Core Insights - The article emphasizes the importance of efficiency ratios as indicators of a company's financial health and operational efficiency [1][2][3][4][5]. Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a higher ratio indicating better performance [2]. - **Asset Utilization**: This ratio assesses how effectively a company converts its assets into sales, with higher values suggesting greater efficiency [3]. - **Inventory Turnover**: This ratio indicates a company's ability to manage inventory relative to its cost of goods sold, with higher values reflecting better inventory management [4]. - **Operating Margin**: This ratio measures the efficiency of a company in controlling operating expenses relative to sales, with higher values indicating better expense management [5]. Screening Process - A screening process was applied using the aforementioned efficiency ratios along with a favorable Zacks Rank (Zacks Rank 1) to identify potential investment opportunities [6]. - The screening narrowed down over 7,906 stocks to 10, focusing on those with efficiency ratios above industry averages [7]. Selected Companies - **Vital Farms (VITL)**: Offers pasture-raised foods and has a four-quarter average positive earnings surprise of 45.3% [8][7]. - **Acushnet (GOLF)**: Designs and distributes golf products, also reporting a four-quarter average positive earnings surprise of 45.3% [9][8]. - **Texas Capital Bancshares (TCBI)**: Focuses on local business ties in Texas and has a four-quarter average positive earnings surprise of 30.2% [10][8]. - **Commerce Bancshares (CBSH)**: Engages in general banking services with a four-quarter average positive earnings surprise of 7.9% [11][8].

Core Insights - Three stocks with strong buy rankings and momentum characteristics are highlighted for investors: Charles Schwab, Texas Capital Bancshares, and Southern First Bancshares [1][2][3][4] Company Summaries - **Charles Schwab (SCHW)**: - Zacks Rank: 1 (Strong Buy) - Current year earnings estimate increased by 6.5% over the last 60 days - Share price increased by 19.4% over the last three months, outperforming the S&P 500's 15.2% gain - Momentum Score: A [1][2] - **Texas Capital Bancshares (TCBI)**: - Zacks Rank: 1 (Strong Buy) - Current year earnings estimate increased by 8.2% over the last 60 days - Share price increased by 30% over the last three months, significantly outperforming the S&P 500's 15.2% gain - Momentum Score: A [2][3] - **Southern First Bancshares (SFST)**: - Zacks Rank: 1 (Strong Buy) - Current year earnings estimate increased by 14.2% over the last 60 days - Share price increased by 33.3% over the last three months, also outperforming the S&P 500's 15.2% gain - Momentum Score: A [3][4]

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Even though momentum is a popular stock characte ...

Core Viewpoint - Texas Capital Bancshares, Inc. (TCBI) reported better-than-expected quarterly results, with shares rising 4.5% following the announcement of adjusted earnings per share (EPS) of $1.63 for Q2 2025, exceeding the Zacks Consensus Estimate of $1.28 and significantly up from 80 cents in the same quarter last year [1][8] Financial Performance - TCBI's net income available to common shareholders (GAAP basis) was $73 million, a substantial increase from $37.3 million in the prior-year quarter [2] - Total quarterly revenues rose 15.2% year over year to $307.4 million, although this figure missed the Zacks Consensus Estimate by 3.1% [3] - Net interest income (NII) reached $253.4 million, up 16.9% year over year, driven by an increase in average earning assets and a decrease in funding costs [3] - Non-interest income increased by 7.2% to $54.1 million, primarily due to higher service charges on deposit accounts and trading income [4] Expense Analysis - Non-interest expenses rose nearly 1% to $190.3 million, mainly due to increases in salaries and benefits, occupancy expenses, and communications and technology expenses [4][8] Loan and Deposit Growth - As of June 30, 2025, total average loans held for investment increased 6.9% sequentially to $23.6 billion, while total deposits rose slightly to $26.1 billion [5] Credit Quality - Total non-performing assets increased 33.6% to $113.6 million compared to the prior-year quarter [6] - Provision for credit losses was $15 million, a decline of 25% from the year-ago quarter, while net charge-offs rose 8.4% to $12.9 million [6] Capital Ratios - As of June 30, 2025, tangible common equity to total tangible assets increased to 10.1% from 9.6% in the prior-year quarter [7] - The leverage ratio decreased to 11.8% from 12.2% as of June 30, 2024, and the common equity tier 1 ratio fell to 11.4% from 11.6% in the prior-year quarter [7] Strategic Outlook - The company continues to execute strategies aimed at enhancing top-line growth, with increasing NII and fee income expected to support future performance, although rising expenses present near-term concerns [9]

Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements%20-%20Unaudited) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$31.9 billion** by June 30, 2025, driven by loan growth, with total deposits reaching **$26.1 billion** and stockholders' equity at **$3.5 billion** Consolidated Balance Sheet Summary (Unaudited) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$31,943,535** | **$30,731,883** | | Loans held for investment, net | $23,647,886 | $22,178,357 | | Investment securities | $4,608,628 | $4,396,115 | | Interest bearing cash and cash equivalents | $2,507,691 | $3,012,307 | | **Total Liabilities** | **$28,433,465** | **$27,363,947** | | Total deposits | $26,064,309 | $25,238,599 | | Short-term borrowings | $1,250,000 | $885,000 | | **Total Stockholders' Equity** | **$3,510,070** | **$3,367,936** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Other%20Comprehensive%20Income) Q2 2025 net income rose to **$77.3 million**, with diluted EPS at **$1.58**, driven by a 17% increase in net interest income, while six-month net income reached **$124.4 million** Income Statement Highlights (Unaudited) | (in thousands except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $253,395 | $216,582 | $489,429 | $431,591 | | Provision for credit losses | $15,000 | $20,000 | $32,000 | $39,000 | | Total non-interest income | $54,069 | $50,424 | $98,513 | $91,743 | | Total non-interest expense | $190,276 | $188,409 | $393,296 | $390,802 | | **Net income** | **$77,328** | **$41,662** | **$124,375** | **$67,804** | | **Diluted earnings per common share** | **$1.58** | **$0.80** | **$2.49** | **$1.25** | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity grew to **$3.51 billion** by June 30, 2025, fueled by **$124.4 million** net income and **$70.2 million** other comprehensive income, despite **$52.2 million** in share repurchases - For the six months ended June 30, 2025, the company repurchased **713,966 shares** of common stock for **$52.2 million**[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents decreased by **$498.7 million** in H1 2025, with **$1.64 billion** used in investing activities, largely offset by **$1.08 billion** from financing activities Cash Flow Summary (Unaudited) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $63,365 | $129,091 | | Net cash used in investing activities | $(1,644,610) | $(1,781,461) | | Net cash provided by financing activities | $1,082,579 | $1,322,599 | | **Net increase in cash and cash equivalents** | **$(498,666)** | **$(329,771)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes disclose significant accounting policies, investment securities, loan portfolio credit quality, debt, regulatory capital, and fair value measurements - Total investment securities stood at **$4.61 billion** as of June 30, 2025. Unrealized losses on available-for-sale debt securities were primarily attributed to changes in market interest rates rather than credit quality issues[20](index=20&type=chunk)[26](index=26&type=chunk) - Gross loans held for investment grew to **$24.0 billion**. The allowance for credit losses on loans was **$277.6 million**, or **1.16%** of total loans held for investment. Criticized loans declined from **$714.0 million** at year-end 2024 to **$637.5 million** at June 30, 2025[29](index=29&type=chunk)[33](index=33&type=chunk) - The Company and the Bank's capital ratios exceeded the regulatory definition of 'well capitalized' as of June 30, 2025. The Company's CET1 capital ratio was **11.45%**[48](index=48&type=chunk)[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q2 2025 performance to higher net interest income and an expanded **3.35%** net interest margin, covering detailed analysis of financial condition, credit quality, liquidity, and capital resources Key Performance Indicators | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net interest margin | 3.35% | 3.01% | | Return on average assets (ROA) | 0.99% | 0.56% | | Return on average common equity (ROE) | 9.17% | 5.26% | | Efficiency ratio | 61.9% | 70.6% | - Net income for Q2 2025 increased to **$77.3 million** from **$41.7 million** in Q2 2024, primarily due to a **$36.8 million** increase in net interest income[75](index=75&type=chunk)[86](index=86&type=chunk) [Net Interest Income Analysis](index=26&type=section&id=Net%20Interest%20Income%20Analysis) Q2 2025 net interest income rose to **$253.4 million**, with net interest margin expanding to **3.35%** due to lower interest-bearing deposit costs, offsetting earning asset yield declines - The increase in net interest margin was primarily due