Operator: Good morning, and welcome to the SB Financial's Second Quarter 26 Conference Call and Webcast. I would like to inform you that this conference call is being recorded. That all participants are in a listen-only mode. We will begin with remarks by management and then open the conference up to the investment community for questions and answers. I will now turn the conference over to Sarah Mekus with SB Financial. Please go ahead, Sarah.
Sarah Mekus: Thank you, and good morning, everyone. I would like to remind you that this conference call is being broadcast live over the Internet and will be archived and available on our website at ir.yourstatebank.com. Joining me today are Mark A. Klein, chairman, president, and CEO Anthony V. Cosentino, chief financial officer and Steven Walz, chief lending officer. Today's presentation may contain forward-looking information. Cautionary statements about this information as well as reconciliations of non GAAP financial measures are included in today's earnings release materials as well as our SEC filings. These materials are available on our website and we encourage participants to refer to them for a complete discussion of risk factors and forward-looking statements. These statements speak only as of the date made, and SB Financial undertakes no obligation to update them. I will now turn the call over to Mr. Klein.
Mark A. Klein: Thank you, Sarah, and good morning, everyone. Welcome to our second quarter 26 conference call and webcast. The second quarter of 26 represented a period of strong execution across our franchise, reflecting the consistency and resilience of our diversified revenue operating model. Our results reflected balanced performance across all business lines, supported by high quality organic loan growth, stable recurring and net interest income, expanded non interest fee revenue, and disciplined expense management. This quarter also marked the 18-month milestone of the Marblehead, and we now view that transaction As a significant contributor to our funding base, expanding our presence in Northern Ohio and driving overall franchise stability. Highlights for this quarter include net income at $4.5 million with diluted earnings per share of $0.07 compared to $0.60 diluted EPS reported in the prior year quarter. This now marks our 62nd consecutive quarter of operational profitability. Tangible book value per share ended at 19.04, increase of approximately 16% from the 16.44 in the prior year quarter. We exclude, AOCI and adjusted tangible book, we are at 22.57. Net interest income expanded to $13 million, up 6.8%. From the $12.1 million in the prior year quarter, driven by stable funding dynamics and expanding asset yields. Loan balances reached $1.19 billion, reflecting an increase of approximately $95 million or 8.7% from the prior year quarter, a slight increase of $8.4 million from the linked quarter. This extends our trend of sequential loan growth to 9 consecutive quarters. Total deposits climbed to $1.39 billion, an increase of a $141 million or just over 11% from the prior year quarter and up 19.3 million or 1.4% sequentially from the linked quarter. Noninterest income finished at $5 million accounting for approximately 28% of our total operating revenue as we continue to maintain stable fee based revenue streams. Noninterest expense run rate remained well controlled. Finishing the quarter at $12.1 million compared to $11.9 million for the prior year quarter. And asset quality remains a key characteristic of our company and a clear competitive advantage. Total nonperforming assets declined to $4.4 million representing just 0.27% of our total assets, a reduction of over 28% compared to the prior year. Our proactive approach to managing problem assets combined with our robust internal loan reviews has successfully driven down our overall nonaccruing balances. We continue to remain focused on our 5 key strategic initiatives as we have indicated in many prior quarters, such growing and diversifying revenue, adding more scale to the organization, improve efficiency, expanding the number of households and services in those households, operational excellence, and of course, asset quality. Let's look a little closer at the revenue diversity. Mortgage originations for the quarter rebounded strongly from the first quarter. $79.3 million representing an increase of approximately 21% from the linked quarter Although production was down compared to the $97.9 million in the prior year period. Current residential pipeline has continued to stabilize at the 25 to $30 million level. Our teams continue to struggle with mortgage rates remaining well above the 6% mark, which we feel is critical in moving into a more balanced split purchase and refinance. Although our mortgage volume has been below expectations, we have had a number of success stories from individual MLOs and from our regions. Specifically, our newest region, Cincinnati, has delivered nearly $20 million in volume during our first half of this year. Higher by more than 50% from the same period 2025. Individually, we have 4 MLOs that have eclipsed $10 million in volume. And additionally, 6 more originators are at the 50% level of their 2026 goal commitment. This quarter's volume growth represents a positive pivot from the volume constraints we witnessed throughout 2025, and the slow seasonal start we experienced from the first quarter of the year. Throughout that lower volume cycle, we made the deliberate strategic decision to keep our core processing infrastructure and originator teams fully intact. That operational discipline continues to yield results today. Providing us with the capacity to eventually capture expanded