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Executive summary

• Net income for Q2 2026 was $48.9 million ($1.43 per diluted share), down from $54.7 million in Q1 2026 but up from $45.5 million in Q2 2025.

• Revenue reached $172.0 million, up 6% year-over-year; net interest income was $153.7 million, up from both prior quarter and year.

• Core deposits represented 89% of total deposits, with year-over-year growth but a slight sequential decline.

• Board declared a $0.52 per share quarterly dividend, payable August 2026, and tangible common equity per share increased 11% year-over-year.

• Announced agreement to acquire Pacific Financial Corporation (Bank of the Pacific), expected to close in Q3 2026, adding $1.3B in assets.

Financial highlights

• Net interest margin (tax equivalent) was 4.13% for Q2 2026, up from 4.11% in Q1 2026 and 3.92% in Q2 2025.

• Return on average assets was 1.20% for Q2 2026; return on average tangible common equity was 12.27%.

• Efficiency ratio was 62.80%, with adjusted efficiency ratio at 61.30%.

• Allowance for credit losses on loans was $161.8 million (1.35% of loans), with coverage of non-performing loans at 295%.

• Loan balances grew by $287 million in the quarter, nearly 10% annualized, with total loan originations at $1.26 billion.

Outlook and guidance

• Management expects continued strong core operating results, focusing on high-quality asset origination and client acquisition.

• The Pacific Financial acquisition is expected to close in Q3 2026, expanding presence in Western Washington and Oregon, pending approvals.

• Net interest margin may expand by 1-2 basis points in Q3, with funding costs expected to remain flat.

• Alternative capital actions (e.g., share buybacks) are on hold until the Bank of the Pacific deal closes.

• Near-term earnings are projected to benefit from higher interest rates, while long-term economic value of equity is more sensitive to rate changes.