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Executive Barry Ray responded that while the company maintains strong expense control, significant improvement in the efficiency ratio will likely be driven by revenue growth, projecting a range of 55% to 59%. He added that potential Fed rate cuts would be a tailwind for deposit costs and that the core net interest margin has an opportunity to 'grind' upward, aided by asset repricing.

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EVP and CFO Barry Ray provided a Q4 expense run rate of approximately $34.5 million and a full-year 2025 forecast in the mid-$140 million range. President and COO Len Devaisher and Chief Credit Officer Gary Sims attributed the C&I growth to supporting client acquisition activity, primarily in the Denver and Twin Cities markets. Sims added that the agricultural portfolio is considered resilient due to an up-tiered customer base and strong local crop yields, which help offset price pressures.

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CFO Derek Meyer confirmed that the $4 million OREO expense is included in the full-year guidance. He acknowledged that this suggests the first quarter's expense level was relatively high compared to the expected run rate for the remainder of the year.

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CEO Andrew Harmening explained that customer satisfaction is driving household growth, which moved from -1% in 2022 to +1% in 2024, with a 2% forecast for 2025. He noted each 1% of growth now adds about $150 million in higher-quality deposit balances. This, combined with a new deposit vertical, new RMs, and the HSA business, fuels confidence in deposit growth. Regarding competition, Harmening stated that the bank has not yet experienced significant pricing pressure on new commercial loans, attributing this to the strength of their RMs' market knowledge and relationships.

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CFO Derek Meyer explained that the bank has aggressively lowered deposit rates in line with the market and expects a total deposit beta of 45-46% on the way down. Chief Credit Officer Pat Ahern confirmed the CRE reserve increase was partly due to specific credit migration and a desire for extra cushion in the office portfolio. CEO Andrew Harmening noted that while the market helped, the strong wealth management fees are increasingly driven by sustainable referrals from new mass affluent and commercial banking initiatives.

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CEO Dennis Shaffer confirmed the loan yield increase was driven purely by disciplined pricing on new and repricing loans, with no unusual interest recoveries. He stated that $110 million in loans are set to reprice higher over the next two quarters. Regarding the nonperforming loans, Shaffer reported the multifamily loan was expected to pay off imminently, while the other C&I loan is taking longer to resolve with a bonding company. He described borrower sentiment as a "wait-and-see" approach, anticipating a near-term slowdown in CapEx spending as businesses assess the impact of tariffs.

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CEO Dennis Shaffer stated the bank is comfortable with a loan-to-deposit ratio between 90% and 95% and confirmed there is no regulatory pressure regarding brokered deposits; the focus on core deposits is a strategic move to secure cheaper funding. EVP Richard Dutton reported that the Ohio multifamily market remains healthy, with new projects seeing higher-than-projected rents and absorption rates meeting or exceeding expectations.

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President and CEO Dennis Shaffer outlined long-term goals of reducing wholesale funding to 15-17% of total funding, achieving a loan-to-deposit ratio around 90%, and bringing the CRE concentration under 300% of risk-based capital, primarily to manage stock price perception. SVP and Chief Lending Officer Chuck Parcher and SVP & COO Rich Dutton detailed that approximately $150 million in loans will reprice higher over the next 12 months, moving from rates around 4.75-5% to the high 6s or low 7s, providing margin uplift. Parcher also expressed confidence in their ability to restart loan growth back to mid-to-high single digits when desired, as they have been selectively passing on projects to manage concentration levels.

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EVP & CFO John Stewart confirmed the indirect auto portfolio yield is in the mid-3s, providing a favorable spread when redeployed. He maintained the full-year NII outlook but noted the exit NIM might be at the lower end of the 3.15%-3.20% range. EVP & Chief Commercial Banking Officer Lynn Kerber added that new commercial loans are originating between 7% and 8.4%, while maturing loans are in the 5-6% range. She attributed C&I growth to the new Equipment Finance division and noted it was well-diversified across sectors.

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John Stewart, EVP and CFO, clarified that the NIM exit rate for December was 3.03% and projected a Q4 2025 exit rate between 3.15% and 3.20%. He stated the FHLB advance payoff would provide a mid-single-digit basis point lift in Q2, with the remaining expansion driven evenly by earning asset mix improvement and liability repricing. He also confirmed the warehouse reserve was released in Q4. Executive Thomas Prame added that the gain from the sale will be recognized in Q1 and is not currently slated to be offset by other actions, thus boosting capital.

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EVP and CFO John Stewart stated that Q4 loan maturities have a yield around 6% and that the deposit cost beta on future rate cuts should be similar to the recent ~40% beta. Executive Thomas Prame highlighted the strategy of simplifying the business model and investing in core areas like treasury management, wealth, and mortgage. Mr. Prame anticipates a return to mid-to-high single-digit loan growth in 2025, which he sees as a potential breakout area.

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Executive James Ryan confirmed the hypothetical math was 'directionally correct' but cautioned that he still expects some 'selective pruning' of the portfolio, making it unlikely the full amount would be retained. Executive John Moran explained that the projected Q4 NII increase is driven by the timing of fixed-asset repricing and the back-end loaded nature of the company's organic loan growth forecast for the year.

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Executive James Ryan emphasized the importance of leadership in the Chicago market and confirmed they are considering both internal and external candidates for the COO role. On M&A, he noted that while regulatory processes may streamline, successful deals will still depend on long-term value creation. Executive John Moran provided the specific data point that 13% of the bank's securities are floating rate.

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CFO John Moran confirmed the Q4 NII guide assumes stable accretion of around $13 million and a 30% down-beta on deposits, which allows for offensive client acquisition. Executive Mark Sander explained that the credit migration was driven by a more conservative risk rating framework. He noted the four large non-accruals were in unrelated sectors, with one stemming from the SNC exam, and emphasized that expected loss content remains low.

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Tyler Wilcox, President, stated that while student loan debt will be factored into underwriting and debt-to-income calculations, he does not expect it to have a meaningful impact on their consumer loan businesses. Regarding charge-offs, he explained that the small ticket leasing portfolio is heavily weighted towards the restaurant and hospitality sectors, which is consistent with the business model and yields. He also noted they have curtailed lending in other areas like title trucking and brewing equipment.

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CFO Kathryn Bailey clarified the acquisition expense was a legal contingency from the Limestone deal and that Q4 swap fees were approximately $1.2 million. Executive Tyler Wilcox stated C&I growth was broad-based, noted about $350 million in CRE maturities for 2025, and confirmed the small ticket leasing portfolio would likely decline further as it moves toward a normalized charge-off rate.

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Executive Tyler Wilcox described competitor deposit pricing as varied and stated their strategy is to remain 'middle of the pack' while keeping CD durations short. He strongly defended the leasing business, arguing that its high profitability and contribution to the bank's powerful margin is a worthwhile trade-off for the attention it receives, and confirmed he believes it is accretive to shareholder value.

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Executive Timothy Crane explained that the NIM outlook is supported by an interest-bearing deposit beta of around 65-67% and an expectation that noninterest-bearing deposits will remain stable at approximately 21% of total deposits. Executive Richard Murphy identified the premium finance businesses, the leasing business, and core C&I lending in the Chicago market as areas with strong competitive moats.

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