Q1 2026 CVB Financial Corp Earnings Call

April 23, 2026

Operator: Financial Corp. and its subsidiary, Citizens Business Bank. My name is Cherie, and I'm your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period. Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, E. Allen Nicholson, Executive Vice President and Chief Financial Officer. You may proceed.

Operator: Financial Corporation and its subsidiary, Citizens Business Bank. My name is Cherie, and I'm your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period. Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, Allen Nicholson, Executive Vice President and Chief Financial Officer. You may proceed.

Speaker #1: Financial Corporation, and it's subsidiary Citizens Business Bank. My name is Sheri, and I'm your operator for today. At this time, I'll participants are on a listen-only mode.

Speaker #1: Later, we will conduct a question-and-answer period. Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, Allen Nicholson, Executive Vice President and Chief Financial Officer.

Speaker #1: You may proceed.

Speaker #2: Thank you, Sheri. And good morning, everyone. Thank you for joining us today to review our financial results for the first quarter of 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones.

E. Allen Nicholson: Thank you, Cherie, good morning, everyone. Thank you for joining us today to review our financial results for Q1 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended 31 December 2025.

Allen Nicholson: Thank you, Cherie, good morning, everyone. Thank you for joining us today to review our financial results for Q1 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended 31 December 2025.

Operator: Good morning, ladies and gentlemen, and welcome to the Q1 2026 Earnings Conference Call for CVB Financial Corporation and its subsidiary, Citizens Business Bank. My name is Sheree, and I'm your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer period. Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, E. Allen Nicholson, Executive Vice President and Chief Financial Officer. You may proceed.

Speaker #2: Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com/ and click on the investors tab.

Speaker #1: My name is Sheree, and I'm your operator for today. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer period.

Speaker #1: Please note that this call is being recorded. I would now like to turn the presentation over to your host for today's call, Alan Nicholson, Executive Vice President and Chief Financial Officer.

Speaker #2: The speakers on this call claim the protection of the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on 31st, 2025.

Speaker #1: You may proceed.

Speaker #2: Thank you, Sheree. And good morning, everyone. Thank you for joining us today to review our financial results for the first quarter of 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones.

E. Allen Nicholson: Thank you, Sheree, and good morning, everyone. Thank you for joining us today to review our financial results for Q1 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended December 31, 2025. In particular, the information set forth in Item 1A Risk Factors therein.

E. Allen Nicholson: Thank you, Sheree, and good morning, everyone. Thank you for joining us today to review our financial results for Q1 2026. Joining me this morning is our Chief Executive Officer, Dave Brager, and our President, Clay Jones. Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cbbank.com and click on the Investors tab. The speakers on this call claim the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the company's annual report on Form 10-K for the year ended December, 2025. In particular, the information set forth in Item 1A Risk Factors therein.

Speaker #2: And in particular, the information set forth in Item 1A, risk factors therein. For a more complete version of the company's Safe Harbor disclosure, please see the company's earnings release issued in connection with this call.

E. Allen Nicholson: In particular, the information set forth in Item 1A, Risk Factors therein. For a more complete version of the company's safe harbor disclosure, please see the company's earnings release issued in connection with this call. I'll now turn the call over to David Brager. David?

Allen Nicholson: In particular, the information set forth in Item 1A, Risk Factors therein. For a more complete version of the company's safe harbor disclosure, please see the company's earnings release issued in connection with this call. I'll now turn the call over to Dave Brager. Dave?

Speaker #2: I'll now turn the call over to Dave Brager. Dave?

Speaker #3: Thank you, Allen. Good morning, everyone. For the first quarter of 2026, we reported net earnings of $51 million or 38 cents per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years.

David A. Brager: Thank you, Alan. Good morning, everyone. For the Q1 2026, we reported net earnings of $51 million or $0.38 per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years. We previously declared a $0.20 per share dividend for the Q1 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for the Q1 2026.

Dave Brager: Thank you, Allen. Good morning, everyone. For the Q1 2026, we reported net earnings of $51 million or $0.38 per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years. We previously declared a $0.20 per share dividend for the Q1 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for the Q1 2026.

Speaker #3: We previously declared a 20 cents per share dividend for the first quarter of 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders.

Speaker #2: And, in particular, the information set forth in Item 1A, Risk Factors therein. For a more complete version of the company's Safe Harbor disclosure, please see the company's earnings release issued in connection with this call.

Speaker #3: We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for the first quarter of 2026.

E. Allen Nicholson: For a more complete version of the company's safe harbor disclosure, please see the company's earnings release issued in connection with this call. I'll now turn the call over to Dave Brager. Dave?

Speaker #2: I'll now turn the call over to Dave Brager. Dave?

Speaker #3: Our net earnings of $51 million or 38 cents per share compares with $55 million for the fourth quarter of 2025, or 40 cents per share, and $51.1 million or 36 cents per share for the prior year quarter.

David A. Brager: Our net earnings of $51 million or $0.38 per share compares with $55 million for Q4 2025 or $0.40 per share and $51.1 million or $0.36 per share for the prior year quarter. Results of Q1 2026 reflect solid growth year over year across several financial metrics, including pre-tax, pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements. Pre-tax, pre-provision income grew by $4 million or 6% over Q1 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by 7 basis points while our cost of funds decreased by 7 basis points.

Dave Brager: Our net earnings of $51 million or $0.38 per share compares with $55 million for Q4 2025 or $0.40 per share and $51.1 million or $0.36 per share for the prior year quarter. Results of Q1 2026 reflect solid growth year over year across several financial metrics, including pre-tax, pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements. Pre-tax, pre-provision income grew by $4 million or 6% over Q1 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by 7 basis points while our cost of funds decreased by 7 basis points.

Speaker #3: Thank you, Alan. Good morning, everyone. For the first quarter of 2026, we reported net earnings of $51 million or 38 cents per share, representing our 196th consecutive quarter of profitability.

David A. Brager: Thank you, Alan. Good morning, everyone. For Q1 2026, we reported net earnings of $51 million or $0.38 per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years. We previously declared a $0.20 per share dividend for Q1 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for Q1 2026. Our net earnings of $51 million or $0.38 per share compares with $55 million for Q4 2025 or $0.40 per share and $51.1 million or $0.36 per share for the prior year quarter.

Dave Brager: Thank you, Alan. Good morning, everyone. For Q1 2026, we reported net earnings of $51 million or $0.38 per share, representing our 196th consecutive quarter of profitability, which is every quarter for 49 years. We previously declared a $0.20 per share dividend for Q1 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders. We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for Q1 2026. Our net earnings of $51 million or $0.38 per share compares with $55 million for Q4 2025 or $0.40 per share and $51.1 million or $0.36 per share for the prior year quarter.

Speaker #3: Which is every quarter for 49 years. We previously declared a 20 cents per share dividend for the first quarter of 2026, representing our 146th consecutive quarter of paying a cash dividend to our shareholders.

Speaker #3: Results of the first quarter of 2026 reflect solid growth year over year across several financial metrics. Including pre-tax preprovision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements.

Speaker #3: We produced a return on average tangible common equity of 13.4% and a return on average assets of 1.33% for the first quarter of 2026.

Speaker #3: Pre-tax preprovision income grew by $4 million or 6% over the first quarter of 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44%, as our earning asset yields increased by 7 basis points, while our cost of funds decreased by 7 basis points.

Speaker #3: Our net earnings of $51 million or 38 cents per share compares with $55 million for the fourth quarter of 2025 or 40 cents per share and $51.1 million or 36 cents per share for the prior year quarter.

Speaker #3: Average loans grew by 157 million or approximately 2025. We also increased our average total deposits and customer repurchase agreements by 288 million or 2.4% from the first quarter of 2025.

David A. Brager: Average loans grew by $157 million or approximately 2% from Q1 2025. We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from Q1 2025. Now, let's discuss loans further. Total loans at 31 March 2026 were $8.64 billion, a $280 million or 3.3% increase from the end of Q1 2025. This increase was driven primarily by growth in commercial real estate loans of $141 million, a $62 million increase in dairy and livestock and agribusiness loans, and a $43 million increase in construction loans.

Dave Brager: Average loans grew by $157 million or approximately 2% from Q1 2025. We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from Q1 2025. Now, let's discuss loans further. Total loans at 31 March 2026 were $8.64 billion, a $280 million or 3.3% increase from the end of Q1 2025. This increase was driven primarily by growth in commercial real estate loans of $141 million, a $62 million increase in dairy and livestock and agribusiness loans, and a $43 million increase in construction loans.

Speaker #3: Results of the first quarter of 2026 reflect solid growth year over year across several financial metrics, including pre-tax pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements.

David A. Brager: Results of Q1 2026 reflect solid growth year-over-year across several financial metrics, including pre-tax, pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements. Pre-tax, pre-provision income grew by $4 million or 6% over Q1 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by seven basis points while our cost of funds decreased by seven basis points. Average loans grew by $157 million or approximately 2% from Q1 2025. We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from Q1 2025. Now, let's discuss loans further.

Dave Brager: Results of Q1 2026 reflect solid growth year-over-year across several financial metrics, including pre-tax, pre-provision income growth, net interest margin expansion, loan growth, and growth in deposits and customer repurchase agreements. Pre-tax, pre-provision income grew by $4 million or 6% over Q1 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by seven basis points while our cost of funds decreased by seven basis points. Average loans grew by $157 million or approximately 2% from Q1 2025. We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from Q1 2025. Now, let's discuss loans further.

Speaker #3: Now, let's discuss loans further. Total loans at March 31st, 2026, were 8.64 billion dollars, a 280 million dollar or 3.3% increase from the end of the first quarter of 2025.

Speaker #3: Pre-tax pre-provision income grew by $4 million or 6% over the first quarter of 2025. Our net interest margin expanded by 13 basis points over the prior year quarter to 3.44% as our earning asset yields increased by 7 basis points while our cost of funds decreased by 7 basis points.

Speaker #3: This increase was driven primarily by growth in commercial real estate loans of 141 million dollars, a 62 million dollar increase in dairy and livestock and agribusiness loans, and a 43 million dollar increase in construction loans.

Speaker #3: Average loans grew by $157 million or approximately 2% from the first quarter of 2025. We also increased our average total deposits and customer repurchase agreements by $288 million or 2.4% from the first quarter of 2025.

Speaker #3: We also had 34 million dollars of growth in SBA 504 loans and CNI loan outstandings, increased by 10 million dollars over the prior year.

David A. Brager: We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year. Total loans declined by $56 million from the end of 2025 as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end. This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at 31 March 2026. C&I loans decreased quarter-over-quarter by $21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of Q1 2026.

Dave Brager: We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year. Total loans declined by $56 million from the end of 2025 as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end. This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at 31 March 2026. C&I loans decreased quarter-over-quarter by $21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of Q1 2026.

Speaker #3: Now, let's discuss loans further. Total loans at March 31, 2026, were $8.64 billion, a $280 million or 3.3% increase from the end of the first quarter of 2025.

Speaker #3: Total loans declined by 56 million dollars from the end of 2025, as dairy and livestock and agribusiness loans declined by 117 million dollars due to the seasonal peak in line usage that occurs every calendar year-end.

David A. Brager: Total loans at 31 March 2026 were $8.64 billion, a $280 million or 3.3% increase from the end of Q1 2025. This increase was driven primarily by growth in commercial real estate loans of $141 million, a $62 million increase in dairy and livestock and agribusiness loans, and a $43 million increase in construction loans. We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year. Total loans declined by $56 million from the end of 2025 as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end. This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at 31 March 2026.

Dave Brager: Total loans at 31 March 2026 were $8.64 billion, a $280 million or 3.3% increase from the end of Q1 2025. This increase was driven primarily by growth in commercial real estate loans of $141 million, a $62 million increase in dairy and livestock and agribusiness loans, and a $43 million increase in construction loans. We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year. Total loans declined by $56 million from the end of 2025 as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end. This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at 31 March 2026.

Speaker #3: This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% at March 31st, 2026.

Speaker #3: This increase was driven primarily by growth in commercial real estate loans of $141 million; a $62 million increase in dairy and livestock and agribusiness loans; and a $43 million increase in construction loans.

Speaker #3: CNI loans decreased quarter over quarter by 21 million dollars as line utilization decreased from 32% at the end of 2025 to 30% at the end of the first quarter of 2026.

Speaker #3: We also had $34 million of growth in SBA 504 loans, and C&I loan outstandings increased by $10 million over the prior year. Total loans declined by $56 million from the end of 2025, as dairy and livestock and agribusiness loans declined by $117 million due to the seasonal peak in line usage that occurs every calendar year-end.

Speaker #3: Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of 57 million dollars, SBA 504 loan growth of 13 million dollars, and construction loans increasing by 22 million dollars.

David A. Brager: Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of $57 million, SBA 504 loan growth of $13 million, and construction loans increasing by $22 million. Loan originations have started off the year at a strong pace as originations for Q1 of 2026 were approximately 90% higher than Q1 of 2025 and 15% higher than Q4 of 2025. Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. C&I loan originations have stayed relatively consistent over the past 5 quarters, commercial real estate loan originations have been strengthening. Loan originations in Q1 had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter.

Dave Brager: Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of $57 million, SBA 504 loan growth of $13 million, and construction loans increasing by $22 million. Loan originations have started off the year at a strong pace as originations for Q1 of 2026 were approximately 90% higher than Q1 of 2025 and 15% higher than Q4 of 2025. Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. C&I loan originations have stayed relatively consistent over the past 5 quarters, commercial real estate loan originations have been strengthening. Loan originations in Q1 had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter.

Speaker #3: This seasonal decline is evident by the decrease in line utilization rate from 78% at the end of 2025 to 69% as of March 31, 2026.

Speaker #3: Loan originations have started off the year at a strong pace, as originations for the first quarter of 2026 were approximately 90% higher than the first quarter of 2025 and 15% higher than the fourth quarter of 2025.

Speaker #3: CNI loans decreased quarter over quarter by 21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of the first quarter of 2026.

David A. Brager: C&I loans decreased quarter over quarter by $21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of Q1 2026. Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of $57 million, SBA 504 loan growth of $13 million, and construction loans increasing by $22 million. Loan originations have started off the year at a strong pace as originations for Q1 2026 were approximately 90% higher than Q1 2025 and 15% higher than Q4 2025. Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. C&I loan originations have stayed relatively consistent over the past five quarters, but commercial real estate loan originations have been strengthening.

Dave Brager: C&I loans decreased quarter over quarter by $21 million as line utilization decreased from 32% at the end of 2025 to 30% at the end of Q1 2026. Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of $57 million, SBA 504 loan growth of $13 million, and construction loans increasing by $22 million. Loan originations have started off the year at a strong pace as originations for Q1 2026 were approximately 90% higher than Q1 2025 and 15% higher than Q4 2025. Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. C&I loan originations have stayed relatively consistent over the past five quarters, but commercial real estate loan originations have been strengthening.

Speaker #3: Our loan pipelines remain relatively strong, although rate competition for high-quality loans continues to be intense. CNI loan originations have stayed relatively consistent over the past five quarters, but commercial real estate loan originations have been strengthening.

Speaker #3: Partially offsetting the decline in line usage from the end of 2025 was commercial real estate loan growth of 57 million; SBA 504 loan growth of 13 million; and construction loans increasing by 22 million.

Speaker #3: Loan originations in the first quarter had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter. Our average loan yield was 5.32% for the first quarter of 2026 compared to 5.47% for the fourth quarter of 2025 and 5.22% for the first quarter of 2025.

David A. Brager: Our average loan yield was 5.32% for Q1 2026 compared to 5.47% for Q4 2025 and 5.22% for Q1 2025. During Q4 2025, we collected $3.2 million of interest on a non-performing loan. Excluding this additional interest income, our loan yield would have been 5.32% for Q4 2025. We experienced $9,000 of net recoveries during Q1 2026 compared to $325,000 of net recoveries for Q4 2025. Total non-performing loans increased by $1.5 million to $6.1 million at 31 March 2026, which represents 0.07% of total loans.

Dave Brager: Our average loan yield was 5.32% for Q1 2026 compared to 5.47% for Q4 2025 and 5.22% for Q1 2025. During Q4 2025, we collected $3.2 million of interest on a non-performing loan. Excluding this additional interest income, our loan yield would have been 5.32% for Q4 2025. We experienced $9,000 of net recoveries during Q1 2026 compared to $325,000 of net recoveries for Q4 2025. Total non-performing loans increased by $1.5 million to $6.1 million at 31 March 2026, which represents 0.07% of total loans.

Speaker #3: Our loan pipelines remain relatively strong although rate competition for high-quality loans continues to be intense. CNI loan originations have stayed relatively consistent over the past five quarters but commercial real estate loan originations have been strengthening.

Speaker #3: During the fourth quarter of 2025, we collected 3.2 million dollars of interest on a non-performing loan. Excluding this additional interest income, our loan yield would have been 5.32% for the fourth quarter of 2025.

