Financial Data and Key Metrics Changes - The second quarter earnings per share grew by 58% compared to the same period last year [6] - Net interest margin increased by 19 basis points to 3.23%, driven by improved mix of earning assets and liabilities [16][18] - Net charge-offs were near $254,000, representing an annualized charge-off rate of two basis points, which is favorable compared to previous performance [12] Business Line Data and Key Metrics Changes - Net loans held for investment grew by $75.5 million, representing 1.5% growth in the quarter and 6.2% on an annualized basis [8] - Commercial loans increased by $117 million, with a growth rate of 14.8% in the quarter [9] - Consumer loan balances decreased by $41 million, reflecting a strategic shift to reduce the indirect auto portfolio [11] Market Data and Key Metrics Changes - Deposit portfolio balances remained relatively flat from Q1, with a disciplined approach to deposit pricing [14] - The competitive environment for lending has become more aggressive, particularly in pricing, leading to compression on spreads [35] Company Strategy and Development Direction - The company aims to improve recurring and predictable operating profitability, with a focus on loan growth in the mid-single-digit range for the year [22] - There is an ongoing strategic repositioning of the balance sheet to reduce reliance on wholesale funding [54] - The company is exploring potential buybacks and other uses of capital as profitability improves [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic conditions in Northern Indiana, citing significant infrastructure investments and a favorable business environment [62] - The outlook for net interest income growth remains unchanged in the mid-teens for the full year 2025 [22] - Future provision expenses will be driven by anticipated loan growth, economic factors, and credit quality churn [12] Other Important Information - The company reported a well-managed expense quarter, with total expenses expected to be flat compared to 2024 [20] - The allowance for credit losses increased to $54 million, reflecting an increase from 1.07% to 1.09% of loans held for investment [12] Q&A Session Summary Question: Thoughts on capital build and potential uses - Management noted that CET1 ratios are up about 90 basis points over the last twelve months, providing more optionality for capital use [29] Question: Update on competitive environment for lending and funding - The lending environment is described as competitive, with some compression on spreads, particularly in commercial lending [35] Question: Decline in interchange revenue - Management acknowledged a slight decline in overall swipes and spend per swipe, attributing it to more conservative consumer spending [40] Question: Outlook for the economy within the footprint - Management expressed positive sentiment regarding the economy in Northern Indiana, highlighting infrastructure investments and business growth [62] Question: Appetite for M&A - The company is open to M&A opportunities, particularly in Indiana and Michigan, focusing on shareholder-friendly discussions [78]