of the acquisition.

Joe Chybowski: The bar chart on the right of the slide breaks out the $565,000 of merger-related expenses during the quarter. Our efficiency ratio has also continued to decline with the adjusted efficiency ratio moving back into the low 50s. While our expenses have consistently been well controlled, we are now seeing the revenue momentum drive the efficiency ratio lower.

Joe Schabowski: The bar chart on the right of the slide breaks out the 565000 of merger related expenses during the quarter.

Joe Schabowski: Our efficiency ratio has also continued to decline with the adjusted efficiency ratio moving moving back into the low fifty's.

Joe Schabowski: Our expenses have consistently been well controlled we are now seeing the revenue momentum drive the efficiency ratio lower.

Nick Place: With that, I'll turn it over to Nick. Thanks, Joe. Turning to slide nine, we've really been pleased with the momentum on the core deposit. balances were up 8.3% annualized in the first quarter. We have now generated $368 million of core deposit growth over the past three quarters and that excludes the core deposits from the first Minnetonka Citibank acquisition in the fourth quarter. The growth we have seen in recent quarters comes from expanding relationships with existing clients, as well as onboarding new client relationships. This has really been a function of the focus our teams have on service and networking.

Nick Place: With that I'll turn it over to Nick.

Nick Place: Thanks, Joe.

Speaker Change: Turning to slide nine we've really been pleased with the momentum on the core deposit front as balances were up eight 3% annualized in the first quarter.

Speaker Change: We have now generated $368 million of core deposit growth over the past three quarters and that excludes the core deposits from the first Minnetonka Citi Bank acquisition in the fourth quarter.

Speaker Change: The growth we have seen in recent quarters comes from expanding relationships with existing clients as well as onboarding new client relationships. This is really been a function of the focus our teams have on service and networking.

Nick Place: While we feel good about our deposit pipeline going forward, the second quarter is typically a seasonally low quarter for us given tax season and industry typicality. As a reminder, our core deposit growth is not always linear, order to quarters, due to the nature of our deposits. So we could see some quarters with larger inflows or outflows.

Speaker Change: We feel good about our deposit pipeline going forward.

Speaker Change: Second quarter is typically a seasonally low quarter for us given tax season and industry cyclicality.

Speaker Change: As a reminder, our core deposit growth is not always linear quarter to quarter due to the.

Speaker Change: The nature of our deposit base, so we could see some quarters with larger inflows or outflows.

Nick Place: Driven by this deposit growth momentum, we were able to return to a more offensive-minded approach on the loan side, resulting in 15.9% annualized loan growth in the first quarter, as shown on slide 10. We were pleased to see the increased demand and pipelines we've been talking about over the past couple of quarters translate into higher loan originations and, in turn, higher balance. As we look ahead, we remain confident in our ability to grow in the mid to high single digit range for the full year 2025. Given the head start we have from the first quarter, there is potential we could even outperform this.

Speaker Change: Driven by this deposit growth momentum, we were able to return to a more offensive minded approach and the loan side, resulting in 15.9% annualized loan growth in the first quarter as shown on slide 10.

Speaker Change: We were pleased to see the increased demand and pipelines, we've been talking about over the past couple of quarters translate into higher loan originations and in turn higher balances.

Speaker Change: We look ahead, we remain confident in our ability to grow in the mid to high single digit range for the full year 2025.

Speaker Change: Given the head start we have from the first quarter. There is potential we could even outperformed this range.

Nick Place: However, near-term loan growth will depend on a variety of factors. In terms of potential tailwinds, our loan pipeline remains at the highest level since 2022. We are also continuing to see opportunities to bring on new clients as a result of market disruption in the twin cities. but there are potential headwinds as well, most notably the economic uncertainty and market volatility regarding tariffs. While we haven't seen significant impacts on the clients to date, we are expecting clients to become a bit more cautious on projects during this period of uncertainty. Overall, we feel we are in a good position to continue growing the loan portfolio, especially with our loan-to-deposit ratio of 96.6% remaining near the low end of our target range.

Speaker Change: However, near term loan growth will depend on a variety of factors.

Speaker Change: In terms of the potential tailwind our loan pipeline remains at the highest level since 2022.

Speaker Change: We are also continuing to see opportunities to bring on new clients as a result of market disruption in the twin cities.

Speaker Change: But there are potential headwinds as well, most notably the economic uncertainty and market volatility regarding tariffs.

Speaker Change: While we haven't seen significant impacts on our clients to date, we are expecting clients to become a bit more cautious on projects. During this period of uncertainty.

Speaker Change: Overall, we feel we are in a good position to continue growing the loan portfolio, especially with our loan to deposit ratio of 96.6% remaining near the low end of our target range.

Nick Place: Slide 11 provides a closer look at our origination and payoff trend. After bottoming in the third quarter of 2024, we have seen two consecutive quarters of strong origination. including 17% growth in the first quarter.

Speaker Change: Slide 11 provides a closer look at our origination and payoff trends.