Speaker #3: We experienced $9,000 of net recoveries during the first quarter of 2026 compared to $325,000 of net recoveries for the fourth quarter of 2025. Total non-performing loans increased by 1.5 million dollars to 6.1 million dollars at March 31st, 2026, which represents 0.07% of total loans.

Speaker #3: Loan originations in the first quarter had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter. Our average loan yield was 5.32% for the first quarter of 2026, compared to 5.47% for the fourth quarter of 2025 and 5.22% for the first quarter of 2025.

David A. Brager: Loan originations in Q1 had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter. Our average loan yield was 5.32% for Q1 2026, compared to 5.47% for Q4 2025 and 5.22% for Q1 2025. During Q4 2025, we collected $3.2 million of interest on a nonperforming loan. Excluding this additional interest income, our loan yield would have been 5.32% for Q4 2025. We experienced $9,000 of net recoveries during Q1 2026, compared to $325,000 of net recoveries for Q4 2025. Total nonperforming loans increased by $1.5 million to $6.1 million at 31 March 2026, which represents 0.07% of total loans.

Dave Brager: Loan originations in Q1 had average yields of approximately 6%, which was roughly 25 basis points lower than the prior quarter. Our average loan yield was 5.32% for Q1 2026, compared to 5.47% for Q4 2025 and 5.22% for Q1 2025. During Q4 2025, we collected $3.2 million of interest on a nonperforming loan. Excluding this additional interest income, our loan yield would have been 5.32% for Q4 2025. We experienced $9,000 of net recoveries during Q1 2026, compared to $325,000 of net recoveries for Q4 2025. Total nonperforming loans increased by $1.5 million to $6.1 million at 31 March 2026, which represents 0.07% of total loans.

Speaker #3: The increase is primarily due to the downgrade of a 2.9 million dollar CNI loan for which we established a specific reserve in our allowance for credit losses.

David A. Brager: The increase is primarily due to the downgrade of a $2.9 million C&I loan for which we established a specific reserve in our allowance for credit losses. Classified loans were $83.1 million at 31 March 2026, compared to $52.7 million at 31 December 2025, and $94.2 million at 31 March 2025. Classified loans as a percentage of total loans were less than 1% at 31 March 2026. Now on to deposits. Our average total deposits and customer repurchase agreements for Q1 2026 were $12.5 billion, which compares to $12.2 billion for Q1 2025, and $12.6 billion during Q4 2025.

Dave Brager: The increase is primarily due to the downgrade of a $2.9 million C&I loan for which we established a specific reserve in our allowance for credit losses. Classified loans were $83.1 million at 31 March 2026, compared to $52.7 million at 31 December 2025, and $94.2 million at 31 March 2025. Classified loans as a percentage of total loans were less than 1% at 31 March 2026. Now on to deposits. Our average total deposits and customer repurchase agreements for Q1 2026 were $12.5 billion, which compares to $12.2 billion for Q1 2025, and $12.6 billion during Q4 2025.

Speaker #3: During the fourth quarter of 2025, we collected $3.2 million of interest on a non-performing loan. Excluding this additional interest income, our loan yield would have been 5.32% for the fourth quarter of 2025.

Speaker #3: Classified loans were 83.1 million dollars at March 31st, 2026, compared to 52.7 million dollars at December 31st, 2025, and 94.2 million dollars at March 31st, 2025.

Speaker #3: We experienced $9,000 of net recoveries during the first quarter of 2026 compared to $325,000 of net recoveries for the fourth quarter of 2025. Total non-performing loans increased by 1.5 million to 6.1 million at March 31, 2026 which represents 0.07% of total loans.

Speaker #3: Classified loans, as a percentage of total loans, were less than 1% at March 31st, 2026. Now, on the deposits. Our average total deposits and customer repurchase agreements for the first quarter of 2026 were 12.5 billion dollars, which compares to 12.2 billion dollars for the first quarter of 2025 and 12.6 billion dollars during the fourth quarter of 2025.

Speaker #3: The increase is primarily due to the downgrade of a $2.9 million CNI loan for which we established a specific reserve in our allowance for credit losses.

David A. Brager: The increase is primarily due to the downgrade of a $2.9 million C&I loan, for which we established a specific reserve in our allowance for credit losses. Classified loans were $83.1 million at March 31, 2026, compared to $52.7 million at December 31, 2025, and $94.2 million at March 31, 2025. Classified loans as a percentage of total loans were less than 1% at March 31, 2026. Now on to deposits. Our average total deposits and customer repurchase agreements for Q1 2026 were $12.5 billion, which compares to $12.2 billion for Q1 2025 and $12.6 billion during Q4 2025. Our non-interest-bearing deposits declined on average by $112 million compared to Q1 2025 and by $107 million compared to Q4 2025.

Dave Brager: The increase is primarily due to the downgrade of a $2.9 million C&I loan, for which we established a specific reserve in our allowance for credit losses. Classified loans were $83.1 million at March 31, 2026, compared to $52.7 million at December 31, 2025, and $94.2 million at March 31, 2025. Classified loans as a percentage of total loans were less than 1% at March 31, 2026. Now on to deposits. Our average total deposits and customer repurchase agreements for Q1 2026 were $12.5 billion, which compares to $12.2 billion for Q1 2025 and $12.6 billion during Q4 2025. Our non-interest-bearing deposits declined on average by $112 million compared to Q1 2025 and by $107 million compared to Q4 2025.

Speaker #3: Classified loans were 83.1 million at March 31, 2026 compared to 52.7 million at December 31, 2025 and 94.2 million at March 31, 2025. Classified loans as a percentage of total loans were less than 1% at March 31, 2026.

Speaker #3: Our non-interest-bearing deposits declined on average by 112 million dollars compared to the first quarter of 2025 and by 107 million dollars compared to the fourth quarter of 2025.

David A. Brager: Our non-interest-bearing deposits declined on average by $112 million compared to Q1 2025 and by $107 million compared to Q4 2025. On average, non-interest-bearing deposits were 58% of total deposits for both Q1 2026 and Q4 2025 compared to 59% for Q1 2025. Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from Q1 2025. Our cost of deposits and repos was 82 basis points for Q1 2026 compared to 86 basis points for Q4 2025 and 87 basis points for the year ago quarter.

Dave Brager: Our non-interest-bearing deposits declined on average by $112 million compared to Q1 2025 and by $107 million compared to Q4 2025. On average, non-interest-bearing deposits were 58% of total deposits for both Q1 2026 and Q4 2025 compared to 59% for Q1 2025. Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from Q1 2025. Our cost of deposits and repos was 82 basis points for Q1 2026 compared to 86 basis points for Q4 2025 and 87 basis points for the year ago quarter.

Speaker #3: On average, non-interest-bearing deposits were 58% of total deposits. For both the first quarter of 2026 and the fourth quarter of 2025, compared to 59% for the first quarter of 2025.

Speaker #3: Now, on the deposits. Our average total deposits and customer repurchase agreements for the first quarter of 2026 were $12.5 billion, which compares to $12.2 billion for the first quarter of 2025 and $12.6 billion during the fourth quarter of 2025.

Speaker #3: Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by 400 million dollars from the first quarter of 2025. Our cost of deposits and repos was 82 basis points for the first quarter of 2026 compared to 86 basis points for the fourth quarter of 2025 and 87 basis points for the year-ago quarter.

Speaker #3: Our non-interest-bearing deposits declined on average by $112 million compared to the first quarter of 2025, and by $107 million compared to the fourth quarter of 2025.

Speaker #3: I will now turn the call over to Allen to further discuss additional aspects of our balance sheet and income.

David A. Brager: I will now turn the call over to E. Allen Nicholson to further discuss additional aspects of our balance sheet and income.

Dave Brager: I will now turn the call over to E. Allen Nicholson to further discuss additional aspects of our balance sheet and income.

Speaker #3: On average, non-interest-bearing deposits were 58% of total deposits for both the first quarter of 2026 and the fourth quarter of 2025 compared to 59% for the first quarter of 2025.

David A. Brager: On average, non-interest-bearing deposits were 58% of total deposits for both Q1 2026 and Q4 2025, compared to 59% for Q1 2025. Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from Q1 2025. Our cost of deposits and repos was 82 basis points for Q1 2026, compared to 86 basis points for Q4 2025 and 87 basis points for the year ago quarter. I will now turn the call over to Alan to further discuss additional aspects of our balance sheet and income.

Dave Brager: On average, non-interest-bearing deposits were 58% of total deposits for both Q1 2026 and Q4 2025, compared to 59% for Q1 2025. Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from Q1 2025. Our cost of deposits and repos was 82 basis points for Q1 2026, compared to 86 basis points for Q4 2025 and 87 basis points for the year ago quarter. I will now turn the call over to Allen to further discuss additional aspects of our balance sheet and income.

Speaker #2: Thanks, Dave. Pre-tax, pre-provisioned income was 71.6 million dollars in the first quarter of 2026. Compared to 71.9 million dollars in the fourth quarter of 2025 and 67.5 million dollars in the first quarter of last year.

E. Allen Nicholson: Thanks, Dave. Pre-tax, pre-provisioned income was $71.6 million in Q1 2026 compared to $71.9 million in Q4 2025 and $67.5 million in Q1 of last year. After adjusting for acquisition expense and gains on OREO, our operating income grew from Q1 2025 by $8 million, reflecting positive operating leverage of 6%. The growth in operating income was driven by growth in net interest income of $7.4 million by a 7% rate of growth.

Allen Nicholson: Thanks, Dave. Pre-tax, pre-provisioned income was $71.6 million in Q1 2026 compared to $71.9 million in Q4 2025 and $67.5 million in Q1 of last year. After adjusting for acquisition expense and gains on OREO, our operating income grew from Q1 2025 by $8 million, reflecting positive operating leverage of 6%. The growth in operating income was driven by growth in net interest income of $7.4 million by a 7% rate of growth.

Speaker #3: Interest-bearing non-maturity deposits and customer repurchase agreements grew on average by $400 million from the first quarter of 2025. Our cost of deposits and repos was $82 basis points for the first quarter of 2026 compared to 86 basis points for the fourth quarter of 2025 and 87 basis points for the year-ago quarter.

Speaker #2: After adjusting for acquisition expense and gains on OREO, our operating income grew from the first quarter of 2025 by 8 million dollars, reflecting positive operating leverage of 6%.

Speaker #2: The growth in operating income was driven by growth in net interest income of 7.4 million dollars by a 7% rate of growth. Net interest income was 117.8 million dollars in the first quarter of 2026.

Speaker #3: I will now turn the call over to Alan to further discuss additional aspects of our balance sheet and income.

Speaker #2: Thanks, Dave. Pre-tax, pre-provisioned income was 71.6 million in the first quarter of 2026. Compared to 71.9 million in the fourth quarter of 2025 and 67.5 million in the first quarter of last year.

E. Allen Nicholson: Thanks, Dave. Pre-tax, pre-provision income was $71.6 million in Q1 2026, compared to $71.9 million in Q4 2025 and $67.5 million in Q1 2025. After adjusting for acquisition expense and gains on OREO, our operating income grew from Q1 2025 by $8 million, reflecting positive operating leverage of 6%. The growth in operating income was driven by growth in net interest income of $7.4 million by a 7% rate of growth. Net interest income was $117.8 million in Q1 2026, compared to $122.7 million in Q4 2025 and $110.4 million in Q1 2025.

E. Allen Nicholson: Net interest income was $117.8 million in Q1 2026 compared to $122.7 million in Q4 2025 and $110.4 million in Q1 2025. Interest income decreased from Q4 2025 by $6.9 million due primarily to 2 fewer calendar days in Q1, a $134 million decrease in earning assets, and the $3.2 million of non-accrued interest paid during Q4.

Allen Nicholson: Net interest income was $117.8 million in Q1 2026 compared to $122.7 million in Q4 2025 and $110.4 million in Q1 2025. Interest income decreased from Q4 2025 by $6.9 million due primarily to 2 fewer calendar days in Q1, a $134 million decrease in earning assets, and the $3.2 million of non-accrued interest paid during Q4.

Speaker #2: Compared to 122.7 million dollars in the fourth quarter of '25 and 110.4 million dollars in the first quarter of 2025. Interest income decreased from the fourth quarter of 2025 by 6.9 million dollars due primarily to two fewer calendar days in the first quarter: a 134 million dollar decrease in earning assets and the 3.2 million dollars of non-accrued interest paid during the fourth quarter.

Speaker #2: After adjusting for acquisition expense and gains on OREO, our operating income grew from the first quarter of 2025 by $8 million reflecting positive operating leverage of 6%.

Speaker #2: The growth in operating income was driven by growth in net interest income of 7.4 million by a 7% rate of growth. Net interest income was 117.8 million in the first quarter of 2026.

Speaker #2: Interest income increased from the first quarter of 2025 by 6.1 million dollars as our earning asset yield increased by 7 basis points, from 4.28% to 4.35%, and our average earning assets increased by 336 million dollars.

E. Allen Nicholson: Interest income increased from Q1 2025 by $6.1 million as our earning asset yield increased by 7 basis points from 4.28% to 4.35% and our average earning assets increased by $336 million. Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was $31.3 million in Q1 2026 compared to $33.3 million in Q4 2025 and $32.6 million in Q1 2025. Our cost of funds decreased from 1.01% in Q4 2025 to 97 basis points in Q1 2026.

Allen Nicholson: Interest income increased from Q1 2025 by $6.1 million as our earning asset yield increased by 7 basis points from 4.28% to 4.35% and our average earning assets increased by $336 million. Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was $31.3 million in Q1 2026 compared to $33.3 million in Q4 2025 and $32.6 million in Q1 2025. Our cost of funds decreased from 1.01% in Q4 2025 to 97 basis points in Q1 2026.

Speaker #2: Compared to 122.7 million in the fourth quarter of '25 and 110.4 million in the first quarter of 2025. Interest income decreased from the fourth quarter of 2025 by 6.9 million due primarily to two fewer calendar days in the first quarter: a $134 million decrease in earning assets and the $3.2 million of non-accrued interest paid during the fourth quarter.

Speaker #2: Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was 31.3 million dollars in the first quarter of 2026 compared to 33.3 million dollars in the fourth quarter of 2025 and 32.6 million dollars in the first quarter of 2025.

E. Allen Nicholson: Interest income decreased from Q4 2025 by $6.9 million, due primarily to two fewer calendar days in Q1 2026, a $134 million decrease in earning assets, and the $3.2 million of non-accrual interest paid during Q4 2025. Interest income increased from Q1 2025 by $6.1 million, as our earning asset yield increased by seven basis points from 4.28% to 4.35%, and our average earning assets increased by $336 million. Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was $31.3 million in Q1 2026, compared to $33.3 million in Q4 2025 and $32.6 million in Q1 2025. Our cost of funds decreased from 1.01% in Q4 2025 to 97 basis points in Q1 2026.

Speaker #2: Our cost of funds decreased from 1.01% in the fourth quarter of 2025 to 97 basis points in the first quarter of 2026. Our cost of funds was 7 basis points lower than the first quarter of 2025, even though the average balance of interest-bearing deposits and repos increased by 400 million dollars.

Speaker #2: Interest income increased from the first quarter of 2025 by 6.1 million as our earning asset yield increased by 7 basis points from 4.28% to 4.35% and our average earning assets increased by $336 million.

E. Allen Nicholson: Our cost of funds was 7 basis points lower than Q1 2025, even though the average balance of interest-bearing deposits and repos increased by $400 million. Non-interest income was $14.3 million in Q1 2026 compared to $11.2 million in Q4 2025 and $16.2 million in Q1 2025. Q4 2025 included a $2.8 million loss on the sale of securities, while Q1 2025 included a gain on sale of OREO of $2.2 million.

Allen Nicholson: Our cost of funds was 7 basis points lower than Q1 2025, even though the average balance of interest-bearing deposits and repos increased by $400 million. Non-interest income was $14.3 million in Q1 2026 compared to $11.2 million in Q4 2025 and $16.2 million in Q1 2025. Q4 2025 included a $2.8 million loss on the sale of securities, while Q1 2025 included a gain on sale of OREO of $2.2 million.

Speaker #2: Interest expense declined from both the prior quarter and the prior year quarter. Interest expense was $31.3 million in the first quarter of 2026, compared to $33.3 million in the fourth quarter of 2025 and $32.6 million in the first quarter of 2025.

Speaker #2: Non-interest expense non-interest income was 14.3 million dollars in the first quarter of 2026. Compared to 11.2 million dollars in the fourth quarter of 2025 and 16.2 million dollars in the first quarter of 2025.

Speaker #2: The fourth quarter of 2025 included a 2.8 million dollar loss on the sale of securities. While the first quarter of 2025 included a gain on sale of OREO of 2.2 million dollars.

Speaker #2: Our cost of funds decreased from 1.01% in the fourth quarter of 2025 to 97 basis points in the first quarter of 2026. Our cost of funds was 7 basis points lower than the first quarter of 2025 even though the average balance of interest-bearing deposits and repos increased by $400 million.