market volume with adding income without adding incremental overhead. Our execution in the secondary market remains highly effective and allows us to manage a larger pipeline of fixed rate commitments. We successfully sold 88.5% of our production this period to maximize immediate fee income while keeping the balance sheet liquid. Furthermore, our total mortgage servicing portfolio crossed a major milestone, this quarter, ending at $1.5 billion. Because we have maintained this operational readiness, we have ample capacity. To continue scaling up toward more historical production levels. Peak Title recorded a strong quarter, generating revenue of $577 thousand up nearly 20% from the linked quarter and flat compared to the prior year. Supported by strong collaboration and steady internal referrals across our lending teams. This business remains an important part of our product suite and a valuable contributor to our fee income diversification. Now pivoting to scale. Our deposit growth has vastly exceeded expectations in the second quarter since the second quarter of 2025. We have grown deposits in every quarter over the past year. While keeping the increase in our deposit cost of funds at less than 2.5% level to just 181 basis points. Our core relationship model delivered an annual increase of $17.3 million in non-interest-bearing checking accounts ended the quarter at nearly $260 million. We continue to see excellent traction growing these core balances organically. By leveraging our treasury management capabilities and capturing new commercial relationships stemming from ongoing disruption in regional players and regional markets. Similar to our Q1 momentum, this disruption strategy has now captured and delivered $130 million in cumulative balances as we track toward our long term goal of $500 million from the ongoing market disruption. As we have highlighted in previous discussions, our targeted commitment to our 2 nearby De Novo markets this year, Angola, Indiana and Napoleon, Ohio, continues to yield results that exceed our original targets and expectations. Capitalizing on branch consolidation and disruption by larger regional players has allowed us to successfully transition these low cost core accounts back to a local relationship driven banking model at State Bank. While our strong Q1 performance, these offices recorded $19.3 million in loans and $22.5 million in deposits and continues to expand their structural footprint. Well ahead of schedule. Now for more scope. We continue to prioritize referrals as an effective way to deepen long-term client relationships across the entire franchise. Concurrently, our Wealth Management division finished the period with fees improving to $955 thousand and assets to nearly $557 million. Our alliance and alignment with Advisory Alpha is now operational, and we have begun to methodically transition our client relationships. Will not only allow our current client base, but also any future clients an extended array of products, advice, and investment vehicles. Moving to operational excellence. We remain focused on matching growth with disciplined execution. The second quarter reflected that mindset with expense levels remaining controlled relative to revenue. Pretax pre provision income increased 9% year over year to $5.8 million, reflecting our expanded balance sheet and ongoing focus on positive operating leverage. To effectively support this expanded balance sheet scale, we have successfully added talented lenders to fill open positions across our footprint, ensuring our teams have the production capacity to sustain our current growth trajectory. As highlighted earlier, linked quarter loan growth while positive, was below our expectations for the second quarter. The details reveal that unlike in prior quarters where Columbus was providing the bulk of that lift, this quarter, we had growth in 3 of our traditional markets, that offset that generally flattish production elsewhere. Specifically, the Lima region was higher by $4.2 million; Fort Wayne, Indiana by $3 million, and Bowling Green had growth of $1.4 million. Our capital position remains strong with total equity climbing to nearly $147 million, up 9.8% from $133 million a year ago. Our capital levels remain robust, with running top tier tangible common equity and regulatory capital support that ensures balance sheet flexibility moving forward. And finally, asset quality. Credit quality remained a key component in our ongoing and high performance this quarter. Our allowance for credit losses rose to $16.4 million, representing 1.38% of our total loans and generating nearly 5 times coverage ratio of our nonperforming loans. Our ongoing commitment to rigorous credit administration is evident across our portfolios. Notably, our core criticized assets dropped sharply this quarter to just $344 thousand while our classified loans stood contained at $4.08 million. Through the positive and proactive efforts of our lending and collections team, We successfully managed our gross total delinquency rate down to just 32 basis points from 51 basis points at this time last year. We continue to emphasize disciplined underwriting, proactive management of problem assets, and prudent growth across all markets. This commitment to disciplined execution is also evident in our agricultural sector, our targeted efforts have successfully expanded total agricultural balances past the $81 million mark reflecting an increase of over $20 million from last year as we continue to track toward our long-term goal of a $100 million portfolio. With that, I will turn it over to Anthony V. Cosentino, our CFO, for some expanded comments on our core financial performance. Tony?
