Thank you, and welcome to the call this morning. We are very pleased with our quarter.

There were a few items of noise in the quarter, specifically the oil and gas and we reported that $3.7 million net gain However, I think it is important that we all remember that by us, making that investment, we also precluded ourselves or eliminated the possibility that we would have had a larger loss when we suffered that loss back in 2023 on the assets. And that is really an important thing to remember.

So not only did we recover, more as a result of that, but once we recovered all the cash that we had spent for the asset, and then we had on top of that a nice return. So management's very pleased, and we also accomplished our goal a little quicker than we thought we would.

So we are delighted with that outcome. And it is important to remember that.

And then I think the second thing is that we also have experienced some heavier expenses relative to some internal changes that we are making in the IT areas, specifically as a result of those material weaknesses that the new accounting firm thought that existed. So we spent considerable time and money doing that.

And then in addition to those expenses, we have incurred expenses related to potential M&A activity. And so when you when you factor out the noise and you look at the recurring, results, we are very pleased with those.

And so we look forward to the rest of the year. We do have some significant loan pay downs that we will need to overcome that is nothing new.

We sometimes experience those. But our asset quality has never been better, and we are just delighted that the position that we are in with plenty of liquidity and no debt, strong earnings, heavy capital, and, well positioned for growing the bank and organically and also in the M&A space.

So with that said, we are here to answer any questions. Thank you.

Hey. Good morning, guys.

Good morning. Maybe just to follow-up on the expenses.

Have all the IT expenses, been made associated with removing that material weakness? And could you kind of just give where you think an expected run rate for expenses going forward now that the oil and gas assets have been sold?

This is Kelly. I think for Q3, we are projecting to be in the 9.5 to 9.7 million range.

You will see some of those similar expenses from Q2 fill over into Q3. It could be a similar clip.

I think that from an M&A transaction perspective, little harder to ballpark. But from an IT and consulting fees, it will probably be very similar to Q2.

And maybe just moving over to deposits and deposit cost and the--it was a relatively stable quarter on the loan growth front, but deposits were down a little. And it might have it looks like there might have been, a little bit of remix going on behind the scenes given deposit cost moving lower.

Would just be interested in your thoughts on, you know, where deposit costs are bottoming out here in the third quarter and how you think deposit costs trend given it feels like rates may be flat for a little while?

Yeah. Deposit costs were static in the month of June.

And so they followed the average for Q2. Currently in the 2.28% to 2.3% range.

I think that, you know, based on that, it could fluctuate based on growth. But we feel really good about where we are at from a deposit cost perspective.

Currently.

Wait a second. Did I hear you say 2.28% to 2.3%?

2.28% to 2.3%. Yeah.

So basically flat. I mean, we are not we are not expecting I think Kelly's word of static is pretty darn accurate.

Mhmm. And then maybe just last for me, I would imagine you are pretty limited in what you can say about the stock purchase agreement.

But I was just curious on the timeline that you see given there is a bidding process and when we might know whether you are the ultimate winner there.

The dates are a little bit fluid for the next few weeks. You know, there is public filings out there that talk about the court is going to listen to some motions and some objections here in the next 10 days.

And so if the timelines that have been established by the court and also in our receivers in the receiver's motion, not our motion, then we would expect the I believe, the proposed auction date end date is September 3rd. And there is a 4-week process.

So everything is aligned and set up for a process during the month of August. And so as you can imagine, if you go to the public record, there is been objections and motions and the court came out recently and required expedited time frame.

Yeah. This has been an ongoing thing for quite some time, and I think the court has recognized that, so we would expect further clarity over the next 2 weeks for sure.

And then if the auction were to if the if the bidding process takes place, it will be in the month of August.

Alright. that is really helpful for taking my questions.

I will hop back in the queue.

Tom, you mentioned some expectations for some large paydowns in the back half of the year. Curious if you can maybe size that up and maybe Jason can comment on kind of what the loan pipeline looks like today to kind of offset some of those large pay downs and Jason, kind of what you are seeing in terms of pricing on new loan production relative to kind of the core yield in the quarter, which was just over 7.0%.

Yeah. Thanks, Nate.

The pipeline is what I would go back to referring to as robust. For yield fundings in the third quarter.

Probably gonna produce, I would say, 2x what we did in Q2 But, again, up against known payoffs, I still think full year guidance of a mid-single-digit loan growth is a nice goal for our team. Again, Tom mentioned it, we are prone to these periods where the payoffs really accelerate.

Our team is fantastic at turning around and putting the money back out the door. And to your point on, you know, hey.

Talk to me about yield. We are we are really good at putting it back out in a safe manner in similar pricing.

