
Financial Data and Key Metrics Changes - The company reported net income of $21.3 million, with earnings per share of $0.65, and an annualized return on assets (ROA) of 1.2% [6][14] - There was a linked quarter decrease in net income of $12.8 million or 37.5%, primarily due to an increase in provision expense and a decrease in net security gains [14] - The annualized loan growth as of June 30, 2021, was 4%, with a target of 7% loan growth for the year [8][15] Business Line Data and Key Metrics Changes - The loan portfolio increased by $14.5 million to $3.64 billion, with commercial real estate loans rising by $82.3 million, offset by a decrease in construction loans of $77.5 million [15][16] - The allowance for loan losses increased by approximately $1.5 million or 3.5% to $42.9 million, with the allowance as a percentage of total loans at 1.18% [17][18] - Noninterest income, excluding net gains on the sale of AFS securities, decreased by $702,000 or 6% for the linked quarter [23] Market Data and Key Metrics Changes - Economic conditions in the company's market areas remained strong, supported by company relocations and population growth in Texas [13] - The company’s securities portfolio increased by $215.8 million or 8.2% on a linked quarter basis [20] Company Strategy and Development Direction - The company is focusing on hiring additional revenue producers in high-growth markets, particularly in Dallas-Fort Worth, Austin, and Houston [52][53] - There is an ongoing interest in M&A opportunities, with an uptick in conversations regarding potential deals [44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth in the second half of the year, citing a healthy loan pipeline [48] - The company anticipates some slight compression in net interest margin (NIM) but expects to stabilize above 3% [34] Other Important Information - The company plans to redeem a $100 million sub debt issue pending regulatory approval, which will positively impact net interest income and margin [11] - The effective tax rate decreased slightly to 11.9% for the second quarter due to an increase in tax-exempt income [27][28] Q&A Session Summary Question: Inquiry about bond portfolio and categories purchased - Management indicated that they primarily bought tax-free municipals and some taxable bonds, with no significant value found in the mortgage arena [32] Question: Outlook on loan growth and NIM stabilization - Management does not foresee a significant decrease in NIM going forward and expects to see income from round two of PPP loans in the next 6 to 9 months [34] Question: Cash flow from mortgage-backed securities - The company anticipates cash flow averaging around $30 million a month, with an expected $90 million in redemptions for the third quarter [40] Question: Unexpected payoffs in construction portfolio - Payoffs were due to projects selling before stabilization, leading to earlier-than-expected payoffs [42] Question: M&A opportunities - Management confirmed an increase in M&A conversations and opportunities [44] Question: Loan growth expectations and market conditions - Management is optimistic about loan growth, citing a healthy pipeline and ongoing construction projects [48] Question: Share buyback activity - The company plans to continue share repurchases, having bought back approximately 91,000 shares in the first quarter [56]