Anthony V. Cosentino: Thanks, Mark, and good morning again, everyone. Let me just outline some highlights and important details of our second quarter results. This quarter, total operating revenue expanded to $17.9 million an increase of 4.5%, from $17.2 million in the second quarter of 2025 and expanding 3% from the $17.4 million recorded in the linked quarter. As Mark noted, the quarter reflected a balanced revenue performance, stable net interest income and a stronger contribution from our fee based businesses. Mark detailed our GAAP net income earlier, and when we adjust both years for our MSR valuation adjustments, adjusted diluted earnings per share advanced to $0.73 for the current period compared to $0.58 in the second quarter of 2025. An increase of nearly 26% on an adjusted basis. Net interest income was driven higher by our reliance on the growth of the top line. With interest income up $1.35 million from the prior year easily outpacing the interest expense growth of $527 thousand. Despite the slight slowdown in loan growth, our low cost deposit growth coupled with higher overnight funding rates have boosted margins. As we indicated, last quarter reflected the peak of our margin percentage level. With this quarter's margin down slightly at 3.43% compared to 3.48% in the prior year and the linked quarter. We continue to benefit from a larger balance sheet and the ongoing repricing of interest earning assets. Although at a slower pace than prior quarters. Noninterest income finished the quarter at $5 million and our core mortgage banking contribution reached $1.9 million. Down slightly from the $2.2 million reported in the second quarter of 2025, but expanding from $1.8 million in the linked quarter. Mortgage banking was supported by core loan servicing fees, contributing $934 thousand while gain on sale mortgages finished. at $1.5 million. Our hedging program successfully offset some of the rate market volatility, leaving the net OMSR valuation at a minor negative $54 thousand for the period. Volume this quarter moved decidedly in favor of purchase activity. As 81% of our volume was purchase or construction. Notably, our total mortgage gain on sale percentage improved to 2.19%, which was the highest level we have achieved since the second quarter of 2024. Operating expenses totaled $12.1 million for the quarter. Up 2.4% from $11.9 million in the prior year. This change reflects the impact of adding talented lenders to fill open positions across our footprint, salaries and benefits totaled $7 million. Our year over year expense comparison was heavily mitigated by lower data processing fees, dropping to $693 thousand from $888 thousand reflecting the system efficiencies as our onetime merger integration costs cleared our run rate. Efficiency ratio for the quarter improved to 67.3%, And notably, operating leverage for the quarter was a positive 1.9 times. With revenue expanding by 4.5% compared to expense growth of 2.4%. Turning back to the balance sheet. Loan balances ended the quarter at approximately $1.19 billion as Mark indicated. Reflecting the continued year over year growth and a modest increase from year end. Loans to assets were a healthy 73.6%. Commercial real estate outstandings continue to drive our own portfolio balances, at $611 million But specifically, exposure to office space is under 5.5% of our total loan portfolio, excluding mortgage portfolio balances no other segment is higher than 10% of our current loan outstanding. Loan to deposit ratio at quarter end was 85.5%, We have significant liquidity currently but are aware of several large institutional deposit relationships that are moving to the wholesale market sector later this year. We expect these losses to not be material to earnings given their marginal rates compared to what we can acquire from retail and TM calling efforts. On capital management, during the second quarter, we continued to adjust our share buyback posture to preserve absolute capital flexibility. Repurchasing a little over 28 thousand shares at an average price of $22.06. As we discussed during our first quarter call, we have guided lower