Financial Data and Key Metrics Changes - The company reported a GAAP net income of $20.8 million for Q2 2025, which included a $3.36 million gain from the sale of a branch and various acquisition-related expenses [10][19] - The core net income, excluding non-core items, was $19.5 million, translating to an EPS of $0.66 [10][19] - The return on average assets (ROAA) was maintained at 1% [5] Business Line Data and Key Metrics Changes - Total loans held for investment increased by 4.5% annualized, amounting to an increase of $66.7 million from Q1 [12] - New loan production was $432 million, with significant growth in commercial and industrial (C&I) loans and commercial real estate (CRE) loans, which increased by $98.8 million and $61.6 million respectively [12] - Total deposits decreased by $38.5 million, primarily due to a net decrease in interest-bearing deposits [13] Market Data and Key Metrics Changes - The weighted average cost of deposits decreased to 2.62%, down six basis points from the previous quarter [17] - Non-interest bearing deposits increased by $102 million or 7.8% on a linked quarter basis [14] Company Strategy and Development Direction - The company is focused on maintaining a diversified loan portfolio while reducing concentration risk, particularly in construction loans [43] - A partnership with Progressive Bank, a $750 million community bank, was announced, which is expected to enhance earnings accretion [7][8] - The company is committed to improving operational efficiency through a core processing system upgrade, which is anticipated to facilitate future growth [6][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate through current credit challenges, with a focus on resolving non-performing loans [21][30] - The sentiment in the market is improving, with increased loan demand and a more optimistic outlook for the remainder of the year [70] Other Important Information - The company achieved a tangible book value growth of almost 15% annualized [5] - The net charge-offs remained low at 0.01%, indicating strong asset quality management [8] Q&A Session Summary Question: Excess liquidity related to core conversion - Management indicated that excess liquidity will be maintained until the core conversion with Oakwood is completed [26][27] Question: Credit migration and reserves - Management confirmed that the increase in non-performing loans (NPLs) was due to migration from substandard to non-accrual, with adequate reserves in place [28][29] Question: Expense outlook - The company expects a modest increase in core expenses in Q3, with a run rate in the low $50 million range [36] Question: Loan growth outlook - Management anticipates mid-single-digit loan growth for the remainder of the year, with a focus on maintaining discipline in lending practices [41][43] Question: Fee income growth - The company is optimistic about growth in fee income from SBA loan services and derivatives, with expectations for continued momentum [72][75]