E. Allen Nicholson: Our cost of funds was seven basis points lower than Q1 2025, even though the average balance of interest-bearing deposits in repos increased by $400 million. Non-interest income was $14.3 million in Q1 2026, compared to $11.2 million in Q4 2025 and $16.2 million in Q1 2025. Q4 2025 included a $2.8 million loss on the sale of securities. While Q1 2025 included a gain on sale of OREO of $2.2 million. The quarter over quarter increase in non-interest income also included a $1.1 million increase in the cash surrender value of bank-owned life insurance. Trust and investment services income grew by $313,000, or 9%, from Q1 2025, but decreased by $307,000 over Q4 2025 due to lower brokerage fee income.

Speaker #2: The quarter-over-quarter increase in non-interest income also included a 1.1 million dollar increase in the cash render value of bank-owned life insurance. Trust and investment services income grew by 313,000 dollars or 9% from the first quarter of 2025, but decreased by 307,000 over the fourth quarter of 2025 due to lower brokerage fee income.

E. Allen Nicholson: The quarter-over-quarter increase in non-interest income also included a $1.1 million increase in the cash surrender value of bank-owned life insurance. Trust and investment services income grew by $313 thousand or 9% from Q1 2025, decreased by $307 thousand over Q4 2025 due to lower brokerage fee income. Our allowance for credit loss was $80.2 million at 31 March 2026. In comparison, our allowance for credit losses was $77 million at 31 December 2025. The $3 million increase in the allowance was primarily due to the establishment of a specific reserve totaling $3.2 million. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's.

Allen Nicholson: The quarter-over-quarter increase in non-interest income also included a $1.1 million increase in the cash surrender value of bank-owned life insurance. Trust and investment services income grew by $313 thousand or 9% from Q1 2025, decreased by $307 thousand over Q4 2025 due to lower brokerage fee income. Our allowance for credit loss was $80.2 million at 31 March 2026. In comparison, our allowance for credit losses was $77 million at 31 December 2025. The $3 million increase in the allowance was primarily due to the establishment of a specific reserve totaling $3.2 million. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's.

Speaker #2: Non-interest expense non-interest income was 14.3 million in the first quarter of 2026. Compared to 11.2 million in the fourth quarter of 2025 and 16.2 million in the first quarter of 2025.

Speaker #2: The fourth quarter of

Speaker #1: Of 2025 included a $2.8 million loss on the sale of securities , while the first quarter of 2025 included a gain on sale of Oreo of $2.2 million .

Speaker #2: Our allowance for credit loss was 80.2 million dollars at March 31st, 2026. In comparison, our allowance for credit losses was 77 million dollars at December 31st, 2025.

Speaker #1: The quarter over quarter increase in non-interest income also included a $1.1 million increase in the cash render value of bank owned life insurance , trust and investment services .

Speaker #2: The 3 million dollar increase in the allowance was primarily due to the establishment of a specific reserve totaling 3.2 million dollars. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's.

Speaker #1: Income grew by $313,000 , or 9% , from the first quarter of 2025 , but decreased by 307,000 over the fourth quarter of 2025 due to lower brokerage fee income .

Speaker #2: We continue to have the largest individual scenario weighting on Moody's baseline forecast, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at March 31st, 2025 was modestly different from our forecast at the end of 2025.

E. Allen Nicholson: We continue to have the largest individual scenario weighting on Moody's baseline forecast, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at 31 March 2025 was modestly different from our forecast at the end of 2025. I'm sorry. The resulting economic forecast at 31 March 2026 was modestly different than the forecast at the end of 2025. Real GDP is forecasted to be below 1% in the H2 2026 and stay below 2% through 2027. The unemployment rate is forecasted to reach 5% by the middle of 2026 and remain above 5% through 2028.

Allen Nicholson: We continue to have the largest individual scenario weighting on Moody's baseline forecast, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at 31 March 2025 was modestly different from our forecast at the end of 2025. I'm sorry. The resulting economic forecast at 31 March 2026 was modestly different than the forecast at the end of 2025. Real GDP is forecasted to be below 1% in the H2 2026 and stay below 2% through 2027. The unemployment rate is forecasted to reach 5% by the middle of 2026 and remain above 5% through 2028.

Speaker #1: Our allowance for credit loss was $80.2 million at March 31st , 2026 . In comparison , our allowance for credit losses was $77 million at December 31st , 2025 .

E. Allen Nicholson: Our allowance for credit loss was $80.2 million at 31 March 2026. In comparison, our allowance for credit losses was $77 million at 31 December 2025. The $3 million increase in the allowance was primarily due to the establishment of a specific reserve totaling $3.2 million. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's. We continue to have the largest individual scenario weighting on Moody's baseline forecast, with both upside and downside risks weighted among multiple forecasts. The resulting economic forecast at 31 March 2026 was modestly different than the forecast at the end of 2025. Real GDP is forecasted to be below 1% in H2 2026 and stay below 2% through 2027.

Speaker #2: I'm sorry, the resulting economic forecast at March 31st, 2026 was modestly different from the forecast at the end of 2025. Real GDP is forecasted to be below 1% in the second half of 2026, and stay below 2% through 2027.

Speaker #1: The $3 million increase in the allowance was primarily due to the establishment of specific reserves, totaling $3.2 million. Our economic forecast continues to be a blend of multiple forecasts produced by Moody's.

Speaker #2: The unemployment rate is forecasted to reach 5% by the middle of 2026 and remain above 5% through 2028. Commercial real estate prices are forecasted to continue their decline through the end of 2026 before experiencing growth in the back half of 2027.

Speaker #1: We continue to have the largest individual scenario waiting on Moody's baseline forecast , with both upside and downside risks weighted among multiple forecasts .

E. Allen Nicholson: Commercial real estate prices are forecasted to continue their decline through the end of 2026 before experiencing growth in the back H2 of 2027. Switching to our investment portfolio. Investment securities totaled $4.8 billion at 31 March 2026, a $116 million decrease from the end of 2025. Available for sale or AFS investment securities were $2.59 billion, and their held-to-maturity investments totaled $2.25 billion. The unrealized loss on AFS securities increased by $2 million from $308 million on 31 December 2025 to $310 million.

Allen Nicholson: Commercial real estate prices are forecasted to continue their decline through the end of 2026 before experiencing growth in the back H2 of 2027. Switching to our investment portfolio. Investment securities totaled $4.8 billion at 31 March 2026, a $116 million decrease from the end of 2025. Available for sale or AFS investment securities were $2.59 billion, and their held-to-maturity investments totaled $2.25 billion. The unrealized loss on AFS securities increased by $2 million from $308 million on 31 December 2025 to $310 million.

Speaker #1: The resulting economic forecasts at March 31st , 2025 was modestly different from our forecast at the end of 2025 . I'm sorry , the resulting economic forecast at March 31st , 2026 was modestly different than forecast at the end of 2025 .

Speaker #2: So switching to our investment portfolio, investment securities totaled 4.8 billion dollars at March 31st, 2026. A 116 million dollar decrease from the end of 2025.

Speaker #1: Real GDP is forecasted to be below 1% in the second half of 2026 , and below 2% through 2027 . The unemployment rate is forecasted to reach 5% by the middle of 2026 , and remain above 5% through 2028 .

Speaker #2: Available for sale or AFS investment securities were 2.59 billion dollars and are held to maturity investments total 2.25 billion dollars. The unrealized loss on AFS securities increased by 2 million dollars from 308 million dollars on December 31st, 2025 to 310 million dollars.

E. Allen Nicholson: The unemployment rate is forecasted to reach 5% by the middle of 2026 and remain above 5% through 2028. Commercial real estate prices are forecasted to continue their decline through the end of 2026, before experiencing growth in H2 2027. Switching to our investment portfolio. Investment securities totaled $4.8 billion at 31 March 2026, a $116 million decrease from the end of 2025. Available for sale or AFS investment securities were $2.59 billion, and our held-to-maturity investments totaled $2.25 billion. The unrealized loss on AFS securities increased by $2 million from $308 million on 31 December 2025 to $310 million. Our $700 million in fair value hedges generated negative carry in Q1 2026, resulting in a $1.1 million and $750,000 decrease in interest income compared to Q1 and Q4 2025 respectively. Now turning to our capital position.

Speaker #1: Commercial real estate prices are forecasted to continue their decline through the end of 2026 , before experiencing growth in the back half of 2027 .

Speaker #2: Our 700 million in fair value hedges generated negative carry in the first quarter of 2026, resulting in a 1.1 million dollar and 750,000 dollar decrease in interest income compared to the first and fourth quarters of 2025, respectively.

E. Allen Nicholson: Our $700 million in fair value hedges generated negative carry in Q1 2026, resulting in a $1.1 million and $750,000 decrease in interest income compared to Q1 and Q4 2025 respectively. Now turning to our capital position. At 31 March 2026, our shareholders' equity was $2.3 billion, a $93 million increase from Q1 2025, including the $52 million increase in other comprehensive income. The company's tangible common equity ratio was 10.5% at 31 March 2026, while our common equity tier one capital ratio was 16.3%.

Allen Nicholson: Our $700 million in fair value hedges generated negative carry in Q1 2026, resulting in a $1.1 million and $750,000 decrease in interest income compared to Q1 and Q4 2025 respectively. Now turning to our capital position. At 31 March 2026, our shareholders' equity was $2.3 billion, a $93 million increase from Q1 2025, including the $52 million increase in other comprehensive income. The company's tangible common equity ratio was 10.5% at 31 March 2026, while our common equity tier one capital ratio was 16.3%.

Speaker #1: So switching to our investment portfolio , investment securities totaled $4.8 billion at March 31st , 2026 , a $116 million decrease from the end of 2025 .

Speaker #1: Available for sale or AFS investment securities were $2.59 billion and are held to maturity Investments totaled $2.25 billion . The unrealized loss on AFS securities increased by $2 million from $308 million on December 31st , 2025 , to $310 million .

Speaker #2: Now, turning to our capital position, at March 31st, 2026, our shareholders' equity was 2.3 billion dollars, a 93 million dollar increase from the first quarter of 2025, including the 52 million dollar increase in other comprehensive income.

Speaker #2: The company's tangible common equity ratio was 10.5% at March 31st, 2026, while our common equity tier one capital ratio was 16.3%. Our tangible book value per share increased over the last 12 months by 9% from $10.45 at March 31st, 2025, to $11.42.

Speaker #1: Our $700 million in fair value hedges generated negative carry in the first quarter of 2026, resulting in a $1.1 million and $750,000 decrease in interest income, compared to the first and fourth quarters of 2025, respectively.

E. Allen Nicholson: Our tangible book value per share increased over the last 12 months by 9% from $10.45 at 31 March 2025 to $11.42. I'll now turn the call back to Dave for further discussion of our expenses.

Allen Nicholson: Our tangible book value per share increased over the last 12 months by 9% from $10.45 at 31 March 2025 to $11.42. I'll now turn the call back to Dave for further discussion of our expenses.

Speaker #1: Now , turning to our capital position at March 31st , 2026 , our shareholder's equity was $2.3 billion . A $93 million increase from the first quarter of 2025 , including the $52 million increase in other comprehensive income .

E. Allen Nicholson: At 31 March 2026, our shareholders' equity was $2.3 billion, a $93 million increase from Q1 2025, including the $52 million increase in other comprehensive income. The company's tangible common equity ratio was 10.5% at 31 March 2026, while our Common Equity Tier 1 capital ratio was 16.3%. Our tangible book value per share increased over the last 12 months by 9% from $10.45 at 31 March 2025, to $11.42. I'll now turn the call back to Dave for further discussion of our expenses.

Speaker #2: I'll now turn the call back to Dave for further discussion of our expenses.

Speaker #1: Thank you, Allen. Non-interest expense for the first quarter of 2026 was 60.6 million dollars, which includes 1.1 million dollars in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves.

David A. Brager: Thank you, Alan. Non-interest expense for Q1 2026 was $60.6 million, which includes $1.1 million in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves. Regulatory assessment expense decreased by $1.6 million as a result of the unwinding the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and Q1 2025. Our efficiency ratio was 45.8% in Q1 2026, compared to 46.3% in Q4 2025 and 46.7% in Q1 2025.

Dave Brager: Thank you, Alan. Non-interest expense for Q1 2026 was $60.6 million, which includes $1.1 million in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves. Regulatory assessment expense decreased by $1.6 million as a result of the unwinding the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and Q1 2025. Our efficiency ratio was 45.8% in Q1 2026, compared to 46.3% in Q4 2025 and 46.7% in Q1 2025.

Speaker #1: The company's tangible common equity ratio was 10.5% at March 31st , 2026 , while our common equity tier one capital ratio was 16.3% .

Speaker #1: Regulatory assessment expense decreased by 1.6 million dollars as a result of the unwinding the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and the first quarter of 2025.

Speaker #1: Our tangible book value per share increased over the last 12 months by 9%, from $10.45 at March 31, 2025, to $11.42.

Speaker #1: I'll now turn the call back to Dave for further discussion of our expenses Thank you . Allen Non-interest expense for the first quarter of 2026 was $60.6 million , which includes $1.1 million in one time merger Acquisition of heritage Bank of Commerce and $500,000 in provision for off balance sheet reserves Regulatory assessment expense decreased by $1.6 million as a result of the unwinding .

David A. Brager: Thank you, Alan. Non-interest expense for Q1 2026 was $60.6 million, which includes $1.1 million in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves. Regulatory assessment expense decreased by $1.6 million as a result of the unwinding of the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and Q1 2025. Our efficiency ratio was 45.8% in Q1 2026, compared to 46.3% in Q4 2025 and 46.7% in Q1 2025. Non-interest expense, excluding acquisition expense, as a percentage of average assets totaled 1.55% for Q1 2026, compared to 1.53% in Q4 2025 and 1.58% for Q1 2025.

Dave Brager: Thank you, Alan. Non-interest expense for Q1 2026 was $60.6 million, which includes $1.1 million in one-time merger acquisition of Heritage Bank of Commerce and $500,000 in provision for off-balance sheet reserves. Regulatory assessment expense decreased by $1.6 million as a result of the unwinding of the remaining accrual for the special FDIC assessment. Excluding acquisition expense and the provision for off-balance sheet reserves, the level of core operating expense was essentially flat to both the prior quarter and Q1 2025. Our efficiency ratio was 45.8% in Q1 2026, compared to 46.3% in Q4 2025 and 46.7% in Q1 2025. Non-interest expense, excluding acquisition expense, as a percentage of average assets totaled 1.55% for Q1 2026, compared to 1.53% in Q4 2025 and 1.58% for Q1 2025.

Speaker #1: Our efficiency ratio was 45.8% in the first quarter of 2026 compared to 46.3% in the fourth quarter of 2025 and 46.7% in the first quarter of 2025.

Speaker #1: Non-interest expense excluding acquisition expense as a percentage of average assets totaled 1.55% for the first quarter of 2026 compared to 1.53% in the fourth quarter of 2025 and 1.58% for the first quarter of 2025.

David A. Brager: Non-interest expense, excluding acquisition expense as a percentage of average assets totaled 1.55% for Q1 2026, compared to 1.53% in Q4 2025 and 1.58% for Q1 2025. This concludes today's presentation. Now Alan and I and Clay will be happy to take any questions that you might have.

Dave Brager: Non-interest expense, excluding acquisition expense as a percentage of average assets totaled 1.55% for Q1 2026, compared to 1.53% in Q4 2025 and 1.58% for Q1 2025. This concludes today's presentation. Now Alan and I and Clay will be happy to take any questions that you might have.

Speaker #1: The remaining accrual for the special FDIC assessment, excluding acquisition expense and the provision for off-balance sheet reserves. The level of core operating expense was essentially flat to both the prior quarter and the first quarter of 2025.

Speaker #1: This concludes today's presentation. Now, Allen and I and Clay will be happy to take any questions that you might have.

Speaker #1: Our efficiency ratio was 45.8% in the first quarter of 2026, compared to 46.3% in the fourth quarter of 2025 and 46.7% in the first quarter of 2025.

Speaker #3: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again.

Operator: Thank you. Our first question will come from the line of David Feaster with Raymond James.

Speaker #3: One moment while we compile the Q&A roster. And our first question will come from the line of David Feaster with Raymond James. Your line is open.

Speaker #1: Non-interest expense, excluding acquisition expense, as a percentage of average assets, totaled 1.55% for the first quarter of 2026, compared to 1.53% in the fourth quarter of 2025 and 1.58% for the first quarter of 2025.

David Feaster: Hey, good morning everybody.

Speaker #4: Hey, good morning, everybody.

Speaker #1: Morning, Dave. Morning.

David A. Brager: Morning, Dave. Morning.

Dave Brager: Morning, Dave.

Allen Nicholson: Morning.

David Feaster: I wanted to start on the deal, and welcome to the call, Robertson. I know we're only a week into this, but I just wanted to get a sense of how it's gone?

Speaker #4: I wanted to start on the deal. and welcome to the call, Clay. so I, I know we're only a week into this, but I just wanted to, to get a sense of, of how it's gone.

David Feaster: I wanted to start on the deal, and welcome to the call, Robertson. I know we're only a week into this, but I just wanted to get a sense of how it's gone?