to a decrease in the cost of interest bearing deposits, which fell to **3.83%** in Q2 2025 from **4.64%** in Q2 2024[79](index=79&type=chunk)[88](index=88&type=chunk) - Average earning assets for Q2 2025 increased by **$1.7 billion** compared to Q2 2024, driven by a **$2.2 billion** increase in average loans held for investment[87](index=87&type=chunk) [Analysis of Financial Condition](index=30&type=section&id=Analysis%20of%20Financial%20Condition) Total loans held for investment grew to **$23.9 billion** by June 30, 2025, with stable asset quality and non-performing assets at **0.36%** of total assets, and an allowance for credit losses at **1.16%** - Non-performing assets, including non-accrual loans, remained stable at **$113.6 million** (**0.36%** of total assets) at June 30, 2025, compared to **$111.2 million** (**0.36%** of total assets) at December 31, 2024[104](index=104&type=chunk) - The provision for credit losses for the first six months of 2025 was **$32.0 million**, down from **$39.0 million** in the prior-year period, reflecting a decline in criticized loans despite overall loan growth[106](index=106&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Customer deposits grew to **$25.9 billion**, with **41%** uninsured, while capital ratios exceeded 'well capitalized' standards, and **$52.2 million** in shares were repurchased under a new **$200 million** program - Estimated uninsured deposits were **41%** of total deposits at June 30, 2025, consistent with the level at year-end 2024[111](index=111&type=chunk) - On January 22, 2025, the board authorized a new share repurchase program of up to **$200.0 million**. During the first six months of 2025, the company repurchased **713,966 shares** for an aggregate price of **$52.2 million**[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with an asset-sensitive position indicating a **3.8%** increase in net interest income for a **100 basis point** rate rise over twelve months Interest Rate Sensitivity Simulation | Rate Shock Scenario | Annualized Hypothetical Change in Net Interest Income (June 30, 2025) | | :--- | :--- | | +200 basis points | 7.4% | | +100 basis points | 3.8% | | -100 basis points | (5.9)% | | -200 basis points | (12.0)% | - The company has a positive cumulative interest rate sensitivity gap of **$6.4 billion** in the 0-3 month repricing period, indicating an asset-sensitive position[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[138](index=138&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[139](index=139&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, but management anticipates no material adverse effect on financial condition or results of operations - Management does not expect the disposition of any current legal matters to have a material adverse impact on the Company's financial statements[141](index=141&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K were reported - No material changes in the Company's risk factors were reported from those previously disclosed in the 2024 Form 10-K[142](index=142&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchase activity, with **713,966 shares** repurchased for the six months ended June 30, 2025, leaving **$148.2 million** available under the current authorization Share Repurchase Activity (2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Total Q1 2025 | 396,106 | $78.25 | | Total Q2 2025 | 317,860 | $65.50 | | **Total YTD 2025** | **713,966** | **$72.58** | - A new share repurchase program was authorized on January 22, 2025, allowing for the repurchase of up to **$200.0 million** in common stock, set to expire on January 31, 2026[144](index=144&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including the amended Long-Term Incentive Plan, CEO and CFO certifications, and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 1350, as well as the company's amended 2022 Long-Term Incentive Plan[146](index=146&type=chunk)

Core Insights - Texas Capital Bancshares reported a 104% increase in adjusted EPS and 100% growth in adjusted net income year over year, supported by a 16% increase in adjusted revenue [1][3] - The company reaffirmed guidance for low double-digit percentage revenue growth for the full year and highlighted a record tangible book value of $70.14 per share [1][9] Financial Performance - Adjusted pre-provision net revenue reached $120.5 million, a 52% year-over-year increase, with both net interest income and adjusted fee-based revenues showing double-digit percentage gains [2] - Adjusted total revenue increased by 16%, adjusted net income to common stockholders rose by 100%, and adjusted earnings per share expanded by 104% [3] Fee Income and Strategic Diversification - Treasury product fees surged 37% year-over-year, marking