on buybacks for 2026 as our market price is now trading at 1.4x tangible book. This disciplined stance ensures we preserve balance sheet flexibility and remains fully aligned with our broader capital priorities, and most importantly, does provide a floor for our market price. Turning lastly to asset quality, nonperforming assets totaled 4.4 million representing 0.27% of total assets. Compared to $4.7 million in linked quarter and $6.2 million in the prior year quarter. While NPAs declined sequentially and remain well controlled, overall credit performance. Again remains sound. Allowance for credit losses as a percentage of total loans is 1.38% compared to 1.39% in the linked quarter and 1.43% the prior year. Average of nonperforming loans rose to 470% compared to 443% in the linked quarter and 266% in the prior year period. Net charge offs, while slightly higher compared to historical averages, remained modest at 6 basis points. Compared to just 1 basis point in the linked quarter and 2 basis points in the prior year quarter. Dealt with a long standing credit problem in the quarter, which was fully allocated in our model, and that is working slowly towards resolution. Total gross delinquency rate ended the period under 35 basis points, and when we exclude those loans on nonaccrual, that delinquency rate is effectively zero. I will now turn the call back over to Mark for some closing remarks.
Mark A. Klein: Thank you, Tony. We enter the second quarter and second half of 26 with strong and steady momentum across our entire franchise. This quarter's performance demonstrates that our diversified business model can deliver solid results even when broader market conditions compress our historical fee income volume. With total loans under our care now and total assets under our care at the $3.7 billion mark, our growing scale is providing the positive operating leverage we need to drive consistent long term value. Our focus for the remainder of the year remains straightforward. Executing on our strategies and our expansion markets of Angola and Napoleon, supporting our lending teams to build on sequential loan growth, continuing to leverage our core relationship model to capture low cost deposits amid regional market disruptions. At the same time, we remain deeply committed to our disciplined credit underwriting standards, and this proactive approach to risk management has successfully kept our nonperforming assets as we have mentioned, at a solid 0.27%. Reflecting our consistent earning power and our ongoing commitment to shareholder returns, we are pleased to announce and pay a quarterly dividend payable in August of $0.16 per share, which represents an annualized yield of approximately 2.4% and a conservative 22% payout ratio. Keeping us firmly on track for the 14th consecutive year of increasing annual dividends payouts to our shareholders. Now we will open the call up to any questions. Sarah?
Sarah Mekus: Thank you. Operator, we are now ready for questions.
Operator: We will now begin the question-and-answer session. To ask a question, you may press star 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brian Martin with Brean. Please go ahead.
Brian: Hey. Good morning, guys.
Mark A. Klein: Morning. Morning, Brian.
Brian: Hey. Maybe I just Tony, we could just start for a minute on your comments about the margin and just kind of more broadly kind of how you are thinking about it. You know, been a lot of comments this quarter from other banks just about competition and both on both sides of the balance sheet and just I know you commented last quarter, you said your margin peaked and kind of just how you think the margin plays out from where we are here today and just kind of the puts and takes on kind of where that is trending. I know there was some excess liquidity this quarter. So it kind of impacted the margin as well with the deposit growth. But just trying to understand, you know, dynamically where we are going to be trending here the next couple quarters and you know, both on the margin and just kind of maybe if funding costs are bottoming, still seeing some repricing on the asset side?