Speaker Change: After bottoming in the third quarter of 2024, we have seen two consecutive quarters of strong originations, including 17% growth in the first quarter.

Nick Place: Loan payoffs, on the other hand, declined 45% during The pace of payoffs can be difficult to predict, but we expect the decline in rates we have seen so far in the second quarter could translate into higher payoffs as refinance options become more attractive for clients. Payoffs will continue to be a factor in our growth over the remainder of the year. Turning to slide 12, the majority of the loan growth in the first quarter was driven by multifamily, much of which came from our affordable housing. As we have talked about recently, affordable housing has been a longer-term expertise.

Speaker Change: Loan payoffs on the other hand declined 45% during the quarter.

Speaker Change: The pace of pay offs can be difficult to predict but we expect the decline in rates, we have seen so far in the second quarter could translate into higher payoffs as refinance options become more attractive for clients.

Speaker Change: Pass will continue to be a factor in our growth over the remainder of the year.

Speaker Change: Turning to slide 12, the majority of the loan growth in the first quarter was driven by multifamily much of which came from our affordable housing vertical as.

Speaker Change: As we've talked about recently affordable housing has been a longer term expertise, which we had been investing in more heavily over the last two years.

Nick Place: which we have been investing in more heavily over the last two years. This is an asset class that generally has a higher barrier to entry, given the more complex nature of the transaction. We have developed a deep expertise in this space, and with our strong networking base, we have expanded this vertical to high-quality affordable housing sponsors throughout the country. Affordable housing is now nearly a $600 million portfolio for us, including 13% growth over the past year. An added benefit is that this also has become a great source of core deposit. Beyond our affordable housing activity, we saw a return to growth in our construction portfolio.

Speaker Change: This is an asset class that generally has a higher barrier to entry given the more complex nature of the transactions. We have developed a deep expertise in this space and with our strong networking base. We have expanded this vertical to high quality affordable housing sponsors throughout the country.

Speaker Change: Portable housing is now nearly a $600 million portfolio for us, including 13% growth over the past year.

An added benefit is that this also has become a great source of core deposit growth.

Speaker Change: Beyond our affordable housing activity, we saw return to growth in our construction portfolio.

Nick Place: which had been seeing an increase, we had been seeing an increase in new construction projects in the back half of 2024 and these commitments have now started funding, translating into growth on the balance sheet. Overall, we remain very comfortable with the mix of the loan portfolio.

Which had been seeing an increase where we had been seeing an increase in new construction projects in the back half of 'twenty 'twenty four and these commitments have now started funding translating into growth in the balance sheet.

Speaker Change: Overall, we remain very comfortable with the mix of the loan portfolio with that I'll turn it over to Jeff.

Jeff Shellberg: With that, I'll turn it over to Jeff. Thanks, Nick. Slide 13 provides a closer look at our multifamily and office exposure. We continue to see positive multifamily market trends in the Twin Cities as a strong labor market and near nation-leading affordability has led to improved absorption levels, all of which suggest a favorable outlook for future occupancy and rent growth. We are seeing this play out as rent growth, lower vacancy rates, and fewer concessions are resulting in higher levels of net operating income for clients. While higher rates continue to be a headwind, we remain bullish on multifamily, given the improved overall market trends and our track record and expertise in this space.

Jeff Shelburne: Thanks, Nick Slide 13 provides a closer look at our multifamily and office exposure.

Jeff Shelburne: We continue to see positive multifamily market trends in the twin cities is a strong labor market and near nation, leading affordability has led to improved absorption levels, all of which suggests a favorable outlook for future occupancy and rent growth.

Jeff Shelburne: We are seeing this play out is rent growth lower vacancy rates and fewer concessions are resulting in higher levels of net operating income for our clients.

Jeff Shelburne: Higher rates continue to be a headwind we remained bullish on multifamily given the improved overall market trends and our track record and expertise in this space.

Jeff Shellberg: Nick also mentioned our focus on affordable housing. About 24% of this portfolio is located outside of Minnesota. The out-of-market component results from us following strong local affordable housing borrowers to new markets, as well as our increased comfort working with a wider range of seasoned national affordable housing sponsors.

Jeff Shelburne: Nick also mentioned our focus on affordable housing about 24% of this portfolio is located outside of Minnesota.

Jeff Shelburne: The outer market component results from us following strong local affordable housing borrowers to new markets as well as our increased comfort working with a wider range of seasoned national affordable housing sponsors.

Jeff Shellberg: Our non-owner-occupied CRE office exposure remains limited at just 5% of total loans. Over the past few quarters, we have mentioned two central business district office loans that we have had some concerns about due to lease rollover risk. One was moved to non-accrual in the third quarter of 2024 and the property was sold in the fourth quarter. The other was moved from special mention to substandard and non-accrual in the first quarter of 2025. We have been closely monitoring the risk of this property for some time. The borrower has remained engaged, but has not been able to backfill the space being vacated in the second quarter.

Jeff Shelburne: Our nano non owner occupied CRE office exposure remains limited to just 5% of total loans.

