Classified loans declined $24.4 million or 5.1%; nonperforming loans declined modestly; criticized loans increased $176.9 million or 17.2%, mainly due to slower lease-up in multifamily loans.
Common equity Tier 1 capital ratio improved 90 basis points to 13.43%.
Deposits declined $102.2 million sequentially, approximately flat year-over-year adjusted for a large temporary deposit in Q2 2024.
Dividend declared of $0.47 per share, yielding 7.0%.
Interest-bearing deposit costs declined 1 basis point; total funding costs declined 9 basis points due to mix shift.
Loans held for investment declined $1 billion, including $338 million moved to held-for-sale related to branch transaction, $74 million sold with credit card outsourcing, and $73 million amortization of indirect lending portfolio.
Net charge-offs were $5.8 million or 14 basis points annualized; provision expense reduced by $0.3 million.
Net income for Q2 2025 was $71.7 million or $0.69 per diluted share, up from $50.2 million or $0.49 per diluted share in Q1 2025.
Net interest income increased by $2.2 million to $207.2 million, driven by reduced interest expense and lower average loan balances.
Net interest margin was 3.32% fully tax equivalent, or 3.26% excluding purchase accounting accretion, up 12 basis points from prior quarter.
Noninterest expense declined $5.5 million to $155.1 million due to lower seasonal payroll taxes and incentive compensation estimates, partially offset by $1.5 million in property valuation and lease termination fees.
Noninterest income was $41.1 million, down $0.9 million sequentially, including a $7.3 million valuation allowance and a $4.3 million gain on sale from credit card outsourcing.
Other borrowed funds declined to $250 million, down $2.2 billion year-over-year and $710 million sequentially.
Yield on average loans increased 6 basis points to 5.65%, driven by repricing and payoffs of lower-yielding loans.
Commercial loan growth was $114 million for the first 6 months of 2025, an annualized rate of 6.2%, despite $154 million in loan reductions primarily from asset sales.
Deposit base increased 13% year-over-year, reducing the loan-to-deposit ratio from 107% to just under 100%.
Effective tax rate was reduced to about 13% in Q2 2025 due to acquisition of transferable energy tax credits, lowering federal income tax expense by $1.5 million.
Mortgage banking income increased 23.4% for the first 6 months of 2025 compared to the same period in 2024.
Net income for Q2 2025 was $22.6 million or $1.39 per diluted share, up from $18.8 million or $1.17 per diluted share in Q2 2024.
Net income for the first 6 months of 2025 was $42.2 million or $2.60 per diluted share, compared to $40.3 million or $2.50 per diluted share in the prior year period.
Net interest income increased by $2.4 million in Q2 and $3.6 million in the first 6 months of 2025 compared to prior year periods.
Net interest margin declined 14 basis points year-over-year in Q2 2025 but improved sequentially from Q1 2025.
Noninterest expenses increased due to higher salary, benefits, data processing costs, and new product introductions.
Provision expense was $1.6 million in Q2 and $3.7 million in the first 6 months, reflecting increased allocations for stressed loans and economic forecast changes.
Dafinchi