Anthony V. Cosentino: Yeah. Sure. You know, as we talked about last quarter, we thought you know, margin percentage was, you know, peaked in Q1 and was going to trend to kind of stabilize to down. It certainly came down, but I think it was more structural than it was anything else. I mean, we had a lot of liquidity, in the quarter as we talked about. Deposit growth at pretty good pricing. I am much more you know, positive now that, you know, we might move that percentage up slightly because we do have a fair amount of loan growth that I think we are going to have here in the half of the year, more than I thought going into the quarter. We looked at we have looked at a number of very good credits with some good pricing. So I think we are going to use up quite a bit of that liquidity. And that is going to drive margins certainly no less than where they are and slightly higher moving forward because I do think that is going to be a bit of a positive for us moving forward.
Mark A. Klein: Know, Brian, 1 of the key metrics, you know, we continue to take a larger bite out of the ag sector as we have talked for a number of quarters. And with those loans have come low cost deposits. So we have been doing very well on finding low cost deposits that keep that average when you add to the margin, at the average been pretty good.
Anthony V. Cosentino: And we say, Tony, at 181 basis point. Yep. Very good. Very good pricing year over year. So I view that as a as a large positive when it comes to adding loans at the 6.5%, 6.75% level.
Mark A. Klein: But bringing in those low cost deposits, really no-cost transactional accounts. So I see that Brian, as a as a boost to that margin, but I know Tony's got his handle on the number.
Brian: Yeah. And it and it sounds, Tony, like, it maybe gets back to where it was last quarter. I mean, if you get some of this loan growth you maybe get back to that, I guess, last quarter's level, which is $3.50. So call it around $3.50. Or can you maybe not get back that high? And then and then it is just more stability after that after you kind of bring on the loans and kind of stabilize it. Is that what you are thinking?
Anthony V. Cosentino: Yeah. I think I think that $3.45 to $3.55 range is, I think, where we are going to be probably in Q3 and probably on for some time. I think we have got I feel like we have got enough momentum on the loan side and we have had enough kind of deposit growth that we have not really had to be crazy on pricing to get there. I think the disruption in the markets that we are in has been much better than we really anticipated in terms of especially on the deposit side. Yeah. And so I think that is going to sustain us for a while.
Mark A. Klein: I mean, I will be surprised if we do not move higher from where we were in this quarter.
Anthony V. Cosentino: Certainly, Tony.
Mark A. Klein: The mix of loans has helped. Yes. From a C and I perspective. As well as the market disruption of a $28 billion player. Yes. Yes.
Brian: Yeah. Okay. that is super helpful, Tony, and Mark. And then maybe just on you know, I guess, you think about where the deposit growth has been, like you said, really strong, that maybe more normalized is not I guess, I it sounds like you still continue to capitalize on that, but maybe the growth in deposits is a little bit slower going forward. And then just in terms of the loan pipeline, Tony, it sounds like that is a bit stronger than expected.
Mark A. Klein: Well, first on deposits, Brian, you know, we are pretty we are pretty excited about the opportunities in the 2 new markets that we descended upon De Novo. You know, Angola is doing well and Napoleon is doing well. And as I mentioned before, there is a billion dollars in deposits in the new market that has had major disruptions and we are taking our share plus some. So I would be a little more bullish on the opportunity to expand our deposit base at well below the margin. As far as the pipeline, I know there is some strong potential for significant growth in all markets coming up here. For the second half of the year.