Speaker #1: This concludes today's presentation. Now, Allen, Clay, and I will be happy to take any questions that you might have.

David A. Brager: This concludes today's presentation. Now Alan, I, and Clay will be happy to take any questions that you might have.

Dave Brager: This concludes today's presentation. Now Alan, I, and Clay will be happy to take any questions that you might have.

Speaker #4: Four days. Excuse me. Excuse me. you know, h-how has it gone thus far? Like, w-what are your top priorities just, you know, in these first few weeks after the deal's closed from an operational perspective and, you know, Dave, I know, like, you're, you're the goal is always to CBB the bank.

David A. Brager: Four days.

Dave Brager: Four days.

Speaker #2: Thank you . To ask a question , please press star one one on your telephone and wait for your name to be announced .

Operator: Our first question will come from the line of David Feaster with Raymond James. Your line is open.

David Feaster: Four days. Excuse me. Excuse me. You know, how has it gone thus far? Like, what are your top priorities just, you know, in these first few weeks after the deal's closed from an operational perspective? You know, Dave, I know like your the goal is always to CBB the bank. Like, where are you focused initially, and you see the most opportunity to add value?

Speaker #2: To withdraw your question, press star one one again. One moment while we compile the Q&A roster. And our first question will come from the line of David Feaster with Raymond James.

Speaker #4: Like, where, like, where are you focused initially? and you see the most opportunity to, to add value.

Operator: Our first question will come from the line of David Feaster with Raymond James. Your line is open.

Speaker #2: Your line is open

Speaker #1: Yeah. So I think initially, David, obviously, we're just trying to acclimate all the new associates that have joined us, through the merger. so, you know, Clay has, been Clay and his team, the former Heritage folks have been drinking through a fire hose.

David A. Brager: I think initially, David, obviously we're just trying to acclimate all the new associates that have joined us through the merger. You know, Robertson and his team, the former Heritage folks, have been drinking through a fire hose. There's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial timeframe. Robertson and Julie, who joined our board, were at our first board meeting yesterday, so they're getting acclimated. Robertson is gonna be spending a lot of time down here. We'll be spending a lot of time together.

Speaker #3: Hey . Good morning everybody .

David Feaster: Hey, good morning, everybody.

Dave Brager: I think initially, David, obviously we're just trying to acclimate all the new associates that have joined us through the merger. You know, Robertson and his team, the former Heritage folks, have been drinking through a fire hose. There's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial timeframe. Robertson and Julie, who joined our board, were at our first board meeting yesterday, so they're getting acclimated. Robertson is gonna be spending a lot of time down here. We'll be spending a lot of time together.

Speaker #1: Morning , Dave .

David A. Brager: Morning, Dave. Morning.

Dave Brager: Morning, Dave. Morning.

Speaker #3: I wanted to start on the deal . And welcome to the call , Clay . So I know we're only a week into this , but I just wanted to get a sense of of how it's gone for days .

David Feaster: I wanted to start on the deal, and welcome to the call, Clay. I know we're only a week into this, but I just wanted to get a sense of how it's gone.

Speaker #1: there's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial timeframe.

David A. Brager: Four days.

Dave Brager: Four days.

Speaker #3: Excuse me , excuse me You know , how is it gone thus far ? Like , what are your top priorities ? Just , you know , in these first few weeks after the deal's closed from an operational perspective , and , you know , Dave , I know , like your the goal is always to CBB the bank , like where , like , where are you focused initially And you see the most opportunity to , to add value

David Feaster: Four days. Excuse me. How has it gone thus far? What are your top priorities just in these first few weeks after the deal's closed from an operational perspective, and, Dave, I know the goal is always to CBB the bank. Where are you focused initially, and you see the most opportunity to add value?

Speaker #1: Clay and, and Julie, who joined our board, were our first board meeting yesterday. so they're getting acclimated. Clay, is gonna be spending a lot of time down here.

Speaker #1: We'll be spending a lot of time together. We, you know, sort of restructured the organization. to involve the, the new senior leaders that are joining us, you know, Clay and, and his former, senior, leadership team that are remaining.

David A. Brager: We've, you know, sort of restructured the organization, to involve the new senior leaders that are joining us, you know, Clay and his former senior leadership team that are remaining. There's just a lot of education about the culture of our bank, the way we do things. You know, that's not an event, it's a process, so it's gonna take some time to do that. All in all, things went very well on close weekend. You know, it'll continue to get easier and better as we go forward. You know, Clay can give his perspective as well.

Dave Brager: We've, you know, sort of restructured the organization, to involve the new senior leaders that are joining us, you know, Clay and his former senior leadership team that are remaining. There's just a lot of education about the culture of our bank, the way we do things. You know, that's not an event, it's a process, so it's gonna take some time to do that. All in all, things went very well on close weekend. You know, it'll continue to get easier and better as we go forward. You know, Clay can give his perspective as well.

Speaker #1: Yeah. So I think initially, David, obviously we're just trying to acclimate all the new associates that have joined us through the merger.

David A. Brager: Yeah. I think initially, David, obviously, we're just trying to acclimate all the new associates that have joined us through the merger. Clay and his team, the former Heritage folks, have been drinking through a fire hose. There's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial timeframe. Clay and Julie, who joined our board, were at our first board meeting yesterday. They're getting acclimated. Clay is going to be spending a lot of time down here. We'll be spending a lot of time together. We've sort of restructured the organization to involve the new senior leaders that are joining us, Clay and his former senior leadership team that are remaining.

Dave Brager: Yeah. I think initially, David, obviously, we're just trying to acclimate all the new associates that have joined us through the merger. Clay and his team, the former Heritage folks, have been drinking through a fire hose. There's a lot of training, a lot of information that's going on. We're looking at how we set up accounts, how we structure relationships. All of those things are part of that initial timeframe. Clay and Julie, who joined our board, were at our first board meeting yesterday. They're getting acclimated. Clay is going to be spending a lot of time down here. We'll be spending a lot of time together. We've sort of restructured the organization to involve the new senior leaders that are joining us, Clay and his former senior leadership team that are remaining.

Speaker #1: So , you know , Clay has been Clay and his team , the former heritage folks have been drinking through a fire hose There's a lot of training , a lot of information that's going on .

Speaker #1: So there's just a lot of education about the culture of our bank, the, the way we do things. And, you know, that's not, an event.

Speaker #1: We're looking at how we set up accounts , how we structure relationships , all of those things are part of that initial time frame .

Speaker #1: It's a process. So it's gonna take some time to do that. But all in all, things, went very well on closed weekend. and, you know, it'll continue to get easier and better, as we go forward.

Speaker #1: Clay and Julie , who joined our board , were our first board meeting yesterday . So they're getting acclimated Clay is going to be spending a lot of time down here .

Speaker #1: But I'd love to, you know, Clay can give his perspective as well.

Speaker #2: Yeah. David, I think, Dave, the, the, the, the, the integration's going just fine as Dave said. The, you know, the team is just getting acclimated to, new reporting lines and new systems and, reporting lines.

Robertson Jones: Yeah, David, I think, Dave, the integration is going just fine. As Dave said, you know, the team is just getting acclimated to new reporting lines and new systems. It's all going just fine. I think the primary focus we have is, one, staying close to our customers and clients and making sure that they hear from us often, and also just keeping a close eye on our associates to make sure that they're keeping pace with the integration and the training.

Clay Jones: Yeah, David, I think, Dave, the integration is going just fine. As Dave said, you know, the team is just getting acclimated to new reporting lines and new systems. It's all going just fine. I think the primary focus we have is, one, staying close to our customers and clients and making sure that they hear from us often, and also just keeping a close eye on our associates to make sure that they're keeping pace with the integration and the training.

Speaker #1: We'll be spending a lot of time together . We , you know , sort of restructured the organization to involve the new senior leaders that are joining us .

Speaker #1: You know, Clay and his former senior leadership team that are remaining. So there's just a lot of education about the culture of our bank.

Speaker #2: So it-it's all going just fine. I think the primary focus we have is, one, staying close to our, our customers and clients and making sure that, they hear from us often.

David A. Brager: There's just a lot of education about the culture of our bank, the way we do things. That's not an event, it's a process. It's going to take some time to do that. All in all, things went very well on closing weekend. It'll continue to get easier and better as we go forward. I'd love to. Clay can give his perspective as well.

Dave Brager: There's just a lot of education about the culture of our bank, the way we do things. That's not an event, it's a process. It's going to take some time to do that. All in all, things went very well on closing weekend. It'll continue to get easier and better as we go forward. I'd love to. Clay can give his perspective as well.

Speaker #1: The , the way we do things . And , you know , that's not an event . It's a process . So it's going to take some time to do that .

Speaker #2: And also just keeping, a close eye on our associates to make sure integration and the training.

Speaker #1: But all in all , things went very well on closed weekend . And you know , it'll continue to get easier and better as we go forward .

Speaker #4: Okay. That's great. And I know, you know, we got I know we didn't include much in the way of optimization. the look, the deal gives you a ton of financial flexibility, right?

David Feaster: Okay. That's great. I know, you know, I know we didn't include much in the way of optimization. Look, the deal gives you a ton of financial flexibility, right? Didn't really include any optimization and guidance outside of maybe some of the purchase mortgages that we'd talked about. With the deal closed and all this financial flexibility, has your thoughts changed at all about, you know, opportunities to optimize things or deploy excess liquidity just given the fully marked balance sheet?

Speaker #1: But I'd love to . You know , Clay can give his perspective as well Yeah . David . I think Dave , the , the , the , the , the integration is going just fine as Dave said , the , you know , the team is just getting acclimated to new reporting lines and new systems and reporting lines .

Speaker #4: Didn't really include any optimization and guidance outside of maybe some of the purchased mortgages that we talked about. With the deal closed, a-and all this financial flexibility, h-has your thoughts changed at all about, you know, opportunities to optimize things or deploy excess liquidity, just given the fully marked balance sheet?

Clay Jones: Yeah, David. I think, Dave, the integration is going just fine. As Dave said, the team is just getting acclimated to new reporting lines and new systems and reporting lines. It's all going just fine. I think the primary focus we have is, one, staying close to our customers and clients and making sure that they hear from us often, and also just keeping a close eye on our associates to make sure that they're keeping pace with the integration and the training.

Speaker #1: So it's all going just fine . I think the primary focus we have is one , staying close to our , our customers and clients and making sure that they hear from us often .

Speaker #1: David, you're right. We do have some, some ability to restructure the balance sheet a little bit. you know, we have announced and, and do have, a, you know, a sale in place for the single-family mortgage pools of Heritage.

David A. Brager: David, you're right. We do have some ability to restructure the balance sheet a little bit. You know, we have announced and do have, you know, a sale in place for the single-family mortgage pools of Heritage. Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings. A lot of moving parts right now because it does give us a fair amount of optionality.

Dave Brager: David, you're right. We do have some ability to restructure the balance sheet a little bit. You know, we have announced and do have, you know, a sale in place for the single-family mortgage pools of Heritage. Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings. A lot of moving parts right now because it does give us a fair amount of optionality.

Speaker #1: And also just keeping a close eye on our associates to make sure that they're keeping pace with the integration and the training

Speaker #3: Okay . That's great . And I know , you know , I know we didn't include much in the way of optimization . The the deal gives you a ton of financial flexibility , right ?

David Feaster: Okay. That's great. I know we didn't include much in the way of optimization. Look, the deal gives you a ton of financial flexibility, right? Didn't really include any optimization and guidance outside of maybe some of the purchase mortgages that we'd talked about. With the deal closed and all this financial flexibility, has your thoughts changed at all about opportunities to optimize things or deploy excess liquidity, just given the fully marked balance sheet?

Speaker #1: beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that will you'll be able to see on the next quarterly earnings.

Speaker #3: Didn't really include any optimization and guidance outside of maybe some of the purchase mortgages that we talked about with the deal closed and all this financial flexibility , has your thoughts changed at all about , you know , opportunities to optimize things or deploy excess liquidity ?

Speaker #1: But, a lot of moving parts right now. And then because it does give us a, a fair amount of optionality.

Speaker #4: Okay. Okay. And then just last one from me. You know, the commentary on the origination activity is extremely encouraging. I, I wanted to dig into that a bit.

David Feaster: Okay. Okay. Just last one from me. You know, the commentary on the origination activity is extremely encouraging. I wanted to dig into that a bit. How much of the improvement that you're seeing is you gaining share at this point and your bankers being more productive versus improving demand? Just kind of curious, how do you think about the growth outlook just in light of the competitive landscape that you alluded to, which it sounds like is primarily on the pricing side, and then just again, the expansion in the Bay Area?

Speaker #3: Just given the fully marked balance sheet.

Speaker #4: H-how much of the, the improvement that you're seeing is, is you gaining share at this point in your bankers being more productive? versus improving demand?

Speaker #1: David . You're right .

David A. Brager: David, you're right. We do have some ability to restructure the balance sheet a little bit. We have announced and do have a sale in place for the single-family mortgage pools of Heritage. Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings. A lot of moving parts right now because it does give us a fair amount of optionality.

Dave Brager: David, you're right. We do have some ability to restructure the balance sheet a little bit. We have announced and do have a sale in place for the single-family mortgage pools of Heritage. Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings. A lot of moving parts right now because it does give us a fair amount of optionality.

Speaker #4: We do have some some ability to restructure the balance sheet a little bit . You know , we have announced and do have , you know , a sale in place for the single family mortgage pools of heritage .

Speaker #4: And just kinda curious, how do you think about the growth outlook just in light of the competitive landscape that you alluded to, which it sounds like is primarily on the c the pricing side?

Speaker #4: Beyond that, we're still evaluating it. I think we'll come out of the quarter with a balance sheet and a plan that you'll be able to see on the next quarterly earnings.

Speaker #4: and then just, again, the expansion in the Bay Area.

Speaker #1: Yeah. Well, obviously, we're not gonna compete on the credit quality side. We're gonna maintain that pristine credit quality. And, and when you're fighting for those types of deals, you have to price them, you know, in a way that, you can win them, assuming that you're monetizing the rest of the relationship as well.

David A. Brager: Yeah. Well, obviously, we're not gonna compete on the credit quality side. We're gonna maintain that pristine credit quality. When you're fighting for those types of deals, you have to price them, you know, in a way that you can win them, assuming that you're monetizing the rest of the relationship as well. I think, you know, initially, I would say to answer your question more specifically, I would say initially it was just there was more opportunity out there. I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position, you know, from a liquidity perspective, from a market perspective.

Dave Brager: Yeah. Well, obviously, we're not gonna compete on the credit quality side. We're gonna maintain that pristine credit quality. When you're fighting for those types of deals, you have to price them, you know, in a way that you can win them, assuming that you're monetizing the rest of the relationship as well. I think, you know, initially, I would say to answer your question more specifically, I would say initially it was just there was more opportunity out there. I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position, you know, from a liquidity perspective, from a market perspective.

Speaker #4: But a lot of moving parts right now, and because it does give us a fair amount of optionality.

Speaker #3: Okay . Okay . And then just last one from me , you know , the commentary on the origination activity is extremely encouraging .

David Feaster: Okay. Just last one from me. The commentary on the origination activity is extremely encouraging. I wanted to dig into that a bit. How much of the improvement that you're seeing is you gaining share at this point and your bankers being more productive versus improving demand? Just kind of curious, how do you think about the growth outlook just in light of the competitive landscape that you alluded to, which it sounds like is primarily on the pricing side, and then just again, the expansion in the Bay Area?

Speaker #3: I wanted to dig into that a bit . How much of the improvement that you're seeing is you gaining share at this point in your bankers being more productive and versus improving demand and just kind of curious , how do you think about the growth outlook just in light of the competitive landscape that you alluded to , which it sounds like is primarily on the pricing side ?

Speaker #1: But I think, you know, initially, I, I would've I would say to answer your question more specifically, I would say initially, it was just there was more opportunity out there.

Speaker #1: I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position, you know, from a liquidity perspective, from a, a market perspective.

Speaker #3: And then, just again, the expansion of the Bay Area.

Speaker #1: Obviously, from the Heritage, the former Heritage perspective, you know, there's some significant opportunity there just with the capacity of the combined organization. relative to, you know, hold limits, house, you know, lending limits, those types of things.

David A. Brager: Obviously, from the Heritage, the former Heritage perspective, you know, there's some significant opportunity there just with the capacity of the combined organization, relative to, you know, whole limits, house, you know, lending limits, those types of things. You know, we view it as very positively. We need to get them integrated and understand how we look at it. From a credit perspective, you know, very similar. From a pricing perspective on the lending side, very similar. You know, on the deposit pricing side, that's probably a little more work that we're gonna have to do ultimately. At the end of the day, we're going after the same types of relationships. We were going after the same types of relationships.

Dave Brager: Obviously, from the Heritage, the former Heritage perspective, you know, there's some significant opportunity there just with the capacity of the combined organization, relative to, you know, whole limits, house, you know, lending limits, those types of things. You know, we view it as very positively. We need to get them integrated and understand how we look at it. From a credit perspective, you know, very similar. From a pricing perspective on the lending side, very similar. You know, on the deposit pricing side, that's probably a little more work that we're gonna have to do ultimately. At the end of the day, we're going after the same types of relationships. We were going after the same types of relationships.

