Financial Data and Key Metrics Changes - Operating earnings per share for the quarter was $0.66, an increase of 14% year over year [3] - Net interest margin expanded to 3.50%, an improvement of 14 basis points over the last quarter [3] - Customer deposits, excluding merger activity, grew by 1.3% annualized [4] - Loan growth was 4.2% annualized, with strong pipelines heading into the third quarter [4] - Efficiency ratio improved to 54.8%, an improvement of 222 basis points compared to last year [5] Business Line Data and Key Metrics Changes - Deposits increased by $205 million, benefiting from the American National deal [7] - Excluding public fund seasonality, deposits grew by $64 million or 1.2% annualized [8] - Loan portfolio growth continued at a 4.2% annualized pace, excluding American National [9] - Spread income grew at a 21% annualized pace, excluding American National [11] - Operating expenses increased by $2.1 million, primarily driven by merit increases [12] Market Data and Key Metrics Changes - The CET1 ratio remained stable at 13.3%, indicating strong capital position [10] - The loan to deposit ratio increased slightly to 79% due to the acquisition and solid loan growth [9] - The total deposit beta was 34% so far, with expectations for a high 30% range through the cycle [8] Company Strategy and Development Direction - The company continues to seek small, high-performing institutions for potential acquisitions [22] - Focus remains on organic growth, M&A, dividends, and buybacks, with a cautious approach to capital management [48] - The company is actively recruiting top talent to enhance its footprint and market presence [62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the outlook for the rest of the year despite uncertainties related to tariffs and yield curve direction [15] - There is a positive sentiment among clients regarding economic conditions and potential tax benefits [43] Other Important Information - The company redeemed $100 million in senior notes to manage interest costs effectively [9] - The allowance for credit losses remained flat at 1.21%, with a provision of $11.8 million for the quarter [14] Q&A Session Summary Question: Inquiry about loan growth and hiring initiatives - Management confirmed there were some pay downs but remains optimistic about loan growth in Q3, expecting it to be around 6% [19] - The company is focused on recruiting top talent and has made recent hires to strengthen its team [20] Question: Update on M&A strategy - The company continues to look for small, high-performing institutions for acquisition, with a more favorable outlook compared to previous months [22] Question: Core margin and deposit beta expectations - Management anticipates continued core margin expansion, targeting about five basis points in the third quarter [25] Question: Openness to share buybacks - Currently, the company is not active in buybacks but retains authorization for future opportunities at lower prices [34] Question: Outlook on Navitas growth - Navitas had a strong quarter, and the company plans to maintain or increase loan sales for the rest of the year [38] Question: Capital management and securities restructuring - The company has significant excess capital and is evaluating options for securities restructuring but prioritizes organic growth and M&A [48][47]

Financial Performance - The company reported GAAP diluted earnings per share of $0.63, a 17% year-over-year improvement[11] - Operating diluted earnings per share reached $0.66, reflecting a 14% year-over-year increase[11] - Return on assets (ROA) under GAAP was 1.11%, up 14 bps year-over-year, while operating ROA was 1.16%, up 12 bps year-over-year[11] - Net interest margin (NIM) increased by 13 bps year-over-year to 3.50%[11] - Tangible book value (TBV) per share grew by 10% year-over-year to $21.00[11] Balance Sheet and Capital - Total assets reached $28.1 billion[9] - Total deposits amounted to $24.0 billion[9] - Total loans reached $18.9 billion[9] - The Common Equity Tier 1 (CET1) Risk-Based Capital (RBC) ratio was 13.3%[9] Deposit and Loan Growth - Customer deposits increased by $124 million in 2Q25[18] - Noninterest-bearing DDA grew by $125 million in 2Q25[22] - Total loans reached $18.9 billion, with annualized loan growth of 4.2% excluding ANB[25, 27]

Financial Data and Key Metrics Changes - Operating earnings were reported at $0.59 per share, with an operating return on assets of 1.04%, both showing solid improvements from the previous year [4] - Loans grew at an annualized pace of just over 5%, while deposits also grew at an annualized rate of 5% [4] - The net interest margin increased by 10 basis points over the fourth quarter, driven by lower deposit costs [4][13] Business Line Data and Key Metrics Changes - The loan portfolio saw a 7% annualized growth in commercial and industrial (C&I) loans, including owner-occupied commercial real estate [10] - The Navitas book experienced a 15% annualized growth, while home equity line of credit (HELOC) loans grew by 13% annualized [10] - Non-interest income decreased by $4.8 million from the previous quarter, but the run rate of fee income remained flat when excluding notable items from the last quarter [14] Market Data and Key Metrics Changes - Deposit growth was strong, with $309 million in deposits or 5.3% annualized growth, despite approximately $85 million in seasonal public fund outflows [8] - The cost of total deposits improved by 15 basis points during the quarter, with a total deposit beta of 30% [9] Company Strategy and Development Direction - The company is well-positioned to succeed despite economic uncertainties, with a focus on maintaining strong client relationships and adapting to market changes [7] - The acquisition of American National Bank is set to close on May 1, marking a strategic expansion into South Florida [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment, noting that consumer spending and employment in their markets remain strong [7] - There are concerns regarding potential impacts from tariffs, but management believes that clients are adapting quickly to maintain margins [7][29] Other Important Information - The Common Equity Tier 1 (CET1) ratio increased to 13.3%, indicating a strong capital position [12] - The total capital ratios remain above peers, allowing the company to be opportunistic in capital use [12] Q&A Session Summary Question: Margin expectations going forward - Management expects margins to increase by 5 to 10 basis points next quarter, driven by lower deposit costs and a shift in the mix between loans and securities [23][24] Question: Borrower behavior and pipelines - There has not been a negative impact on pipelines, with Q2 expected to be similar to Q1 [38] Question: SBA and fee income challenges - The company is a preferred lender for SBA loans, which mitigates potential headwinds in gaining approvals [40] Question: Operating expenses outlook - Operating expenses are expected to remain in the low single-digit growth range, with some seasonal increases anticipated [41] Question: Capital priorities and share repurchase - Management indicated a preference for share buybacks over M&A at current stock prices, viewing it as a low-risk investment [46] Question: Loan loss reserves and economic scenarios - The company uses Moody's scenarios for loan loss reserves, balancing economic forecasts with actual portfolio performance [51][52] Question: Deposit growth drivers - Strong deposit growth was attributed to the maturity of CDs and a focus on money market accounts [60][61] Question: M&A environment outlook - Conversations regarding M&A continue, but management does not expect significant activity in the next 12 to 18 months due to market conditions [66] Question: Navitas loan sales outlook - Management indicated that they may not sell Navitas loans in the second quarter, focusing on maintaining high-quality credit on the balance sheet [72]