Jeff Shelburne: Over the past few quarters, we have mentioned to central business District office loans that we have had some concerns about due to lease rollover risk. One was moved to nonaccrual in the third quarter of 2024 and the property was sold in the fourth quarter.

Jeff Shelburne: The other was moved from special mention to substandard and nonaccrual in the first quarter of 2025.

Jeff Shelburne: We have been closely monitoring the risk of this property for some time. The borrower has remained engage but it has not been able to backfill the space being vacated in the second quarter.

Jeff Shellberg: While Central Business District Office remains a challenging asset class, we don't have any significant concerns regarding our remaining three loans in this portfolio, two of which are in the early stages of being converted to multi-family.

Jeff Shelburne: Well Central business District office remains a challenging asset class, we don't have any significant turns regarding our remaining three loans in this portfolio two of which are in the early stages of being converted to multifamily.

Jeff Shellberg: Turning to slide 14, our overall credit profile remains strong. We recorded a $1.5 million provision in the quarter, which was primarily growth-driven. We remain well-reserved at 1.34% of loans. Non-performing assets increased to 0.2% of loans due to the Central Business District office loan I mentioned. However, our non-performing assets continue to remain well below peer level. We also had virtually no net charge-offs in the first quarter.

Jeff Shelburne: Turning to slide 14, our overall credit profile remains strong.

Jeff Shelburne: We recorded a $1 5 million provision in the quarter, which was primarily growth driven.

Jeff Shelburne: We remain well reserved at 134% of loans.

Jeff Shelburne: Nonperforming assets increased to <unk>, 2% of loans due to the central business District office loan I mentioned, however, our nonperforming assets continue to remain well below peer levels.

Jeff Shelburne: We also had virtually no net charge offs in the first quarter.

Jeff Shellberg: Slide 15 highlights our WATCH, Special Mention, and Substandard loans, which have remained relatively stable overall. WATCH and Special Mention declined in the first quarter, while Substandard increased, primarily due to the migration of the one Central Business District office loan. We continue to be very pleased with our overall asset quality.

Jeff Shelburne: Slide 15 highlights our watch special mention and substandard loans, which have remained relatively stable overall watch and special mention declined in the first quarter, while substandard increased primarily due to the migration of the one central business District office loan.

Jeff Shelburne: We continue to be very pleased with our overall asset quality, however, with a loan portfolio now over $4 billion, there will always be the potential for occasional one off issues here and there we remain diligent in our risk management and covenant testing practices to identify potential issues early in the process I will now turn it back over to Joel.

Jeff Shellberg: However, with a loan portfolio of now over $4 billion, there will always be the potential for occasional one-off issues here and there. We remain diligent in our risk management and covenant testing practices to identify potential issues early in the process.

Joe Chybowski: I'll now turn it back over to Joe. Thanks, Jeff. Slide 16 highlights our stable capital position as capital ratios leveled off following the acquisition in the fourth quarter. This included CET1, which remained above 9%. During the quarter, we repurchased approximately $600,000 of common stock. We will continue to evaluate future repurchases based on a variety of factors, including valuation, capital levels, growth opportunities, and other uses of capital. As of quarter end, we still had $14.7 million remaining under our current share repurchase authorization. In the near term, we expect capital levels to hold relatively stable given our stronger growth outlook.

Joel: Thanks, Jeff.

Speaker Change: Slide 16 highlights our stable capital position as capital ratios leveled off following the acquisition in the fourth quarter. This included C. T, one which remained above 9%.

Speaker Change: During the quarter, we repurchased approximately 600000 of common stock we will continue to evaluate future repurchases based on a variety of factors, including valuation capital levels growth opportunities and other uses of capital.

Speaker Change: As of quarter end, we still had $14 7 million remaining under our current share repurchase authorization.

Speaker Change: In the near term, we expect capital levels to hold relatively stable given our stronger growth outlook.

Joe Chybowski: Turning to slide 17, I'll recap our near-term expectations. Keep in mind that these are all dependent on market conditions given the recent volatility. As Nick mentioned, we feel good about our loan growth outlook, while understanding there is uncertainty that could impact the pace going forward. We remain confident that we can achieve full year loan growth in the mid to high single digits. Given our head start in the first quarter, there is potential to outperform these expectations. We have been pleased with the level of margin expansion over the past two quarters and believe there is still more to come.

Speaker Change: Turning to slide 17, I'll recap, our near term expectations.

Speaker Change: Keep in mind that these are all dependent on market conditions, given the recent volatility.

Nick Place: As Nick mentioned, we feel good about our loan growth outlook, while understanding there is uncertainty that could impact the pace going forward. We remain confident that we can achieve full year loan growth in the mid to high single digits.

Nick Place: Given our head start in the first quarter there is potential to outperform these expectations we.

Nick Place: <unk> been pleased with the level of margin expansion over the past two quarters and believe there is still more to come how's.

