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01/10 16:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance, with EPS and tangible book value increases, stable net interest margins, and strong deposit growth. The Q&A section indicates confidence in achieving growth targets and managing competitive pressures. Despite an increase in NPAs, management reassures collateral coverage. Overall, the company demonstrates resilience and growth potential, warranting a positive sentiment.
Core Deposits Increased $70 million or 11% annualized from the first quarter and up 10% from last year's second quarter. Growth attributed to exceptional deposit gathering and long-term relationship development.
Loan Balances Grew about $267 million over the same period last year, up about 9%. Growth driven by demand for conventional and niche C&I products, including asset-based lending, Floorplan financing, and equipment finance.
Private Wealth Assets Under Management Grew 36% annualized during the quarter and were up 15% from a year ago. Growth attributed to transfers from new and existing clients, accounting for 63% of the increase.
Pretax Pre-Provision Adjusted Earnings Increased 13% over last year's second quarter. Growth driven by solid operating revenue and revenue diversification strategy.
Earnings Per Share (EPS) Increased 10% year-over-year. Growth supported by strong financial performance.
Tangible Book Value Per Share Grew 14% from a year ago. Growth attributed to strong earnings and capital generation.
Net Interest Margin Reported at 3.67% for the quarter, with adjusted net interest margin rising 1 basis point to 3.47% compared to both linked and prior year quarters. Stability maintained through balance sheet management.
Service Charges on Deposits Grew 16% from last year's second quarter. Growth reflects success in core deposit gathering.
Net Charge-Offs Declined during the quarter, with low levels attributed to anticipated runoff in the transportation and logistics segment of the small ticket equipment finance portfolio.
Non-Performing Assets (NPAs) Increased by $4.6 million due to a single credit in the transportation and logistics sector of the conventional C&I portfolio. Exposure is well collateralized, and overall loss risk is low.
Operating Revenue Grew 10% year-to-date compared to the same period in 2024. Growth driven by revenue diversification and strong financial performance.
Net Income Increased 17% year-to-date compared to the same period in 2024. Growth supported by strong earnings and capital levels.
Private Wealth assets under management: Grew 36% annualized during the quarter and were up 15% from a year ago. Approximately 63% of the growth in assets under management during the past 12 months was from transfers from new and existing clients.
C&I products: Total C&I balances expanded $30 million or 10% annualized, including growth within asset-based lending (up $13 million), Floorplan financing (up $10 million), and equipment finance (up $7 million).
Core deposits: Increased $70 million or 11% annualized from the first quarter and up 10% from last year's second quarter. Service charges on deposits grew 16% from last year's second quarter.
Loan balances: Grew about $267 million over the same period last year, up about 9%.
Net interest margin: Maintained a strong margin of 3.67%, with adjusted net interest margin rising 1 basis point to 3.47% for the quarter.
Fee income diversification: Quarterly variability in specific line items reinforces the value of fee income diversification. Total fee income is expected to grow at a long-term target rate of 10% annually.
Expense management: Expenses were well contained in Q2, with a focus on achieving annual positive operating leverage.
Leadership transition: CEO Corey Chambas announced planned retirement, with President & COO Dave Seiler succeeding as CEO effective May 2026.
SBIC investments: Plans to invest in additional SBIC funds as a long-term revenue catalyst and effective use of capital.
SBA Loan Sale Premiums and Fee Income: Decrease in SBA loan sale premiums and fee income due to timing of closings and loans fully funding. Competitive pricing environment is also a challenge.
Transportation and Logistics Sector Exposure: Increase in non-performing assets (NPAs) by $4.6 million due to a single credit in the transportation and logistics sector. Exposure to this industry is $75 million, with $44 million in the conventional portfolio and $31 million in the small ticket equipment finance portfolio. The company has stopped lending to this sector in small ticket equipment finance, but risks remain.
Fee Income Variability: Quarterly variability in fee income, including a $369,000 decrease in SBIC fee income in Q2. This variability impacts revenue predictability.
Net Interest Margin: Decline in fees in lieu of interest, which contributed to a lower reported margin in Q2 compared to previous quarters. This could affect profitability.
Competitive Pricing in SBA Loans: Pricing for SBA loans is extremely competitive, which could impact the company's ability to maintain margins and win deals.
Revenue Growth: The company expects total fee income to grow at a long-term target rate of 10% annually going forward.
Tax Rate: The effective tax rate is expected to remain within the range of 16% to 18%.
Capital Levels: Strong earnings are expected to generate sufficient capital to support anticipated organic growth.
SBIC Fee Income: Fee income from SBIC is expected to improve in the second half of the year as existing funds mature, with plans to invest in additional SBIC funds as a long-term revenue catalyst.
Net Interest Margin: The company aims to maintain a strong and stable net interest margin, with adjusted net interest margin at 3.47% for the quarter.
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The earnings call indicates strong financial performance with a 16% revenue growth, a stable net interest margin, and reduced nonperforming assets. The Q&A section reveals positive borrower sentiment and growth opportunities, especially in asset-based lending. While there are some concerns, like the litigation issue and rising deposit costs, overall guidance remains optimistic with plans for shareholder returns and strategic acquisitions. The positive aspects outweigh the negatives, suggesting a positive stock price movement in the near term.
The earnings call summary shows strong financial performance, with EPS and tangible book value increases, stable net interest margins, and strong deposit growth. The Q&A section indicates confidence in achieving growth targets and managing competitive pressures. Despite an increase in NPAs, management reassures collateral coverage. Overall, the company demonstrates resilience and growth potential, warranting a positive sentiment.
The earnings call indicates strong financial performance with a 27% increase in EPS, significant revenue and deposit growth, and well-managed expenses. Despite some concerns about loan portfolio risks and economic conditions, management's responses suggest stability, with no major impact from tariffs or macro volatility. The company also maintained its effective tax rate and expects consistent loan fee income. These factors, along with positive Q&A insights, support a positive sentiment, predicting a stock price increase of 2% to 8% over the next two weeks.
The earnings call presents a mixed outlook. Strong financial metrics like a 27% EPS increase and 13% revenue growth are positive, but concerns over credit quality risks, competitive pressures, and economic conditions temper enthusiasm. The Q&A reveals management's avoidance of specific details, adding uncertainty. No significant new partnerships or guidance changes were noted, and while shareholder returns are a focus, no specific plans were announced. The stock is likely to remain stable, resulting in a neutral sentiment.
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