Thank you, and good morning, everyone. I'd 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 Klein, Chairman, President, and CEO, Tony Cosentino, Chief Financial Officer, and Steve 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.

Thank you, Sarah, and good morning, everyone. Welcome to our second quarter 2026 conference call and webcast.

The second quarter of 2026 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 reoccurring net interest income, expanded non-interest fee revenue, and disciplined expense management.

This quarter also marked the 18th month milestone of the Marblehead acquisition, 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 72 cents, compared to 60 cents 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, an increase of approximately 16% from the $16.44 in the prior-year quarter.

When we exclude AOCI and adjusted tangible book, were 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 nine consecutive quarters.

Total deposits climbed to $1.39 billion, an increase of $141 million, or just over 11%, from the prior-year quarter, and up $19.3 million, or 1.4%, sequentially from the linked quarter. Non-interest income finished at $5 million, accounting for approximately 28% of our total operating revenue, as we continue to maintain stable fee-based revenue streams.

Non-interest expense run rate remained well controlled, finishing the quarter at $12.1 million, compared to $11.9 million for the prior-year quarter. Asset quality remains a key characteristic of our company and a clear competitive advantage.

Total non-performing 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 non-accruing balances.

We continue to remain focused on our five key strategic initiatives, as we have indicated in many prior quarters. That's growing and diversifying revenue, adding more scale to the organization to 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 to $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.

The 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 between 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 in 2025.

Individually, we have four MLOs that have eclipsed $10 million in volume, and, additionally, six 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 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 $577,000, 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 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, which 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 two 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. Following our strong 1Q 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 $955,000 and assets to nearly $557 million. Our alliance and alignment with Advisor Group is now operational, and we've begun to methodically transition our client relationships, which 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.

Pre-tax 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 necessary 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 three of our traditional markets that offset that generally flattish production elsewhere.

Specifically, Lima region was higher by $4.2 million, Fort Wayne, Indiana, by $3 million, and Bowling Green had a growth of $1.4 million. Our capital position remains strong, with total shareholder equity climbing to nearly $147 million, up 9.8% from $133 million a year ago.

Our capital levels remain robust, providing top-tier tangible common equity and regulatory capital support that ensures balance sheet flexibility moving forward. Finally, asset quality.

Credit quality remained a key component in our ongoing high performance this quarter. Our allowance for credit losses rose to $16.4 million, representing 1.38% of our total loans, and generating nearly five times coverage ratio of our non-performing loans.

Our ongoing commitment to rigorous credit administration is evident across our portfolios. Notably, our core criticized assets dropped sharply this quarter to just $344,000, while our classified loans still well contained at $4.08 million.

Through the positive and proactive efforts of our lending and collections team, we successfully managed our 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, where 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'll turn it over to Tony Cosentino, our CFO, for some expanded comments on our core financial performance.

Tony?

Thanks, Mark. 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 '25, and expanding 3% from the $17.4 million recorded in the linked quarter.

As Mark noted, the quarter reflected a balanced revenue performance, with 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 MSR valuation adjustments, adjusted diluted earnings per share advanced to 73 cents for the current period, compared to 58 cents in the second quarter of '25, 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 $527,000. 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 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.

Non-interest 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 '25, but expanding from $1.8 million in the linked quarter. Mortgage banking was supported by core loan servicing fees contributing $934,000, while gain on sale of mortgages finished at $1.5 million.

Our hedging program successfully offset some of the rate market volatility, leaving the net MSR valuation at a minor negative $54,000 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, with salaries and benefits totaling $7 million. Our year-over-year expense comparison was heavily mitigated by lower data processing fees, dropping to $693,000 from $888,000, reflecting the system efficiencies as our one-time 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 loan portfolio balances at $611 million.

Specifically, exposure to office space is under 5.5% of our total loan portfolio, and excluding mortgage portfolio balances, no other segment is higher than 10% of our current loan outstandings. 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 28,000 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 1.4 times 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, non-performing assets totaled $4.4 million, representing 0.27% of total assets, compared to $4.7 million in the 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 was 1.38%, compared to 1.39% in the linked quarter and 1.43% the prior year.

Coverage of non-performing loans rose to 470%, compared to 443% in the linked and 266% in the prior-year period. Net charge-offs, while slightly higher compared to historical averages, remained modest at six basis points, compared to just one basis point in the linked quarter and two basis points in the prior-year quarter.

We 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 at under 35 basis points, and when we exclude those loans on non-accrual, that delinquency rate is effectively zero.

I'll now turn the call back over to Mark for some closing remarks.

