This article first appeared on GuruFocus .
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Adjusted Earnings Per Share (EPS):Increased 15% year-over-year to $1.88 per share.
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Total Revenue:Increased $28 million or 9% year-over-year.
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Non-Interest Income:Increased $21 million or 39% year-over-year to $75.1 million.
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Investment Banking Fees:Grew 34% year-over-year to $42.8 million.
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Treasury Product Fees:Increased 8% year-over-year to $12.5 million.
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Wealth Management Fees:Increased 38% year-over-year to $5.1 million.
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Tangible Book Value Per Share:Increased 10% year-over-year to $76.98.
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Net Interest Income:Increased $7 million year-over-year to $260.4 million.
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Adjusted Non-Interest Expense:Increased $13.9 million or 7% year-over-year to $202.8 million.
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Pre-Provision Net Revenue (PPNR):Increased $13 million or 11% year-over-year to $130 million.
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Net Income to Common:Increased $7.6 million or 10% year-over-year to $80.6 million.
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Commercial Loans:Increased $1.2 billion or 10% year-over-year to $13 billion.
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Total Deposits:Increased $2.8 billion or 11% year-over-year to $28.9 billion.
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Provision for Credit Losses:Increased $3 million year-over-year to $18 million.
Release Date: July 22, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Quarterly adjusted earnings per share increased 15% year-over-year to $1.88, supported by record fee income and strong C&I loan growth.
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Non-interest income rose by 39% year-over-year to $75.1 million, representing 22% of total revenue, up from 18% a year ago.
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Investment banking fees grew 34% year-over-year to $42.8 million, driven by tailored strategic advice and strong client relationships.
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Tangible book value per share increased 10% year-over-year to $76.98, marking the ninth consecutive quarterly record.
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Strong credit quality with disciplined oversight and conservative reserve posture, maintaining a solid financial foundation.
Negative Points
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Net interest margin was slightly lower than expected due to changes in earning asset mix and higher temporary funding costs.
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Criticized loans increased slightly, with multifamily commercial real estate borrowers facing pressure on net operating income.
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Commercial real estate loans decreased 3% linked quarter and are expected to decline by approximately 12% for the full year.
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Interest-bearing deposit costs increased due to higher average broker deposits, impacting overall deposit cost.
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The company faces competitive pressure and irrational behavior in both C&I and CRE lending markets, affecting pricing and structure.
Q & A Highlights
Q: Can you explain the factors affecting the net interest margin and how it might change in the third quarter? A: The net interest income (NII) and margin dynamics were largely consistent with expectations, but the earning asset mix changed slightly. Higher average mortgage finance loans pulled down overall loan yields, and temporary funding increased interest-bearing deposit costs. For Q3, we expect better income growing to $265 million to $270 million, with a slight seasonal step-down in margin to the low to mid-3.20% range due to a higher weighting of mortgage finance assets. (Matt Scurlock, CFO)
Q: What is the outlook for credit quality, given the increase in criticized and classified loans? A: Criticized levels moved slightly higher, with increases in special mention loans, particularly in multifamily commercial real estate. This is due to rental concessions affecting net operating income. We have accounted for some migration in our full-year provision outlook, which remains comfortable at 35 to 40 basis points of loans, excluding mortgage finance. (Matt Scurlock, CFO)
Q: Can you provide more details on the strong performance in investment banking and trading fees? A: Investment banking fees saw broad contributions from syndications, capital solutions, M&A, and sales and trading. Notably, 33% of investment banking fees came from new relationships, and all closed M&A transactions involved selling middle-market, privately held Texas-based companies. We expect continued strong performance with a pipeline supporting $40 million to $45 million in fees for Q3. (Rob Holmes, CEO)
Q: How do you view the current competitive environment in commercial real estate and C&I lending? A: We are seeing irrational behavior in both commercial real estate and C&I lending, with some banks offering aggressive pricing and structures. We remain disciplined, focusing on banking the best clients and not expanding our client base in segments where we see irrational behavior. (Rob Holmes, CEO)
Q: What is the strategy for managing interest-bearing deposit costs, especially with the seasonal impact of mortgage finance? A: Interest-bearing deposit costs were up 8 basis points, primarily due to higher average broker deposits. We expect a slight increase in average broker deposits in Q3, which will push deposit costs up a few basis points. However, this is a temporary effect, and we anticipate a reduction in brokered CDs by Q4. (Matt Scurlock, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
