Great. Good morning. Thank you for that. The company released its second quarter results today and we're going to spend a little time going through those, and then take your questions. The results were we earned $2.6 million or $0.05 a share. Margin expanded a little bit, certainly off the lows that it had, driven primarily by deposit repricing during the quarter and then late in the quarter, acquisition of some repurchased advantage loans.
So that helped bring the margin up to 2.70%. Expenses continue to run high, a little better than they have been, but still quite elevated. And capital continues to be okay at the bank, although with the company, as I've mentioned in the last couple of calls, we at some point have to address the subordinated debt issue that is upon us. The debt is into the variable stage of the initial 10-year maturity.
So we're in the second five years.
Following the quarter, we completed the sale of the Bellevue, Washington branch and that was done on July 23.
So a good transaction for both buyer and seller, and we're happy about that. And deposits, I think as we've mentioned earlier in the first quarter call, with greater definition to the needs to repurchase the advantage loans, both the timing and the dollar amounts, we had built up liquidity and let that run down in the quarter as we got a little more definition to that. Also that benefits the margin because liquidity is really quite expensive. It's kind of typical with us the second quarter included a lot of moving parts. The bank is going through IT system conversion, and that probably added $600,000 in cost during the quarter. Professional costs were down net predominantly, because we got around $2.5 million back from the insurance company. And there's been some, as we expected, some gradual reduction in other professional and consulting type fees.
I think we're still pretty comfortable that cost will drift down in the third and fourth quarter, not going to be dramatically. It's going to be I think noticeable, primarily because things like the look back that we had to do for AML purposes is nearing its conclusion. The securities class action is nearing its final action. And there's several other things that are at least beginning to finish up from where they were, and the costs that go with it will start to dissipate. We still have not insignificant legal costs until these investigations, at least from the bank's perspective, start to wind down some. The asset quality is modestly better. The allowance was basically unchanged quarter-to-quarter, just about $72 million. We did take a $600,000 benefit there, but that was basically dollar-for-dollar for recoveries we had on loans that were non-performing that paid off in the fall. And those were, I think it was five or six advantage loans in that category. And that has been, I would say, probably the most typical outcome with these advantage loans, as for those that go bad, which statistically is probably not too inconsistent with the general residential portfolios in the banking world. The credit aspects are not as dramatic as the compliance and different activities in the original underwriting that led to the investigations and the problems that the bank faces. That's not to minimize those at all. They've been painful. But they were -- just from the pure credit perspective that gives us $600,000 back in the quarter. Non-performing loans hedged down a little bit at 92.6 million. And as I think -- again, as I've said the last couple of calls, in that total, there's about, say, 50 million of commercial credits and maybe mid 30s or $40 million of advantage loans.
I think as you all know, the ones I'm most concerned about from the credit side are the commercial products.
We have a lot to deal with there. And in terms of the criticized, classified loans and all that hits, it's the ones where we expect to have some difficulty working out of those.
So they will occupy more of our resources and our time and probably the allowance than anything else. I'm not expecting the advantage loans, again, purely from the credit side, to behave much differently than they have to-date. Other than that, as I said, the look back is nearing its completion. And that was certainly a long time coming. It's been very labor intensive and expensive. And litigations appear to be at the tail end.
I think at this point on the class action, we're looking at September for conclusion there. And then the income tax expense was up in the quarter and in all candor, predominantly because certain person's executive compensation is not deductible for income tax purposes, under 162(m), so that with a lower dollar amount and earnings and a non-deductibility, that drives up the price of the effective tax rate. And as the government has changed or I guess clarified or modified the 162(m) regulations, we have to deal with that. And other than that, things continue. Progress at the bank is, it's moving directionally I think where we anticipate it. It is not something we can speed up or control, because it's really in the hands of government agencies. But time has moved us along. And I think we continue to be optimistic that we're much nearer the end of these things than anything else. And I will say, I did make a trip out to San Francisco in July I think it was, spent some time at our branches out there and got to know the people. That was my first opportunity to make that trip. And there'll be further opportunities to that for me in the near future.
So with that, operator, we can go into the Q&A.