Financial Data and Key Metrics Changes - The company reported adjusted earnings per diluted share of $0.72, representing an adjusted return on assets of 1.41% [4] - Net interest income increased by 4.6% over the prior quarter, while fee income rose by 15% [11] - The net interest margin improved by 10 basis points to 3.51% [12] - Adjusted pre-provision net revenue grew by 23.2% over the prior quarter [27] Business Line Data and Key Metrics Changes - The retirement services business generated stable revenue of over $16 million, with assets under administration and management increasing by 6.3% [17][18] - The wealth management business saw revenues increase by 6.6% on a linked quarter basis, with assets under management rising by 2.5% [18] - Noninterest income from banking was $8.4 million for the second quarter, with a $2.1 million gain related to the sale of hospitality loans [16] Market Data and Key Metrics Changes - Deposits shrank by 3.3% due to expected seasonal outflows from public funds [15] - The company expects continued seasonal volatility in deposits, with average deposit account sizes growing over 20% since 2019 [15] Company Strategy and Development Direction - The company is focused on maximizing profitability through disciplined pricing and enhancing its diversified business model [4][5] - Strategic initiatives include optimizing the balance sheet and investing in talent and technology to deepen client relationships [8][9] - The company aims to achieve consistent performance levels and is targeting mid-single-digit loan growth for 2025 [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainty and competitive pressures but emphasized a disciplined approach to growth and credit risk management [87] - The guidance for the year remains consistent, with expectations for low single-digit deposit growth and continued focus on core business lines [22][26] Other Important Information - The company recorded no provision for the quarter due to a net gain from the sale of hospitality loans [6] - The adjusted efficiency ratio improved to 52.4% from 66.9% in the prior quarter [19] - The company remains well-capitalized with a common equity Tier one capital ratio of 10.5% [21] Q&A Session Summary Question: What are the expectations for third and fourth quarter accretion? - The company expects 27 basis points of purchase accounting accretion in the third quarter and 22 basis points in the fourth quarter, with no early payoffs included [29][34] Question: What is the status of the larger construction credit? - The final certificate of occupancy was issued, and the property is currently at 57% leased, with expectations for a sale in early 2026 [37][65] Question: How does the company view the capital deployment for the rest of the year? - The company prioritizes organic balance sheet growth, maintaining dividend history, and pursuing M&A opportunities in the retirement sector [45] Question: What is the outlook for noninterest income? - The company expects noninterest income to be up low single digits for the year, factoring in seasonal downturns in the mortgage business [25][80] Question: How is the company addressing nonperforming assets? - Nonperforming assets are primarily driven by two large relationships, with resolutions expected in early 2026 [65][66] Question: What is the outlook for deposit costs? - The company anticipates an increase of 8 to 10 basis points in deposit costs due to competition and a shift from non-interest bearing to interest-bearing deposits [73][76]

Financial Data and Key Metrics Changes - The company reported an adjusted earnings per diluted share of $0.72, representing an adjusted return on assets of 1.41% [3] - Net interest income increased by 4.6% over the prior quarter, while fee income rose by 15% [10] - The net interest margin improved by 10 basis points to 3.51% [11] Business Line Data and Key Metrics Changes - The retirement services business generated stable revenue of over $16 million, with assets under administration and management increasing by 6.3% [16] - The wealth management business saw revenues increase by 6.6% on a linked quarter basis, with assets under management rising by 2.5% [17] - Noninterest income from banking was $8.4 million for the second quarter, including a $2.1 million gain from the sale of hospitality loans [15] Market Data and Key Metrics Changes - Deposits shrank by 3.3% due to expected seasonal outflows from public funds [14] - The company maintained a net retention rate of approximately 97% since the acquisition of Home Federal [15] Company Strategy and Development Direction - The company is focused on maximizing capacity and enhancing profitability in its commercial wealth bank [4] - Strategic initiatives include optimizing the balance sheet and pursuing meaningful partnerships [6] - The company aims to double the number of wealth advisers and grow assets under management at the same pace as banking assets [6] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the business, citing strong momentum and robust opportunities in the lending pipeline [4] - The guidance for the year remains consistent, with expectations for mid-single-digit loan growth and low-single-digit deposit growth [22] - Management acknowledges macroeconomic uncertainty and competitive pressures but emphasizes a disciplined approach to growth and risk management [73] Other Important Information - The company recorded no provision for the quarter due to a strategic sale of $60 million in non-owner occupied commercial real estate hospitality loans, resulting in a net gain of $2 million [5] - The adjusted efficiency ratio improved to 52.4% from 66.9% in the prior quarter, driven by core expense and revenue improvements [19] Q&A Session Summary Question: What are the expectations for third and fourth quarter accretion? - The company expects 27 basis points of purchase accounting accretion in the third quarter and 22 basis points in the fourth quarter, with no early payoffs included [28][29] Question: What is the status of the larger construction credit? - The final certificate of occupancy was issued, and the property was listed for sale, currently at 57% occupancy [31] Question: How does the company view capital deployment and M&A opportunities? - The company prioritizes organic balance sheet growth, maintaining dividend history, and pursuing M&A in the retirement sector [39] Question: What is the outlook for fee income and participant counts in the retirement business? - The company experienced a decline in participant counts due to one-time effects but expects numbers to rise in the future [42] Question: What is the outlook for loan growth and demand? - Loan growth is primarily from leveraging the current client base and taking market share rather than new credits [46] Question: How does the company plan to address nonperforming loans? - Nonperforming loans are driven by two large relationships, with resolutions expected in early 2026 [57]