Esquire Financial (ESQ) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter 2025 Highlights Esquire Financial Holdings, Inc. reported strong Q2 2025 results, driven by significant growth in low-cost core deposits funding commercial loan expansion, achieving industry-leading earnings and performance metrics Q2 2025 Key Financial Performance Metrics (YoY) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | | Net Income | $11.9 Million | $10.5 Million | 13% | | Diluted EPS | $1.38 | $1.25 | 10.4% | | Return on Average Assets (ROAA) | 2.37% | 2.58% | -0.21 percentage points | | Return on Average Equity (ROAE) | 18.74% | 20.16% | -1.42 percentage points | | Net Interest Margin (NIM) | 6.03% | 6.19% | -0.16 percentage points | | Total Revenue | $35.8 Million | $30.6 Million | 17% | | Total Deposits | $1.78 Billion | $1.49 Billion | 20% | | Total Loans | $1.49 Billion | $1.26 Billion | 19% | | Efficiency Ratio | 47.6% | 49.8% | -2.2 percentage points | | Allowance for Credit Losses to Loans | 1.30% | 1.47% | -0.17 percentage points | | Nonperforming Loans to Total Assets | 0.42% | 0.64% | -0.22 percentage points | | Payment Processing Volume | $10.1 Billion | $9.2 Billion | 9.2% | - Net interest margin expanded to 6.03% on a linked-quarter basis, a 7 basis point increase, primarily due to successful deployment of low-cost core deposit growth into higher yielding commercial law firm loans[1] - Off-balance sheet sweep funds totaled $373 million, with approximately 93.7% available for additional on-balance sheet liquidity, generating $643 thousand in administrative service payments (ASP) fee income[1] Management Commentary Chairman Tony Coelho highlighted the leadership team's innovation and execution in delivering customized solutions to underserved markets, resulting in industry-leading shareholder returns, while CEO Andrew C. Sagliocca emphasized strong capital generation and growth despite elevated charge-offs on an isolated commercial loan - Chairman Tony Coelho praised the leadership team for innovation, execution, and delivery of customized solutions to complex, fragmented, and underserved national markets, providing industry-leading returns to shareholders[3] - CEO Andrew C. Sagliocca noted that Esquire continues to generate significant capital and industry-leading growth despite elevated charge-offs and provisioning on a previously criticized and isolated commercial loan[4] - Strategic investments in technology, tailored digital marketing, and key hires have been crucial for expanding the national footprint, including the planned opening of a Los Angeles private client office and service center[4] Key Recognitions & Strategic Initiatives The company maintained a strong capital foundation and received several industry recognitions, including the Raymond James Community Bankers Cup for the seventh consecutive year and inclusion in the KBW Bank Honor Roll, while strategically appointing Raymond Kelly to the Board and planning a Los Angeles private banking office Capital Ratios (June 30, 2025) | Capital Ratio | Value | | :-------------------------- | :---- | | Common Equity Tier 1 (CET1) | 14.89% | | Tangible Common Equity to Assets | 12.79% | | Tier 1 Leverage Ratio | 12.06% | | Total Capital Ratio | 16.11% | - Esquire Bank remains well above the bank regulatory 'Well Capitalized' standards[6][30] - Key recognitions include the 2024 Raymond James Community Bankers Cup (7th consecutive year), inclusion in the Keefe, Bruyette & Woods (KBW) Bank Honor Roll (2nd consecutive year), and recognition by the ANA B2 Awards (3rd consecutive year)[6] - Raymond Kelly was appointed to the Board of Directors, bringing extensive financial services, strategic, financial, governance, SEC, and regulatory experience[6] Financial Performance Analysis - Second Quarter 2025 Net Income and Returns Net income for Q2 2025 increased by 13% year-over-year, reaching $11.9 million, or $1.38 per diluted share, though returns on average assets and equity saw a slight decrease compared to the prior year, reflecting an increased asset base and equity Q2 2025 Net Income and Returns (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------------- | :------------ | :------------ | :--------- | | Net Income | $11.9 Million | $10.5 Million | +13% | | Diluted EPS | $1.38 | $1.25 | +$0.13 | | Return on Average Assets | 2.37% | 2.58% | -0.21 percentage points | | Return on Average Equity | 18.74% | 20.16% | -1.42 percentage points | Net Interest Income and Margin Net interest income grew by 20.3% to $29.3 million, primarily due to a 