Speaker #1: Yeah . Well , obviously , we're not going to compete on the credit quality side . We're going to maintain that pristine credit quality .

David A. Brager: Yeah. Well, obviously we're not going to compete on the credit quality side. We're going to maintain that pristine credit quality. When you're fighting for those types of deals, you have to price them in a way that you can win them, assuming that you're monetizing the rest of the relationship as well. I think initially, I would say to answer your question more specifically, I would say initially, it was just there was more opportunity out there. I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position from a liquidity perspective, from a market perspective. Obviously from the former Heritage perspective, there is some significant opportunity there just with the capacity of the combined organization relative to loan limits, house lending limits, those types of things.

Dave Brager: Yeah. Well, obviously we're not going to compete on the credit quality side. We're going to maintain that pristine credit quality. When you're fighting for those types of deals, you have to price them in a way that you can win them, assuming that you're monetizing the rest of the relationship as well. I think initially, I would say to answer your question more specifically, I would say initially, it was just there was more opportunity out there. I think what's happened over the last couple quarters, for example, and with the increase in the opportunities that we're seeing, I think that we're in a very good position from a liquidity perspective, from a market perspective. Obviously from the former Heritage perspective, there is some significant opportunity there just with the capacity of the combined organization relative to loan limits, house lending limits, those types of things.

Speaker #1: And and when you're fighting for those types of deals , you have to price them , you know , in a way that you can win them .

Speaker #1: Assuming that you're monetizing the rest of the relationship as well . But I think , you know , initially I , I would , I would say to answer your question more specifically , I would say initially it was just there was more opportunity out there .

Speaker #1: So, you know, we view it as very positively. we need to get them integrated and understand how we look at it. But from a credit perspective, ex you know, very similar.

Speaker #1: from a pricing perspective on the lending side, very similar. You know, there on the deposit pricing side, that's probably a little more work that we're gonna have to do ultimately.

Speaker #1: I think what's happened over the last couple quarters for example , and with the increase in the opportunities that we're seeing , I think that we're in a very good position , you know , from a liquidity perspective , from a market perspective , obviously from the heritage , the former heritage perspective , you know , there's some significant opportunity there just with the capacity of the combined organization relative to , you know , hold limits house , you know , lending limits , those types of things .

Speaker #1: but at the end of the day, we're going after the same types of relationships we were going after the same types of relationships. So, I think it's our people recognizing that, hey, we're, we're ready.

David A. Brager: I think it's our people recognizing that, "Hey, we're ready." You know, a lot of it is just there's a lot going on out there, but there's a lot of competition. You know, that's primarily why even though in some ways the treasury rates have gone up a little bit, and our loan origination yields have gone down slightly just because we're having to compete if we want to win.

Dave Brager: I think it's our people recognizing that, "Hey, we're ready." You know, a lot of it is just there's a lot going on out there, but there's a lot of competition. You know, that's primarily why even though in some ways the treasury rates have gone up a little bit, and our loan origination yields have gone down slightly just because we're having to compete if we want to win.

Speaker #1: but, you know, a lot of it is just there's a lot a lot going on out there. But there's a lot of competition. So, you know, that's primarily why even though in some ways the, the Treasury rates have gone up a little bit, the, you know, in our loan origination yields have gone down slightly just because we're having to compete if we wanna win.

Speaker #1: So, you know, we view it as very positively. We need to get them integrated and understand how we look at it.

David A. Brager: We view it as very positive. We need to get them integrated and understand how we look at it. From a credit perspective, very similar. From a pricing perspective on the lending side, very similar. On the deposit pricing side, that's probably a little more work that we're going to have to do ultimately. At the end of the day, we're going after the same types of relationships. We were going after the same types of relationships. I think it's our people recognizing that, hey, we're ready, but a lot of it is just there's a lot going on out there, but there's a lot of competition. That's primarily why even though in some ways the Treasury rates have gone up a little bit. And our loan origination yields have gone down slightly just because we're having to compete if we want to win.

Dave Brager: We view it as very positive. We need to get them integrated and understand how we look at it. From a credit perspective, very similar. From a pricing perspective on the lending side, very similar. On the deposit pricing side, that's probably a little more work that we're going to have to do ultimately. At the end of the day, we're going after the same types of relationships. We were going after the same types of relationships. I think it's our people recognizing that, hey, we're ready, but a lot of it is just there's a lot going on out there, but there's a lot of competition. That's primarily why even though in some ways the Treasury rates have gone up a little bit. And our loan origination yields have gone down slightly just because we're having to compete if we want to win.

Speaker #1: But from a credit perspective , you know , very similar from a pricing perspective on the lending side , very similar , you know , they're on the deposit pricing side .

Speaker #4: So is, is, is our pipeline still holding up pretty solid, and do you think you can kinda hold new, new origination yields in this 6% realm?

David Feaster: Is our pipelines still holding up pretty solid? Do you think you can kind of hold new origination yields in this 6% realm?

Speaker #1: That's probably a little more work that we're going to have to do, ultimately. But at the end of the day, we're going after the same types of relationships.

David A. Brager: Yeah. I mean, I would say that, you know, it's gonna be around that 6% range, you know, going forward. Obviously, it depends on the mix of real estate versus C&I and then the utilization of that because we're actually getting better rates on the C&I stuff than on the real estate stuff. That was part of the reason, you know, the net interest margin. Well, there's a lot of, you know, the Fed lowered rates in December. There was a number of things that happened and our yield stayed the same, essentially the same if you exclude the NAIP. I think that was a big victory for us.

Speaker #1: yeah. I mean, I would say that, you know, it's gonna be around that 6% range. you know, going forward, I obviously, it depends on the mix of real estate versus CNI and then the utilization of that because we're actually getting better rates on the CNI stuff than on the real estate stuff.

Dave Brager: Yeah. I mean, I would say that, you know, it's gonna be around that 6% range, you know, going forward. Obviously, it depends on the mix of real estate versus C&I and then the utilization of that because we're actually getting better rates on the C&I stuff than on the real estate stuff. That was part of the reason, you know, the net interest margin. Well, there's a lot of, you know, the Fed lowered rates in December. There was a number of things that happened and our yield stayed the same, essentially the same if you exclude the NAIP. I think that was a big victory for us.

Speaker #1: We were going after the same types of relationships . So I think it's our people recognizing that , hey , we're , we're ready .

Speaker #1: But you know , a lot of it is just there's a lot , a lot going on out there . But there's a lot of competition .

Speaker #1: And, and that was part of the reason, you know, the net interest margin d well, there's a lot of, you know, the Fed lowered rates in December.

Speaker #1: So , you know , that's primarily why , even though in some ways the , the Treasury rates have gone up a little bit , the , you know , in our loan origination yields have gone down slightly just because we're having to compete .

Speaker #1: The, you know, there was a number of things that happened. And our yield stayed the same, essentially the same if you exclude the, the NAIP.

Speaker #1: If we want to win.

Speaker #1: And so I think that was a big victory for us. And if we're continuing to, to book what we've been booking, you know, I think it you know, that's a big tailwind for us as we keep going through the year.

David Feaster: Are pipelines still holding up pretty solid, and do you think you can kind of hold new origination yields in this 6% realm?

Speaker #3: In our pipelines, still holding up pretty solid. And do you think you can kind of hold new origination yields in the 6% realm?

David Feaster: Are pipelines still holding up pretty solid, and do you think you can kind of hold new origination yields in this 6% realm?

David A. Brager: If these, if this loan demand remains and we're continuing to book what we've been booking, you know, I think it, you know, that's a big tailwind for us as we keep going through the year. Yes, pipelines are holding up and, you know, there's plenty of opportunities for us out there for the right relationships.

Dave Brager: If these, if this loan demand remains and we're continuing to book what we've been booking, you know, I think it, you know, that's a big tailwind for us as we keep going through the year. Yes, pipelines are holding up and, you know, there's plenty of opportunities for us out there for the right relationships.

Speaker #1: Yeah . I mean , I would say that , you know , it's going to be around that 6% range . You know , going forward .

David A. Brager: Yeah. I would say that it's going to be around that 6% range going forward. Obviously, it depends on the mix of real estate versus C&I and then the utilization of that because we're actually getting better rates on the C&I stuff than on the real estate stuff. That was part of the reason, the net interest margin. Well, the Fed lowered rates in December. There was a number of things that happened and our yield stayed the same, essentially the same if you exclude the NAIP. I think that was a big victory for us. If this loan demand remains and we're continuing to book what we've been booking, I think that's a big tailwind for us as we keep going through the year. Yes, pipelines are holding up and there's plenty of opportunities for us out there for the right relationships.

Dave Brager: Yeah. I would say that it's going to be around that 6% range going forward. Obviously, it depends on the mix of real estate versus C&I and then the utilization of that because we're actually getting better rates on the C&I stuff than on the real estate stuff. That was part of the reason, the net interest margin. Well, the Fed lowered rates in December. There was a number of things that happened and our yield stayed the same, essentially the same if you exclude the NAIP. I think that was a big victory for us. If this loan demand remains and we're continuing to book what we've been booking, I think that's a big tailwind for us as we keep going through the year. Yes, pipelines are holding up and there's plenty of opportunities for us out there for the right relationships.

Speaker #1: But yes, pipelines are holding up. And, and, you know, there's plenty of opportunities, for us out there for the right relationships.

Speaker #1: Obviously , it depends on the mix of real estate versus CNI and then the utilization of that because we're actually getting better rates on the CNI stuff than on the real estate stuff .

Speaker #4: That's terrific. Thanks, everybody.

David Feaster: That's terrific. Thanks, everybody.

Speaker #1: Thank you.

David A. Brager: Thank you.

Dave Brager: Thank you.

Speaker #1: And , and that was part of the reason , you know , the net interest margin Well , there's a lot of , you know , the fed lowered rates in December .

Speaker #3: One moment, for our next question. And that will come from the line Your line is open.

Operator: One moment for our next question. That will come from the line of Kelly Motta with KBW. Your line is open.

Speaker #1: The , you know , there was a number of things that happened . And our yields stayed the same . Essentially the same .

Speaker #5: Hi. Good morning. Thanks for the question.

Kelly Motta: Hi. Good morning. Thanks for the question.

Speaker #1: If you exclude the the IP . And so I think that was a big victory for us . And if these if this loan demand remains and we're continuing to to book what we've been booking , you know , I think it you know , that's a big tailwind for us as we keep going through the year .

Speaker #1: Good morning.

David A. Brager: Good morning.

Dave Brager: Good morning.

Kelly Motta: Maybe building upon, David's question, I do appreciate the color on pipelines, and it's all quite encouraging. I'm wondering in your markets if you're seeing any, you know, increased competitive dynamics. Notably, I think, growth at Wells was a lot stronger with the asset cap coming off. I'm just wondering if there's been any notable shifts or change in dynamics in your markets. Thanks.

Speaker #5: Maybe, maybe building upon, David's question, I, I do appreciate the color on pipelines. And it's all quite encouraging. I'm wondering, in your markets, if you're seeing any, you know, increased c-competitive dynamics, notably, I think, growth at Wells was a lot stronger with the asset cap coming, coming off.

Speaker #1: But yes , pipelines are holding up and and you know , there's plenty of opportunities for us out there for the right relationships .

Speaker #5: I'm just wondering if there's been any notable shifts or change in, in dynamics in, in your markets. Thanks.

Speaker #3: That's terrific . Thanks everybody .

David Feaster: That's terrific. Thanks, everybody.

Speaker #1: Thank .

David A. Brager: Thank you.

Dave Brager: Thank you.

Speaker #5: You

Speaker #1: Yeah. I don't I don't know if I would say there's been any noticeable shift. I mean, it's always extremely competitive, especially for the types of relationships that we're looking for.

David A. Brager: Yeah, I don't know if I would say there's been any noticeable shift. I mean, it's always extremely competitive, especially for the types of relationships that we're looking for. You know, there are some banks, I mean, you mentioned Wells Fargo. You know, there's other banks, you know, Pacific Premier was not as active for the last few years. Columbia is gonna be much more active. I mean, there's a number of organizations, you know, the Fifth Thirds, the regional banks, BMO. There's a number of banks that are coming into our market and, you know, plus you always have the big guys. I think there is, you know, maybe some increase at the higher end of sort of our typical type relationship we go after, but it's not significantly different than before.

Dave Brager: Yeah, I don't know if I would say there's been any noticeable shift. I mean, it's always extremely competitive, especially for the types of relationships that we're looking for. You know, there are some banks, I mean, you mentioned Wells Fargo. You know, there's other banks, you know, Pacific Premier was not as active for the last few years. Columbia is gonna be much more active. I mean, there's a number of organizations, you know, the Fifth Thirds, the regional banks, BMO. There's a number of banks that are coming into our market and, you know, plus you always have the big guys. I think there is, you know, maybe some increase at the higher end of sort of our typical type relationship we go after, but it's not significantly different than before.

Speaker #2: One moment for our next question . And that will come from the line of Kelly Motta with KBW . Your line is open

Operator: One moment for our next question. That will come from the line of Kelly Motta with KBW. Your line is open.

Speaker #6: Hi . Good morning . Thanks for the question . Good . Maybe . Maybe building upon David's question , I do appreciate the color on pipelines .

Speaker #1: you know, there are there are some banks. I mean, you mentioned Wells Fargo. I would you know, there's other banks, you know, PAC Premier was not as active for the last few years.

Kelly Motta: Hi. Good morning. Thanks for the question.

David A. Brager: Good morning.

Dave Brager: Good morning.

Kelly Motta: Maybe building upon David's question, I do appreciate the color on pipelines, and it's all quite encouraging. I'm wondering in your markets if you're seeing any increased competitive dynamics. Notably, I think growth at Wells is a lot stronger with the asset cap coming off. I'm just wondering if there's been any notable shifts or change in dynamics in your markets. Thanks.

Speaker #6: And it's all quite encouraging . I'm wondering in your markets if you're seeing any , you increased competitive dynamics . Notably , I think growth at Wells was a lot stronger with the asset cap coming , coming off .

Speaker #1: Columbia's gonna be much more active. I mean, there's a number of organizations, you know, the fifth thirds, the regional banks, BMO. There's a number of banks that are coming into our market.

Speaker #1: And, you know, plus you always, have the, the big guys. and so I think there is, you know, maybe some increase at the higher end of sort of our typical type relationship we go after.

Speaker #6: I'm just wondering if there's been any notable shifts or change in dynamics in in your markets . Thanks .

Speaker #5: Yeah . I don't I don't know if I would say there's .

David A. Brager: Yeah. I don't know if I would say there's been any noticeable shift. It's always extremely competitive, especially for the types of relationships that we're looking for. There are some banks. You mentioned Wells Fargo. There's other banks. Pacific Premier was not as active for the last few years. Columbia is going to be much more active. There's a number of organizations, the Fifth Third, the regional banks, BMO. There's a number of banks that are coming into our market, and plus you always have the big guys. I think there is maybe some increase at the higher end of sort of our typical type relationship we go after. It's not significantly different than before. I don't know, Clay, do you want to-

Dave Brager: Yeah. I don't know if I would say there's been any noticeable shift. It's always extremely competitive, especially for the types of relationships that we're looking for. There are some banks. You mentioned Wells Fargo. There's other banks. Pacific Premier was not as active for the last few years. Columbia is going to be much more active. There's a number of organizations, the Fifth Third, the regional banks, BMO. There's a number of banks that are coming into our market, and plus you always have the big guys. I think there is maybe some increase at the higher end of sort of our typical type relationship we go after. It's not significantly different than before. I don't know, Clay, do you want to-

Speaker #1: Been any noticeable shift . I mean , it's always extremely competitive , especially for the types of relationships that we're looking for . You know , there are , there are some banks .

Speaker #1: But i-it's not significantly different than before. I don't know, Clay, do you wanna?

David A. Brager: I don't know, Clay.

Dave Brager: I don't know, Clay.

Speaker #6: Yeah. No. I, I, I echo Dave's comments here. The, the market continues to be very competitive. I don't think there's been any recent shifts in the, competitive nature of, of the clients that we go after.

Robertson Jones: Yeah, no. I echo Dave's comments here. The market continues to be very competitive. I don't think there's been any recent shifts in the competitive nature of the clients that we go after. In the Bay Area, it continues to be just as competitive as it is here.

Clay Jones: Yeah, no. I echo Dave's comments here. The market continues to be very competitive. I don't think there's been any recent shifts in the competitive nature of the clients that we go after. In the Bay Area, it continues to be just as competitive as it is here.

Speaker #1: I mean , you mentioned Wells Fargo . I would , you know , there's other banks , you know , PAC Premier was not as active for the last few years .

Speaker #6: In the Bay Area, it continues to be just as competitive as it is here.