Joe Chybowski: However, the magnitude will be largely dependent on additional rate cuts and the shape of the yield curve. For the second quarter, we would expect the pace of expansion to slow from what we saw in the first quarter, primarily due to stabilizing deposit costs and less accretion benefits. If we do see additional rate cuts in 2025, we could see the margin expand a bit more quickly. Regardless, our focus is really on growing net interest We believe we are well positioned given our outlook for margin expansion and balance sheet growth. From an expense standpoint, we are right on track for full year 2025 non-interest expense growth in the high teens.

Nick Place: However, the magnitude will be largely dependent on additional rate cuts in the shape of the yield curve.

Nick Place: For the second quarter, we would expect the pace of expansion to slow from what we saw in the first quarter, primarily due to stabilizing deposit costs and less accretion benefit.

Nick Place: If we do see additional rate cuts in 2025, we could see the margin expand a bit more quickly rigor.

Nick Place: Regardless, our focus is really on growing net interest income. We believe we are well positioned given our outlook for margin expansion and balance sheet growth.

Nick Place: From an expense standpoint, we are right on track for full year 2025, noninterest expense growth in the high teens.

Joe Chybowski: excluding merger-related expenses. As a reminder, this is higher than normal pace in 2025 is to help support the larger asset base following the acquisition, as well as some redundant expenses until we reach systems conversion. We feel we are well-reserved at current levels and would expect provision to remain dependent on the pace of loan growth and the overall asset quality of the portfolio.

Nick Place: Excluding merger related expenses.

Nick Place: As a reminder, this is higher than normal pace in 2025 is to help support the larger asset base. Following the acquisition as well as some redundant expenses until we reach systems conversion.

Nick Place: We feel we are well reserved at current levels and would expect provision to remain dependent on the pace of loan growth in the overall asset quality of the portfolio I'll now turn it back to Jerry.

Jerry Baack: I'll now turn it back to Jerry. Thanks, Joe. Finishing up on slide 18, I want to provide a quick update on our 2025 strategic priority. In the first quarter, we demonstrated our ability to get back to more normalized levels of profitable growth, both on the loan and deposit side. Gaining market share remains a focus, and continued market disruption in the Twin Cities is an opportunity for us, both from a client and talent acquisition standpoint. We are seeing traction in the affordable housing and C&I space. Finally, our teams remain on track for two significant technology initiatives this year, including an upgraded retail and small business online banking platform and a systems conversion of a recent acquisition.

Speaker Change: Thanks, Joe finishing up on slide 18, I want to provide a quick update on our 2025 strategic priorities in the first quarter, we demonstrated our ability to get back to more normalized levels of profitable growth both on the loan and deposit side.

Speaker Change: Gaining market share remains a focus and continued market disruption in the twin cities as an opportunity for us both from a client and talent acquisition standpoint.

Speaker Change: We are seeing traction in the affordable housing and C&I spaces.

Speaker Change: Finally, our teams remain on track for two significant technology initiatives this year, including an upgraded retail and small business online banking platform and our systems conversion of our recent acquisition.

Justin Horstman: With that said, we will open it up for questions. As a reminder, to ask a question, please press star 1 on the touchstone. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2.

Speaker Change: With that said, we will open it up for questions.

Speaker Change: As a reminder to ask a question. Please press star one on your Touchtone phone.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Justin Horstman: With this done, we will pause momentarily to assemble our robot.

Speaker Change: At this time, we will post momentarily to assemble a roaster.

Jeff Rulis: The first question comes from the line of Jeff Rulis with DA Davidson. Please go ahead. Thanks. Good morning. Just a question on the... The CRE front, from your perspective, I guess, are you seeing any change in competition? It seems that one more bank's kind of signaling a subtle shift into CRE, away from CNI, from a preferred asset class. Um, you know, your franchise certainly knows the merits and health of Siri, um, long term. I just wonder if you're, if you're seeing peers act any differently in the, in the last few quarters.

Speaker Change: The first question comes from the line of Jeff Realists with D. A Davidson. Please go ahead.

Jeff Realists: Thanks, and good morning.

Speaker Change: Just a question on the.

Speaker Change: The the CRE front from your perspective, I guess have you seen any change in competition. It seems that more and more banks kind of signaling a subtle shift in the CRE away from C&I from a from a preferred asset class.

Speaker Change: And your franchise, certainly knows that merits and health I'm, sorry, a long term I just wondering if youre if youre seeing peers act any differently than in the last few quarters.

Nick Place: Hey, Jeff, it's Nick. Yeah, I think we've, we mentioned that on prior calls, I think, as a lot of the liquidity constraints in the market have subsided over the last, you know, three quarters. We've seen some players that have been on the sidelines get more active again. So, you know, that has tightened spreads a bit, as there's been a bit more competition. You know, I think we're actively monitoring what's going to happen with the Primer and ONB, you know, merger to understand, you know, what that means for their ability to you know, originate the same volume of loans that the previous two organizations did once the merger is complete.

Nick Place: Hey, Jeff it's Nick.

Nick Place: Yeah, I think we've we mentioned that on prior calls I think as.

Nick Place: A lot of the liquidity constraints in the market or have subsided over the last you know.