Ranges. And so I do not really see a meaningful move on loan interest rate.

I do think that we will do a little bit better on fee income in the third quarter because I just think we are gonna book more loans. We are gonna fund more loans.

so than we had in Q2. So all in all, that is really the story on the loan growth.

Gotcha. And just to clarify, Jason, I mean, to get to a mid-single-digit growth number for this year, I mean, that would imply kind of high single digit growth just given maybe kind of a slower start in the first half of the year.

Yeah. Yeah.

I am I am measuring year over year, not quarter to quarter. But, yeah, it is third quarter is going to be good on loan fundings.

Again, up against really large payoffs, but it will be a good quarter on loan fundings.

Okay. Great.

And then, just going back to the acquisition announcement, I appreciate that it is a fluid process at this point in the court's hands to some degree. But maybe, Tom, just any visibility on kind of the prospects to, you know, acquire the full or the minority interest in that franchise and kind of what those conversations are looking like these days just to avoid some kind of nuanced accounting, components until, that minority stake is acquired, hopefully.

Yeah. I think, you know, should the receiver bidding and auction go through and should we be successful as a stalking horse bidder, then it certainly would be our intention at some point to engage with the other 29 percent owners of the bank.

I do not know at this point whether we would engage with them prior to that September 3rd date. it is possible just depends on the dynamics of the transaction and what is going on.

And so it is clearly our intention, and we are confident that we could meet with that group of people or with them and strike a really good transaction. You know, we are not people.

We are not bottom feeder people. We have had plenty of transactions in our history where we deal fairly and professionally with people, and so we are highly confident that will eventually happen.

And, clearly, the sooner, the better. But you are right.

There will be a I will call it a stub period if we if we are successful acquiring the 71 percent, there will be a stub period there for a short while, we work to consolidate the remaining 29 percent.

Gotcha. And just given the magnitude of this deal potentially, with Century, I mean, is it fair to assume, you know, M&A is probably off the table additionally maybe through the first half of 2027 just given the implied decline in capital ratios and so forth, contemplated by this deal.

Just any thoughts, Tom, on terms of what you are seeing on the M&A front otherwise these days and what the appetite would look like?

No. I would say to you that our ability to go to the market and raise capital or issue debt instruments should we desire to do that.

The bottom line is that we are in a growth mode, and our team is this is what we have always said that we wanted to do, and we have continued to pursue that. And so anything that comes up that is a strategic good fit for us, we are going to pursue it.

Now when I say that, clearly, you have to be careful with any follow on transaction so that you have got plenty of time to make the purchase, make the acquisition, plan the conversion, integrate people. And, of course, that takes time.

But I think for us, we are not afraid of, and we would look forward to any kind of a--relatively short to midterm follow on that would allow us to continue expanding the company and achieving our objectives.

Makes sense. I appreciate all the color.

I will step back. Thanks, guys.

Hey, good morning. Thanks for taking my question.

I just wanted to ask about the margin. I think previously you indicated that you would be reverting back to that 4.40% to 4.45% range, call it core margin ex-loan fees.

Is that still the case for you as based on what you are seeing with loan pricing and deposit cost, and then how would that change if we were to get a rate hike at the end of the year just given how sensitive you guys are? Thanks.

The margin performed very well in Q2. I think it is more of a story of managing excess liquidity.

And the ebbs and flows of the fundings and pay downs. I think if June was a little bit lower on the margin than the quarter average, I think that you could see some of that bleed over into Q3 while we are waiting for the loan funding.

But I think, you know, from a range perspective, 4.45% to 4.53% is probably a good guide for our core NIM. And then, you know, obviously, if a rate hike does occur at the end of the year, I think we would benefit from that from an asset sensitive perspective.

Got it. And then do you happen to have what that margin was for the month of June?

It was 4.51%.

Perfect. And then just maybe 1 follow-up.

I guess, can you talk about what you are seeing on the loan in deposit pricing competition, what you are seeing out in the market?

The more things change, the more they remain the same. I mean, if you look at our NIM management over the years in the deck, it is like watching paint dry for us.

Right? So I would suggest that there is nothing extraordinary or dynamic either on the loan pricing or the deposit pricing side?

Got it. Thanks for taking my questions.

Again, we were really happy with the quarter, happy that we accomplished our objective on the energy asset. We are out of the oil and gas business on that basis.

We accomplished it a little quicker than we thought. And still have a little bit of work to do on some expenses Relative to the structural changes on the IT side and the material weakness remediation.

I expect most of that to be done through the third quarter, but in the meantime, the bank's doing very, very well. We thank our team members, our great group of bankers, and it is just a great group of professional people to work with.

and produce these results. So thank you.