Endeavor Bancorp Reports Net Income of $1.1 Million for the Second Quarter of 2025; Highlighted by Continued Loan and Deposit Growth, and NIM Expansion
'Our second quarter results reflect the strength of our core banking franchise and the disciplined execution of our strategic growth plan,' said Julie Glance, CFO. 'We continued to grow loans and deposits during the quarter while maintaining a strong net interest margin, demonstrating the resilience of our business model in an uncertain interest rate environment. Our strategic investments in talent and infrastructure are starting to deliver measurable returns, enhancing both operational efficiency and client service. As we look ahead, we remain focused on driving sustainable, profitable growth and creating long-term value for our shareholders.'
Results for the second quarter of 2025 included a $746,000 provision for credit losses, reflecting continued prudent credit risk management amid a growing loan portfolio. This compared to a $385,000 provision for credit losses in the first quarter of 2025, and a $451,000 provision for credit losses in the second quarter of 2024. Excluding taxes and loan loss provisions, pretax, pre-provision net income was $2.28 million, consistent with the prior quarter's $2.33 million, and up from $1.55 million in the second quarter of 2024.
Income Statement
Strong first quarter earnings were driven by loan growth and earning asset rates. Total interest income on loans and bank deposits and investments was $11.6 million, an increase of $504,000 compared to the preceding quarter, while total interest expenses increased $128,000 during the same timeframe. Net interest income was $7.4 million in the second quarter of 2025, which was an increase of $376,000, or 5.4% compared to the preceding quarter and a 37.8% increase compared to the second quarter of 2024.
'Our net interest margin expanded by nine basis points in the second quarter of 2025 compared to the prior quarter, driven primarily by strong loan growth and continued improvement in our funding costs,' said Dan Yates, CEO. 'This positive trend reflects not only solid execution on the asset side of the balance sheet but also disciplined management of our deposit base in a competitive rate environment. We remain proactive in optimizing our asset-liability mix to safeguard and enhance margin performance, while maintaining prudent risk management and offering attractive pricing to our clients. As interest rate dynamics evolve, we are confident in our ability to navigate the environment effectively, positioning us to sustain earnings momentum.'
The Company's net interest margin increased nine basis points to 4.21% in the second quarter of 2025 compared to 4.12% in the first quarter of 2025 and increased 51 basis points compared to 3.70% in the second quarter of 2024. The yield on total earning assets remained strong, increasing 10 basis points during the second quarter of 2025 to 6.62%, compared to 6.52% in the preceding quarter, and up from 6.33% in the second quarter of 2024. The cost of deposits decreased to 2.57% in the second quarter, compared to 2.58% in the first quarter of 2025, and down from 2.84% in the second quarter of 2024.
Non-Interest income was $276,000 in the second quarter of 2025, an increase of $93,000 or 50.5% compared to the first quarter of 2025, and a decrease compared to $390,000 in the second quarter of 2024.
Non-Interest expense was $5.4 million in the second quarter of 2025, an increase of $521,000 compared to the first quarter of 2025, and an increase of $1.2 million compared to the second quarter of 2024. Included in non-interest expense during the second quarter of 2025 was $263,000 in annual board compensation. In the prior year annual board compensation of $312,000 was paid during the first quarter of 2024. The higher expenses year-over-year were also due to strategic investment in staff. 'In 2024, we made strategic investments in talent, increasing our headcount by over 30%. These additions are now delivering strong returns, with revenue growth fueled by our enhanced capabilities more than offsetting the associated rise in expenses year-over-year. Our improved efficiency ratio, which declined to 70.3% during the second quarter of 2025 from 75.8% during the second quarter of 2024, further demonstrates that the team we built last year is now fully ramped and highly productive. With fewer new hires planned for the remainder of the year, we remain focused on maximizing the impact of our expanded workforce and are well positioned to drive continued earnings growth,' said Yates.
The Company's annualized return on average equity for the second quarter of 2025 was 8.75%, compared to 11.68% in the first quarter of 2025 and 6.96% in the second quarter of 2024. The annualized return on average assets for the second quarter of 2025 was 0.60% compared to 0.79% in the first quarter of 2025 and 0.52% in the second quarter of 2024. The decrease compared to the prior quarter was primarily due to the previously mentioned board expense along with one-time consulting expense associated with contract renegotiation during the second quarter of 2025.
Balance Sheet
Total assets increased by $42.3 million, or 6.0%, during the second quarter of 2025 to $746.9 million at June 30, 2025, compared to $704.6 million at March 31, 2025, and increased $153.1 million, or 25.8%, compared to June 30, 2024. Balance sheet liquidity remains strong with cash balances of $87.4 million, which represents 11.7% of total assets as of June 30, 2025. The Company's investment securities increased $1.7 million during the second quarter of 2025 to $28.1 million as of June 30, 2025, representing 3.8% of total assets. Total available borrowing capacity through the Federal Home Loan Bank and the Federal Reserve discount window totaled $245.3 million as of quarter end.
'We are pleased with the continued progress in our deposit-gathering and lending efforts, which reflects the strength of our client relationships and the effectiveness of our strategy,' said Steve Sefton, President. 'Our team remains focused on delivering tailored financial solutions to our business clients, while maintaining disciplined underwriting and sound risk management. As we continue to deepen these relationships, we are well positioned to drive sustainable growth and long-term value.'