Nick Place: Three quarters.

Nick Place: We've seen some players that had been on the sidelines get more active again so.

Nick Place: That has tightened spreads a bit.

Nick Place: There's been a bit more competition.

Nick Place: I think we're actively monitoring what's going to happen with the brammer and OMB.

Nick Place: Merger to understand you know.

Nick Place: What that means for us.

Nick Place: Their ability to.

Nick Place: Originate the same volume of loans at the previous two organizations did at.

Nick Place: So we think that should unlock a little bit more potential for us. But yeah, some of the smaller players that historically, you know, over the last year or so had been on the sidelines do seem to be a bit more active and it's tightened spreads a little bit. You know, I think we still feel really, really good about our ability to. get looks at transactions and our deep relationships with clients. And a lot of cases kind of gives us a last look at deals to where we can be competitive on transactions that we really like.

Nick Place: Once the merger is complete so we think that should unlock a little bit more potential for us, but yes. Some of the smaller players that historically over the last year or so had been on the sidelines do seem to be a bit more active than it's tightened spreads a little bit I think we still feel really.

Nick Place: Really good about our ability to.

Nick Place: Get looks at transactions and our deep relationships with clients and a lot of cases kind of gives us a last look at deals to where.

Nick Place: We can be competitive on the transactions that we really like.

Jeff Rulis: Thanks, Nick.

Joe Chybowski: Joe, maybe a question for you on the on the margin. You know, certainly a little accretion help, but the core margin encouraging. Do you have the March average on margin? And then it certainly looks like the ability to further lower costs and hold loan yields up. looks positive, but just hoping for a little detail there.

Nick Place: Thanks, Nick.

Joe Schabowski: Joe maybe a question for you on the on the margin.

Joe Schabowski: Certainly a little accretion help but the core margin encouraging do you do.

Joe Schabowski: You have the March average.

Joe Schabowski: On margin and then.

Joe Schabowski: Certainly it looks like the ability to further lower cost and whole loans.

Joe Schabowski: Loan yields up.

Joe Schabowski: It looks positive but.

Joe Schabowski: Just hoping for a little detail there.

Joe Chybowski: Yeah, thanks, Jeff. Yeah, full year, or sorry, month of March margin was $253,000. So I think as you compare that relative to the $251,000 for the quarter, and then deposit costs, you know, we're $318,000 for the quarter, for March standalone was $317,000. So I think that's really, when we think about the guide on a go-forward basis, you know, still really encouraged by the progress of our teams, especially on the deposit cost front. And there's definitely still opportunity there, especially if we see, you know, rate cuts in the back half of the year. But we're going to continue to be disciplined on both sides of the balance sheet, you know, pricing loans at levels that we think make sense.

Jeff: Yeah. Thanks, Jeff.

Joe Schabowski: Full year or sorry.

Joe Schabowski: Month of March margin was 253.

So I think as you compare that relative to the $2 51 for the quarter.

Joe Schabowski: And then deposit costs were 318 for the quarter for March Standalone was $3 17.

Joe Schabowski: So I think that's really when we think about the guide on a go forward basis.

Joe Schabowski: Really.

Joe Schabowski: <unk> by the progress.

Joe Schabowski: Our teams, especially.

Joe Schabowski: Especially on the deposit cost runs and there's definitely still opportunity there, especially if we see.

Joe Schabowski: Rate cuts in the back half of the year.

Joe Schabowski: But we're going to continue to be disciplined on both sides of the balance sheet.

Joe Schabowski: Pricing loans at levels that we think makes sense and given the flow that we see of transactions, we can be selective and be disciplined on pricing and then obviously.

Joe Chybowski: And given the flow that we see of transactions, we can be selective and be disciplined on pricing and then obviously continue to rationalize deposit costs lower. So feel good and optimistic about continued margin expansion. I think what we're saying, though, is just the pace that we saw in the first quarter, you know, we'd expect that to moderate in the back half. Got it. Thanks.

Joe Schabowski: You need to rationalize deposit costs lower so feel good and optimistic about continued margin expansion I think what we're saying, though is just the pace that we saw in the first quarter.

Joe Schabowski: We'd expect that to moderate in the back half.

Joe Chybowski: And just as a follow up, the loan growth in the quarter, was that pretty steady?

Joe Schabowski: Got it thanks.

Joe Schabowski: As a follow up the the loan growth in the quarter was that pretty steady kind of thinking about if that were a little more backend loaded you didn't you didn't see the full margin benefit, but just trying to I guess.

Joe Chybowski: You know, I'm kind of thinking about if that were a little more backend loaded, you didn't see the full margin benefit. But just trying to, I guess the question, how was that growth spread over the course of the first quarter?

Joe Schabowski: The question, how is that growth spread over the course of the first quarter.

Jeff Shellberg: Yeah, it was pretty even across the quarter, you know, maybe a little loaded toward the back half, but, but it wasn't, you know, heavy in any Okay, and maybe one last one for Jeff. On the one loan put on non-accrual, you did identify the prior central business loan that was sold. Any thoughts on the workout timeline with this one on non-accrual? And is this, in a little more detail, is this a longer-term customer? Just the comfort level around that loan. Appreciate it. Sure.