Thank you, Tony. We enter the second quarter the second half of 2026 with strong, steady momentum across our entire franchise.

This quarter's performance demonstrates that our diversified business model can deliver solid profitability 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 $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 in our expansion markets of Angola and Napoleon, supporting our lending teams to build on sequential loan growth, and 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 non-performing assets, as we mentioned, at a solid 0.27%.

Reflecting our consistent earning power and our ongoing commitment to shareholder returns, we're pleased to announce and pay a quarterly dividend payable in August of 16 cents per share. This represents an annualized yield of approximately 2.4% and a conservative 22% payout ratio, keeping us firmly on track for a 14th consecutive year of increasing annual dividend payouts to our shareholders.

Now we'll open the call up to any questions. Sarah?

Thank you. Operator, we're now ready for questions.

Hey, good morning, guys.

Morning, Brian.

Hey, Tony, we could just start for a minute on your comments about the margin and just kind of more broadly kind of how you're thinking about it. There's been a lot of comments this quarter from other banks just about competition and on both sides of the balance sheet, and just I know you commented last quarter as 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's trending.

I know there was some excess liquidity this quarter, kind of impacted the margin as well with the deposit growth, but just trying to understand dynamically where we're going to be trending here the next couple quarters on the margin and just kind of maybe if funding costs are bottoming, you're still seeing some repricing on the asset side.

Sure. As we talked about last quarter, we thought margin percentage 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. We had a lot of liquidity in the quarter as we talked about, deposit growth at pretty good pricing.

I'm much more positive now that we might move that percentage up slightly because we do have a fair amount of loan growth that I think we're going to have here in the second half of the year, more than I thought going into the quarter. We've looked at a number of very good credits with some good pricing.

I think we're going to use up quite a bit of that liquidity, and that's going to drive margins certainly no less than where they are and slightly higher moving forward, cuz I do think that's going to be a bit of a positive for us moving forward.

Brian, we continue to take a larger bite out of the ag sector as we've talked for a number of quarters, and with those loans have come low-cost deposits. We've been doing very well on finding low-cost deposits that keep that average.

When you add to the margin at the average has been pretty good, and what did we say, Tony, 100 181 basis points?

Very good, very good pricing year over year.

I view that as a large positive when it comes to adding loans at the 6.5%, 6.75% level, but bringing in those low-cost deposits really no-cost transactional accounts. I see that, Brian, as a boost to that margin, but I know Tony's got his handle on the number.

It sounds, Tony, like it maybe gets back to where it was last quarter, if you get some of this loan growth, you maybe get back to that, I guess last quarter's level, which is almost 3.50%, call it around 3.50%, or can you maybe not get back that high and then it's just more stability after you kind of bring on the loans and kind of stabilize it? Is that what you're thinking?

I think that 3.45% to 3.55% range is I think where we're going to be probably in Q3 and probably on for some time. I feel like we've got enough momentum on the loan side, and we've had enough kind of deposit growth that we haven't really had to be crazy on pricing to get there.

I think the disruption in the markets that we're in has been much better than we really anticipated, especially on the deposit side. I think that's going to sustain us for a while.

I'll be surprised if we don't move higher from where we were in this quarter.

Certainly, Tony, the mix of loans has helped.

Yes.

From a C&I perspective as well as the market disruption of a $28 billion player.

Yes. Yes.

Yeah. Okay.

That's super helpful, Tony and Mark. Then maybe just on, I guess if you think about where the deposit growth has been, like you said, really strong, that maybe more normalizes now.

I guess it sounds like you still continue to capitalize on that, but maybe the growth in these deposits is a little bit slower going forward, and then in terms of the loan pipeline, Tony, it sounds like that's a bit stronger than expected.

First on deposits, Brian, we're pretty excited about the opportunities in the two new markets that we descended upon de novo. Angola's doing well, and Napoleon's doing well.

As I mentioned before, there's a billion dollars in deposits in the new market that has had major disruptions, and we're taking our share plus some. 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's some strong potential for significant growth in all markets coming up here for the second half of the year.

I just would supplement Mark's comments. As we've indicated, we're going to lose about $40 million at kind of call it wholesale deposits of a client we've had for a number of times here in probably Q3.

Again, we're $140 million up year over year to me, which is way outsized what you would think would be kind of a normalized deposit growth area. If you normalize that to, call it a $100 million, net of this deposit we think we're going to lose, I do think we're still going to be growing 3% to 5% per quarter over the linked period based on everything we see.