Speaker #1: Columbia is going to be much more active . I mean , there's a number of organizations , you know , the Fifth Third's the regional banks , BMO , there's a number of banks that are coming into our market .

Speaker #1: Yeah. And Kelly, I would just say this. You know, we're, we're, we're our bankers are most, successful in their, you know, new customer origination, new relationship origination business.

David A. Brager: Kelly, I would just say this, you know, where our bankers are most successful in their, you know, new customer origination, new relationship origination business, it's with the biggest banks. You know, we provide a super high level of service that allows us to compete. You know, and we have the product array, and I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects. You know, there are some, you know, very positive things that are occurring. As we get, you know, everybody integrated and acclimated, it should improve.

Dave Brager: Kelly, I would just say this, you know, where our bankers are most successful in their, you know, new customer origination, new relationship origination business, it's with the biggest banks. You know, we provide a super high level of service that allows us to compete. You know, and we have the product array, and I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects. You know, there are some, you know, very positive things that are occurring. As we get, you know, everybody integrated and acclimated, it should improve.

Speaker #1: And , you know , plus you always have the big guys . And so I think there is , you know , maybe some increase at the higher end of sort of our typical type relationship .

Speaker #1: It's with the biggest banks. You know, we provide a super high-level service that allows, us to compete you know, and we have the, the product array.

Speaker #1: We go after , but its not significantly different than before . I don't know , Clay , do you want to . Yeah .

Speaker #1: And I think that's another sort of tailwind from the Heritage, merger as far as both combined organizations being able to provide that wide array of products and, and services to our to our relationships and prospects.

Speaker #1: No , I echo David's comments here . The the market continues to be very competitive . I don't think there's been any recent shifts in the competitive nature of , of the clients that we go after in the Bay area .

Speaker #1: So, you know, there, there are some you know, very positive things that are occurring. And as we get, you know, everybody integrated and acclimated, it, i-it should improve.

Speaker #1: It continues to be just as competitive as it is here . Yeah . And Kelly , I would just say this , you know , we're , we're , we're our bankers are most successful in their , you know , new customer origination , new relationship origination business .

David A. Brager: Yeah. Kelly, I would just say this. Where our bankers are most successful in their new customer origination, new relationship origination business, it's with the biggest banks. We provide a super high level of service that allows us to compete. We have the product array, and I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects. There are some very positive things that are occurring, and as we get everybody integrated and acclimated, it should improve.

Dave Brager: Yeah. Kelly, I would just say this. Where our bankers are most successful in their new customer origination, new relationship origination business, it's with the biggest banks. We provide a super high level of service that allows us to compete. We have the product array, and I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects. There are some very positive things that are occurring, and as we get everybody integrated and acclimated, it should improve.

Speaker #3: Got it. That's, that's really helpful color. Thank you. turning to capital, you know, your level, level should still be quite robust, pro forma, for the merger just closed.

Kelly Motta: Got it. That's really helpful color. Thank you. Turning to capital, you know, your level, levels should still be quite robust, pro forma for the merger just closed. You had been, you know, a bit active in the buyback prior to announcing the deal, which put that on hold. Wondering any updated thoughts on, you know, capital management, buybacks, future deals, the works. Thanks.

Speaker #1: It's with the biggest banks , you know , we provide a super high level of service that allows us to compete , you know , and we have the product array .

Speaker #3: you had been, you know, a, a bit active in the buyback prior to, to, announcing the deal, which put that on hold. Wondering any updated thoughts on, you know, capital management, buybacks, future deals, the works.

Speaker #1: And I think that's another sort of tailwind from the Heritage merger as far as both combined organizations being able to provide that wide array of products and services to our relationships and prospects.

Speaker #3: Thanks.

Speaker #1: Yeah. So I'll, I'll sort of start with the, the tail end of your question first. Look, we wanna make sure we integrate Heritage appropriately.

Speaker #1: So , you know , there are some , you know , very positive things that are occurring . And as we get , you know , everybody integrated and acclimated , it should improve

David A. Brager: Yeah. I'll sort of start with the tail end of your question first. Look, we want to make sure we integrate Heritage appropriately. That is our number one focus. Unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I would say we're more focused on the integration of Heritage than, you know, additional M&A. We do recognize that we have an enormous amount of capital. You know, prior to us getting in conversations with Clay and Heritage, you know, that was something that we were very active in. We repurchased $4.2 million shares last year. We'll continue to evaluate that. Obviously, the combined company's earnings, you know, we'll be looking at the dividend, you know, ultimately.

Dave Brager: Yeah. I'll sort of start with the tail end of your question first. Look, we want to make sure we integrate Heritage appropriately. That is our number one focus. Unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I would say we're more focused on the integration of Heritage than, you know, additional M&A. We do recognize that we have an enormous amount of capital. You know, prior to us getting in conversations with Clay and Heritage, you know, that was something that we were very active in. We repurchased $4.2 million shares last year. We'll continue to evaluate that. Obviously, the combined company's earnings, you know, we'll be looking at the dividend, you know, ultimately.

Speaker #1: That is our number one focus. so unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I, I would say we're more focused on the integration of Heritage than, you know, additional M&A.

Speaker #6: Got it . That's , that's really helpful . Color . Thank you . Turning to capital , you know your level levels should still be quite robust pro forma for the merger .

Kelly Motta: Got it. That's really helpful color. Thank you. Turning to capital, your levels should still be quite robust, pro forma for the merger just closed. You had been a bit active in the buyback prior to announcing the deal, which put that on hold. Wondering any updated thoughts on capital management, buybacks, future deals, the works? Thanks.

Speaker #6: Just closed . You had been , you know , a bit active in the buyback prior to to announcing the deal , which put that on hold .

Speaker #1: we do recognize that we have a-an enormous amount of capital. And, you know, prior to us getting in conversations with Clay and Heritage, you know, that was something that we were very active in.

Speaker #6: Wondering any updated thoughts on , you know , capital management buybacks , future deals , the works ? Thanks .

Speaker #1: we purch we purchased 4.2 million shares last year. And, and we'll continue to evaluate that. Obviously, the combined companies' earnings, you know, we'll be looking at, at the dividend, you know, ultimately.

Speaker #1: Yeah . So I'll sort of start with the tail end of your question . First . Look , we want to make sure we integrate heritage appropriately .

David A. Brager: Yeah. I'll sort of start with the tail end of your question first. Look, we want to make sure we integrate Heritage appropriately. That is our number one focus. Unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I would say we're more focused on the integration of Heritage than additional M&A. We do recognize that we have an enormous amount of capital, and prior to us getting in conversations with Clay and Heritage, that was something that we were very active in. We repurchased 4.2 million shares last year, and we'll continue to evaluate that. Obviously, the combined company's earnings, we'll be looking at the dividend ultimately. This quarter's really where we're going to get all that.

Dave Brager: Yeah. I'll sort of start with the tail end of your question first. Look, we want to make sure we integrate Heritage appropriately. That is our number one focus. Unless there's something that's really unique or an opportunity that's really unique and something we've been looking at, I would say we're more focused on the integration of Heritage than additional M&A. We do recognize that we have an enormous amount of capital, and prior to us getting in conversations with Clay and Heritage, that was something that we were very active in. We repurchased 4.2 million shares last year, and we'll continue to evaluate that. Obviously, the combined company's earnings, we'll be looking at the dividend ultimately. This quarter's really where we're going to get all that.

Speaker #1: You know, this quarter's, you know, really where we're gonna get all the Allen can opine on this as well. But where we're gonna get, you know, the balance sheet set up the way that we want it set up.

David A. Brager: You know, this quarter is, you know, really where we're going to get all that. Allen can opine on this as well. Where we're going to get, you know, the balance sheet set up the way that we want it set up, and then we'll be working on, you know, those capital management things. Definitely buybacks are going to be part of that strategy going forward. I don't know, Allen, do you have anything you want to add?

Dave Brager: You know, this quarter is, you know, really where we're going to get all that. Allen can opine on this as well. Where we're going to get, you know, the balance sheet set up the way that we want it set up, and then we'll be working on, you know, those capital management things. Definitely buybacks are going to be part of that strategy going forward. I don't know, Allen, do you have anything you want to add?

Speaker #1: That is our number one focus . So unless there's something that's really unique or an opportunity that's really unique and something we've been looking at , I would say we're more focused on the integration of heritage than , you know , additional M&A .

Speaker #1: And then we'll, we'll be working on, you know, those, capital management things. And, and definitely, buybacks are gonna be part of that strategy going forward.

Speaker #1: So I don't know, Allen, do you have anything you wanna add?

Speaker #1: We do recognize that we have an enormous amount of capital and , you know , prior to us getting in conversations with Clay and heritage , you know , that was something that we were very active in and we purchased repurchased 4.2 million shares last year .

Speaker #6: You know, Kelly, as, as Dave said, it'll be noisy in Q2. a little bit more noise in Q3. But as we get into Q3, I think we'll have, a lot more visibility into our capital.

E. Allen Nicholson: You know, Kelly, as Dave said, it'll be noisy in Q2, a little bit more noise in Q3. As we get into Q3, I think we'll have a lot more visibility into our capital. Of course, as you pointed out, you know, our pro forma is already very strong. Historically, we've been able to generate a lot of organic capital and, you know, we'll definitely have to evaluate all those things that Dave mentioned.

Allen Nicholson: You know, Kelly, as Dave said, it'll be noisy in Q2, a little bit more noise in Q3. As we get into Q3, I think we'll have a lot more visibility into our capital. Of course, as you pointed out, you know, our pro forma is already very strong. Historically, we've been able to generate a lot of organic capital and, you know, we'll definitely have to evaluate all those things that Dave mentioned.

Speaker #6: And of course, as you pointed out, you know, a pro forma, it's already very strong. And historically, we've been able to generate a lot of organic, capital in, you know, we'll, we'll definitely have to evaluate all those things that Dave mentioned.

Speaker #1: And and we'll continue to evaluate that . Obviously , the combined companies earnings , you know , will be looking at the dividend .

Speaker #1: You know , ultimately , you know , this quarter's , you know , really where we're going to get all the Alan can opine on this as well .

David A. Brager: Alan can opine on this as well, but where we're going to get the balance sheet set up the way that we want it set up, and then we'll be working on those capital management things. Definitely buybacks are going to be part of that strategy going forward. I don't know, Alan, do you have anything you want to add?

Dave Brager: Alan can opine on this as well, but where we're going to get the balance sheet set up the way that we want it set up, and then we'll be working on those capital management things. Definitely buybacks are going to be part of that strategy going forward. I don't know, Alan, do you have anything you want to add?

Speaker #3: Got it. if I if I could just flip, flip it in as a, a follow-up. You mentioned the resi mortgage. It's, it's help for sale right now.

Kelly Motta: Got it. If I could just slip it in as a follow-up. You mentioned the resi mortgage. It's held for sale right now. Do you anticipate that off the balance sheets by quarter end, or is there a possibility that could stick around a bit longer than perhaps we expected at announcement? Thanks.

Speaker #1: But we're going to get , you know , the balance sheet set up the way that we want it set up . And then we'll we'll be working on , you know , those capital management things and , and definitely buybacks are going to be part of that strategy going forward .

Speaker #3: Do you anticipate that, off the balance sheets by quarter end? Or is, is there a possibility that could stick around a, a bit longer than perhaps we, expected at announcement?

Speaker #1: So I don't know Alan , do you have anything you want to add ?

Speaker #4: You know , Kelly , as Dave said , it will be noisy in Q2 a little bit more noise in Q3 . But as we get into Q3 , I think we'll have a lot more visibility into our capital .

E. Allen Nicholson: Kelly, as Dave said, it'll be noisy in Q2. A little bit more noise in Q3. As we get into Q3, I think we'll have a lot more visibility into our capital. Of course, as you pointed out, our pro forma is already very strong. Historically, we've been able to generate a lot of organic capital, and we'll definitely have to evaluate all those things that Dave mentioned.

Speaker #3: Thanks.

Speaker #1: No. We do expect it to be off the balance sheet by the end of the quarter.

David A. Brager: No, we do expect it to be off the balance sheet by end of the quarter.

Dave Brager: No, we do expect it to be off the balance sheet by end of the quarter.

Speaker #3: Great. Thank you so much. I'll step back.

Kelly Motta: Great. Thank you so much. I'll step back.

Speaker #1: Thanks.

David A. Brager: Thanks.

Dave Brager: Thanks.

Speaker #7: One moment for our next question. And that will come from the line of Matthew Clark with Piper Sandler. Your line is open.

Operator: One moment for our next question. That will come from the line of Matthew Clark with Piper Sandler. Your line is open.

Speaker #4: And of course , as you pointed out , you know , a pro forma , it's already very strong . And historically , we've been able to generate a lot of organic capital .

Speaker #4: And, you know, we'll definitely have to evaluate all those things that Dave mentioned.

Speaker #8: Hey. Good morning, guys.

Matthew Clark: Hey, good morning, guys.

Speaker #1: Good morning.

David A. Brager: Good morning.

Dave Brager: Good morning.

Matthew Clark: Wanted to start on the C&I credit that you assigned some specific reserves to, and then the other classified credits that migrated. I know classified overall is still sub 1%, just wanted to get some color on what happened there and, you know, plans for resolution and timing, if possible.

Speaker #8: wanna start on the, CNI credit that you, assigned some specific reserves to. And then, the other classified credits that migrated, I know classified overall still sub-1%.

Speaker #6: Got it . If I , if I could just slip it in as a follow up , you mentioned the mortgage . It's held for sale right now .

Kelly Motta: Got it. If I could just slip it in as a follow-up. You mentioned the resi mortgage. It's-

Kelly Motta: Got it. If I could just slip it in as a follow-up. You mentioned the resi mortgage.

Speaker #6: Do you anticipate that off the balance sheets by quarter end, or is there a possibility that could stick around a bit longer than perhaps we expected at announcement?

Speaker #8: But just wanted to get some color on, this what happened there. And, you know, plans for resolution and timing if possible.

Speaker #6: Thanks .

Speaker #4: No, we do expect it to be off the balance sheet by the end of the quarter.

Speaker #1: Yeah. So I'll, I'll start with the non-performer. So that CNI loan, was impacted by one of their customers who declared bankruptcy. so we have, shored up our collateral position.

David A. Brager: Yeah. I'll start with the non-performer. That C&I loan was impacted by one of their customers who declared bankruptcy. We have shored up our collateral position. You know, we did put a specific reserve because at the time, we had not shored up the collateral position in the way that we wanted to. I don't really anticipate, you know, there could be some challenges there. You know, we're very proactive when we grade things and when we look at things and how we classify them. Just being very transparent. You know, it's, they're, you know, for lack of a better term, they're a marketing company for a larger organization, and they sell agricultural products.

Dave Brager: Yeah. I'll start with the non-performer. That C&I loan was impacted by one of their customers who declared bankruptcy. We have shored up our collateral position. You know, we did put a specific reserve because at the time, we had not shored up the collateral position in the way that we wanted to. I don't really anticipate, you know, there could be some challenges there. You know, we're very proactive when we grade things and when we look at things and how we classify them. Just being very transparent. You know, it's, they're, you know, for lack of a better term, they're a marketing company for a larger organization, and they sell agricultural products.

Speaker #6: Great. Thank you so much. I'll step back.

Speaker #4: Thanks

Speaker #2: One moment for our next question. That will come from the line of Matthew Clark with Piper Sandler. Your line is open.

Speaker #1: You know, we did we did put a specific reserve because at the time, we had not shored up the collateral position in the way that we wanted to.

Speaker #7: Hey, good morning, guys.

Speaker #8: Good morning .

Speaker #7: Want to start on the CNI credit that you assigned some specific reserves to . And then the other classified credits that migrated . I know classified overall still sub 1% , but just wanted to get some color on what happened there .

Speaker #1: So I don't really anticipate, you know, there could be some challenges there. But, you know, we're very proactive when we grade things and when we look at things and, and how we classify them.

Speaker #1: So, just being very transparent, you know, it's a they're, you know, for lack of a better term, they're a marketing company for a large organization.

Speaker #7: And plans for resolution, and timing if possible.

Speaker #1: Yeah. So I'll start with the non-performer. So that CNI loan was impacted by one of their customers who declared bankruptcy. So we have shored up our collateral position.

Speaker #1: And they sell, agricultural products. So, you know, it's something that, we've been involved with, since one of these customers. But we just wanted to make sure that we elevated it to that level.

David A. Brager: You know, it's something that we've been involved with since one of these customers, but we just wanted to make sure that we elevated it to that level. As far as the classified loans, it's really centered in 2 relationships. They both happen to be C&I. We're in very good collateral positions in both of those deals. That makes up the majority of the increase in the classified loans.

Dave Brager: You know, it's something that we've been involved with since one of these customers, but we just wanted to make sure that we elevated it to that level. As far as the classified loans, it's really centered in 2 relationships. They both happen to be C&I. We're in very good collateral positions in both of those deals. That makes up the majority of the increase in the classified loans.

Speaker #1: As far as the classified loans, it's really centered in two, relationships. They both happen to be CNI. We're in, very good collateral positions. And both posi both of those deals, that makes up the majority of the increase in the classified loans.

