Financial Data and Key Metrics Changes - The company reported net income of $13.2 million or $0.68 per share, an increase from $12.2 million and $0.63 per share in the previous quarter, reflecting a growth of $1.5 million or $0.07 per share when excluding infrequent items from Q1 [8] - Net interest income was $37.2 million, up by $763,000 or 2% on a linked quarter basis, with the margin increasing by seven basis points to $2.36 [8][9] - Non-interest income totaled $17.1 million in Q2, adjusted for a Q1 sale leaseback net gain, this represented an increase of $1.4 million or 9% [9] Business Line Data and Key Metrics Changes - Wealth Management revenues were $10.1 million, up by $229,000 or 2%, driven by increased transaction-based and seasonal tax servicing fee income, although asset-based revenues saw a modest decline [9] - Mortgage banking revenues totaled $3 million, an increase of $730,000 or 32%, with the mortgage pipeline at $102 million, up by $6 million or 7% from the previous quarter [10] Market Data and Key Metrics Changes - Total loans increased by $44 million or 1%, with commercial loans rising by $57 million or 2%, while residential loans decreased by 1% [12] - End market deposits were up by $30 million or 1% from the end of the first quarter and by $47 million or 9% year-over-year [12] Company Strategy and Development Direction - The company is focused on enhancing its wealth management team and has finalized the conversion of its core wealth management system to improve customer experience [5][6] - There is an ongoing strategy to explore potential expansion opportunities in Massachusetts, particularly in light of recent market consolidations, while maintaining a focus on organic growth [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth, particularly in the commercial sector, with a pipeline of approximately $1.4 billion, indicating a positive outlook for the second half of the year [35] - There is a cautious optimism regarding borrower sentiment, with management noting a level of uncertainty in the market but also recognizing some positive investment activity [38][39] Other Important Information - The company’s asset and credit quality metrics remain solid, with non-accruing loans at 51 basis points and past due loans at 27 basis points [12] - The allowance for loan losses totaled $41.1 million, providing coverage of 157% for non-performing loans [13] Q&A Session Summary Question: How is the company thinking about net interest margin and Fed rate cuts? - Management expects modest expansion in net interest margin for Q3, with higher deposit costs impacting projections [18] Question: What is the mix of mortgage originations between purchase and refinance? - Approximately 75% of mortgage originations are related to the purchase market, with a predominant mix of thirty-year fixed loans [20][21] Question: Is there a strategy for expansion into Massachusetts? - Management is considering opportunities in Massachusetts but is focused on building out existing locations in Rhode Island first [22][24] Question: What is the sentiment of borrowers compared to previous quarters? - Borrower sentiment is cautiously optimistic, with some investment activity noted, but uncertainty remains in the market [38][39] Question: Can the company expect similar levels of derivative income in the future? - Management leans towards a more normalized level of derivative income, as it is hard to predict [40] Question: What is the status of non-performing loans? - There is a potential exposure to a broadband contractor that filed for Chapter 11, with appropriate reserves in place [53] Question: How is the company addressing net outflows in the Wealth Management Unit? - The company has added talent and completed a core system conversion to improve client service and experience [29][30]

Financial Data and Key Metrics Changes - The company reported net income of $13.2 million or $0.68 per share, an increase from $12.2 million and $0.63 per share in the previous quarter, reflecting a growth of $1.5 million or $0.07 per share when excluding infrequent items from Q1 [7][8] - Net interest income was $37.2 million, up by $763,000 or 2% on a linked quarter basis, with the margin increasing by seven basis points to $2.36 [8][9] - Non-interest income totaled $17.1 million in Q2, adjusted for a prior sale leaseback net gain, this represented an increase of $1.4 million or 9% [9][10] Business Line Data and Key Metrics Changes - Wealth Management revenues were $10.1 million, up by $229,000 or 2%, driven by increased transaction-based and seasonal tax servicing fee income, although asset-based revenues saw a modest decline [9][10] - Mortgage banking revenues totaled $3 million, an increase of $730,000 or 32%, with the mortgage pipeline at $102 million, up by $6 million or 7% from the previous quarter [10][11] - Total loans increased by $44 million or 1%, with commercial loans rising by $57 million or 2%, while residential loans decreased by 1% [12] Market Data and Key Metrics Changes - End market deposits rose by $30 million or 1% from the end of the first quarter and by $407 million or 9% year-over-year [12] - The allowance for loan losses totaled $41.1 million or 80 basis points on total loans, providing non-performing loan coverage of 157% [13] Company Strategy and Development Direction - The company is focused on enhancing its wealth management team and has finalized the conversion of its core wealth management system to improve customer experience [4][5] - There is an ongoing strategy to explore potential expansion into Massachusetts, considering the recent consolidation in the banking sector [22][24] - The management emphasized a preference for organic growth and maintaining independence rather than pursuing aggressive acquisitions [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding loan growth, with a pipeline of $1.4 billion and expectations for low single-digit growth for the year [36] - There is a recognition of ongoing uncertainty in the economy, particularly in real estate, with borrowers being careful in their investments [39] - The sentiment among borrowers is described as optimistic but cautious, with a focus on careful investment decisions [39] Other Important Information - The company is committed to maintaining strong capital levels and has decided to prioritize capital preservation over stock buybacks at this time [65][66] - The company has seen a significant uptick in non-performing loans related to a broadband infrastructure contractor, with appropriate reserves in place [56][57] Q&A Session Summary Question: Thoughts on net interest margin and Fed rate cuts - Management expects modest expansion in net interest margin for Q3, with higher deposit costs impacting projections [17][18] Question: Mortgage originations breakdown - Approximately 75% of mortgage originations are related to the purchase market, with a predominant mix of thirty-year fixed loans [20][21] Question: Strategic expansion into Massachusetts - Management is considering opportunities in Massachusetts but prefers to build on existing strengths in Rhode Island first [22][24] Question: Loan growth expectations - The company is optimistic about loan growth, with a strong pipeline and expectations for continued growth in the commercial sector [36] Question: Fee income and derivative income outlook - Management anticipates a return to more normalized levels of derivative income after a strong quarter [40][41] Question: Capital levels and stock buyback considerations - The company has approval for buybacks but is currently focused on capital preservation and operational growth [65][66]