23.2% increase in average interest-earning assets, funded by low-cost core deposits, with average loan yields increasing despite a 16 basis point decrease in net interest margin year-over-year Q2 2025 Net Interest Income & Margin (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :--------- | | Net Interest Income | $29.3 Million | $24.3 Million | +20.3% | | Average Interest Earning Assets | $1.95 Billion | $1.58 Billion | +23.2% | | Net Interest Margin | 6.03% | 6.19% | -16 basis points | | Average Loan Yields | 7.89% | 7.85% | +4 basis points | | Average Loans | $1.46 Billion | $1.24 Billion | +17.9% | | Commercial Loan Growth | $211.3 Million | N/A | +27.5% | | Average Securities | $333.0 Million | $253.3 Million | +31.4% | | Securities Yields | 3.77% | 3.21% | +56 basis points | | Average Deposits | $1.75 Billion | $1.41 Billion | +23.8% | | Cost of Deposits | 0.98% | 0.87% | +11 basis points | | Loan-to-Deposit Ratio | 84% | N/A | N/A | - Growth in average interest-earning assets was primarily funded by increases in escrow/IOLTA, money market, and noninterest-bearing demand deposits[8] - The decrease in NIM was attributed to a $65 million increase in average interest-earning cash balances and decreases in short-term market interest rates on these balances[8] Provision for Credit Losses The provision for credit losses increased significantly to $3.5 million in Q2 2025, primarily due to a $3.3 million charge-off on a small business commercial loan placed on nonaccrual, though management believes the allowance for credit losses remains adequate considering current credit risk and economic conditions Q2 2025 Provision for Credit Losses (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :--------- | | Provision for Credit Losses | $3.5 Million | $1.0 Million | +$2.5 Million | | Allowance to Loans Ratio (June 30) | 1.30% | 1.47% | -0.17 percentage points | - The increase in provision was primarily driven by a $3.3 million charge-off on a small business or merchant-related commercial loan, which was placed on nonaccrual for $736 thousand[9] - Management assesses the allowance for credit losses as adequate, considering current credit risk in multifamily and commercial portfolios, loan growth, composition, and the uncertain economic environment[9] Noninterest Income Total noninterest income remained stable at $6.6 million for Q2 2025, with payment processing income seeing a slight decrease due to changes in merchant risk profile despite increased payment processing volumes, and the company also recognized a deferred gain from a fintech investment sale Q2 2025 Noninterest Income (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------- | :------------ | :------------ | :------------- | | Total Noninterest Income | $6.6 Million | $6.3 Million | +$0.3 Million | | Payment Processing Income | $5.1 Million | $5.3 Million | -$0.215 Million | | Payment Processing Volumes | $10.1 Billion | $9.2 Billion | +9.2% | | ASP Fees | $643 Thousand | $643 Thousand | Flat | | Deferred Gain (Litify sale) | $432 Thousand | N/A | N/A | - The company continues to expand sales channels through ISOs, prudently manage risk, focus on new merchant originations, and enhance technology in the payment vertical[10] - The tech-enabled payments platform supports 92,000 small business merchants nationally and performed commercial treasury clearing services for $10.1 billion in volume across 152.9 million transactions[10] Noninterest Expense Noninterest expense increased by 12.0% to $17.1 million in Q2 2025, primarily driven by higher employee compensation and benefits, professional and consulting services, and data processing costs, reflecting investments in growth initiatives, risk management, and client service, including staffing for the new Los Angeles branch Q2 2025 Noninterest Expense (YoY) | Expense Category | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :------------- | | Total Noninterest Expense | $17.1 Million | $15.2 Million | +12.0% | | Employee Compensation & Benefits | $10.2 Million | $9.5 Million | +7.3% | | Professional & Consulting Services | N/A | N/A | +$434 Thousand | | Data Processing | N/A | N/A | +$338 Thousand | | Other Operating Costs | N/A | N/A | +$242 Thousand | | Travel & Business Relations | N/A | N/A | +$123 Thousand | - Increases in employee compensation were mainly due to sales commissions, bonuses, stock grants, and salary increases, directly linked to the regional Business Development Officer (BDO) strategy[11] - Higher professional and consulting services costs were incurred for evaluating business