Speaker #1: You know , we did , we did put a specific reserve because at the time we had not shored up the collateral position in the way that we wanted to .

Speaker #1: So I don't really anticipate , you know , there could be some challenges there . But , you know , we're very proactive when we grade things and when we look at things and how we classify them .

Robertson Jones: One of the companies is in the midst of a sale, that could happen. I mean, we're, you know, obviously prepared if it doesn't. They're both within their collateral guidelines, you know, we think one of them, it's just a situation with the operations, they're working hard on that. Again, just being very proactive, it's a, you know, it's something that happens now and again, nothing, you know, systematic or endemic of the rest of the portfolio. These are just two separate situations.

Speaker #1: one of the companies is in the midst of a sale. And, that could happen. I mean, we're, you know, obviously prepared if it doesn't.

Dave Brager: One of the companies is in the midst of a sale, that could happen. I mean, we're, you know, obviously prepared if it doesn't. They're both within their collateral guidelines, you know, we think one of them, it's just a situation with the operations, they're working hard on that. Again, just being very proactive, it's a, you know, it's something that happens now and again, nothing, you know, systematic or endemic of the rest of the portfolio. These are just two separate situations.

Speaker #1: So just being very transparent , you know , it's there , you know , for lack of a better term , they're a marketing company for a larger organization and they sell agricultural products .

Speaker #1: but they're, they're both within, their collateral guidelines and, and, you know, we think one of them it's just a situation with the, the operations.

Speaker #1: So , you know , it's something that we've been involved with since one of these customers . But we just wanted to make sure that we elevated it to that level .

Speaker #1: And they're working hard on that. So, again, just being very proactive and it's a, you know, it's something that happens now and again. And, but nothing, you know, systematic or endemic of the rest of the portfolio.

Speaker #1: As far as the classified loans, it's really centered in two relationships. They both happen to be C&I. We're in very good collateral positions in both.

Speaker #1: These are just two separate situations.

Speaker #1: Both of those deals . That makes up the majority of the increase in the classified loans . One of the companies is in the midst of a sale , and that could happen .

Speaker #8: Okay. Great. And then, just a few housekeep-keeping items. do you plan to do the CISO double count here in, in 2Q, you know, resulting in, you know, an outsized provision?

Matthew Clark: Okay, great. Just a few housekeeping items. Do you plan to do the CECL double count here in Q2, you know, resulting in, you know, an outsized provision, or are you gonna opt out of that?

Speaker #1: I mean , we're , you know , obviously prepared if it doesn't . But they're both within their collateral guidelines and and , you know , we think one of them is just a situation with the operations and they're working hard on that .

Speaker #8: Or are you gonna opt out of that?

Speaker #1: Yeah. Matthew, you know, we elected a new accounting. So there won't be a double count.

E. Allen Nicholson: No, Matthew, you know, we elected the new accounting, so there won't be a double count.

Allen Nicholson: No, Matthew, you know, we elected the new accounting, so there won't be a double count.

Speaker #8: Okay. Great. And then, Creation expectations, I know the marks can still move around a little bit. But I assume you have preliminary marks at this stage.

Matthew Clark: Okay, great. Accretion expectations. I know the marks can still move around a little bit, but I assume you have preliminary marks at this stage. Any guesstimate? I mean, we have our own, but I just wanted to check in to see what you thought maybe quarterly or normal accretion might be per quarter.

Speaker #1: So again , just being very proactive and it's a , you know , it's something that happens now and again . And , but nothing , you know , systematic or endemic of the rest of the portfolio .

Speaker #8: any, any guesstimate? I mean, we have our own. But I just wanted to check in to see, what you thought maybe quarterly, or normal accretion or normal accretion might be.

Speaker #1: These are just two separate situations

Speaker #7: Okay , great . And then just a few housekeeping items . Do you plan to do this , double count here in two Q resulting in , you know , an outsized provision ?

Speaker #8: Per quarter?

Speaker #1: Too early, Matt. Too early. Sorry. we'll have we'll be able to give you better answers next quarter.

E. Allen Nicholson: Too early, Matt. Too early. Sorry. We'll be able to give you better answers next quarter.

Allen Nicholson: Too early, Matt. Too early. Sorry. We'll be able to give you better answers next quarter.

Speaker #8: Okay. And then just the I think there was a, a special FHLB dividend you just quantified that this quarter?

Matthew Clark: Okay. Then just I think there was a special FHLB dividend. Can you just quantify that this quarter?

Speaker #7: Or are you going to opt out of .

Speaker #8: That ?

Speaker #4: Matthew, you know, we elected the new accounting, so there won't be a double count.

Speaker #1: I think it was $400,000.

E. Allen Nicholson: I think it was about $400,000.

Allen Nicholson: I think it was about $400,000.

Speaker #7: Okay , great . And then Accretion expectations . I know the marks can still move around a little bit , but I assume you have preliminary marks at this stage .

Speaker #8: Okay. Great. Thank you.

David A. Brager: Okay. Great. Thank you.

Matthew Clark: Okay. Great. Thank you.

Speaker #1: You're welcome.

E. Allen Nicholson: You're welcome.

Allen Nicholson: You're welcome.

Speaker #7: And one moment for our next question. And that will come from the line of Andrew Terrell with Stevens. Your line is open.

Operator: One moment for our next question. That will come from the line of Andrew Terrell with Stephens. Your line is open.

Speaker #7: Any any guesstimate . I mean , we have our own , but I just wanted to check in to see what you thought .

Speaker #9: Hey. Good morning.

Andrew Terrell: Hey, good morning.

Speaker #1: Good morning.

E. Allen Nicholson: Good morning, Andrew.

Allen Nicholson: Good morning, Andrew.

Speaker #7: Maybe quarterly or normal accretion. Normal accretion might be per.

Speaker #9: Hey. So I maybe just wanted to start off. I know you guys don't don't generally guide. But, you know, with the with the merger closed in, in the second quarter, the, the kind of range of, of forecast for, for the margin for 2Q are pretty widespread.

Andrew Terrell: Hey. Maybe just wanted to start off. I know you guys don't generally guide, you know, with the merger close in the second quarter, the kind of range of forecasts for the margin for Q2 are pretty widespread. I was hoping you could maybe just help us out. You know, I don't know if you have kind of day one pro forma margin, what the general kind of impact is to your reported margin when you layer in Heritage. Just any kind of guardrails you could put kind of around margin expectations for us.

Speaker #8: Quarter too early .

Speaker #4: Too early . Sorry . We'll have we'll be able to give you better answers next quarter .

Speaker #7: Okay . And then just the I think there was a special flb dividend . Can you just quantify that this quarter ?

Speaker #9: I was hoping you could maybe just help us out. You know, I don't know if you have kind of day-one pro forma margin, what the general kind of impact is to, to your reported margin.

Speaker #4: I think it was about 400,000 .

Speaker #7: Okay , great . Thank you .

Speaker #9: When you layer in heritage, just any kind of guardrails you could put kind of around margin expectations for us?

Speaker #9: You're welcome .

Speaker #2: And one moment for our next question . And that will come from the line of Andrew Terrell with Stephens . Your line is open

E. Allen Nicholson: Andrew, once again, sorry, it's a little bit too early. You know, Dave said we closed 4 days ago. We did include on page 31 of the investor presentation, the pro forma loans and deposits for the combined organization, excluding the mortgages we're selling. At least, I mean, you can look at that from a starting point, but, you know, we are still evaluating the balance sheet in terms of what we're gonna do with repositioning the bond portfolio, repositioning some of our wholesale funds. Unfortunately, it's too preliminary for me to give you much more information.

Speaker #1: Andrew, once again, sorry. It's a little to, too early. you know, Dave said we closed four days ago. We did include on page 31 of the investor presentation, the pro forma loans and deposits, for the combined organization.

Allen Nicholson: Andrew, once again, sorry, it's a little bit too early. You know, Dave said we closed 4 days ago. We did include on page 31 of the investor presentation, the pro forma loans and deposits for the combined organization, excluding the mortgages we're selling. At least, I mean, you can look at that from a starting point, but, you know, we are still evaluating the balance sheet in terms of what we're gonna do with repositioning the bond portfolio, repositioning some of our wholesale funds. Unfortunately, it's too preliminary for me to give you much more information.

Speaker #10: Hey . Good morning .

Speaker #1: Good morning

Speaker #10: Hey . So maybe just wanted to start off . I know you guys don't don't generally guide , but you know , with the with the merger close in the second quarter , the , the kind of range of forecasts for , for the margin for two Q are pretty widespread .

Speaker #1: excluding the, mortgages we're selling. so at least, I mean, you can look at that from a starting point. But, you know, we are still evaluating the balance sheet, in terms of what we're gonna do with, repositioning the bond portfolio, repositioning some of our, wholesale funds.

Speaker #10: I was hoping you could maybe just help us out. You know, I don't know if you have kind of day one pro forma margin.

Speaker #10: What the general kind of impact is to to your reported margin when you layer in heritage , just any kind of guardrails , you could put kind of around margin expectations for us .

Speaker #1: So, unfortunately, it's just two preliminary for me to give you much more information.

Speaker #9: Okay. Does the yield on page 31 of the deck for HDBK loans, the 560, does that include the single-family yield? And I'm assuming the 560 is pre, pre any kind of mark?

Andrew Terrell: Okay. Does the yield on page 31 of the deck for HTBK loans, the 5.60, does that include the single-family yield? I'm assuming the 5.60 is pre any kind of mark.

Speaker #4: Andrew . Once again , sorry , it's a little bit too early . You know , Dave said we closed four days ago .

Speaker #4: We did include on page 31 of the investor presentation , the pro forma loans and deposits for the combined organization , excluding the mortgages we're selling .

Speaker #1: Yeah. There's no marks. And, and if you look at the pro forma, yield of 547, that's excluding the single-family. And that's on a combined basis, of course.

E. Allen Nicholson: Yeah, there's no marks. If you look at the pro forma yield of 5.47%, that's excluding the single family. That's on a combined basis, of course.

Allen Nicholson: Yeah, there's no marks. If you look at the pro forma yield of 5.47%, that's excluding the single family. That's on a combined basis, of course.

Speaker #4: So at least , I mean , you can look at that from a starting point , but you know , we are still evaluating the balance sheet in terms of what we're going to do with repositioning the bond portfolio , repositioning some of our wholesale funds .

Speaker #1: So.

Speaker #9: Got it. Okay. you know, we talked some in the past just about maybe some of the opportunity to upsize, you know, some of the, the legacy heritage relationships.

Andrew Terrell: Got it. Okay. You know, we talked some in the past just about maybe some of the opportunity to upsize, you know, some of the legacy Heritage relationships and maybe that some of that was, you know, already occurring pre-deal close. Just can you remind us, you know, general kind of opportunity set there, how that influences kind of how you're thinking about loan growth throughout the year?

Speaker #4: So unfortunately , it's just too preliminary for me to give you much more information .

Speaker #9: And maybe that some of that was, you know, already occurring pre, pre-deal close. Just can you remind us, you know, general kind of opportunity set there, how that influences kinda how you're thinking about loan growth throughout the year?

Speaker #10: Okay . Does the yield on page 31 of the deck for TBC loans , the 560 , does that include the single family yield ?

Speaker #10: And I'm assuming the 560 is pre pre any kind of mark .

Speaker #1: Yeah. Andrew, no question about it. at deal announcement, we, we, we gave a mantra out to the team to make sure that, you know, we captured all of those clients that were growing.

Robertson Jones: Andrew, no question about it. At deal announcement, we gave a mantra out to the team to make sure that, you know, we captured all of those clients that were growing and that were reaching our upper limits at Heritage. We now have, you know, greatly expanded that capacity, and those clients obviously have extended their runway with Heritage significantly. There's great opportunities in terms of our largest clients that on the going forward basis. I would add to that too, as Dave said, there's some, you know, additional synergies amongst the two firms as combined in terms of ag, dairy lending, mortgage origination, trust, wealth services, international services. There's just a wide variety of opportunities that our relationship management teams and calling officers are engaged in. Going forward looks good.

Clay Jones: Andrew, no question about it. At deal announcement, we gave a mantra out to the team to make sure that, you know, we captured all of those clients that were growing and that were reaching our upper limits at Heritage. We now have, you know, greatly expanded that capacity, and those clients obviously have extended their runway with Heritage significantly. There's great opportunities in terms of our largest clients that on the going forward basis. I would add to that too, as Dave said, there's some, you know, additional synergies amongst the two firms as combined in terms of ag, dairy lending, mortgage origination, trust, wealth services, international services. There's just a wide variety of opportunities that our relationship management teams and calling officers are engaged in. Going forward looks good.

Speaker #8: Yeah .

Speaker #4: There's no marks . And if you look at the pro forma yield of . 547 , that's excluding the single family . And that's on a combined basis .

Speaker #1: And that we're reaching our upper limits at heritage. we now have, you know, greatly expanded that capacity. And those clients obviously have extended their runway with heritage significantly.

Speaker #4: Of course . So

Speaker #10: Got it . Okay You know we talked some in the past just about maybe some of the opportunity to upsize , you know , some of the legacy heritage relationships and maybe that some of that was , you know , already occurring Pre-deal close .

Speaker #1: So there's great opportunities in terms of our largest clients that, on the going forward basis. I would add to that too, as Dave said, there's, you know, additional synergies amongst the, the two firms as combined in terms of, ag, dairy lending, mortgage origination, trust, wealth services, international services.

Speaker #10: Just can you remind us , you know , general kind of opportunity set there , how that influences kind of how you're thinking about loan growth throughout the year ?

Speaker #1: Yeah . Andrew . No question about it . At deal announcement , we , we gave them on trial to the team to make sure that , you know , we captured all of those clients that were growing and that we're reaching our upper limits at Heritage .

Speaker #1: So there's just a, a wide variety of opportunities that our relationship management teams and calling officers are, are engaged in. So going forward, looks good.

Speaker #1: Yeah. And I would just say, you know, I, I, I wanna clay to answer that first just from the perspective of the former heritage offices.

David A. Brager: Yeah. I would just say, you know, I want Clay to answer that first just from the perspective of the former Heritage offices. From the overall perspective, Andrew, just to your question, you know, we, a lot of this is, you know, 4 days in, you know, they're drinking through the fire hose trying to, you know, figure out everything, and so we're working on it. Just overall, you know, pipelines have remained strong. The relationships, you know, we haven't had a lot of turnover in relationships. You know, we're seeing opportunities for us to, you know, do maybe a little bit better than we did last year as far as loan growth. I do think that, you know, as we get through the Q2, we'll have a much better idea.

Dave Brager: Yeah. I would just say, you know, I want Clay to answer that first just from the perspective of the former Heritage offices. From the overall perspective, Andrew, just to your question, you know, we, a lot of this is, you know, 4 days in, you know, they're drinking through the fire hose trying to, you know, figure out everything, and so we're working on it. Just overall, you know, pipelines have remained strong. The relationships, you know, we haven't had a lot of turnover in relationships. You know, we're seeing opportunities for us to, you know, do maybe a little bit better than we did last year as far as loan growth. I do think that, you know, as we get through the Q2, we'll have a much better idea.

Speaker #1: We now have , you know , greatly expanded that capacity . And those clients obviously have extended their runway with heritage significantly . So there's great opportunities in terms of our largest clients that on the going forward basis , I would add to that too , as Dave said , there's , you know , additional synergies amongst the the two firms as combined in terms of ag dairy lending , mortgage origination , trust , wealth services , international services .

Speaker #1: But from the overall perspective, Andrew, just to your question, you know, we, we, w a, a lot of this is, you know, four days in, you know, they're drinking through the fire hose, trying to, you know, figure out everything.

Speaker #1: And so we're working on it. But just overall, you know, pipelines have remained strong. the relationships, you know, we haven't had a lot of turnover in, in relationships.

Speaker #1: You know, we're, we're seeing opportunities for us to, you know, do maybe a little bit better than we did last year as far as loan growth.

Speaker #1: So, there's just a wide variety of opportunities that our relationship management teams and calling officers are engaged in. So, going forward looks good.

Speaker #1: But I, I do think that, you know, as we get through the second quarter, we'll have a much better idea. And as you're right.

Speaker #1: Yeah . And I would just say , you know , I want to answer that first just from the perspective of the former Heritage offices , but from the overall perspective , Andrew , just to your question , you know , we a lot of this is , you know , four days in , you know , they're drinking through the fire hose , trying to , you know , figure out everything .

David A. Brager: As you're right, I mean, I've always said sort of low single-digit growth. I mean, that could be mid-single-digit growth. You know, we just need to make sure that we understand, you know, the relationships as we look at them, the opportunities that are out there. You know, for now, we're sort of just sticking with what we've been doing and what's been, you know, done in the past. I don't know if that gives you a better answer, but, you know, we're still kind of in. We want quality stuff and we're having to price it, you know, aggressively. I think that, you know, is going to be somewhat of a limiting factor as well.