Anthony V. Cosentino: Yeah. I would just I would just supplement Mark's comment. I mean, you know, as we have indicated, we are going to lose about $40 million of kind of, call it, wholesale deposits of a client we have had for a number of times here in probably Q3. So, you know, we are $140 million up year over year to me, which is, you know, way outsized what you would think would be kind of a normalized deposit growth area. So you normalize that to, call it, you know, $100 million, you know, net of this deposit we think we are going to lose, I do think we are still gonna be growing 3% to 5% per quarter over the linked period based upon everything we see. And you know, I do think, you know, flipping to your question about the loan pipeline, it is much stronger and I will let Steven fill in than what it was when we kind of got into the middle of this. We have had a few paydowns, but it has not been, you know, kind of in prior years, kind of the dominant story we talk about. it is been more about the production side, which was a little soft in Q2, and I think that is ramping back up here in Q3.
Mark A. Klein: And the pay down is, Tony, were more strategic than anything. Yes. Yes. So Well put. It was not like we got pruned. Yeah, we decided to walk away on a couple credits, but I know, Steven, the pipeline looks strong, and we are pretty bullish on the second half of the year, I would hope.
Steven Walz: No. Certainly, I would just add, Brian. Columbus is remains a core driver of our growth. But what is been encouraging, and Mark touched on it a little earlier, was the breadth has expanded, which is something going into the year we had talked about as a goal. But we are seeing that come to fruition here Certainly welcome. And that is a function to a not insignificant degree of that market disruption that Mark had referenced earlier. Our legacy markets are in a way in our growth story in a way that they had not over the last, really call it several years. So I think we are encouraged. Certainly, Columbus and our growth markets like Fort Wayne, for example, will play a role. But the breadth of that expansion is welcome as we look to the second half of the year.
Mark A. Klein: Yeah, Brian. Because you know, as we have talked, our model has been gather low cost, really low cost deposits from our traditional markets and expand where there is capital need, which is our growth markets. But as Steven said, they are starting to flip around a little bit. We are getting the low cost transaction deposit and our legacy markets. And now we are identifying some loans from those markets as well. So we are kind of getting a double bump. Gotcha.
Brian: And just in terms of the know, the pickup in loans, kind of where it is coming from, I mean, I know a lot of it is been from Columbus, but this other markets, if you think about the second half of the year, does the growth stay? Is it more balanced across the footprint? Or is Columbus still leading it? And then there is you know, these other markets are just contributing that building.
Anthony V. Cosentino: Well, I would say at a high level, I am thinking we are probably going to do $50 million to $70 million in kind of balance sheet increase on the loan side between now and the end of the year. You know, without talking about any pay down. So, you know, kind of a normalized group of pay downs that might be a $50 million or $60 million number. I would guess it is probably 50% Columbus and 50% everywhere else as I look at the pipeline as it lays out today. So to me, that is a victory because, you know, last year, we were 90% Columbus and 10% everywhere else. I would like that much better in terms of a geographic spread.
Mark A. Klein: And, Tony, without Columbus exiting the game. I mean, Columbus is still in the game, so we are balancing it out, as we indicated, in Northwest Ohio and Northeast Indiana. Yep.
Brian: Yeah. Okay. No. that is helpful. It sounds like you are optimistic on the on both the loan and deposit front. And like you said, the broadening out is a definitely a positive here compared to just continuing the momentum. It gives you another angle and diversification. So okay. And then maybe just last couple ones. On the on the mortgage side, pretty easy, I guess, just in terms of your outlook given where the rate environment's at. I know you talked about being more money, which makes sense given rates, but you know, just and, you know, I guess, thinking about full year you know, outlook for mortgage in terms of you know, originations and activity and just kind of that pace and how I know you are built for a much bigger balance sheet or, you know, opportunity than we have talked, Mark. But in terms of where you think the market giving you today, what is the outlook look like on mortgage?
Mark A. Klein: Well, as you know, the rate environment certainly made it difficult for the MLOs because at the margin, we do not have many people that are above that or are willing to refinance at, you know, 6.75. So that is presenting challenges. But that said, we have hired, several high producing MLOs that are going to move the needle. We got a nice team in Columbus and certainly a good 1 that is continued to expand in Cincinnati Indy is doing well. We continue to do some private client variable rate mortgage to put on our books, which has been great. It does not deliver any noninterest income, but certainly delivers some margin revenue.
