Ross Haberman

Ross Haberman from RLH Investments inquired about Avidbank's expected loan growth for 2026 and the current loan backlog, as well as any additional concerns regarding delinquent or criticized loan quality beyond the specific issues already discussed.

Answer

Chairman and CEO Mark Mordell stated that Avidbank anticipates 10% to 15% loan growth for 2026, considering the team's capabilities and current pipeline. Regarding loan quality, Mordell acknowledged that all loans are monitored closely but reiterated confidence in resolving the previously mentioned well-collateralized construction loans without losses, despite the process being a distraction. He confirmed no other significant credit trends or concerns beyond the specific $16 million construction loan that significantly impacted Q4's non-performing assets.

Ross Haberman asked about the expected loan growth for 2026 and the current backlog, and whether any other delinquent or criticized loans were causing concern beyond those previously described.

Answer

Patrick Oakes (CFO) stated that loan growth for 2026 is expected to be between 10% and 15%, which they believe is achievable given the team and pipeline. He acknowledged that all loans are monitored closely due to the dynamic nature of criticized and classified assets, but confirmed no other specific trends in credit are concerning beyond the $16 million construction loan mentioned earlier.

Ross Haberman from RLH Investments asked CEO and Chairman Mark Mordell whether Avidbank Holdings, Inc. is adjusting the size of loans it originates following the new capital infusion from the IPO, and if the bank is engaging in loan participations.

Answer

CEO and Chairman Mark Mordell explained that while the new capital increases Avidbank's legal lending limit, the bank primarily continues to focus on loans of $25 million and under to manage overall credit risk, only considering larger deals for long-standing clients with well-understood credit profiles. He confirmed that Avidbank does engage in loan participations, particularly on the fund finance side, with approximately $70 million currently in syndications, viewing them as a means to achieve good yields with low risk and solidify relationships in the venture community.

Ross Haberman asked if Avidbank Holdings Inc. was adjusting the size of its loans with the new capital brought in from the IPO, and if it was engaging in any loan participations.

Answer

CEO Mark Mordell explained that while the new capital raises the legal lending limit, Avidbank remains primarily focused on deals $25 million and under to manage downgrade and credit risk, only going higher opportunistically for long-standing clients. He confirmed that Avidbank does engage in participations, primarily on the fund finance side, with about $70 million in syndications, viewing them as a way to achieve good yields with low risk, solidify its position in the venture community, and deploy capital.

Ross Haberman inquired about the specific allowance and recent default experience for BayFirst Financial's $171 million unguaranteed government loan portfolio, also asking about its peak balance prior to recent loan sales.

Answer

Scott McKim, EVP and CFO, clarified that the $171.6 million represents all SBA 7(a) unguaranteed balances as of December 31, with approximately 13% allocated to the allowance for credit losses. He noted the portfolio is expected to shrink through runoff and sales, and that the unguaranteed balance was $50.5 million higher at the end of the third quarter.

Ross Haberman inquired about the specific allowance for credit losses against the $171 million unguaranteed government loan portfolio and the recent default experience within that category. He also asked about the peak balance of the unguaranteed portion.

Answer

Scott McKim, EVP and CFO, explained that approximately 13% of the $171.6 million unguaranteed SBA 7(a) loan balances are covered by the allowance for credit losses, noting the portfolio is expected to shrink. He clarified that the unguaranteed balance was $50.5 million higher at the end of the third quarter.

Ross Haberman from RLH Investments questioned the total size of the BOLT loan portfolio on the balance sheet, requesting a breakdown of the unguaranteed portion where credit issues are concentrated. He also asked for more details regarding the company's mention of evaluating "strategic alternatives" and whether an investment banker has been retained.

Answer

Executive VP & CFO Scott McKim provided approximate figures, stating the total SBA portfolio is around $350 million, with the BOLT loan component at about $160 million. He specified that the unguaranteed, stressed portion of small-dollar loans was approximately $123 million as of June 30, which is the largest component of the allowance for credit losses. Regarding strategic alternatives, President & COO Robin Oliver stated that while the company is evaluating all possibilities for a successful path forward, they could not comment on whether an investment banker has been hired, as the evaluation is ongoing.

Ross Haberman inquired about BayFirst's financial exposure to the recent hurricanes in the Tampa Bay area and whether the bank had quantified the potential impact.

