The following table sets forth the changes in interest income and interest expense attributable to changes in volume and changes in interest rates for the six months ended June 30, 2025 and 2024:
Taxable-Equivalent Net Interest Income — Changes Due to Volume and Rate(1)
Three Months Ended June 30, 2025-2024 Increase/(Decrease) in Net Interest Income Due to Changes in Volume Changes in Rate Total Change
Interest-earning assets: Loans $863 $(7,342) $(6,479) Investment securities (405) (1,573) (1,978) Federal Home Loan Bank stock — (126) (126) Deposits with other banks 1,332 (2,691) (1,359) Total changes in interest income 1,790 (11,732) (9,942)
Interest-bearing liabilities: Interest-bearing demand accounts (176) (1,888) (2,064) Money market accounts 2,272 (2,782) (510) Savings accounts 1,090 1,342 2,432 Time deposits (5,448) (18,264) (23,712) Other borrowed funds (1,387) (772) (2,159) Long-term debt — 166 166 Total changes in interest expense (3,649) (22,198) (25,847)
Changes in net interest income $5,439 $10,466 $15,905
(1) Changes in interest income and interest expense attributable to changes in both volume and rate have been allocated proportionately to changes due to volume and changes due to rate.
Provision for credit losses The Company recorded a provision for credit losses of $11.2 million in the second quarter of 2025 compared with $6.6 million in the second quarter of 2024. As of June 30, 2025, the allowance for credit losses, comprised of the reserve for loan losses and the reserve for unfunded loan commitments, increased $12.0 million to $183.4 million, or 0.93% of gross loans, compared to $171.4 million, or 0.88% of gross loans, as of December 31, 2024. The change in the allowance for credit losses during the six months ended June 30, 2025, consisted of a $26.7 million provision for credit losses and $14.7 million in net charge-offs.
The following table sets forth the charge-offs and recoveries for the periods indicated:
Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 2024 2025 2024 (In thousands)
Charge-offs: Commercial loans $9,117 $8,257 $11,461 $10,196 Real estate loans (1) 3,913 — 3,913 254 Total charge-offs 13,030 8,257 15,374 10,450 Recoveries: Commercial loans 196 126 465 938 Construction loans — — 1 — Real estate loans (1) 93 134 190 375 Total recoveries 289 260 656 1,313 Net charge-offs $12,741 $7,997 $14,718 $9,137
(1) Real estate loans include commercial real estate loans, residential mortgage loans, and equity lines.
Non-Interest Income Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $15.4 million for the second quarter of 2025, an increase of $2.2 million, or 16.7%, compared to $13.2 million for the second quarter of 2024. The increase was primarily due to an increase of $2.4 million in derivative fees when compared to the same quarter a year ago.
Non-Interest Expense Non-interest expense decreased $10.3 million, or 10.4%, to $89.1 million in the second quarter of 2025 compared to $99.4 million in the same quarter a year ago. The decrease in non-interest expense in the second quarter of 2025 was primarily due to a decrease of $12.2 million in amortization expense of investments in low-income housing and alternative energy partnerships, offset by an increase of $2.7 million in salaries and employee benefits when compared to the same quarter a year ago. The efficiency ratio was 45.34% in the second quarter of 2025 compared to 55.65% for the same quarter a year ago.
Income Taxes The effective tax rate for the second quarter of 2025 was 19.6% compared to 7.9% for the second quarter of 2024. The effective tax rate includes the impact of low-income housing tax credits in 2025 and solar tax credits and low-income housing tax credits in 2024.
As a result of the enactment of the single factor apportionment by the State of California in June 2025, the Company recorded a $3.4 million write down of its deferred tax assets during the second quarter of 2025.
Year-to-Date Statement of Operations Review Net Income Net income for the six months ended June 30, 2025, was $147.0 million, an increase of $8.7 million, or 6.3%, compared to net income of $138.3 million for the same period a year ago. Diluted earnings per share for the six months ended June 30, 2025, was $2.09 per share compared to $1.90 per share for the same period a year ago.
Return on average stockholders’ equity was 10.28% and return on average assets was 1.27% for the six months ended June 30, 2025, compared to a return on average stockholders’ equity of 10.01% and a return on average assets of 1.19% for the same period a year ago.
The following table sets forth information concerning average interest-earning assets, average interest-bearing liabilities, and the average yields and rates paid on those assets and liabilities for the six months ended June 30, 2025, and 2024. The average outstanding amounts included in the table are daily averages:
Interest-Earning Assets and Interest-Bearing Liabilities
Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Interest Average Yield/ Interest Average Yield/ Balance Expense Rate (1)(2) Balance Expense Rate (1)(2) (In thousands)
Interest-earning assets: Total loans (1) $19,411,434 $590,841 6.14% $19,469,033 $605,864 6.26% Investment securities 1,622,309 27,332 3.38 1,667,279 31,288 3.77 Federal Home Loan Bank stock 17,250 746 8.65 17,250 1,054 11.63 Deposits with banks 1,102,579 24,044 4.37 997,808 26,819 5.39 Total interest-earning assets 22,231,538 642,963 5.83 22,121,449 665,025 6.05 Non-interest earning assets: Cash and due from banks 159,751 — — 161,182 — — Other non-earning assets 1,144,713 — — 1,217,198 — — Total non-interest earning assets 1,304,464 — — 1,378,380 — — Less: Allowance for loan losses (173,530) — — (151,889) — — Deferred loan fees (12,536) — — (11,486) — — Total assets $23,349,936 — — $23,336,454 — —
Interest-bearing liabilities: Interest-bearing demand accounts $2,133,874 $18,180 1.71% $2,169,045 $22,306 2.07% Money market accounts 3,464,685 59,358 3.44 3,217,813 60,380 3.77 Savings accounts 1,343,043 22,202 1.67 1,037,771 6,338 1.23 Time deposits 9,692,056 189,728 3.91 10,185,497 236,152 4.66 Total interest-bearing deposits 16,633,658 289,468 3.35 16,610,126 325,176 3.94
Other borrowings 103,059 1,868 3.63 235,234 6,186 5.29 Long-term debt 119,136 4,062 6.83 119,136 3,726 6.29 Total interest-bearing liabilities 16,855,853 295,398 3.37 16,964,496 334,088 3.97
Non-interest bearing liabilities: Demand deposits 3,331,433 — — 3,247,498 — — Other liabilities 263,682 — — 331,903 — — Total equity 2,898,968 — — 2,792,557 — — Total liabilities and equity $23,349,936 — — $23,336,454 — —
Net interest spread 2.46% 2.08% Net interest income $181,221 $165,316 Net interest margin 3.27% 3.01% (1) Yields and amounts of interest earned include loan fees. Non-accrual loans are included in the average balance. (2) Calculated by dividing net interest income by average outstanding interest-earning assets.
The above information is based on the assumption that the reader has access to and has read the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The market has reacted to these announcements by moving the company's shares 1.39% to a price of $45.40. For more information, read the company's full 10-Q submission here.
