Strategic Priorities - The management team is focusing on several strategic priorities, particularly capital deployment and organic growth initiatives [2] - There is an emphasis on navigating through transformation and improving operational efficiency, which has been a significant topic over the last couple of years [3] Capital Deployment - Capital deployment is currently a top priority for the management, especially following a recent significant acquisition in the wealth sector [2] - The company aims to continue its growth journey through effective capital allocation [2] Organic Growth Initiatives - The company has multiple ongoing organic growth initiatives across various lines of business, which are crucial for maintaining momentum [2] - Centralizing client experience is also a key focus area for enhancing service delivery [2] Operational Efficiency - Operational efficiency has been a critical focus area, particularly in light of recent IT investments aimed at supporting the transformation journey [3]

Financial Data and Key Metrics Changes - The company reported an adjusted net income of nearly $128 million or $1.49 per share, compared to $118 million or $1.37 per share in the previous quarter, reflecting a strong performance [12] - Return on Assets (ROA) improved to 1.46% from 1.32% a year ago, indicating continued profitability improvement [5] - Net interest income (NII) increased by $3 million or 1%, while the efficiency ratio improved to 54.1% from 54.91% in the prior quarter [13][15] - Total loans grew by $135 million or 2% annualized, with a notable increase in loan production of 6% quarter over quarter and 46% year over year [6][7] Business Line Data and Key Metrics Changes - Fee income totaled $106 million, an increase of 8% from the prior quarter, driven by record highs in investment insurance and annuity fees [5][6] - The company experienced a modest increase in personnel expenses due to investments in revenue producers, contributing to a controlled expense growth of just 1% [6][12] - Criticized commercial loans decreased by $20 million to $549 million, while non-accrual loans increased slightly to $114 million [17][18] Market Data and Key Metrics Changes - Deposits decreased by $387 million, primarily due to seasonal activity in public fund accounts, with interest-bearing transaction balances increasing [8][16] - The company ended the quarter with a tangible common equity (TCE) ratio of 10.01% and a common equity Tier 1 ratio of 14.08% [9] - The yield on the bond portfolio increased by six basis points to 2.92%, with expectations for continued yield improvement through reinvestment at higher rates [14] Company Strategy and Development Direction - The company plans to open five new locations in the Dallas market, aiming for growth in the region and a target compounded annual balance sheet growth rate [10] - The focus remains on organic growth, with a strategy to hire more bankers to support loan production and maintain profitability [10][29] - The company aspires to become the best bank in the Southeast for privately owned businesses, emphasizing the importance of local access and quality service [105] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic environment, highlighting a strong capital position and solid allowance for credit losses [11] - The company anticipates continued growth and profitability through disciplined execution of its organic growth plan, despite challenges from loan paydowns [10][30] - Future expectations include low single-digit growth in loans and deposits, with a focus on maintaining high-quality deposits [29][100] Other Important Information - The company repurchased approximately $40 million of shares during the quarter, with plans to continue share repurchases at similar levels [18][36] - The company expects to see a reduction in deposit costs following anticipated rate cuts in the fourth quarter [15][16] Q&A Session Summary Question: Loan growth expectations and paydowns - Management noted that loan production was strong, with a 6% increase quarter over quarter, but paydowns were higher than expected due to project completions and client sales [21][24] Question: Capital management and M&A opportunities - Management clarified that they are not currently focused on M&A but are open to opportunistic growth, prioritizing organic growth and capital deployment [32][34] Question: Guidance for NII and expenses - Management indicated that NII growth expectations are more modest than previously suggested, with a focus on controlling expenses in the upcoming quarter [54][56] Question: Competitive landscape for deposits - Management reported no significant changes in competitive pressures for deposits, with expectations for continued stability in deposit pricing [99][100] Question: Future branch expansion plans - Management confirmed plans for branch expansions in Dallas and other markets, with a focus on enhancing service quality and client relationships [101][105]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported net income of $8.4 million or $0.08 per share and adjusted EBITDAX of $49.9 million, driven by NRI production of 16,956 BOE per day, which exceeded guidance [5][18] - NRI sales for the quarter were 19,393 BOE per day, a slight increase from the first quarter, while pricing decreased by approximately 15% quarter over quarter [19] - Production costs for Q2 were $40.4 million, a 10% reduction quarter over quarter, with a per barrel cost of $22.87 [20] Business Line Data and Key Metrics Changes - The FPSO project in Cote D'Ivoire is ahead of schedule, with significant investments expected to yield production increases starting in 2026 [9][10] - Gabon has shown positive production results, with strong uptime and improved decline curves, and a drilling program is set to begin in late Q3 2025 [10][12] - In Egypt, the company has drilled multiple wells in 2025, with plans for an additional eight wells in the second half of the year [13][59] Market Data and Key Metrics Changes - The company has seen higher volatility in the commodity price environment in 2025, impacting pricing despite increased sales [19] - The company’s unrestricted cash at the end of Q2 was $67.9 million, not including approximately $24 million in receipts collected in July [21] Company Strategy and Development Direction - The company remains focused on operational efficiency, prudent investments, and maximizing asset value while returning cash to shareholders through dividends [7][26] - A new reserve-based revolving credit facility was established with an initial commitment of $190 million, allowing for growth to $300 million to fund organic growth initiatives [6][22] - The company is committed to returning over $100 million to shareholders through dividends and share buybacks since 2022 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on multiple major projects that are expected to significantly grow production and reserves [27] - The company anticipates a strong year in 2025, with continued focus on organic growth and shareholder returns [71] Other Important Information - The FPSO refurbishment in Cote D'Ivoire is underway, with the vessel expected to return to service in early 2026 [8][9] - The company has maintained its full-year guidance despite a 10% reduction in CapEx forecast [23] Q&A Session Summary Question: Update on Cote D'Ivoire project status - The FPSO project remains ahead of schedule, with projections for reconnection in March 2026 [32] Question: Working capital and cash flow expectations - Working capital is expected to show a positive inflow in Q3, with improvements in receivables anticipated [34] Question: Cote D'Ivoire FPSO critical path concerns - The bearing swivel assembly is on track for installation, with no delays expected [41] Question: Impact of Gabon drilling program on production - Minimal disruptions are expected during the drilling program, with planned downtime aligned with rig movements [51] Question: Equatorial Guinea final investment decision timeline - The FID for Equatorial Guinea is projected for 2026, with ongoing evaluations to optimize expenditures [46] Question: Planned drilling activity in Egypt - The company plans to drill eight additional wells in the second half of the year, which is expected to positively impact production [59]