Dave Brager: As you're right, I mean, I've always said sort of low single-digit growth. I mean, that could be mid-single-digit growth. You know, we just need to make sure that we understand, you know, the relationships as we look at them, the opportunities that are out there. You know, for now, we're sort of just sticking with what we've been doing and what's been, you know, done in the past. I don't know if that gives you a better answer, but, you know, we're still kind of in. We want quality stuff and we're having to price it, you know, aggressively. I think that, you know, is going to be somewhat of a limiting factor as well.

Speaker #1: I mean, I've always said sort of low single-digit growth. I mean, that could be mid-single-digit growth. But, you know, we just need to make sure that we understand, you know, the relationships as we look at them, the opportunities that are out there.

Speaker #1: But, you know, for now, we're sort of just sticking with, with what we've been doing. and what's been, you know, done in the past.

Speaker #1: And so we're working on it . But just overall , you know , pipelines have remained strong . The relationships , you know , we haven't had a lot of turnover in relationships .

Speaker #1: So, I don't know if that gives you a better answer. But, you know, we're still kind of in we want quality stuff. And we're having to price it, you know, aggressively.

Speaker #1: You know , we're , we're seeing opportunities for us to , you know , do maybe a little bit better than we did last year as far as loan growth .

Speaker #1: And so I think that, you know, is gonna be somewhat of a limiting factor as well. But, on the positive side are definitely the things Clay said.

Speaker #1: But I do think that , you know , as we get through the second quarter , we'll have a much better idea . And you're right .

David A. Brager: On the positive side are definitely the things Clay said, not just on the loan side, but on the overall relationship side.

Dave Brager: On the positive side are definitely the things Clay said, not just on the loan side, but on the overall relationship side.

Speaker #1: Not just on the loan side, but on the overall, relationship side.

Speaker #1: I mean , I've always said sort of low single digit growth . I could be mid-single digit growth . But you know , we just need to make sure that we understand , you know , the relationships as we look at them , the opportunities that are out there .

Speaker #9: Great. thank you for taking the questions. I appreciate it.

Andrew Terrell: Great. Thank you for taking the questions. I appreciate it.

Speaker #1: Of course.

David A. Brager: Of course.

Dave Brager: Of course.

Speaker #7: Thank you. As a reminder, if you would like to ask a question, please press star 11. One moment for our next question. And that will come from the line of Gary Tenner with DA Davidson.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one one. One moment for our next question. That will come from the line of Gary Tenner with D.A. Davidson. Your line is open.

Speaker #1: But , you know , for now , we're sort of just sticking with with what we've been doing and what's been done in the past .

Speaker #7: Your line is open.

Speaker #1: So I don't know if that gives you a better answer , but you know , we're still kind of in we want quality stuff and we're having to price it .

Speaker #10: thanks. Good morning.

Gary Tenner: Thanks. Good morning.

Speaker #1: Good morning.

David A. Brager: Good morning.

Dave Brager: Good morning.

Speaker #10: I have one, one follow-up on the initial, loan growth, commentary. In terms of the strengthening of the commercial real estate segment from a demand and production perspective, h-how much could you kinda parse that a little bit in terms of, more is it more customer activity?

Gary Tenner: I have one follow-up on the initial loan growth commentary. In terms of the strengthening of the commercial real estate segment from a demand and production perspective. Could you kind of parse that a little bit in terms of, is it more customer activity? Is it, you know, borrowers getting more comfortable with the rate environment we're in and moving forward on projects? Is it, you know, CBB getting more competitive on pricing? Just kind of parse out kind of the moving parts that's attributed to that strengthening.

Speaker #1: You know , aggressively . And so I think that , you know , is going to be somewhat of a limiting factor as well .

Speaker #1: But on the positive side , are definitely the things Clay said , not just on the loan side , but on the overall relationship side

Speaker #10: Is it, you know, borrowers getting more comfortable with the rate environment we're in and moving forward on projects? is it CB, you know, CBB getting more competitive on pricing?

Speaker #10: Great . Thank you for taking the questions . I appreciate it .

Speaker #8: Of course .

Speaker #2: Thank you. As a reminder, if you would like to ask a question, please press star one one. One moment for our next question, and that will come from the line of Gary Tenner with D.A.

Speaker #10: Just kinda parse out kinda the moving parts that's, that's attributed to that strengthening.

David A. Brager: Yeah. Well, I definitely think it starts with the potential borrowers out there. It's, I mean, our existing customers. It's, you know, our bankers' ability to go and attract new relationships to the bank. I think that's driving some of it. I think also, Gary, you know, I'd say our average size of new loan origination has creeped up a little bit as well. There are a number of things that are sort of assisting us in, you know, reaching that low single-digit growth that we had last year. I think that's part of it. I don't know that we're getting more aggressive on pricing than we have been in the past. We were always aggressive for the right relationships. Obviously, the loan pricing is just one component of the overall relationship. We have to look at the deposit side.

Dave Brager: Yeah. Well, I definitely think it starts with the potential borrowers out there. It's, I mean, our existing customers. It's, you know, our bankers' ability to go and attract new relationships to the bank. I think that's driving some of it. I think also, Gary, you know, I'd say our average size of new loan origination has creeped up a little bit as well. There are a number of things that are sort of assisting us in, you know, reaching that low single-digit growth that we had last year. I think that's part of it. I don't know that we're getting more aggressive on pricing than we have been in the past. We were always aggressive for the right relationships. Obviously, the loan pricing is just one component of the overall relationship. We have to look at the deposit side.

Speaker #1: Yeah. Well, I, I definitely think i-it starts with the potential borrowers out there. It's, I mean, our existing customers, it's, you know, our bankers' ability to go and attract new relationships to the bank.

Speaker #2: Davidson . Your line is open .

Speaker #11: Thanks . Good morning . I have one , one follow up on the initial loan growth . Commentary . In terms of the strengthening of the commercial real estate segment from a demand and production perspective , how much can you kind of parse that a little bit in terms of more ?

Speaker #1: So I think that's driving some of it. I think also Gary, you know, the I'd say our average, size of new loan origination has creeped up a little bit as well.

Speaker #1: there are a number of things that are sort of assisting us in, you know, reaching that low single-digit growth that we had last year.

Speaker #11: Is it more customer activity ? Is it , you know , borrowers getting more comfortable with the rate environment we're in and moving forward on projects ?

Speaker #1: so I think that's part of it. I don't know that we're getting more aggressive on pricing than we have been in the past. We were always aggressive for the right relationships.

Speaker #11: Is it CV , you know , getting more competitive on pricing ? Just kind of parse out kind of moving parts . That's that's attributed to that strengthening .

Speaker #8: Yeah . Well .

Speaker #1: I definitely think it starts with the potential borrowers out there . It's , I mean , our existing customers , that's , you know , our bankers ability to go and attract new relationships to the bank .

Speaker #1: obviously, the loan pricing's just one component of the overall relationship. We have to look at the deposit side. We look at the fee income side.

David A. Brager: We look at the fee income side. We look at how we monetize the entire relationship. You know, I don't know that we're getting more aggressive, but I definitely think customers are more used to the rate environment, and money can't sit on the sidelines for that long. There are, you know, there are people that are doing things, and we're seeing some of that activity and capturing a good part of it. Yeah, I think it's all of those things that are sort of contributing to, you know, those opportunities. You know, 90% new loan originations in Q1 over Q1 of last year did, you know, it's basically double what we did last year.

Dave Brager: We look at the fee income side. We look at how we monetize the entire relationship. You know, I don't know that we're getting more aggressive, but I definitely think customers are more used to the rate environment, and money can't sit on the sidelines for that long. There are, you know, there are people that are doing things, and we're seeing some of that activity and capturing a good part of it. Yeah, I think it's all of those things that are sort of contributing to, you know, those opportunities. You know, 90% new loan originations in Q1 over Q1 of last year did, you know, it's basically double what we did last year.

Speaker #1: We look at how we monetize the entire relationship. and so, you know, that I don't know that we're getting more aggressive. But I definitely think customers are more used to the rate environment.

Speaker #1: So I think that's . Driving some of it . I think also , Gary , you know , the I'd say our average size of new loan origination has creeped up a little bit as well .

Speaker #1: And money can't sit on the sidelines for that long. So, there are, you know, there are people that are doing things. And, and we're seeing some of that activity.

Speaker #1: There are a number of things that are sort of assisting us in, you know, reaching that low single-digit growth that we had last year.

Speaker #1: And capturing a good part of it. But, yeah, I think it's all of those things that are sort of contributing to, you know, those opportunities.

Speaker #1: So I think that's part of it . I don't know that we're getting more aggressive on pricing than we have been in the past .

Speaker #1: And, you know, we just 90% new loan originations in the first quarter over the first quarter of last year, d you know, it's basically double what we did last year.

Speaker #1: We were always aggressive for the right relationships . Obviously , the loan pricing is just one component of the overall relationship . We have to look at the deposit side , we look at the fee income side , we look at how we monetize the entire relationship .

Speaker #1: And that's, you know, I think that speaks to just the opportunities that we're seeing and the opportunities that we're winning.

David A. Brager: That's, you know, I think that speaks to just the opportunities that we're seeing and the opportunities that we're winning.

Dave Brager: That's, you know, I think that speaks to just the opportunities that we're seeing and the opportunities that we're winning.

Speaker #10: Appreciate that. And, and, and actually, as a follow-up there, any, any particular asset class within CRE that you're seeing more activity in? Or maybe is, is driving more of the activity?

Gary Tenner: Appreciate that. Actually as a follow-up there, any particular asset class within CRE that you're seeing more activity in or maybe is driving more of the activity?

Speaker #1: And so you know that I don't know that we're getting more aggressive , but I definitely think customers are more used to the rate , environment and money can't sit on the sidelines for that long .

Speaker #1: So there are , you know , there are people that are doing things and we're seeing some of that activity and capturing a good part of it .

Speaker #1: Yeah. I don't I don't know that there's a specific a-asset class. It's pretty well balanced between all asset classes. I will say even you know, it's probably easier to parse it out by owner or non-owner.

David A. Brager: I don't know that there's a specific asset class. It's pretty well balanced between all asset classes. I will say even, you know, it's probably easier to parse it out by owner or non-owner. We were doing a lot of owner-occupied in the past. The thing that was really missing was investor commercial real estate really across all classes, multifamily, industrial, and retail. I mean, we are seeing much more investor commercial real estate than we have in the past, you know. I mean, going back the last year has been pretty steady in that area. Before that, we weren't really seeing any investor commercial real estate. Nobody was doing anything. I think it's just more investor real estate across all asset classes and those opportunities we've been doing pretty well with.

Dave Brager: I don't know that there's a specific asset class. It's pretty well balanced between all asset classes. I will say even, you know, it's probably easier to parse it out by owner or non-owner. We were doing a lot of owner-occupied in the past. The thing that was really missing was investor commercial real estate really across all classes, multifamily, industrial, and retail. I mean, we are seeing much more investor commercial real estate than we have in the past, you know. I mean, going back the last year has been pretty steady in that area. Before that, we weren't really seeing any investor commercial real estate. Nobody was doing anything. I think it's just more investor real estate across all asset classes and those opportunities we've been doing pretty well with.

Speaker #1: But yeah , I think it's all of those things that are sort of contributing to , you know , those opportunities . And , you know , we just 90% new loan originations in the first quarter .

Speaker #1: we were doing a lot of owner-occupied in the past. The thing that was really missing, was investor commercial real estate. Really across all classes, multifamily, industrial, retail.

Speaker #1: Over the first quarter of last year , you know , basically double what we did last year . And that's , you know , I think that speaks to just the opportunities that we're seeing and the opportunities that we're winning .

Speaker #1: I mean, we are seeing much more investor commercial real estate, than we have in the past, you know, I mean, going back the last year, it's been pretty steady in that area.

Speaker #11: Appreciate that . And actually , as a follow up there , any , any particular asset class within Sri that you're seeing more activity in or maybe is driving more of the activity ?

Speaker #1: But before that, we weren't really seeing any investor commercial real estate. Nobody was doing anything. So I think it's just more investor real estate across all asset classes.

Speaker #8: Yeah, I don't, I don't.

Speaker #1: Know that there's a specific asset class . It's pretty well balanced between all asset classes . I will say even , you know , it's probably easier to parse it out by owner or non-owner .

Speaker #1: And, those opportunities, we've been doing pretty well with.

Speaker #10: Interesting. All right. Thanks, Dave.

Gary Tenner: Interesting. All right. Thanks, David A. Brager.

Speaker #1: You're welcome.

David A. Brager: You're welcome.

Dave Brager: You're welcome.

Speaker #1: We were doing a lot of owner occupied in the past . The thing that was really missing was investor commercial real estate , really across all classes , multifamily , industrial , retail .

Speaker #7: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Brager for any closing remarks.

Operator: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Brager for any closing remarks.

Speaker #1: Great. Thank you, Sharee. First, I would like to welcome Heritage Bank of Commerce customers associates and shareholders to Citizens Business Bank. The merger with Heritage Bank of Commerce marks the most strategic and largest acquisition by asset size in our history.

David A. Brager: Great. Thank you, Cherie. First, I would like to welcome Heritage Bank of Commerce customers, associates, and shareholders to Citizens Business Bank. The merger with Heritage Bank of Commerce marks the most strategic and largest acquisition by asset size in our history, bringing together two premier relationship-focused business banks and advancing our long-standing objective of expanding Citizens throughout California by entering the Bay Area. Our team is eager to build on the strong customer and community relationships that Heritage has established, and our performance in Q1 demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium-sized businesses and their owners. Our consistent financial performance is highlighted by our 196 consecutive quarters of profitability and our 146 consecutive quarters of paying cash dividends.

Dave Brager: Great. Thank you, Cherie. First, I would like to welcome Heritage Bank of Commerce customers, associates, and shareholders to Citizens Business Bank. The merger with Heritage Bank of Commerce marks the most strategic and largest acquisition by asset size in our history, bringing together two premier relationship-focused business banks and advancing our long-standing objective of expanding Citizens throughout California by entering the Bay Area. Our team is eager to build on the strong customer and community relationships that Heritage has established, and our performance in Q1 demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium-sized businesses and their owners. Our consistent financial performance is highlighted by our 196 consecutive quarters of profitability and our 146 consecutive quarters of paying cash dividends.

Speaker #1: I mean , we are seeing much more investor commercial real estate than we have in the past . You know , I mean , going back the last year , it's been pretty steady in that area .

Speaker #1: But before that , we weren't really seeing any investor commercial real estate . Nobody was doing anything . So I think it's just more investor real estate across all asset classes and those opportunities we've been doing pretty well with .

Speaker #1: Bringing together two premier relationship-focused business banks and advancing our long-standing objective of expanding Citizens throughout California by entering the Bay Area. Our team is eager to build on the strong customer and community relationships that Heritage has established.

Speaker #11: Interesting. All right. Thanks, Dave.

Speaker #9: You're welcome .

Speaker #2: Thank you . I'm showing no further questions in the queue at this time . I would now like to turn the call back over to Mr. Brager for any closing remarks .

Speaker #1: And our performance in the first quarter demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium-sized businesses and their owners.

Speaker #8: Great .

Speaker #1: Thank you . Sherry . First , I would like to welcome heritage Bank of Commerce customers , associates and shareholders to Citizens Business Bank , a merger with heritage Bank of Commerce marks the most strategic and largest acquisition by asset size in our history , bringing together two premier relationship focused business banks and advancing our long standing objective of expanding citizens throughout California by entering the Bay area .

Speaker #1: Our consistent financial performance is highlighted by our 100 and 96 consecutive quarters of profitability and our 146 consecutive quarters of paying cash dividends. I would like to thank our customers and associates for their continuing commitment and loyalty.

David A. Brager: I would like to thank our customers and associates for their continuing commitment and loyalty. Thank you for joining us this quarter. We appreciate your interest and look forward to speaking with you in July for our Q2 2026 earnings call. Please let Allen or I know if you have any questions. Have a great day.

Dave Brager: I would like to thank our customers and associates for their continuing commitment and loyalty. Thank you for joining us this quarter. We appreciate your interest and look forward to speaking with you in July for our Q2 2026 earnings call. Please let Allen or I know if you have any questions. Have a great day.

Speaker #1: Thank you for joining us this quarter. We appreciate your interest. And look forward to speaking with you in July for our second quarter 2026 earnings call.

Speaker #1: Our team is eager to build on the strong customer and community relationships that heritage has established , and our performance in the first quarter demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium sized businesses and their owners .

Speaker #1: Please let Allen or I know if you have any questions. Have a great day.

Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

Speaker #1: Our consistent financial performance is highlighted by our 196 consecutive quarters of profitability and our 146 consecutive quarters of paying cash dividends . I would like to thank our customers and associates for their continuing commitment and loyalty .

Speaker #1: Thank you for joining us this quarter. We appreciate your interest and look forward to speaking with you in July for our second quarter 2026 earnings call.

Speaker #1: Please let Alan or I know if you have any questions . Have a great day .

Q1 2026 CVB Financial Corp Earnings Call

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