Joe Schabowski: Yeah, it was pretty even across the quarter.

Joe Schabowski: Be a little loaded toward the back half but.

Joe Schabowski: It wasn't.

Joe Schabowski: Heavy in any one month.

Speaker Change: Okay, and maybe one last one for Jeff on the.

Joe Schabowski: The the one loan put on non accrual if you did identify the prior.

Speaker Change: Central business.

Speaker Change: It was sold.

Speaker Change: Any thoughts on the workout timeline with with this one.

Speaker Change: On non accrual and is this a little more detail into some longer term customer just the comfort level around.

Speaker Change: That loan I appreciate it.

Jeff Shellberg: Yeah, I think it I mean, just given the that that challenging, you know, central business district asset class, I think it's going to be a little bit longer term to work out. We the borrower is engaged, we're working with them on some type of a workout plan that would allow them just to, you know, they'd stay in the property, continue to manage the property and hope to stabilize it over a period of time. But that's going to be dependent a little bit on economic conditions. Okay, thanks.

Speaker Change: Sure.

Speaker Change: I think I mean, just given the debt that challenging central business District asset class I think it's going to be a little bit longer term to work out.

Speaker Change: The borrower is engage we're working with them on some type of a workout plan that would allow them to stay.

Speaker Change: Stay in the property continued managed property and.

Speaker Change: Hope to stabilize it over a period of time, but that's going to be dependent a little bit on economic conditions.

Jeff Shellberg: I'll step back.

Speaker Change: Okay. Thanks, I'll step back.

Nathan Race: The next question comes from the land of Nathan Race with Piper Sandler. Please go ahead. Hey everyone, good morning. Appreciate you taking the questions.

Nathan Race: Next question comes from the line of Nathan race with Piper Sandler. Please go ahead.

Nathan Race: Hey, everyone. Good morning, I appreciate you taking the questions.

Nathan Race: Joe, just curious how you're thinking about the exit point for the margin come out of this year to the extent we maybe get a couple Fed cuts in the back half of the year. You absolutely provide great disclosures in the deck in terms of some of the asset repricing and some of the index funding on the balance sheet, but just wondering if you can put that all together within the context of maybe a couple rate cuts within the back half of the year. Yeah, well, I think, you know, as we've said in the past, I mean, we've, we spent a lot of time last year, positioning the deposit and funding portfolio to benefit from from rate cuts.

Speaker Change: Joe just curious how you're thinking about kind of the.

Speaker Change: Exit point for the margin come out of this year to the extent, we can maybe get a couple of fed cuts in the back half of the year you have supervisory disclosures in the deck in terms of some of the <unk>.

Speaker Change: As the re pricing in some of the index.

Speaker Change: Index funding on the balance sheet.

Speaker Change: Wonder if you put that all together within the context of maybe a couple of rate cuts in the back half of the year.

Speaker Change: Yeah, well I think as we've said in the past I mean, we've we spent a lot of time last year positioning the deposit and funding portfolio to benefit from from rate cuts and obviously, we saw that in the fourth quarter and we really saw it.

Joe Chybowski: And obviously, you know, we saw that in the fourth quarter, and we really saw it in the first quarter. So I mean, we got a billion six of the funding base is explicitly linked to short term rates. And so, you know, if you see one cut, three cuts, five cuts, you know, it's obviously going to be beneficial for us, the more the better from the deposit standpoint. So I think we've, you know, we've obviously shied away in the past of explicitly linking each 25 base point cut. But I will say, yeah, that will certainly be beneficial.

Speaker Change: In the first quarter.

Speaker Change: So I mean, we've got 1 billion six of the funding base is explicitly linked to short term rates and so.

Speaker Change: You see one cut three cuts five cuts.

Speaker Change: Obviously, you can be beneficial for us.

Speaker Change: More of the the better from the deposit standpoint.

Speaker Change: So I think we've obviously shied away in the passive explicitly linking each 25 basis point cut.

Speaker Change: But I will say, yes that will certainly be beneficial I think shaping the curve is also.

Joe Chybowski: I think shaping the curve is also, you know, is a big thing for us, given, you know, the type of lending that we do. So I just think the the first quarter, you know, we spent a lot of time going through the deposit portfolio beyond those accounts that were linked to Fed funds. And, you know, we saw opportunity there and continue to rationalize. And we will do that, you know, going throughout the year. So I think all in all, I mean, you know, from our standpoint, we still feel like there's expansion just given those dynamics.

Speaker Change: It is a big thing for us given the type of lending that we do.

Speaker Change: So I just think the the first quarter. We spent a lot of time going through the deposit portfolio beyond those accounts that were linked to fed funds.

Speaker Change: You know, what's the opportunity there and continue to rationalize and we will do that going throughout the year.

Speaker Change: So I think all in all I mean, you know from our standpoint, we still feel like there's expansion.

