Executive Summary

Q1 2025 delivered adjusted EPS of $0.63 (GAAP $0.54) with strong NIM of 3.88% FTE and disciplined expense control; ROA was 1.13% and adjusted ROA 1.33% .
Versus consensus, EPS was a slight beat ($0.63 vs $0.628*) while “revenue” (net interest income after provision + noninterest) missed ($191.6M* vs $215.0M*), driven by lower FX and a $9.9M securities loss; adjusted fee income remained solid .
Management guided Q2 NIM higher to 3.95–4.05% (assumes a 25 bp June cut), fee income $64–66M, noninterest expense $126–128M, and lower net charge-offs; dividend maintained at $0.24 .
Strategic catalysts: margin expansion from deposit cost reductions, record wealth management income, and ongoing optimization lowering fraud and incentive costs; watch ICRE prepayment pressure and private-credit refinancing headwinds as loan growth normalizes .

What Went Well and What Went Wrong

What Went Well

Margin durability: NIM 3.88% FTE, only down 6 bps QoQ with deposit costs -12 bps and asset yields -18 bps; management expects near-term expansion given current short-term rates (“expect the margin to expand”) .
Fee engines: record wealth management ($8.1M) and continued strength in leasing ($18.7M); adjusted noninterest income was $61.0M despite seasonal FX softness .
Expense discipline: adjusted noninterest expenses fell 3.3% QoQ; drivers were lower incentive compensation and fraud losses; adjusted efficiency ratio improved to 60.2% .

Quote (Archie Brown): “We expect the margin to expand in the near-term.” .
Quote (Archie Brown): “We were very pleased with our expense management… adjusted noninterest expenses declined by 3.3% due to a decrease in incentive compensation and lower fraud losses.” .

What Went Wrong

Consensus miss on “revenue”: S&P revenue actual $191.6M* vs $215.0M* consensus, reflecting FX softness and a $9.9M securities loss from portfolio restructuring (expected earnback ~2.3 years) .
Loan growth stalled: EOP loans fell $37.6M on C&I workouts and elevated ICRE prepayments; average loans grew modestly (annualized +1.5%) .
Credit costs remained elevated vs long-term targets: NCOs 0.36% annualized, primarily one C&I relationship (flooring manufacturer impacted by upstream bankruptcies); provision expense $8.7M .

Financial Results

Core P&L and Returns vs prior periods and estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Diluted EPS (GAAP) ($)	0.55	0.68	0.54
Adjusted EPS ($)	0.67	0.71	0.63
Net Interest Margin (FTE) (%)	4.08%	3.94%	3.88%
ROA (%)	1.17%	1.41%	1.13%
Efficiency Ratio (%)	62.5%	66.0%	63.9%
Adjusted Efficiency Ratio (%)	58.2%	58.4%	60.2%
Revenue (S&P “Revenue”) ($MM)	190.6*	183.1*	191.6*
Revenue Consensus ($MM)	214.3*	216.3*	215.0*
EPS Consensus ($)	0.662*	0.650*	0.628*
EPS Actual (S&P) ($)	0.55*	0.71*	0.63*

Values with asterisks (*) retrieved from S&P Global.

Noninterest Income Breakdown

Category ($MM)	Q3 2024	Q4 2024	Q1 2025
Service charges	7.55	7.63	7.46
Wealth management	6.91	7.96	8.14
Bankcard	3.70	3.66	3.31
Client derivatives	1.16	1.53	1.57
Foreign exchange	12.05	16.79	12.54
Leasing	16.81	19.41	18.70
Gains on loan sales	5.02	4.63	4.32
Securities gains/(losses)	(17.47)	0.14	(9.95)
Other	9.97	8.09	4.98
Total	45.70	69.85	51.08

Credit and Capital KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
ACL / Loans (%)	1.37%	1.33%	1.33%
NCOs / Avg Loans (annualized, %)	0.25%	0.40%	0.36%
NPAs / Assets (%)	0.36%	0.36%	0.32%
CET1 (%)	12.04%	12.16%	12.29%
Tier 1 (%)	12.37%	12.48%	12.61%
Total Capital (%)	14.58%	14.43%	14.90%
TBV per share ($)	14.26	14.15	14.80

