Executive Summary

Q2 2025 delivered stronger profitability with EPS $0.60 and net income $2.70M, aided by a $528k recovery of credit losses and improved net interest margin to 3.45%; revenue (net interest income after credit losses plus noninterest income) was $12.85M, up versus Q1 and Q2 2024 .
Interest expense fell 12% YoY, reflecting disciplined deposit rate management and a pivot toward lower-cost core deposits; efficiency ratio improved to 76.71% from 89.31% in Q1 .
Balance sheet strengthened: total assets $1.004B (corrected), loans (net) $649.09M, deposits $910.53M, book value per share $15.77, and Tier 1 leverage ratio 8.85% .
Parent retired ~$10M capital notes, expected to reduce annual interest expense by ~$327k; Board declared a $0.10 quarterly dividend, supporting shareholder return and lowering liability costs—potential catalysts for investor sentiment .

What Went Well and What Went Wrong

Margin expansion: “Net interest margin of 3.45% in the second quarter of 2025 was the highest in a number of quarters,” driven by repricing of loans and deposit rate discipline .
Asset quality remained strong: NPL ratio 0.28%, ACL/loans 0.96%, with no OREO; management emphasized “maintaining exceptional asset quality” through diligent credit monitoring .
Liability optimization: retirement of ~$10M capital notes expected to “reduce our interest expense by approximately $327,000 annually” and lower the overall rate on interest-bearing liabilities .

Higher noninterest expense: Q2 noninterest expense rose to $9.46M (vs. $8.74M YoY) due to consulting fees tied to a major vendor agreement, new revenue-generating hires, and facility expansion .
Noninterest income modestly softer YoY: $4.075M (vs. $4.191M) as mortgage-related gains offset mixed trends elsewhere .
YoY loan growth led by CRE increases concentration risk; management highlighted monitoring of CRE exposures, noting no large metro office exposure but continued focus is necessary .

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue (NII after credit losses + Noninterest) ($USD Millions)	$11.57	$10.87	$12.85
Net Interest Income After Credit Losses ($USD Millions)	$7.76	$7.58	$8.78
Noninterest Income ($USD Millions)	$3.82	$3.28	$4.08
Diluted EPS ($USD)	$0.36	$0.19	$0.60
Net Interest Margin (%)	3.18%	3.25%	3.45%
Efficiency Ratio (%)	82.62%	89.31%	76.71%
Return on Average Assets (%)	0.63%	0.33%	1.06%

Metric	Q2 2024	Q2 2025
Revenue (NII after credit losses + Noninterest) ($USD Millions)	$11.41	$12.85
Diluted EPS ($USD)	$0.47	$0.60
Net Interest Margin (%)	3.02%	3.45%
Interest Expense ($USD Millions)	$3.84	$3.39

Component	Amount ($USD Millions)
Gains on sale of loans held for sale	$1.589
Service charges, fees and commissions	$0.975
Wealth management fees	$1.300
Life insurance income	$0.190
Other	$0.021
Total	$4.075

KPI	Q4 2024	Q1 2025	Q2 2025
Total Assets ($USD Billions)	$0.979	$1.012	$1.004
Loans, Net ($USD Millions)	$636.55	$642.39	$649.09
Total Deposits ($USD Millions)	$882.40	$911.68	$910.53
Stockholders’ Equity ($USD Millions)	$64.87	$68.35	$71.67
Book Value per Share ($USD)	$14.28	$15.04	$15.77
NPL / Total Loans (%)	0.25%	0.28%	0.28%
ACL / Total Loans (%)	1.09%	1.08%	0.96%
Tier 1 Leverage Ratio (Bank) (%)	—	—	8.85%
Core Deposits ($USD Millions)	$651.90	$698.92	$681.36

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend ($/share)	Q3 2025 payable 9/26	$0.10 (Q1 declaration)	$0.10 (declared 7/12; record 9/12; pay 9/26)	Maintained
Capital Notes Outstanding ($USD Millions)	Q2 2025	~$10.05 at 12/31/24	Retired (~$10M)	Lowered (eliminated)
Interest Expense Run-Rate ($USD)	Annualized	—	Reduce by ~$327k per year from note retirement	Lowered
Formal Revenue/Margin/OpEx Guidance	2025	Not provided	Not provided	Maintained (no formal guidance)

No Q2 2025 earnings call transcript was available; themes are drawn from management press releases and 8-Ks.

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Net interest margin and spread	NIM trended up in 2H’24; NIM 3.18% in Q4; Q1 NIM 3.25% with spread 2.95%	NIM 3.45%; spread 3.15%—highest in quarters	Improving
Asset quality	Strong NPL and ACL metrics; NPL 0.25% at YE’24; 0.28% in Q1	NPL 0.28%; ACL/loans 0.96%; no OREO	Stable/high-quality
Deposit mix and cost	Focus on growing core deposits; deposit growth in Q4 and Q1	Core deposits $681.36M; no brokered deposits	Stable, low-cost focus
CRE lending	CRE led loan growth in Q4 and Q1; vigilant on concentrations	CRE balances increased; no large metro office exposure	Growing with risk controls
Noninterest expense discipline	Q4 one-time consultant fee; Q1 ~$1M core contract fee; anticipated savings	Elevated Q2 noninterest expense (consulting, hires, facilities)	Near-term higher; longer-term savings expected

“Net interest margin and interest spread have consistently improved during the past year… Net interest margin of 3.45% in the second quarter of 2025 was the highest in a number of quarters.” — CEO Robert R. Chapman III .
“A strong cash position enabled our parent company to achieve a significant milestone… retire approximately $10 million in capital notes. This is expected to reduce our interest expense by approximately $327,000 annually…” .
“Maintaining high quality interest-earning assets… Diligent credit management and monitoring has an important role in maintaining exceptional asset quality.” .

No Q2 2025 earnings call transcript was available; therefore, no Q&A commentary or guidance clarifications can be provided from a call record [ListDocuments: earnings-call-transcript returned none].

Wall Street consensus (S&P Global) for Q2 2025 was unavailable for EPS and revenue (# of estimates not provided). Actual “Revenue” (SPGI definition: net interest income after credit losses + noninterest income) was $12.853M*; EPS consensus not available*.
Implication: With no published consensus, post-earnings estimate revisions may be limited; investors should focus on structural margin improvements, expense trajectory, and balance sheet quality.

Metric	Q2 2025 Consensus	Q2 2025 Actual
Revenue ($USD Millions)	—	$12.85*
EPS ($USD)	—	$0.60

Values marked with an asterisk (*) retrieved from S&P Global.

Margin recovery is firmly underway (NIM 3.45%), driven by loan repricing and deposit cost control; monitor sustainability as rate environment evolves .
Liability optimization provides durable earnings tailwind: retirement of ~$10M capital notes lowers interest expense by ~$327k annually and reduces overall funding cost .
Q2 profitability benefited from a $528k recovery of credit losses; normalize results by tracking credit provisioning cadence in coming quarters .
Asset quality remains a core strength (NPL 0.28%, no OREO); this supports stable margins and lower credit cost—key to valuation resilience in regional banks .
Noninterest expense is elevated due to strategic investments and consulting fees; expected contract savings (from Q4/Q1 actions) should improve operating leverage medium term .
Dividend maintained at $0.10/share and book value per share rose to $15.77—signals capital health and shareholder return focus .
Near-term trading: focus on follow-through in NIM and realized interest expense savings; medium-term thesis hinges on disciplined CRE growth, core deposit trajectory, and operating efficiency ramps .