Total loans outstanding increased $28.1 million, or 4.7%, during the second quarter of 2025 to $625.9 million at June 30, 2025, compared to $597.8 million three months earlier, and increased $142.5 million, or 29.5%, when compared to $483.4 million a year earlier. Total non-performing loans decreased to 0.32% of the total loan portfolio as of June 30, 2025, compared to 0.40% as of March 31, 2025. The Company had $421,000 in net charge-offs during the second quarter of 2025, which included one loan that had previously been reserved for. This compared to zero in net charge-offs during the preceding quarter and the year ago quarter.
Total deposits increased $41.2 million, or 6.6%, during the quarter to $667.4 million at June 30, 2025, compared to $626.2 million three months earlier, and increased $149.2 million, up 28.8% when compared to $518.2 million a year earlier. The loan to deposit ratio was 93.8% at June 30, 2025, compared to 95.5% at March 31, 2025, and 92.9% as of June 30, 2024. 'We are strategically managing our balance sheet with a target loan to deposit ratio of 95% as we aim for the right balance between strong lending activity and liquidity,' added Sefton.
As a result of its participation in reciprocal deposit placement networks, the Bank accepted 'reciprocal' deposits from other institutions, enabling the Bank to offer customers FDIC insurance on accounts in excess of the typical $250,000 FDIC insurance limit. Although the reciprocal deposits maintained through the network are core deposits seeking FDIC insurance, the FDIC rules indicate that reciprocal deposits aggregating over 20% of total liabilities are classified as deposits obtained by or through a deposit broker. The total reciprocal deposits reported as brokered deposits were $133.3 million at June 30, 2025, and $102.5 million as of March 31, 2025. To support strong loan growth, the Company is utilizing a conservative amount of wholesale deposits. As of June 30, 2025, total wholesale deposits, excluding the reciprocal deposits, was $56.8 million, representing 8.5% of total deposits compared to $55.7 million, or 8.9% of total deposits as of March 31, 2025.
Shareholders' equity was $48.9 million at June 30, 2025, compared to $47.7 million at March 31, 2025, and $44.1 million at June 30, 2024. Tangible book value per share increased to $13.64 at June 30, 2025, compared to $13.49 three months earlier and $12.55 a year earlier.
Capital
The Bank's Tier 1 leverage ratio was 10.60% as of June 30, 2025, compared to 10.57% at March 31, 2025. The Tier 1 risk-based capital ratio was 10.20% as of June 30, 2025, compared to 10.47% on March 31, 2025, and the Total risk-based capital ratio was 11.37% compared to 11.65% three months earlier, all of which were well above regulatory minimums.
About Endeavor Bancorp
Endeavor Bancorp, the holding company for Endeavor Bank, is primarily owned and operated by Southern Californians for Southern California businesses and their owners. The bank's focus is local: local decision-making, local board, local founders, local owners, and relationships with local clients in Southern California.
Headquartered in downtown San Diego in the Symphony Towers building, the Bank also operates a loan production and executive administration office in Carlsbad, as well as a branch office in La Mesa. In addition, the Bank maintains production teams throughout Southern California. Endeavor Bank provides traditional business banking services across a broad spectrum of industries and specialties. Unique to the bank is its consultative banking approach that partners our business clients with Endeavor Bank's senior management. Together, we build strategies and provide resources that solve problems, plan for the future, and help clients' efforts to grow revenues and profits. Endeavor Bancorp trades on the OTCQX® Best Market under the symbol 'EDVR.' Visit www.endeavor.bank for more information.
Endeavor Bank is rated by Bauer Financial as Five-Star 'Superior' for strong financial performance, the top rating given by the independent bank rating firm. DepositAccounts.com awarded Endeavor Bank an A rating.
EDVR Shareholders
With many of our shareholders transferring their EDVR shares to their brokerage companies, along with ongoing trading taking place, Bancorp may not have the most current shareholder contact information. If you are an EDVR shareholder and would like to receive information via a more timely method, please complete the Shareholder Communication Preference Form on our website: https://www.bankendeavor.com/investor-relations so we can keep you updated on EDVR news, and invite you to various shareholder networking events throughout the year.
Forward-Looking Statements
This press release includes 'forward-looking statements,' as such term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the current beliefs of the Company's directors and executive officers (collectively, 'Management'), as well as assumptions made by and information currently available to the Company's Management. All statements regarding the Company's business strategy and plans and objectives of Management of the Company for future operations, are forward-looking statements. When used in this press release, the words 'anticipate,' 'believe,' 'estimate,' 'expect' and 'intend' and words or phrases of similar meaning, as they relate to the Company or the Company's Management, are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations ('cautionary statements') are loan losses, rapid and unanticipated deposit withdrawals, unavailability of sources of liquidity, additional regulatory requirements that may be imposed on community banks or banks generally, changes in interest rates, loss of key personnel, lower lending limits and capital than competitors, regulatory restrictions and oversight of the Company, the secure and effective implementation of technology, risks related to the local and national economy, the effect on customers, collateral value and property insurance markets of the recent wildfires in the Los Angeles metropolitan area and similar events in the future, changes in real estate values, the Company's implementation of its business plans and management of growth, loan performance, interest rates, and regulatory matters, the effects of trade, monetary and fiscal policies, inflation, and changes in accounting policies and practices. Based upon changing conditions, if any one or more of these risks or uncertainties materialize, or if any underlying assumptions prove incorrect, actual results may vary materially from those described as anticipated, believed, estimated, expected, or intended. The Company does not intend to update these forward-looking statements.
Endeavor Bancorp Contact Information:
(858) 230.5185
Dan Yates, CEO
[email protected]
(858) 230.4243
Steve Sefton, President
[email protected]
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