Joe Chybowski: I mean, the loan portfolio continues to reprice. I think the pickup and growth obviously accelerates some of that repricing, which is great. I also say we, you know, with this, you know, increase in originations over the last couple of quarters, we've been really focused on diversifying, you know, the structure of fixed to floating to adjustable. And so, you know, almost 50 percent of the originations in the first quarter were linked to two more floating rates. And so I think it's been an approach to be more balanced throughout. And so I think you kind of put that all together.

Speaker Change: Given those dynamics I mean, the loan portfolio continues to reprice I think the pickup in growth, obviously, we accelerated some of that repricing, which is great.

Speaker Change: I also would say we you know with this.

Speaker Change: The increase in originations over the last couple of quarters, we've been really focused on diversifying.

Speaker Change: The structure of.

Speaker Change: Fixed to floating to adjustable and so you can almost 50% of the originations in the first quarter were linked to two more floating rates and so.

Speaker Change: I think it's been an approach to be more balanced throughout.

Speaker Change: And so I think you kind of put that altogether I mean were confident with expansion I. Just think we're trying to say is we're really pleased with the first quarter, we wouldn't expect that type of expansion.

Joe Chybowski: I mean, we're confident with expansion. I just think we're trying to say is, you know, we're really pleased with the first quarter. We wouldn't expect that type of expansion, you know, on a linked quarter basis. But I think overall directionally, you know, we feel better and feel good about the trajectory.

Speaker Change: On a linked quarter basis, but I think overall directionally, we feel better and and feel good about the trajectory and I think the last thing I would say is just.

Joe Chybowski: And I think the last thing I would say is just. At the end of the day, we're focused on that issue. I think when you have a stabilizing to expanding margin with a pickup in growth, that obviously is the output. And so we feel really good about that over the last quarter and certainly over the last. Got it. Really helpful. Thanks for that, Joe.

Speaker Change: At the end of the day, we're focused on net interest income growth and I think when you have a stabilizing to expanding margin with a pickup in growth that obviously is the output and so we feel really good about that over the last quarter and certainly over the last year.

Speaker Change: Got it really helpful. Thanks for that Joe and then maybe a question for Nick.

Nick Place: And then maybe a question for Nick, you know, as you look at the loan pipeline today, you know, just curious, you know, what you've seen in terms of pricing on new production lately, you know, curious within that context, if you've seen any kind of notable shifts from a competitive pricing perspective within the last 90 days or so? Yeah, I mean, like I mentioned before, we've seen spreads tighten in a little bit, but you know, our new originations are still coming on, you know, right around, you know, six and a half percent plus or minus. So it's still well above current portfolio yields and You know, and we've been, we talked about the affordable housing vertical.

Speaker Change: Look at the loan pipeline today, just curious what youre seeing in terms of pricing.

Speaker Change: Pricing on new production lately I'm curious within that context, if you've seen any kind of notable shifts from a competitive pricing perspective within the last 90 days or so.

Speaker Change: Yeah I mean.

Speaker Change: Like I mentioned before we've seen spreads tightening a little bit, but our new originations are still coming on right around <unk>.

Speaker Change: Six 5% plus or minus so it's still well above current portfolio yields and.

Speaker Change: And we've been we talked about the affordable housing vertical I mean, we've been really pleased with not only the volume that we've been able to drive through that initiative, but.

Nick Place: I mean, we've been really pleased with not only the volume that we've been able to drive through that initiative, but, you know, a lot of those transactions, given the complexity, do tend to come on with a bit higher pricing than what we'd see in sort of a competitive local sponsor CRE deal.

Speaker Change: You know a lot of those transactions given the complexity and do tend to come on with a bit higher pricing than what we'd see in sort of a competitive local local sponsor CRE deal. So overall, but that's a business line that is a bit less.

Nick Place: So, you know, overall, that's a business line that is a bit less you know susceptible to sort of local market competition. Okay, got it.

Speaker Change: Susceptible to sort of local market competition, which is great.

Speaker Change: Okay got it.

Jeff Shellberg: I hopped on late, so I apologize if you already touched on this, but were there any specific allocations on the credit, the office credit that migrated in the quarter, either going in the quarter or that were allocated during 1Q? Yeah, we have established a specific reserve for that credit. And Jeff, was that already there going into the quarter, or was that allocated in the first quarter? That was allocated to the first... got it.

Speaker Change:

Speaker Change: I hopped on late so I apologize if you already touched on this but were there any specific allocations on the credit.

Speaker Change: The office credit.

Speaker Change: Migrated in the quarter, either going into the quarter that were allocated during <unk>.

Speaker Change: Yeah, we have a we have.

Speaker Change: Establishing a specific reserve for that credit.

Speaker Change: And Jeff was that already there.

Speaker Change: They're going into the quarter or was that.

Speaker Change: In the first quarter.

Speaker Change: That was allocated in the first quarter.

Speaker Change: Okay.