I do think, flipping to your question about the loan pipeline, it is much stronger, and I'll kind of Steve fill in, than what it was when we kind of got into the middle of this. We've had a few paydowns, but it hasn't been kind of in prior years kind of the dominant story we talk about.

It's been more about the production side, which was a little soft in Q2, and I think that's ramping back up here in Q3.

The paydowns, Tony, were more strategic than anything.

Yes. Yes.

Put.

It wasn't like we got pruned. We decided to walk away on a couple credits, but I know Steve, the pipeline looks strong, and we're pretty bullish in the second half of the year, I would hope.

No,

certainly, I would just add, Brian, Columbus remains a core driver of our growth, but what's been encouraging, and Mark touched on a little earlier, was the breadth has expanded, which is something going into the year we had talked about as a goal. We're seeing that come to fruition here, certainly welcome.

That is a function to not insignificant degree of that market disruption that Mark had referenced earlier. Our legacy markets are participating in our growth story, in a way that they had not over the last really call it several years.

I think we are encouraged. Certainly Columbus and in our growth marks like Fort Wayne, for example, will play along.

The breadth of that expansion is welcome as we look to the second half of the year.

Brian, because, as we've talked, our model has been gather low-cost, really low-cost deposits from our traditional markets and expand where there's capital need, which is our growth markets. As Steve said, that's starting to flip around a little bit.

We're getting the low-cost transactional deposits in our legacy markets, and now we're identifying some loans from those markets as well, we're kind of getting a double bump.

Gotcha. Just in terms of the pickup in loans, kind of where it's coming from, I know a lot of it's been from Columbus, but other markets, if you think about the second half of the year, is it more balanced across the footprint, is Columbus still leading it, and then these other markets are just contributing, and that's building?

I would say at a high level, I'm thinking we're probably going to do between $50 to $70 million in kind of balance sheet increase on the loan side between now and the end of the year, without talking about any paydowns. Kind of a normalized group of paydowns, that might be a $50 or $60 million number.

I would guess it's probably 50% Columbus and 50% everywhere else as I look at the pipeline as it lays out today. To me, that's a victory, because last year we were 90% Columbus and 10% everywhere else.

I'd like that much better in terms of a geographic spread.

Tony, without Columbus exiting the game.

Absolutely. Yes.

Columbus is still in the game, where we're balancing it out at, as we've indicated, is Northwest Ohio and Northeast Indiana. Yeah.

Yeah. Okay.

No, that's helpful. It sounds like you're you're optimistic on the, on both the loan and deposit fronts, and like you said, the broadening out is a is definitely, a positive here compared to just, continuing the momentum.

It gives you gives you another angle in in, diversification. So, okay.

Then maybe just last couple ones, on the on the mortgage side, pretty easy, I guess, just in terms of your year outlook given where the rate environment's at, I know you talked about being more purchase money, which makes sense given rates, but, just, I guess thinking about full-year, outlook for mortgage in terms of, originations, activity, and just kind of that pace, and how I know you're built for much bigger balance sheet and, opportunity that we've talked, Mark, but just in terms of where you think the market's giving you today, what's the what's the outlook look like on mortgage?

As the rate environment has certainly made it difficult for the MLOs, because at the margin, we don't have many people that are above that that are willing to refinance at 6.75%. That's presenting challenges, but that said, we've hired several high-producing MLOs that are going to move the needle.

We got a nice team in Columbus, and certainly a good one that's continuing to expand in Cincinnati. Indy's doing well.

We continue to do some private client variable-rate mortgages to put on our books, which has been great. It doesn't deliver any non-interest income, but certainly delivers some margin revenue.

Yeah.

I continue to remain optimistic on getting somewhere near that $300 million mark, but I think it's going to be a tough place to land, Tony, this year. But

I think we're probably looking at an $80 million quarter, kind of very similar to Q2, and we're probably anywhere from $50 to $60 million in Q4. Again, as we've talked about on rates, we're not that far away.

We're 50 basis points from I think unpacking another $30 to $50 million in volume depending on where you get there, but if we stay stuck at this 6 and 5/8% kind of range for the remainder of the year, then I think that $130 million is what we're 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. That additional $50 million is all dependent on us seeing something at 6% or below, which I certainly don't see until maybe Q4.

We've got high producers that are highly incented, and we're bringing on more producers in newer markets. We're going to continue to optimize the back end of our process, which can do, I'm going to go on record and say we can do $400 to $500 million without adding anybody.

Mhm. Those fixed costs are pretty much fixed.

It's 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.

Gotcha. Just remind me, Mark, it sounds like you brought some people on this quarter.

Roughly how many MLOs have you added maybe that aren't in the numbers today?