increases in eight of the last 12 quarters, while investment banking and trading income climbed 43% quarter over quarter [4][5] - The ongoing build-out of equities, research, and trading operations now covers 72 companies, expected to scale further in the second half of 2025 [4] Risk Management and Capital Position - The bank increased its allowance for credit loss by $2 million to a record $334 million, representing 1.79% of loans held for investment, while criticized loans declined by 26% year over year [6][7] - The CET1 capital ratio remained high at 11.45%, and the company repurchased approximately 318,000 shares for $21 million, reflecting disciplined capital deployment [6] Future Outlook - Management expects quarterly noninterest income to reach $60 million to $65 million in Q3, supported by $35 million to $40 million in investment banking fees [9] - Full-year noninterest income guidance is now $230 million to $240 million, with noninterest expense guidance decreased to mid to high single-digit percent growth for the full year [9]

Core Insights - Texas Capital (TCBI) reported revenue of $307.46 million for Q2 2025, marking a year-over-year increase of 15.2% and exceeding the Zacks Consensus Estimate by 3.09% [1] - The earnings per share (EPS) for the same quarter was $1.63, a significant increase from $0.80 a year ago, resulting in an EPS surprise of 27.34% compared to the consensus estimate of $1.28 [1] Financial Performance Metrics - Efficiency Ratio stood at 61.9%, better than the five-analyst average estimate of 66.6% [4] - Net interest margin was reported at 3.4%, surpassing the average estimate of 3.2% [4] - Net charge-offs to average total loans held for investment for the last 12 months remained at 0.2%, matching the average estimate [4] - Average balance of total earning assets was $30.3 billion, slightly below the four-analyst average estimate of $30.98 billion [4] - Total non-performing assets were $113.61 million, higher than the average estimate of $96.88 million [4] - Non-accrual loans held for investment also totaled $113.61 million, compared to the average estimate of $96.88 million [4] - Net Interest Income was reported at $253.4 million, exceeding the average estimate of $245.58 million [4] - Total Non-Interest Income reached $54.07 million, above the five-analyst average estimate of $52.56 million [4] - Net Interest Income (FTE) was $253.89 million, compared to the four-analyst average estimate of $246.85 million [4] - Wealth management and trust fee income was $3.73 million, below the average estimate of $4.02 million [4] - Brokered loan fees amounted to $2.4 million, exceeding the average estimate of $1.99 million [4] - Service charges on deposit accounts were reported at $8.18 million, slightly above the average estimate of $8.12 million [4] Stock Performance - Texas Capital shares have returned +13.1% over the past month, outperforming the Zacks S&P 500 composite's +4.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Adjusted total revenue increased by 16% year-over-year, amounting to $42.3 million, with net interest income growing by 17% and adjusted fee-based revenue by 11% [10] - Adjusted net income to common rose by 100% year-over-year to $75.5 million, while adjusted earnings per share expanded by 104% [11] - Adjusted return on average assets reached 1.02%, approaching the 1.1% goal set for 2025 [5] Business Line Data and Key Metrics Changes - Commercial loans grew by 5% linked quarter and 13% year-over-year, reflecting effective competition for client relationships [5] - Treasury product fees increased by 37% year-over-year, marking a record high for the firm [7] - Investment banking and trading income rose by 43% quarter-over-quarter and 4% year-over-year, driven by a rebound in capital markets activity [8] Market Data and Key Metrics Changes - Average commercial loan balances increased by 4% during the quarter, with year-over-year balances up approximately $1.4 billion or 13% [12] - Interest-bearing deposits grew by $2.8 billion or 19% year-over-year, while the ratio of average mortgage finance deposits to average mortgage finance loans improved to 91% [13][14] Company Strategy and Development Direction - The company is focused on building a diversified and client-centric institution, enhancing client journeys, and driving operational efficiency [9] - Continued investments in technology and client service models are expected to enhance profitability and support growth [14] - The firm aims to maintain a strong capital position, with CET1 finishing the quarter at 11.45%, despite robust loan growth [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of the diversified earnings platform and the ability to drive consistent client engagement [19] - The outlook for full-year