development opportunities and staffing needs for the upcoming Los Angeles private banking branch[11] Efficiency Ratio and Tax Rate The efficiency ratio improved to 47.6% in Q2 2025, despite continuous investments in technology and personnel for future growth and risk management, while the effective tax rate decreased to 22.0% due to discrete tax benefits related to share-based compensation Q2 2025 Efficiency Ratio & Tax Rate (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--------------- | :------ | :------ | :--------- | | Efficiency Ratio | 47.6% | 49.8% | -2.2 percentage points | | Effective Tax Rate | 22.0% | 27.0% | -5.0 percentage points | - The improved efficiency ratio reflects the company's ability to manage costs while investing in resources to support future growth, lead acquisition initiatives, client service, and enhanced risk management[13] Financial Performance Analysis - Year to Date 2025 Net Income and Returns For the six months ended June 30, 2025, net income increased by 13% to $23.3 million, or $2.70 per diluted share, with returns on average assets and equity slightly decreasing compared to the prior year, reflecting a larger asset and equity base YTD 2025 Net Income and Returns (YoY) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :---------------------- | :------------ | :------------ | :--------- | | Net Income | $23.3 Million | $20.5 Million | +13% | | Diluted EPS | $2.70 | $2.45 | +$0.25 | | Return on Average Assets | 2.38% | 2.59% | -0.21 percentage points | | Return on Average Equity | 18.93% | 20.15% | -1.22 percentage points | Net Interest Income and Margin Year-to-date net interest income rose by 20.5% to $56.9 million, driven by a 23.5% increase in average interest-earning assets, primarily funded by low-cost core deposits, though the net interest margin decreased by 14 basis points year-over-year due to higher cash balances and lower short-term market rates, despite an increase in average loan yields YTD 2025 Net Interest Income & Margin (YoY) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :--------- | | Net Interest Income | $56.9 Million | $47.2 Million | +20.5% | | Average Interest Earning Assets | $1.91 Billion | $1.55 Billion | +23.5% | | Net Interest Margin | 5.99% | 6.13% | -14 basis points | | Average Loan Yields | 7.84% | 7.82% | +2 basis points | | Average Loans | $1.43 Billion | $1.22 Billion | +16.7% | | Commercial Loan Growth | $199.6 Million | N/A | +26.5% | | Average Securities | $330.4 Million | $239.8 Million | +37.8% | | Securities Yields | 3.77% | 3.04% | +73 basis points | | Average Deposits | $1.71 Billion | $1.38 Billion | +24.2% | | Cost of Deposits | 0.96% | 0.91% | +5 basis points | | Loan-to-Deposit Ratio | 84% | N/A | N/A | - Average deposits increased, led by escrow/IOLTA, money market, and noninterest-bearing demand deposits, reflecting the company's focus on low-cost core funding[15] - The company strategically purchased short-duration agency mortgage-backed securities throughout 2024 to enhance liquidity and improve the securities-to-asset ratio[15] Provision for Credit Losses The year-to-date provision for credit losses increased to $5.0 million, a $3.0 million increase from the prior year, primarily due to $6.2 million in charge-offs, including a small business commercial loan and a multifamily loan, though the allowance for credit losses is deemed adequate by management YTD 2025 Provision for Credit Losses (YoY) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :--------- | | Provision for Credit Losses | $5.0 Million | $2.0 Million | +$3.0 Million | | Total Charge-offs | $6.2 Million | N/A | N/A | | Allowance to Loans Ratio (June 30) | 1.30% | 1.47% | -0.17 percentage points | - Charge-offs included a $3.3 million small business/merchant commercial loan (currently nonaccrual for $736 thousand) and a $2.9 million multifamily loan in Q1 2025[16] - Management's evaluation of current credit risk in multifamily and commercial portfolios, along with increases in general reserves, supports the adequacy of the allowance for credit losses[16] Noninterest Income Year-to-date noninterest income remained flat at $12.7 million, with payment processing income decreasing slightly due to changes in merchant risk profiles despite increased payment processing volumes, while ASP fee income saw an increase and a deferred gain from a fintech investment sale was recognized YTD 2025 Noninterest Income (YoY) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :-------------------------- | :------------ | :------------ | :------------- | | Total