Financial Data and Key Metrics Changes - The company reported a net income of $26.4 million, translating to earnings per share of $0.93 and a return on assets (ROA) of 1.28% [4] - Deposits increased by 13% annualized, with total revenue growth approximating 10% [4][5] - The net interest margin for the quarter was strong at 4.07%, maintaining above 4% for eleven consecutive quarters [14] Business Line Data and Key Metrics Changes - Service fee revenue performance improved significantly, with a revenue mix increase of over 300 basis points compared to the previous quarter, now representing almost 26% of total revenues [5] - Mortgage banking income surged by $4.2 million, driven by a 43% increase in origination levels compared to the prior quarter [16] - Total new loan fundings reached $484 million in Q2, marking a 21% increase from the previous quarter and a 29% increase year-over-year [12] Market Data and Key Metrics Changes - The company experienced robust deposit growth, particularly in money market and transaction accounts, with noninterest-bearing deposits now representing 24% of the total deposit mix [11] - The loan to deposit ratio improved to 91.6%, up from 94.3% at the end of the previous quarter [13] Company Strategy and Development Direction - The company is focused on delivering value-added solutions and maintaining a balanced mix of service fee business offerings to support long-term sustainable growth [5][6] - There is a strategic emphasis on relationship-based banking to differentiate from competitors and deepen existing client relationships [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. economy despite macroeconomic volatility, expecting continued growth in their vibrant Southwestern and Western markets [8][15] - The company anticipates mid-single-digit growth for both loans and deposits for the full year, reflecting a conservative outlook [13][28] Other Important Information - The company reported an elevated level of charge-offs during the quarter, primarily linked to specific credits in the telecom and public finance sectors [7][19] - The allowance for credit loss ratio ended at 1.28%, with expectations for net charge-offs to be in the high 30s to low 40s basis points range for the full year [18][19] Q&A Session Summary Question: Inquiry about charge-offs and specific credits - Management clarified that two specific credits were the primary drivers of the charge-offs, with one credit accounting for about 80% of the total [22][23] Question: Future reserve levels in anticipation of charge-offs - Management indicated that the normalized allowance for credit loss (ACL) is expected to be in the range of the current level, around the 120s [24][25] Question: Deposit growth guidance despite strong first-half performance - Management acknowledged strong deposit growth but maintained a conservative mid-single-digit growth guidance for the second half, citing potential headwinds from timing items [26][28] Question: Insights on deposit mix and pricing leverage - Management noted a favorable mix shift from CDs to money market and transaction products, with limited pricing changes anticipated absent macro rate moves [35][36] Question: Loan growth contributions from newer markets - Management confirmed that newer markets, particularly Southern California, are contributing significantly to loan growth, with strong performance expected to continue [43][44] Question: Capital priorities and potential for M&A - Management emphasized a focus on organic growth while remaining opportunistic regarding M&A opportunities, particularly in the Southwest region [48][62]