Jerry Baack: Um, maybe one last one for Jerry. Just curious what you're hearing and seeing on the M&A front these days. You know, just curious if there's, you know, similar deals to the one you guys closed on late last year that, you know, could be additive to the franchise going forward.

Speaker Change: Got it.

Speaker Change: Maybe one last one for Gerry just curious what youre hearing and seeing on the M&A front. These days just curious if there is no similar deals to the ones you guys closed on late last year that could be additive to the franchise going forward.

Jerry Baack: Well, as I mentioned in previous calls, I mean, we're consistently getting in front of other owners that own smaller franchises in the Twin Cities, so continue to be in discussions, but certainly nothing unevident. Okay, I appreciate all the color.

Speaker Change: As I've mentioned in previous calls we're consistently get in front of other owners that own.

Speaker Change: Smaller franchises in the twin cities.

Speaker Change: So continue to be in discussions, but certainly nothing eminent.

Speaker Change: Okay I appreciate all the color congrats on a great quarter guys.

Brendan Nosal: Congrats on a great quarter, guys.

Speaker Change: Yeah.

Brendan Nosal: As a reminder, to ask a question, please press star 1 on your t- The next question comes from a man of Brendan Nosal with Hovda Group. Please go ahead. Good morning, guys. Hope you're doing well. Morning Brendan.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone.

The next question comes from the line of Brendan Nosal with Hovde Group. Please go ahead.

Speaker Change: Hey, good morning, guys hope you're doing well.

Brendan Nosal: Most of mine have been asked and answered so far, but maybe one more just on the buyback. You know, Joe, you spoke to this a little bit in your prep remarks. We're just kind of curious on the decision process over the next few quarters on additional share of purchases, you balance buying back at a pretty attractive price versus the capital needs to fund the return of loan growth. Yeah, I think, you know, our messaging hasn't changed there either. I think it's, it's not one thing that's driving that. I think we're constantly evaluating, you know, valuations, needs, opportunities, to Jerry's point on the M&A front.

Speaker Change: Morning, Brian.

Speaker Change: Most of mine have been asked and answered so far but maybe one more just on the buyback.

Joe Schabowski: Joe you spoke to this a little bit in your prep remarks.

Joe Schabowski: Securities on the decision process over the next few quarters on additional share repurchases balanced buying back at a pretty attractive price versus the capital needs to fund return of loan growth. Thanks.

Joe Schabowski: Yes, I think.

Joe Schabowski: Our messaging hasn't changed there either I think it's it's not one thing that's driving that I think we're constantly evaluating.

Joe Schabowski: Valuations.

Joe Schabowski: Needs.

Joe Chybowski: So I think right now, we feel really good about the growth prospects. And we certainly want to have, you know, capital to to continue the growth and the trajectory that we see. So I think we're going to weigh that. Obviously, periods of volatility, I mean, we support the stock. And so but I think there's no one thing that's driving it. And we're constantly evaluating every day. Yeah, understood.

Joe Schabowski: Opportunities to Jerry's point on the M&A front.

Joe Schabowski: So I think right now we feel really good about the growth prospects and we certainly want to have.

Joe Schabowski: Capital too to continue the growth and the trajectory that we see.

Joe Schabowski: So I think we're going to weigh that.

Joe Schabowski: Obviously periods of volatility I mean, we support the stock and so.

Joe Schabowski: But I think there's no one thing that's driving it.

Joe Schabowski: And we're constantly evaluating every day.

Brendan Nosal: All right. Thank you for taking my questions. Appreciate it.

Speaker Change: Okay understood Alright, Thank you for taking my questions I appreciate it.

Justin Horstman: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session.

Jerry Baack: I will now turn the call back over to Gerry Baack for any closing remarks. Thanks for joining the call today. We're really excited about the strong start to 2025 we've had. and really feel great about the remainder of the year. I think the disruption with Bremmer being sold and then Wings being announced for doing a merger, too, that was announced last night. Just all of that creates opportunity for us. both of those. Companies have been very aggressive on rates over the last few years and we feel that that disruption will continue to benefit us. in the years ahead.

Joe Schabowski: Now ill turn the call back over to Joe <unk> for any closing remarks. Thank you.

Joe Schabowski: Thanks for joining the call today were really excited about the strong start to 2025, we've had.

Joe Schabowski: I really feel great about the remainder of the year I think the disruption with bremmer being sold and then wind is being announced for doing.

Joe Schabowski: Doing a merger too, but it was announced last night.

Joe Schabowski: Just all of that creates opportunity for us and.

Joe Schabowski: Both of those.

Joe Schabowski: Companies have been very aggressive on rates over the last few years and we feel that that.

Joe Schabowski: Disruption will continue to.

Joe Schabowski: Benefit us in.

Joe Schabowski: In the in the years ahead, so I.

Jerry Baack: And I just want to, one more time, thank our incredible team here, and everybody enjoy their day. Thanks.

Joe Schabowski: And I just wanted to one more time, thank our incredible team here and everybody enjoy their day. Thanks.

Joe Schabowski: Okay.

Joe Schabowski: [music].

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