Noninterest Income | $12.7 Million | $12.7 Million | Flat | | Payment Processing Income | $10.0 Million | $10.6 Million | -$0.599 Million | | Payment Processing Volumes | $19.4 Billion | $17.9 Billion | +8.6% | | ASP Fee Income | $1.5 Million | $1.343 Million | +$0.157 Million | | Deferred Gain (Litify sale) | $432 Thousand | N/A | N/A | - Payment processing transactions totaled 293.3 million for the current six months[17] - ASP fee income is directly influenced by average balances of off-balance sheet sweep funds and current short-term market interest rates[17] Noninterest Expense Year-to-date noninterest expense increased by 13.5% to $33.8 million, driven by higher employee compensation and benefits, data processing, professional and consulting services, and occupancy costs, reflecting ongoing investments in technology, business development, and infrastructure, including costs associated with the new Los Angeles branch YTD 2025 Noninterest Expense (YoY) | Expense Category | YTD 2025 | YTD 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :------------- | | Total Noninterest Expense | $33.8 Million | $29.8 Million | +13.5% | | Employee Compensation & Benefits | $20.3 Million | $18.7 Million | +8.5% | | Data Processing | N/A | N/A | +$747 Thousand | | Professional & Consulting Services | N/A | N/A | +$747 Thousand | | Other Operating Costs | N/A | N/A | +$536 Thousand | | Occupancy & Equipment | N/A | N/A | +$217 Thousand | | Travel & Business Relations | N/A | N/A | +$151 Thousand | - Increased employee compensation is linked to sales commissions from the regional BDO strategy, attracting commercial banking clients and impacting loan and deposit growth[18] - Data processing costs increased due to higher core banking processing volumes and continued technology implementation for client relationships, lead acquisition (CRM, digital marketing), and risk management[18] Efficiency Ratio and Tax Rate The year-to-date efficiency ratio improved to 48.6%, reflecting effective cost management despite ongoing investments in growth and risk management, while the effective tax rate decreased to 24.3% due to discrete tax benefits from share-based compensation YTD 2025 Efficiency Ratio & Tax Rate (YoY) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :--------------- | :------ | :------ | :--------- | | Efficiency Ratio | 48.6% | 49.8% | -1.2 percentage points | | Effective Tax Rate | 24.3% | 26.8% | -2.5 percentage points | - The improved efficiency ratio demonstrates the company's commitment to supporting future growth, lead acquisition, client service, and enhanced risk management through continuous investment in resources[21] Asset Quality Nonperforming Loans and Allowance for Credit Losses As of June 30, 2025, nonperforming loans totaled $8.7 million, a decrease from the prior year, with the allowance for credit losses at $19.4 million, representing 1.30% of total loans, and despite a $736 thousand commercial loan placed on nonaccrual, management maintains the overall allowance for credit losses is adequate Asset Quality Metrics (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------------- | :------------ | :------------ | :------------ | | Nonperforming Loans | $8.7 Million | $10.9 Million | -$2.2 Million | | Allowance for Credit Losses | $19.4 Million | $18.5 Million | +$0.9 Million | | Allowance for Credit Losses to Loans | 1.30% | 1.47% | -0.17 percentage points | | Nonperforming Loans to Total Loans | 0.58% | 0.87% | -0.29 percentage points | | Nonperforming Assets to Total Assets | 0.42% | 0.64% | -0.22 percentage points | - The company has no exposure to commercial office and construction related borrowers, and only $14.4 million in performing loans to the hospitality industry[23] - A $736 thousand commercial loan (net of a $3.3 million charge-off) to a small business/merchant was placed on nonaccrual and classified as substandard, unrelated to the primary commercial litigation lending platform[23] Real Estate Portfolio Credit Metrics The combined multifamily and CRE portfolio, excluding nonaccrual loans, totaled $449.6 million with strong credit metrics, while loans maturing within one to two years also demonstrated healthy debt service coverage ratios and original loan-to-value ratios Multifamily and CRE Portfolio Credit Metrics (June 30, 2025) | Portfolio Segment | Total (excl. nonaccrual) | Current Weighted Average DSCR | Original LTV | | :-------------------------------- | :----------------------- | :---------------------------- | :----------- | | Combined Multifamily & CRE | $449.6 Million | ~1.58 | ~55% | | Loans maturing < 1 year | $79.4 Million | ~1.25 | ~62% | | Loans maturing 1-2 years | $59.8 Million | ~1.39 | ~66% | Balance Sheet Overview Assets Composition and Growth Total assets grew by 20.1% to $2.06 billion as of June 30, 2025, primarily driven by an 18.5% increase in loans, particularly higher-yielding variable rate commercial loans, fueled by the company's robust commercial relationship banking sales pipeline, with the securities portfolio also increasing to enhance liquidity Asset Growth (June 30, 2025 vs. 2024) | Asset Category | June 30, 2025 | June 30, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Total Assets | $2.06 Billion | $1.72 Billion | +20.1% | | Total Loans | $1.49 Billion | $1.26 Billion | +18.5% | | Higher Yielding Variable Rate Commercial Loans | $1.00 Billion | $0.78 Billion | +28.1% | | Commercial Litigation Related Loans | $918.4 Million | $668.7 Million | +37.3% | | Available-for-Sale Securities | $257.4 Million | $176.8 Million | +$80.6 Million | | Held-to-Maturity Securities | $64.5 Million | $73.1 Million | -11.8% | | Total Securities to Assets Ratio | 16% | 15% | +1 percentage point | - The commercial relationship banking sales pipeline is robust, anchored by regional Business Development Officers (BDOs) and supported by a best-in-class technology stack, including proprietary CRM, digital marketing cloud, and AI for advanced data analytics[25] - Management strategically purchased short-duration agency mortgage-backed securities to enhance liquidity and asset composition, especially in light of tempering commercial real estate (CRE) growth[25] Loan Portfolio Composition The loan portfolio as of June 30, 2025, was predominantly commercial, with litigation-related loans forming the largest segment at 61.5% of total loans, while real estate loans, including multifamily and commercial real estate, constituted 31.3% of the portfolio Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | % of Total Loans | | :------------------------ | :-------------------- | :--------------- | | Real estate: | | | | Multifamily | $366,439 Thousand | 24.5% | | Commercial real estate | $91,166 Thousand | 6.1% | | 1 – 4 family | $10,093 Thousand | 0.7% | | Total real estate | $467,698 Thousand | 31.3% | | Commercial: | | | | Litigation related | $918,424 Thousand | 61.5% | | Other | $89,403 Thousand | 6.0% | | Total commercial | $1,007,827 Thousand | 67.5% | | Consumer | $18,584 Thousand | 1.2% | | Total loans held for investment | $1,494,109 Thousand | 100.0% | Deposits and Funding Strategy Total deposits increased by 19.9% to $1.78 billion, primarily driven by growth in NOW/IOLTA, noninterest-bearing demand, and money market deposits, reflecting a strategy focused on full-service commercial banking relationships rather than rate competition, with a significant portion of deposits being longer-duration IOLTA, escrow, and settlement funds, and uninsured deposits representing 31% of total deposits, largely from full commercial relationship clients Deposit Growth and Composition (June 30, 2025 vs. 2024) | Deposit Category | June 30, 2025 | June 30, 2024 | YoY Change (%) | | :-------------------------- | :------------ | :------------ | :------------- | | Total Deposits | $1.78 Billion | $1.49 Billion | +19.9% | | NOW or IOLTA | N/A | N/A | +16.1% (+$130.8 Million) | | Noninterest Bearing Demand | N/A | N/A | +17.4% (+$84.2 Million) | | Money Market Deposits | N/A | N/A | +61.8% (+$91.9 Million) | | Longer Duration IOLTA, Escrow & Settlement Deposits | $944.4 Million | N/A | 53.0% of total | | Uninsured Deposits | $561.0 Million | N/A | 31% of total | - Approximately 75% of uninsured deposits are from clients with full commercial relationship banking, including law firm operating accounts, IOLTA/escrow accounts, and merchant/ISO reserves[26] - Off-balance sheet sweep funds totaled $373.1 million, with 93.7% available to be swept on balance sheet as reciprocal client relationship deposits, demonstrating efficient cash management[27] Liquidity and Capital Position The company maintains a strong liquidity and capital position, with significant unutilized borrowing capacity from the FHLB and FRB, and stockholders' equity increased by $46.1 million, primarily driven by retained earnings and other comprehensive income, ensuring the bank remains well above regulatory 'Well Capitalized' standards Liquidity and Capital Metrics (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | YoY Change | | :-------------------------- | :------------ | :------------ | :------------ | | FHLB