Answer

Executive Tom Zernick, CFO Scott McKim, and President and COO Robin Oliver addressed the question. They confirmed proactive outreach to affected customers with deferral offers. McKim stated it was too early to assign a specific dollar figure to the exposure but noted many customers were prepared. Oliver added that properties securing loans in flood zones have adequate insurance, and the bank expects a rapid recovery for the area, mitigating long-term impacts.

Ross Haberman asked about Washington Trust Bancorp's strategies to expand wealth management faster in 2026, including the role of business development officers, the institutional team, and M&A. He also inquired about the average return on assets or fee structure for wealth management services.

Answer

Ned Handy, Chairman and CEO, explained that expansion efforts include adding business development officers and leveraging the new institutional banking team for endowments and retirement plans from the nonprofit sector (higher ed, healthcare, private schools). He noted M&A, like the 2025 Lighthouse deal, is part of the strategy but not the primary focus due to high prices and the need for cultural fit, with an opportunistic approach to smaller tuck-in transactions. Ned Handy also stated the average fee structure for wealth management is about 60 basis points and mentioned investment in financial planning for retention and appealing to next-gen clients. Bill Wray, EVP and Chief Risk Officer, reiterated the cautious approach to M&A due to price and fit.

Ross Haberman from RLH Investments asked about Washington Trust Bancorp's strategies to accelerate wealth management expansion in 2026 and inquired about the average fee structure or return on assets for their wealth management services.

Answer

Chairman and CEO Ned Handy and EVP and Chief Risk Officer Bill Wray outlined expansion efforts including adding business development officers, leveraging the new institutional banking team for nonprofit endowments and retirement plans, and opportunistic, smaller tuck-in M&A (following the 2025 Lighthouse deal). Ned Handy also mentioned investing in financial planning services for retention and appealing to next-gen clients. Ned Handy confirmed the average fee structure for wealth management is approximately 60 basis points.

Ross Haberman inquired about First Western Financial's outlook for the mortgage market in 2026, assuming stable or slightly lower rates, and the expectations for its mortgage operations. He also asked if any pickup in mortgage division activity is observed in specific markets like Phoenix, Wyoming, or Bozeman, Montana, versus the Denver area. Finally, he questioned whether the company is actively pursuing acquisitions of money management firms, branches, or other banks, or if the focus remains on organic growth through hiring relationship bankers and team lift-outs.

Answer

Scott C. Wylie, Chairman and CEO, explained that the company has been strategically building its mortgage production capability during a slower market, increasing MLOs by 45% in 2025 to prepare for future demand. Julie A. Courkamp, Chief Operating Officer, confirmed nice production from MLOs in Arizona and Wyoming, with Montana's Bozeman office being a full-service, contribution-positive profit center. David L. Weber, Chief Financial Officer, stated that while First Western has a history of acquisitions, the current focus is on organic growth, leveraging market disruption to hire talent and acquire desired business without taking on unwanted assets, across all their markets.

Ross Haberman inquired about First Western Financial's expectations for the mortgage market in 2026, including any regional pickups in Phoenix, Wyoming, or Bozeman. He also asked if the company is actively looking for M&A opportunities (money management, branches, banks) or if the focus remains on organic growth through hiring relationship bankers.

Answer

Scott Wylie, Chairman and CEO, and Julie Courkamp, COO, explained that First Western Financial has been building its mortgage production capability during the slower market, adding 8 MLOs in 2025, and expects pent-up demand to eventually create opportunities. They noted successful MLO additions and production in Arizona and Wyoming, with Bozeman operating as a full-service profit center. David Weber, CFO, emphasized that the company's focus is on organic growth by hiring talent due to market disruption, rather than M&A, given their current currency and the ability to selectively acquire desired business.

Ross Haberman from RLH Investments requested a market-by-market breakdown to identify any geographies experiencing softness in loan originations. He also asked about the financial impact of the new personnel, specifically if they would cause a significant expense increase and how quickly they are expected to become accretive to the bottom line.

Answer

Executive Scott Wylie provided a high-level overview, noting the Colorado Front Range remains healthy, resort communities show continued interest, and Bozeman is a hot market. He stated that expenses are expected to remain flat despite the new hires, as the company aims to generate operating leverage. Wylie expressed optimism that the new personnel will have a positive impact over the next 2-3 quarters.

Ross Haberman asked about the profitability of the newer offices in Arizona and Montana, any plans for expansion or acquisitions in those markets, and the status of the company's share buyback program.

Answer

CEO Scott Wylie, COO Julie Courkamp, and CFO David Weber confirmed that the Arizona offices are profitable, and the Bozeman, Montana office is roughly breakeven and trending positively. Scott Wylie stated they are investing in these growth markets but that M&A is difficult with the stock trading below tangible book value. He also confirmed the 10b5-1 share repurchase plan remains active, though only a small number of shares have been bought back to date.