Anthony V. Cosentino: Yep.
Mark A. Klein: But I continue to remain optimistic on getting somewhere near that $300 million mark, but I do not I think it is gonna be a tough place to land, Tony, this year.
Anthony V. Cosentino: But yeah, I think, you know, we are probably looking at an $80 million quarter, you know, kind of very similar to Q2, and we are probably anywhere from $50 million to $60 million in Q4. And again, you know, as we have talked about on rates, we are we are not that far away. We are, you know, 50 basis points from, I think, on unpacking another $30 million to $50 million in volume depending on where you get there. But if we stay stuck at this, you know, 6.875% kind of range for the remainder of the year, then I think that $130 million is what we are probably going to do, which is just your normal level of volume of people moving and life changes and all of that kind of stuff. And that additional $50 million is all dependent on us seeing something at 6 or below. Which I certainly do not see until maybe Q4.
Mark A. Klein: You know, we have got high producers that are highly incented. And now we are bringing on more producers in newer markets. So we are gonna continue to optimize the back end of our process, which can do I am going to go on record and say we can do $400 million to $500 million without adding anybody. Mm-hmm. So You know, those fixed costs are pretty much fixed. So it is going to be accretive to our whole process and with a little bit of play in the mortgage rate, I think we can ramp our results up dramatically.
Brian: Gotcha. And just remind me, Mark, easy. The it sounds like you brought some people on this quarter. Roughly how many MLOs have you added maybe that are not in the numbers today?
Mark A. Klein: Well, it is a great question. We have added 1 in Columbus. We have added 1 in Cincinnati. And I think we might have replaced 1, not a net addition, but replacing 1 in Indy. Mm-hmm. But 2 or 3 without confirming, you know, who those are right offhand.
Anthony V. Cosentino: But I would say 2 or 3, but we have got I think we are generally right at that 27, I think, where we have been before.
Mark A. Klein: And the good part about that is, you know, they are all very hungry and they are all doing great things. And here recently, what is really ramped up is the FHLB 4.5% fixed rate. Product that is out there for households that are below 80% of median income. So that is gaining traction in all of our markets and to my knowledge, there is no lid on that amount. So our people are trying to pedal that out across our footprint.
Anthony V. Cosentino: Yes.
Brian: Gotcha. Okay. And the okay. that is and just the gain on sale margin, Tony, that is that is similar range where it is been. I mean, nothing really changing there. The pricing. So okay. Yep. That is good. And then maybe just last 1 is on the on the expense front. You know, given some pickup in volume here, you know, obviously, there is incentives that come along with that. How do we think about expenses in the back half of the year as revenue given the revenue outlook in terms of I know you guys have done a great job managing the expenses, but you are kind of balancing that with the growth you are expecting. What do expenses look like in the back half of the year?
Anthony V. Cosentino: Yeah. I mean, I think I think they certainly trend higher than what we have had. In Q2. I would say Q2 is kind of the low end of the scale because we filled a couple of slots as Mark indicated during his comments. Know, I think our you know, compensation level is going to continue to kind of move slightly higher given the performance of the company this year through the first half and what that means for kind of a, you know, we pay out incentives to a broad range of our team. Which we, you know, accrue for all year long. And given not only the bottom line performance, but the metrics on the deposit side and a number of areas that are highly incented, you know, we are we are going to have some higher expense levels. But it is not going to be, you know, I would say we are probably in that $12.3 million to $12.4 million range in Q3. And probably at $12 million in Q4 as kind of mortgage volume ramps down. So it is not going to be -- it is going to be higher by $300 thousand probably from where we were in Q2 and Q3. But other than that, it is gonna be pretty well maintained.