average balances in mortgage finance is expected to grow by 10%, supported by a $1.9 trillion origination market [51] - Management remains cautious about the macroeconomic environment but believes in the strength of the firm's credit portfolio and client selection [58] Other Important Information - The allowance for credit loss increased to $334 million, representing 1.79% of loans held for investment, which is among the top decile in the peer group [16] - The firm repurchased approximately 318,000 shares for a total of $21 million at a weighted average price of $65.5 per share [18] Q&A Session Summary Question: Insights on investment banking and trading pipeline - Management noted that despite capital markets being closed in April and May, investment banking and trading income exceeded guidance, supported by strong syndication fees and sales growth [24] Question: Expectations for ROA and future performance - Management indicated that while the aspiration is not solely to achieve a 1.1% ROA, the strategy is working well, and client acceptance has been strong [28][29] Question: Commentary on restructuring charges and expense guidance - Management highlighted ongoing efforts to drive structural efficiencies and match expenses with fee income areas, maintaining a focus on investment banking trends [32] Question: Impact of regulatory tone on excess capital - Management stated that the regulatory outlook does not affect their view on excess capital, which is seen as a strategic advantage [35] Question: Revenue trends and guidance adjustments - Management expressed confidence in moving towards the high end of revenue guidance due to strong net interest income momentum and client engagement [39] Question: Commercial customer behavior during the quarter - Management observed continued strong client acquisition and a stable line utilization, with expectations for growth in bank debt demand [48][49] Question: Progress on wealth management build-out - Management is optimistic about the wealth management segment, noting improvements in client journey and performance compared to other wealth managers [61]

Financial Data and Key Metrics Changes - Adjusted total revenue increased by 16% year-over-year, amounting to $42.3 million, with net interest income growing by 17% and adjusted fee-based revenue by 11% [10] - Adjusted net income to common rose by 100% year-over-year to $75.5 million, while adjusted earnings per share expanded by 104% [11] - Adjusted return on average assets reached 1.02%, approaching the 1.1% goal set for 2025 [5] Business Line Data and Key Metrics Changes - Commercial loans grew by 5% linked quarter and 13% year-over-year, reflecting effective competition for client relationships [5] - Treasury product fees increased by 37% year-over-year, marking a record high for the firm [7] - Investment banking and trading income rose by 43% quarter-over-quarter and 4% year-over-year, driven by a rebound in capital markets activity [8] Market Data and Key Metrics Changes - Average commercial loan balances increased by 4% during the quarter, with year-over-year balances up approximately $1.4 billion [12] - Interest-bearing deposits grew by $2.8 billion or 19% year-over-year, while the ratio of average mortgage finance deposits to average mortgage finance loans improved to 91% [13][14] Company Strategy and Development Direction - The company is focused on building a diversified and client-centric institution, enhancing client journeys, and driving operational efficiency [9] - Continued investments in technology and client service models are expected to enhance profitability and support growth in various business lines [8][44] - The firm aims to maintain a strong capital position, with a CET1 ratio of 11.45%, and views excess capital as a strategic advantage [17][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of the diversified earnings platform and the ability to drive consistent client engagement across market conditions [19] - The outlook for revenue growth is reaffirmed at low double-digit percentages, with non-interest expense growth expected to be mid to high single digits [19] - Management remains cautious about the mortgage outlook for the remainder of 2025, anticipating a 10% increase in full-year average balances [13] Other Important Information - The allowance for credit loss increased to $334 million, representing 1.79% of loans held for investment, with a strong reserve coverage ratio [16] - The firm repurchased approximately 318,000 shares for a total of $21 million at a weighted average price of $65.5 per share [18] Q&A Session Summary Question: Insights on investment banking and trading pipeline - Management noted that despite capital markets being closed in April and May, investment banking