Ross Haberman inquired about the financial outlook for the Tin Building following its restructuring with Jean-Georges, specifically asking if it's projected to reach cash break-even in 2026, the nature of the restructuring (cost-cutting vs. new concepts), the progress and prospects for leasing the remaining 100,000 sq ft of space, and the expected capital expenditures for the fourth quarter.

Answer

President and CEO Matt Partridge stated that he could not provide forward guidance for the Tin Building's 2026 performance but confirmed a detailed plan would be shared on the next earnings call in early March. He clarified that the restructuring involved bringing the employee base in-house and reducing management fees, with all options, including new or adjusted concepts, being considered in collaboration with Jean-Georges. Regarding the 100,000 sq ft of available space, Partridge noted the Nike space is the largest component (returning in 2027), with other smaller shop spaces expected to command higher rents, and expressed excitement about potential announcements by year-end. For Q4 CapEx, he anticipated it would be light, with significant spending ramping up in the first half of 2026, as approximately $50 million is committed for announced projects, mostly in mid to late 2026.

Ross Haberman from RLH Investments asked about the potential accretive impact on Norwood Financial's margin or spread from an additional quarter-point rate drop. He also questioned where the company is experiencing the strongest loan growth and demand, and if this trend is expected to continue into the fourth quarter, considering the impact of lower rate expectations.

Answer

John McCaffrey, CFO, indicated that a rate drop would be accretive to deposit costs but hesitated to provide a specific dollar or basis point amount due to portfolio dynamics and timing. James Donnelly, CEO, stated that loan growth has been broad-based across categories, with no single major growth factor, noting a slight decrease in the agricultural portfolio percentage.

Ross Haberman from RLH Investments asked about the potential accretive impact on Norwood Financial's margin or spread from an additional quarter-point rate drop. He also questioned where the company is experiencing the strongest loan growth and demand, and if this trend is expected to continue into the fourth quarter, considering the impact of lower rate expectations.

Answer

John McCaffrey, CFO, indicated that a rate drop would be accretive to deposit costs but hesitated to provide a specific dollar or basis point amount due to portfolio dynamics and timing. James Donnelly, CEO, stated that loan growth has been broad-based across categories, with no single major growth factor, noting a slight decrease in the agricultural portfolio percentage.

Ross Haberman from RLH Investments asked for clarification on administrative expenses, questioning if they would continue to grow, and inquired about the company's exposure to California wildfires, including any new allowances or impact from recent events.

Answer

CEO Joseph Brown stated that administrative expenses would likely only see a significant increase if the company closes on an M&A transaction. Regarding wildfires, he confirmed that the reserves established in Q1 for previous fires have held firm with minimal movement and that the company has not seen any significant exposure from the newest fires in California.

Ross Haberman inquired about the timeline for GBLI's expense ratio to decrease below 40% and asked for an explanation regarding the issuance of approximately 500,000 new A2 shares.

Answer

CFO Brian Riley stated that the long-term expense ratio target of 37% is likely a 2026 or 2027 event, with 2025 expected to be in the 39-40% range. CEO Joseph Brown explained that 550,000 A2 shares were issued to Fox Paine as a fee for their advisory role in implementing 'Project Manifest'. He clarified that these shares have voting and dividend rights similar to A shares but only accrue value if the company's value increases beyond the book value at the time of issuance, making them a hybrid of restricted stock and an option.

Ross Haberman of Haberman Management Corporation inquired about the runoff timeline for discontinued business lines, the company's strategy for adding new lines, and any share repurchase activity in the quarter.

Answer

CEO Joseph Brown stated that less than $5 million in earned premium from discontinued lines remains to run off through the end of 2025. He explained that while GBLI is constantly looking for new opportunities, the focus will shift to adding new products in 2025 and 2026 after a two-year period of stabilizing the core business. Brown also confirmed that no shares were repurchased during the quarter.

Ross Haberman of RLH Investments sought clarification on why it will take one to two years to bring the expense ratio back in line and whether accelerating expense cuts would risk losing business.

Answer

CFO Brian Riley explained that the company consciously maintained staffing levels to ensure high customer service despite a premium drop, leading to a higher expense ratio. He detailed that the current ratio of approximately 39% includes 13 points of fixed costs, which needs to decline to 11 points to hit the target of 37%. This improvement is expected to come from a combination of double-digit premium growth and modest inflationary increases in dollar-based expenses.