Mark A. Klein: Given that mortgage lending is highly variable in compensation. Yeah. We would love to see it go up. But, clearly, we have attempted to even make -- you all know we have attempted to make commercial lending variable because we, you know, we pay great base pays, but we also highly incent individuals to find commercial loans across all of our footprint, but that goes up marginally. that is more fixed cost basis than it is variable-based. But we like it -- we like everything to be variable-based pay, you know? We want to pay high producers.
Brian: Yeah. No. It makes sense. And, Tony, I guess, do not know. Maybe more for you, but Mark can chime in. The growth that you expect, I mean, just there is a lot of dynamics here going on with that 1 payoff on the deposit side. You are going to -- you expect to get or potentially could get, then you are still growing it. Just in terms of funding the loan growth, I mean, I do not know if the math works out where if you do lose a $40 million deposit, but the new growth is a similar level, your deposits are the same type of level, you know, net with some movement there. But funding the loan growth in the second half, you know, kind of what is the outlook there in terms of how do you manage that given some of, you know, the nuances on the deposit side that may come in this quarter?
Anthony V. Cosentino: Yeah. I mean, I think you know, we have got an excess level of liquidity as we sit today, you know, assuming worst case scenario that, you know, $40 million walks out without any replacement, I think we can fund all of our what I think is the kind of medium to high end range of our loan pipeline from now to the end of the year. So anything we are building on the deposit side is for us to be funding 2027 loan growth. So that is the continued push that we are gonna have. Okay.
Mark A. Klein: You know, I think we are slow down on our interest in deposit gathering. And I think, disruptions, I think it is gonna continue to be outsized of our expectation. And maybe I just gotta expand my expectation. But I think that is where we are. And, Tony, certainly that makes continue to remain excited about the $20 million we get back in the securities portfolio.
Anthony V. Cosentino: Absolutely. that is all. Woven in there plus payoff, pay downs. Yes. Good cash flow. Yeah.
Brian: Okay. Yeah. In the in terms of the liquidity today, Tony, what is just remind me what is the excess today that you have? Like, what is on balance sheet versus kind of what is excess to fund the loan, you know, the loan growth in the second half of the year? What is the additional right now outside of the normal level of capital? Terms of liquidity?
Anthony V. Cosentino: Yeah, probably. it is probably $70 million, you know, which is really high relative to where we are.
Brian: Okay.
Anthony V. Cosentino: But we purposely stayed there because I have been hoping for the loan pipeline to turn around, which I feel like it is going to in the second half. So Yeah.
Brian: Okay.
Mark A. Klein: Very liquid and very flexible.
Brian: Okay. No. that is what I figured was the case. I just wanted to make sure I am clear on the dynamics on the deposit. If that 1 walked away, there is it sounds like there is still good growth there. So okay. I think I am good. I mean, I think unless there is any -- there is no additional comments on credit. It feels like the credit quality is really good. You know, you have been working on some resolution to some legacy ones, but nothing in the pipeline of new credits, you know, potentially weakening looks sound like it is all that big, and they still expect some improvement on the legacy as you work through things?
Mark A. Klein: Yeah. We continue to see, you know, some optimistic movements on, you know, some of the ones that have been around a long time. But boy, it is like watching paint dry sometimes in terms of getting rid of some of your you know, your asset quality problems. Fortunately, Brian, they are not -- they are not 7 -- they are not 7-figure things. You know? They are smaller, 6-figure things. So they are more of an annoyance than they are a needle mover.
Brian: Yeah. Okay. that is how I figured it. It was a good story there, and not a lot to elaborate on. So well, thank you guys for the questions, and I appreciate it.
Mark A. Klein: Alright. Thanks, Brian.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mark A. Klein for any closing remarks.
Mark A. Klein: Thank you. Once again, thanks for joining us this morning. We certainly look forward to speaking with you in October. and give you an update on our third quarter 26 results. Thanks for joining. Have a great day. Goodbye.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.