Borrowing Capacity | $456.1 Million | N/A | N/A | | FRB Discount Window Capacity | $49.8 Million | N/A | N/A | | Stockholders' Equity | $263.6 Million | $217.4 Million | +$46.1 Million | | Equity to Assets Ratio | 12.79% | 12.67% | +0.12 percentage points | - Historically, the company has funded asset growth and earnings through core client deposits rather than leveraging its balance sheet[28] - The increase in stockholders' equity was primarily due to net increases in retained earnings (net income less dividends) and a $3.3 million unrealized net gain on available-for-sale securities[29] Company Information About Esquire Financial Holdings, Inc. Esquire Financial Holdings, Inc. is a financial holding company based in Jericho, NY, operating through its wholly-owned subsidiary, Esquire Bank, National Association, specializing in serving the litigation industry and small businesses nationally with tailored financial and payment processing solutions, alongside commercial and retail banking services in the New York metropolitan area - Esquire Bank is a full-service commercial bank dedicated to serving the financial needs of the litigation industry and small businesses nationally[31] - The bank provides tailored financial and payment processing solutions to the litigation community and their clients, as well as dynamic and flexible payment processing solutions to small business owners[31] Cautionary Note Regarding Forward-Looking Statements This section advises readers that the press release contains forward-looking statements subject to various risks and uncertainties, including changes in economic conditions and financial markets, emphasizing that actual events may differ materially from projections and that the company does not undertake to update these statements, except as required by law - Forward-looking statements are subject to risks and uncertainties, including changes in business plans, general economic, business, and political conditions, and financial markets[32] - Actual events may differ materially from those made or suggested in forward-looking statements, and the company does not undertake to update them except as legally required[32] Contact Information Contact details for investor and media inquiries are provided for Eric S. Bader, Executive Vice President and Chief Operating Officer of Esquire Financial Holdings, Inc - For contact, reach Eric S. Bader, Executive Vice President and Chief Operating Officer, at (516) 535-2002 or eric.bader@esqbank.com[33] Consolidated Financial Statements Consolidated Statement of Condition (Balance Sheet) The Consolidated Statement of Condition provides a snapshot of the company's financial position at various periods, detailing assets, liabilities, and stockholders' equity, with key trends including growth in total assets and loans, alongside an increase in total deposits and stockholders' equity Consolidated Statement of Condition (Unaudited) (Dollars in thousands) | | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------- | :---------------- | :------------------ | :---------------- | | ASSETS | | | | | Cash and cash equivalents | $162,973 Thousand | $126,329 Thousand | $152,733 Thousand | | Securities available-for-sale, at fair value | $257,375 Thousand | $241,746 Thousand | $176,814 Thousand | | Securities held-to-maturity, at cost | $64,470 Thousand | $68,660 Thousand | $73,062 Thousand | | Loans, net of allowance | $1,475,192 Thousand | $1,376,042 Thousand | $1,242,541 Thousand | | Total Assets | $2,059,977 Thousand | $1,892,503 Thousand | $1,715,714 Thousand | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Total deposits | $1,782,328 Thousand | $1,642,236 Thousand | $1,486,893 Thousand | | Total liabilities | $1,796,421 Thousand | $1,655,409 Thousand | $1,498,303 Thousand | | Total stockholders' equity | $263,556 Thousand | $237,094 Thousand | $217,411 Thousand | | Total Liabilities and Stockholders' Equity | $2,059,977 Thousand | $1,892,503 Thousand | $1,715,714 Thousand | | Selected Financial Data | | | | | Book value per share | $31.01 | $28.38 | $26.22 | | Equity to assets | 12.79% | 12.53% | 12.67% | | Nonperforming loans | $8,736 Thousand | $10,940 Thousand | $10,940 Thousand | | Allowance for credit losses to total loans | 1.30% | 1.50% | 1.47% | | Nonperforming loans to total loans | 0.58% | 0.78% | 0.87% | | Nonperforming assets to total assets | 0.42% | 0.58% | 0.64% | Consolidated Income Statement The Consolidated Income Statement presents the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, compared to prior periods, highlighting