Total revenues of $530 million missed the API Ninjas estimate of $545.1 million by 2.8%.
Adjusted diluted EPS of $0.01 missed the API Ninjas estimate of $0.07 by 86%.
The operating line improved: net interest income rose $20 million or 5% to $460 million, net interest margin gained 4 basis points to 2.17%, and adjusted pre-provision net revenue rose $4 million or 6% to $66 million.
The provision for credit losses jumped to $76 million from $18 million, and the one forward change disclosed is timing: full realization of the long-term strategic objectives is now 2028, from 2027.
The one thing that matters: the shortfall is credit and tax, not revenue. A $76 million provision against $18 million last quarter consumed a quarter in which net interest income, margin and adjusted PPNR all improved, and a one-off $22 million tax benefit is what kept the result positive; management's answer was to push full realization of its strategic objectives to 2028 from 2027.
Key metrics
Metric
Reported
Prior year
Change
Net interest income
$ 460 million
$ 440 million
up $ 20 million or 5 %
Net interest margin
2.17 %
2.13 %
increased 4 basis points
Provision for credit losses
$ 76 million
$ 18 million
increased $ 58 million
Total C & I loans
$ 20.6 billion
—
increased $ 2.0 billion or 11 %
Adjusted PPNR ( non - GAAP )
$ 66 million
$ 62 million
up $ 4 million or 6 %
Tangible book value per common share
$ 17.05
$ 17.51
—
Guidance changes
Item
New guidance
Prior guidance
Full realization of long - term strategic objectives
2028
2027
Quality of earnings
The profit is a tax artifact. Income before taxes was a $10 million loss; a $22 million tax benefit from settling a 2019-2021 federal audit produced the $12 million of net income and the $0.01 per diluted share, at a 217.8% effective tax rate.
There is no non-GAAP cushion this quarter: adjusted diluted EPS is also $0.01 and adjusted PPNR equals reported PPNR at $66 million, where the prior quarter's $0.06 GAAP included a $4 million gain on the Figure Technology stake that pulled adjusted EPS down to $0.05.
Revenue growth did not reach the bottom line. Total revenues rose 3% to $530 million against a 3% rise in operating expenses to $441 million, but the provision more than quadrupled to $76 million from $18 million, turning a flat $66 million PPNR into a pre-tax loss.
Gotchas & watch items
Credit is deteriorating beneath the improving headline: criticized and classified loans rose $670 million or 6% and substandard loans $248 million or 4%, while the total allowance was left unchanged at $927 million and total ACL coverage slipped to 1.50% of loans held for investment from 1.52%.
The multi-family run-off story sits against rising early delinquency in that book: multi-family loans 30-89 days past due climbed to $392 million from $233 million and those 90 days or more past due and still accruing to $50 million from $38 million, even as the portfolio shrank 4% to $25.9 billion.
Tangible book value per common share fell to $17.05 from $17.51 as accumulated other comprehensive loss widened to $839 million from $547 million; adjusted for exercise of the 104,985,000 warrants struck at $7.42, tangible book value is $15.56.
The strategic timeline slipped a year, to 2028 from 2027, on a higher-for-longer rate environment that is simultaneously credited with the 26 basis point year-over-year margin expansion to 2.17%.