Financial Data and Key Metrics Changes - The company reported a 13% improvement in earnings per share (EPS) over the first quarter, driven by increased net interest income and disciplined expense management [3][19] - Net interest income for the quarter was $62 million, a $2 million increase from the first quarter, with a net interest margin (NIM) expansion of 4 basis points [19][20] - Adjusted return on average assets (ROAA) was 1.29%, contributing to the increase in EPS [6][24] - Total non-interest expenses were $49.6 million, an increase of $3 million, but down 9% on an annualized basis compared to the first half of 2024 [23][24] Business Line Data and Key Metrics Changes - Loan growth reached an annualized rate of 8%, with strong new loan production, despite a planned runoff of M2 equipment finance loans [3][26] - Capital markets revenue improved significantly, up more than 50% from the first quarter, totaling $10 million for the second quarter [4][21] - Wealth management revenue remained consistent at $5 million for the second quarter, reflecting an 8% growth compared to the same period in 2024 [22] Market Data and Key Metrics Changes - The company holds the number one market share in the Quad Cities and Cedar Rapids, Iowa markets, and is ranked sixth in Des Moines, Iowa, indicating strong competitive positioning [9][10] - Total deposits declined slightly by $19 million or 1% on an annualized basis during the second quarter, while average deposit balances rose by $72 million compared to the first quarter [27] Company Strategy and Development Direction - The company is focused on three primary lines of business: traditional banking, wealth management, and LITEQ lending, with significant opportunities identified in each [8][14] - A digital transformation initiative is underway to improve operational efficiency and enhance customer experience, expected to be completed by the first half of 2027 [11][12] - The company aims to strengthen its core deposit base as a top strategic initiative, which is expected to improve funding mix and profitability [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about solid loan growth for the remainder of the year, guiding for gross loan growth in the range of 8% to 10% in the second half [4][6] - The company anticipates capital markets revenue to normalize over the next four quarters, with a strong pipeline of transactions expected to close [5][6] - Management highlighted the importance of relationships in navigating economic uncertainties and emphasized the company's commitment to community engagement [7] Other Important Information - The company plans to call and replace $70 million of subordinated debt in September, which is expected to maintain current Tier 2 total risk-based capital levels [30][74] - The effective tax rate for the quarter was 5%, up from 1% in the prior quarter, primarily due to higher pretax income [31][32] Q&A Session All Questions and Answers Question: Can you talk about the margin and the outlook? - The company is guiding for a static to up four basis points in NIM for the third quarter, assuming no Fed rate cuts [34][35] Question: What is the appetite for buybacks going forward? - The company is building capital at a fast pace and will evaluate capital deployment options in the back half of the year [51][53] Question: What are the implications of the latest legislation for affordable housing? - Management does not anticipate immediate impacts but sees significant long-term implications for LITEQ allocations [56][58] Question: Can you provide insights on the credit side, particularly non-performing loans? - There is a high correlation between the decline in non-performing loans and net charge-offs, primarily from the M2 equipment finance segment [111][112]

Financial Data and Key Metrics Changes - For the full year 2024, the company earned $6 billion or $13.74 per share, achieving record revenue and a 6% growth in fee income [5][6] - The tangible book value per share increased by 12% compared to the previous year, reaching $95.33 [12] - The net interest income for Q4 was $3.5 billion, an increase of $113 million or 3% from the previous quarter, with a net interest margin of 2.75%, up 11 basis points [18][20] Business Line Data and Key Metrics Changes - Consumer DDA growth in 2024 was the highest in 8 years, and brokerage revenue reached record levels [7] - Non-interest income for Q4 was $2 billion, a 1% increase, while non-interest expense rose by 5% to $3.5 billion [18][22] - The asset management and brokerage income declined by 2%, reflecting lower annuity sales, while lending and deposit services revenue grew by 3% [20] Market Data and Key Metrics Changes - Sales in expansion markets grew by 26%, with over 60% of those sales being non-credit [7] - Average deposits increased by $3 billion or 1%, with non-interest bearing deposits stable at $96 billion [16] - The company expects deposit growth of 1% to 2% in 2025, with some seasonality expected in commercial deposits [31] Company Strategy and Development Direction - The company is investing in new products and expanding its footprint, including doubling new branch builds in fast-growing regions [9] - A new online banking platform is set to be rolled out to enhance customer experience and operational efficiency [8][100] - The company aims to generate substantial positive operating leverage in 2025, with expectations for net interest income and non-interest income to grow [28] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued economic growth in 2025, with a projected real GDP growth of approximately 2% [26] - The company expects to see further tailwinds from fixed asset repricing over the next couple of years [5] - There are uncertainties regarding the economic outlook, but the company believes its balance sheet is well positioned [9][10] Other Important Information - The company returned $3 billion of capital to shareholders through dividends and share buybacks [6] - Non-performing loans decreased by 10% linked quarter, while total delinquencies increased by 8% [23] - The company is adequately reserved for credit risk, with an allowance for credit losses totaling $5.2 billion [24] Q&A Session Summary Question: Industry deposit growth and trends in 2025 - The company expects slight deposit growth of 1% to 2% in 2025, with positive organic efforts in expansion markets [31][32] Question: NII guidance and drivers - The guidance for NII is conservative, with expectations for a decline in Q1 due to fewer days and lower seasonal commercial deposits [33][35] Question: Loan growth and demand outlook - Management noted that utilization is lower across all segments, with uncertainty impacting capital investment decisions [42][65] Question: Fee income growth outlook - The company expects fee income to grow approximately 5% in 2025, driven by various segments including asset management and capital markets [56][57] Question: Capital buyback plans - The company plans to sustain buybacks at levels between $100 million and $200 million, depending on loan growth [58][59] Question: Regulatory environment and M&A opportunities - The company sees potential for easier deal approvals but notes that many banks are currently not looking to sell [122]