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (FTE)	Q2 2025	Not previously quantified	3.95%–4.05% (assumes 25 bp June cut)	Raised (explicit range provided)
Fee Income	Q2 2025	Not previously quantified	$64–66M; FX $13–15M; Leasing $18–20M	Initiated
Noninterest Expense	Q2 2025	Not previously quantified	$126–128M; stable excluding leasing/fee-based incentive	Initiated
Credit Costs	Q2 2025	25–30 bps normalized (multi-quarter commentary)	NCOs expected lower in Q2; ACL stable to slightly increasing	Positive skew
Loans	Near-term (Q2)	4–5% full-year (updated from 6–7%)	Low single-digit annualized growth near term; payoff pressure in ICRE	Tempered near term
Deposits	Near-term (Q2)	Not previously quantified	Modest growth; continued cost reductions	Positive
Dividend	Ongoing	$0.24 declared (Q1)	Maintain $0.24	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Margin/NIM	NIM 4.08%; resilience due to asset yields and mix	NIM 3.94%; deposit cost declines offset lower loan yields	NIM 3.88%; guided to 3.95–4.05% with deposit cost tailwind	Improving near term
Deposits	Avg deposits +$166M annualized growth	Avg deposits +$543M annualized growth	Avg deposits -$99M; excluding brokered +$63M; 21% noninterest-bearing	Mixed; quality improving
Fee income mix	FX, leasing strong	FX, leasing, wealth management robust	Record wealth mgmt; leasing strong; FX softer; adjusted fees $61M	Diversified; seasonal FX
Credit	ACL 1.37%; NCOs 0.25%	NCOs 0.40%; classified assets up 7 bps	NCOs 0.36% (one C&I loan); NPAs down; normalized NCOs 25–30 bps target	Improving
ICRE & Office	Payoffs elevated; loan pipelines strengthening	—	ICRE prepayments elevated; office portfolio ~3.5% of loans; no downgrades; ~$17M nonaccrual	Stable; monitored
Tariffs/macro	—	—	Monitoring client impact; uncertainty into H2’25; pipelines remain strong	Watch macro

Management Commentary

“Adjusted earnings per share were $0.63… our net interest margin remains strong… we expect the margin to expand in the near-term.” — Archie Brown, CEO .
“Adjusted fee income was in line with our expectations at $61 million… another record quarter from our Wealth Management business.” — Archie Brown .
“Adjusted noninterest expenses declined by 3.3% due to a decrease in incentive compensation and lower fraud losses.” — Archie Brown .
“Adjusted net income was $60.2 million or $0.63 per share… we expect the earn back on [securities sales] to be a little over 2 years.” — Jamie Anderson, CFO .
“We expect our net interest margin… expand to 3.95%–4.05%… assume a 25 bp rate cut in June.” — Archie Brown .

Q&A Highlights

Asset sensitivity: Each 25 bp cut implies ~5–6 bps NIM decline, but deposit cost reductions could halve the impact; margin expected to hold ~3.90–3.95% with methodical cuts .
Capital deployment & M&A: More discussions than in a long time, but macro/tariff noise may delay timing; repurchases not expected near term .
Credit specifics: One large C&I charge-off (flooring manufacturer impacted by upstream bankruptcy at Lumber Liquidators); otherwise no systemic issues; healthy workouts in classified loans .
LOB outlook: Agile to seasonally ramp with good asset quality; Oak Street solid; Summit strong originations, small-ticket vendor programs show modest deterioration; mid-market/larger clients performing well .
Loan growth path: Full-year outlook trimmed to 4–5% from 6–7%; near-term payoffs driven by office exits, private credit flexibility, and potential refi to agencies if long rates decline .

Estimates Context

Q1 2025 EPS: $0.63* actual vs $0.628* consensus — slight beat; revenue: $191.6M* actual vs $215.0M* consensus — miss as FX normalized and securities losses impacted adjusted fee line. Values retrieved from S&P Global.
Prior quarters: Q4 2024 EPS beat ($0.71* vs $0.65*), but revenue missed ($183.1M* vs $216.3M*); Q3 2024 EPS missed ($0.55* vs $0.662*) and revenue missed ($190.6M* vs $214.3M*). Values retrieved from S&P Global.
Implications: With guided NIM expansion and fee cadence (FX/leasing ranges), EPS estimates may need modest upward revision for Q2; revenue models should reflect the company’s definition (net interest income after provision + noninterest) and expected continued FX/leasing variability .

Key Takeaways for Investors

Near-term NIM expansion is the core catalyst: deposit cost tailwinds and asset yield stability support guidance to 3.95–4.05% in Q2, mitigating asset sensitivity through cycle .
Fee engines are durable: leasing and wealth management provide diversification; FX volatility likely sustains activity even if quarterly prints remain variable .
Expense discipline is sticking: incentive and fraud loss reductions plus ongoing optimization underpin efficiency (adjusted ~60%) even as volumes normalize .
Credit normalization on track: NCOs guided lower in Q2; ACL stable-to-up slightly; isolated C&I charge-off, office portfolio well-underwritten with no downgrades in Q1 .
Loan growth tempered by ICRE prepayments and private credit competition; pipelines remain healthy — expect modest growth rebound in Q2 and more visibility into H2 .
Capital strong and improving: TBV/share up 4.6% QoQ to $14.80; CET1 12.29%; dividend maintained at $0.24 (3.8% annualized yield as of 3/31) .
Watch tariffs/macro: management remains engaged with clients; uncertainty is centered in back-half demand — monitor for any incremental provisioning or payoff acceleration .