and trading income exceeded guidance, supported by strong syndication fees and sales growth [24] Question: Expectations for ROA and future performance - Management indicated that while the aspiration is not solely to achieve a 1.1% ROA, the strategy is working well, and client acceptance has been strong [28][29] Question: Commentary on restructuring charges - Management highlighted ongoing efforts to drive structural efficiencies and reposition expenses against fee income areas [32] Question: Impact of regulatory tone on excess capital - Management stated that the regulatory outlook does not affect their view on excess capital, which is seen as a competitive advantage [35] Question: Revenue trends and guidance adjustments - Management expressed confidence in moving towards the high end of the revenue guidance due to strong net interest income momentum [39] Question: Commercial customer behavior during the quarter - Management reported continued strong client acquisition and a 20% annualized growth in commercial and industrial loans, with no significant changes in line utilization [48] Question: Progress on wealth management build-out - Management is optimistic about the wealth management segment, noting improvements in client journey and performance compared to other wealth managers [61]

Financial Data and Key Metrics Changes - Adjusted total revenue increased by $42.3 million or 16% year-over-year, supported by a 17% growth in net interest income and an 11% growth in adjusted fee-based revenue [10][11] - Adjusted net income to common rose to $75.5 million, a 100% increase compared to the same quarter last year, with adjusted earnings per share expanding by 104% [11][12] - The adjusted return on average assets reached 1.02%, nearing the 1.1% goal set for 2025 [5][11] Business Line Data and Key Metrics Changes - Commercial loans grew by 5% linked quarter and 13% year-over-year, reflecting effective competition for holistic client relationships [5][12] - Treasury product fees increased by 37% year-over-year, marking a record high for the firm [6][12] - Investment banking and trading income rose by 43% quarter-over-quarter and 4% year-over-year, driven by a rebound in capital markets activity [8][12] Market Data and Key Metrics Changes - Average commercial loan balances increased by 4% or $399 million during the quarter, with year-over-year balances up approximately $1.4 billion or 13% [12] - Client interest-bearing deposits grew by $2.8 billion or 19% year-over-year, while deposit betas increased to 81% [13][14] - The allowance for credit loss increased to $334 million, representing 1.79% of loans held for investment, which is among the top decile in the peer group [16][17] Company Strategy and Development Direction - The company is focused on building a diversified and client-centric institution, enhancing client journeys, and driving operational efficiency [9][10] - Continued investments in technology and capabilities are expected to support growth in investment banking and trading [25][66] - The firm aims to maintain a strong capital position, with a CET1 ratio of 11.45%, allowing for onboarding of new clients [17][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of the diversified earnings platform and the ability to drive consistent client engagement across various market conditions [20][41] - The firm anticipates continued earnings momentum and aims to achieve a quarterly return on average assets of 1.1% in the second half of the year [20][41] - Management remains cautious about the mortgage outlook for the remainder of 2025, expecting a 10% increase in full-year average balances [13][52] Other Important Information - The company repurchased approximately 318,000 shares for a total of $21 million at a weighted average price of $65.5 per share [19] - The firm is focused on maintaining strong credit quality, with a 26% reduction in year-over-year criticized loans [61][62] Q&A Session Summary Question: Insights on investment banking and trading pipeline - Management noted that despite capital markets being closed in April and May, investment banking and trading income exceeded guidance, supported by strong syndication fees and growth in sales and trading [25] Question: Commentary on restructuring charges - Management highlighted ongoing efforts to drive structural efficiencies and match expenses with fee income areas of focus [34] Question: Guidance on revenue trends - Management indicated that net interest income momentum could support moving to the high end of the current revenue guidance [41] Question: Update on wealth management build-out - Management expressed optimism about the wealth management segment, noting improvements in client journey and performance compared to other wealth managers [66]