Asked about the repricing of the loan portfolio, the potential for net interest margin expansion in a stable rate environment, the sustainability of the recent strong loan growth, and the company's hiring plans for new lenders. In a follow-up, he inquired about the profitability of the mortgage business, its expected volume in 2025, and potential for cost-cutting in that division.

Answer

Executives stated that while it's hard to predict rates, the loan portfolio should reprice higher with rising rates, and they are optimistic about margin expansion even in a stable environment due to other factors like investment portfolio restructuring. The strong Q4 loan growth may not be repeatable quarterly, but the pipeline is strong. The company is selectively hiring lenders. Regarding the mortgage business, they don't disclose segment profitability but noted it runs lean and provides cross-sell opportunities, and that all business lines are being evaluated for efficiency.

Ross Haberman inquired about the outlook for net interest margin if rates remain stable, the sustainability of the fourth quarter's strong loan growth, and the bank's plans for hiring new lenders. He also asked about the profitability of the mortgage business and its potential for cost reductions.

Answer

CEO Abigail Wendel, CFO Mark Herpich, and CCO Raymond McLanahan collectively addressed the questions. They indicated that even in a stable rate environment, they expect margin expansion, aided by deposit-side levers and a recent investment portfolio restructuring. Wendel noted that while Q4's 20% annualized loan growth might not be repeatable every quarter, the pipeline remains strong. She also confirmed recent lender hires and an ongoing recruiting effort. Regarding the mortgage business, Wendel stated that while segment profitability isn't disclosed, the unit runs lean and the bank is continuously evaluating all business lines for efficiency.

Asked about the future trend of expenses, particularly legal fees, other non-recurring items, the repricing dynamics of loans versus liabilities, the resolution of nonaccrual loans, concerns about delinquencies, and the significance of the mark-to-market footnote in the 10-K.

Answer

The executive stated that significant legal expenses related to the OCC investigation are largely finished. The bank plans to pay off a maturing FHLB advance rather than renew it. While about $200 million in loans reprice quarterly, rising deposit costs are expected to continue pressuring margins. The $9 million in nonaccrual loans are residential, not considered a major issue, and are expected to be resolved without significant loss. There are no major concerns in the delinquency or criticized loan buckets. The mark-to-market footnote is viewed as a reasonable data point for estimating embedded interest rate risk.

Asked about credit trends in the leasing portfolio, the specific allowance for those loans, and the metrics used for determining executive bonuses.

Answer

The executive responded that the leasing portfolio is stable, with the corporate segment performing very well, and noted the bank does not invest in residuals. The CFO specified that the allowance for the non-government/non-investment grade portion of the Equipment Finance portfolio is about 1%. For the question on executive bonuses, the executive referred the analyst to the company's Proxy statement.

Ross Haberman of RLH Investments questioned a related-party transaction where ships were bought from an affiliate and later spun off with a $9 million writedown. He suggested that the optics of such transactions might contribute to the stock's low valuation.

Answer

CEO Harry Vafias clarified that the vessels were acquired when the market was higher and the subsequent impairment charge from the spin-off is a non-cash item that provides protection against future losses. He defended the company's history of related-party transactions, noting that previous, highly profitable vessel purchases from affiliates did not draw criticism, and emphasized that while market predictions are not always perfect, the majority of their strategic moves have been successful.

Ross Haberman from RLH Investments questioned the specifics of a dry bulk transaction where ships were bought from an affiliated party and subsequently spun off a year later with a $9 million writedown. He suggested that such related-party transactions could be negatively impacting the stock's valuation.

Answer

CEO Harry Vafias clarified that the vessels were acquired when the market was higher and the spin-off necessitated a non-cash impairment charge, which does not affect cash flow and protects against future losses on a sale. Vafias defended the company's track record with related-party transactions, citing previous instances where vessels were bought from affiliates at low prices and later appreciated significantly, arguing that the majority of their strategic moves have been profitable.

Ross Haberman of RLH Investments questioned the optics of a related-party transaction where ships were purchased from an affiliate and later spun off, resulting in a $9 million writedown. He suggested such transactions might contribute to the stock's low valuation.

Answer

CEO Harry Vafias explained that the ships were acquired when the market was higher and the subsequent impairment is a non-cash item that provides accounting protection against future losses on a sale. He defended the company's track record, noting that previous profitable related-party transactions did not draw criticism and that market fluctuations are inherent to the shipping business.