growth in net interest income and net income, alongside increases in provision for credit losses and noninterest expenses Consolidated Income Statement (Unaudited) (Dollars in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $33,536 Thousand | $27,385 Thousand | $65,049 Thousand | $53,458 Thousand | | Interest expense | $4,282 Thousand | $3,063 Thousand | $8,186 Thousand | $6,273 Thousand | | Net interest income | $29,254 Thousand | $24,322 Thousand | $56,863 Thousand | $47,185 Thousand | | Provision for credit losses | $3,525 Thousand | $1,000 Thousand | $5,025 Thousand | $2,000 Thousand | | Total noninterest income | $6,577 Thousand | $6,275 Thousand | $12,728 Thousand | $12,664 Thousand | | Total noninterest expense | $17,062 Thousand | $15,232 Thousand | $33,810 Thousand | $29,800 Thousand | | Income before income taxes | $15,244 Thousand | $14,365 Thousand | $30,756 Thousand | $28,049 Thousand | | Income taxes | $3,354 Thousand | $3,878 Thousand | $7,459 Thousand | $7,504 Thousand | | Net income | $11,890 Thousand | $10,487 Thousand | $23,297 Thousand | $20,545 Thousand | | Diluted EPS | $1.38 | $1.25 | $2.70 | $2.45 | | Return on average assets | 2.37% | 2.58% | 2.38% | 2.59% | | Return on average equity | 18.74% | 20.16% | 18.93% | 20.15% | | Net interest margin | 6.03% | 6.19% | 5.99% | 6.13% | | Efficiency ratio | 47.6% | 49.8% | 48.6% | 49.8% | Consolidated Average Balance Sheets and Average Yield/Cost (Q2) This table provides average balance sheet data and corresponding average yields/costs for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, and comparable periods, illustrating the composition of interest income and expense, and the calculation of net interest spread and margin Consolidated Average Balance Sheets and Average Yield/Cost (Unaudited) (Dollars in thousands) - Three Months Ended | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :---------------- | :------------- | :---------------- | | INTEREST EARNING ASSETS | | | | | Loans, held for investment (Avg. Balance) | $1,462,401 Thousand | $1,394,602 Thousand | $1,240,599 Thousand | | Loans, held for investment (Avg. Yield) | 7.89% | 7.80% | 7.85% | | Securities (Avg. Balance) | $332,965 Thousand | $327,838 Thousand | $253,328 Thousand | | Securities (Avg. Yield) | 3.77% | 3.76% | 3.21% | | Total interest earning assets (Avg. Balance) | $1,947,281 Thousand | $1,878,208 Thousand | $1,580,952 Thousand | | Total interest earning assets (Avg. Yield) | 6.91% | 6.80% | 6.97% | | INTEREST BEARING LIABILITIES | | | | | Total interest bearing deposits (Avg. Balance) | $1,184,095 Thousand | $1,144,905 Thousand | $911,121 Thousand | | Total interest bearing deposits (Avg. Cost) | 1.45% | 1.38% | 1.35% | | Total interest bearing liabilities (Avg. Cost) | 1.45% | 1.38% | 1.35% | | KEY METRICS | | | | | Net interest income | $29,254 Thousand | $27,609 Thousand | $24,322 Thousand | | Net interest spread | 5.46% | 5.42% | 5.62% | | Net interest margin | 6.03% | 5.96% | 6.19% | | Deposits (incl. noninterest bearing demand) (Avg. Cost) | 0.98% | 0.94% | 0.87% | Consolidated Average Balance Sheets and Average Yield/Cost (YTD) This table presents the average balance sheet data and associated average yields/costs for interest-earning assets and interest-bearing liabilities for the six months ended June 30, 2025, and the comparable prior year period, providing a year-to-date perspective on the drivers of net interest income and margin Consolidated Average Balance Sheets and Average Yield/Cost (Unaudited) (Dollars in thousands) - Six Months Ended June 30, | | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | INTEREST EARNING ASSETS | | | | Loans, held for investment (Avg. Balance) | $1,428,689 Thousand | $1,224,513 Thousand | | Loans, held for investment (Avg. Yield) | 7.84% | 7.82% | | Securities (Avg. Balance) | $330,416 Thousand | $239,752 Thousand | | Securities (Avg. Yield) | 3.77% | 3.04% | | Total interest earning assets (Avg. Balance) | $1,912,936 Thousand | $1,548,647 Thousand | | Total interest earning assets (Avg. Yield) | 6.86% | 6.94% | | INTEREST BEARING LIABILITIES | | | | Total interest bearing deposits (Avg. Balance) | $1,164,609 Thousand | $891,161 Thousand | | Total interest bearing deposits (Avg. Cost) | 1.42% | 1.42% | | Total interest bearing liabilities (Avg. Cost) | 1.42% | 1.42% | | KEY METRICS | | | | Net interest income | $56,863 Thousand | $47,185 Thousand | | Net interest spread | 5.44% | 5.52% | | Net interest margin | 5.99% | 6.13% | | Deposits (incl. noninterest bearing demand) (Avg. Cost) | 0.96% | 0.91% |