It's a great question, and we've added one in Columbus. We've added one in Cincinnati, and I think we might have replaced one, not a net addition, but replacing one in Indy.

Mhm. Two or three without confirming who those are right off the cuff,

but

I'd say two or three. I think we're generally right at that 27, I think where we've been before.

The good part about that is they're all very hungry and they're all doing great things. Here recently, what's really ramped up is the FHLB 4.5% fixed-rate product that is out there for households that are below 80% of median income.

That's gaining traction in all of our markets, and to my knowledge, there is no lid on that amount, our people are trying to peddle that all across our footprint.

Yes. Gotcha.

Okay.

Just the gain on sale margin, Tony, that's similar range where it's been. Nothing's really changing there the pricing, okay.

Yep. Yep.

That is good. Then

maybe just last one is on the expense front, given some pickup in volume here, obviously there's incentives that come along with that, how do we think about expenses in the back half of the year given the revenue outlook and in terms of I know you guys have done a great job managing the expenses, but kind of balancing that with the growth you're expecting, what do expenses look like in the back half of the year?

I think they've certainly trended higher than what we've had in Q2. I would say Q2's kind of the low end of the scale because we filled a couple of slots as Mark indicated during his comments.

I think our 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 we pay out incentives to a broad range of our team, which we 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, we're going to have some higher expense levels, but it's not going to be, I would say we're probably in that $12.4 to $12.3 million range in Q3 and probably at $12 million in Q4 as kind of mortgage volume ramps down. It's going to be higher by $300,000 probably from where we were in Q2 and Q3, but other than that, it's going to be pretty well maintained.

Given that mortgage lending is highly variable in compensation,

Yes.

we'd love to see it go up. Clearly, Brian, as you well know, we've attempted to make commercial lending variable rate,

Yeah. Because

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's more fixed cost basis than it is variable-based.

We like everything to be variable-based pay. We want to pay high producers.

Yeah. No, makes sense.

Tony, I guess just I don't know, maybe more for you, but Mark can chime in, the growth that you expect, there's a lot of dynamics here going on with that one payoff on the deposit side you expect to get or potentially could get, then you're still growing it, just in terms of funding the loan growth, I don't 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, net with some movement there, but funding the loan growth in the second half, kind of what's the outlook there in terms of how do you manage that given some of the nuances on the deposit side that may come in this quarter?

I think we've got an excess level of liquidity, and as we sit today, assuming worst-case scenario that $40 million walks out without any replacement, I think we can fund all of what I think is the kind of medium to high-end range of our loan pipeline from now to the end of the year. Anything we're building on the deposit side is for us to be funding 2027 loan growth.

That's the continued push that we're going to have,

and

I don't think we're going to slow down on our interest in deposit gathering, and I think given disruptions, I think it's going to continue to be outsized of our expectation, and maybe I just got to expand my expectation, but I think that's where we are.

Tony, we certainly

Okay. That makes

continue to remain excited about the $20 million we get back in the securities portfolio,

and

that's all woven in there plus payoff, paydowns, Absolutely.

Absolutely.

good cash flow.

Yeah.

Okay. In terms of the liquidity today, Tony, just remind me, what's the excess today that you have?

What's on balance sheet versus kind of what's access to fund the loan growth the second half of the year? What is the additional right now outside of normal level of capital in terms of liquidity?

It's probably $70 million, which is really high relative to where we are. We've purposely stayed there because I've been hoping for the loan pipeline to turn around, which I feel like it's going to in the second half, Brian Martin (Brean):

Yeah. Okay.

we've stayed very liquid and very flexible.

Okay. No, that's what I figured was the case.

I just want to make sure the clarity on the dynamics on the deposit, if that one walked away, it sounds like there's still good growth there. Okay.

I think I'm good. I think, unless there's no additional comments on credit, it feels like the credit quality's really good.

I know you've been working on some resolution to some legacy ones, but nothing that the pipeline of new credits potentially weakening doesn't sound like it's all that big and you still expect some improvement on the legacy as you work through things?

We continue to see some optimistic movements on some of the ones that have been around a long time, but boy, it's like watching paint dry sometimes in terms of getting rid of some of your asset quality problems. Fortunately, Brian, they're not

They're small. They're not seven-

they're not seven-figure things, they're smaller six-figure things, they're more of an annoyance than they are a needle mover.

Yeah. Okay.

That's what I figured. It's a good story there and not a lot to elaborate on.

Thank you, guys, for the questions, and I appreciate it.

All right. Thanks, Brian.

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 2026 results. Thanks for joining.

Have a great day. Goodbye.