Paragon Bank Announces Record-Setting Second Quarter of 2025

Paragon Bank Announces Record-Setting Second Quarter of 2025

08-20-25

Paragon Bank today announced its 2025 second quarter financial earnings, reporting a record net income of approximately $1,917,000, an increase of $759,000 or 65%, over the second quarter of 2024.

2025 year-to-date net income is 112% higher than the first six months of 2024. Return on equity and return on assets for the first six months of 2025 were 12.67% and .90% respectively. Earnings per share increased to $.86 during the first six months of 2025 from $.41 during the same period of 2024.

"Over the last several years, Paragon Bank has invested heavily by adding key team members to our existing operations and market, in addition to expanding our reach with new products and an enlarged geographic footprint," said Robert Shaw, Chief Executive Officer and President at Paragon Bank. "Paragon's second quarter of 2025 and first six months' results reflect the ongoing successful execution of our strategic plan."

Net income of $3.9 million for the first six months of 2025 was a record for Paragon. The primary drivers of the increased earnings for the first six months of 2025 were a 23% increase in net interest income and a 32% increase in noninterest income. Net interest income growth was fueled by loan growth over the last twelve months, a sizeable increase in core deposits, and an improving net interest margin. The growth in noninterest income was a result of increases in income from Paragon's fee-based businesses of Small Business Administration (SBA) lending, mortgage lending, and capital markets.

Additional highlights from the second quarter and first six months of 2025 include:

• Total loans decreased $35 million during the first six months of 2025. This decrease was caused by Paragon's Capital Market Group converting loans to trading assets and by Paragon's Small Business Capital Group selling government guaranteed loans. Excluding loans sold by these departments, loans increased $16.8 million, or 5%, on an annualized basis. Paragon had increases in loans in five of our six markets. One market had expected loan payoffs from customers' normal courses of business.
• On June 30, 2025, trading assets totaled $15 million compared to $0 on December 31, 2024. Trading assets are the government guaranteed loans that Paragon's new Capital Markets division has converted into securities that are ready to sell into the market.
• During the first six months of 2025, core deposits increased $61.6 million, or an impressive 21%, on an annualized basis. Increasing core deposits is an important strategic goal for Paragon Bank.
• The increase in core deposits and the sale of loans and trading assets during the first six months of the year allowed Paragon to decrease brokered deposits by $53 million and to pay down short-term borrowings.
• Total revenue during the second quarter of $9.1 million was $1.3 million, or 17% higher, than the second quarter of 2024 and was a record for Paragon. Year-to-date revenue of $18.1 million was $3.5 million, or 24% higher than the first six months of 2024; this was also a record.
• Net interest margin for the second quarter was 3.94%, an increase of 11 basis points from the first quarter of 2025, reflecting a 12 basis point decline in the total cost of funds.
• Through June 30, 2025, noninterest expense has increased $832 thousand, or 6.88%. The largest increases in expenses are related to Paragon's expansion into the Jackson, TN, and Nashville, TN, markets, the FDIC assessment, and an increase in data processing expenses due to Paragon's growth.
• Overall, asset quality metrics continue to remain at solid levels. The ratio of nonperforming assets to total assets decreased slightly during the second quarter from .17% of total assets to .16% of total assets.
• The ratio of the allowance to gross loans excluding government guaranteed loans was 1.23% on June 30, 2025, down from 1.25% on March 31, 2025. The ratio of the allowance to nonperforming assets on June 30 was 581%.

In addition to the numerous financial records set in 2025, Paragon continues to prioritize community service in all our markets through its ACTS (Assisting the Community Through Service) Initiative, founded in 2005. In 2024 alone, nearly 96 percent of Paragon team members participated in ACTS, working with 89 nonprofit organizations across the Southeast U.S.. Since the bank began tracking ACTS time in 2008, Paragon team members have provided over 19,000 hours of community service.

Paragon Bank's continued growth was bolstered on June 9, 2025, when the latest full-service banking center opened in Jackson, TN. The Grand Opening ceremony for the location, situated at 1348 Union University Drive, will be held on Thursday, August 28, 2025 from 4-6 p.m.

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