Q2 2026 Independent Bank Corp Earnings Call

July 17, 2026

Speaker #1: Hello everyone, thank you for joining us, and welcome to the Independent Bancorp Q2 2026 earnings call. Joining me on today's call is Jeff Tangle, CEO, and Mark Ruggero, CFO.

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. Before proceeding, please note that during this call we will be making forward-looking statements. Actual results may differ materially from these statements due to a number of factors, including those described in our earnings release and other SEC filings.

Speaker #1: We undertake no obligation to publicly update any such statements. In addition, some of our discussion today may include references to certain non-GAAP financial measures.

Speaker #1: Information about these non-GAAP measures, including reconciliation to GAAP measures, may be found in our earnings release, and other SEC filings. These SEC filings can be accessed via the Investor Relations section of our website.

Speaker #1: Finally, please note that this event is being recorded. I would now like to turn the conference over to Jeff Tangle, CEO. Please go ahead.

Speaker #2: Thank you. Good morning, and thanks for joining us today. I'm accompanied this morning by CFO and Head of Consumer Lending, Mark Ruggero. Before we discuss our quarterly results, I wanted to share an update on my health.

Speaker #2: We've released an 8K in February disclosing that I had been diagnosed with non-Hodgkin's lymphoma. I'm happy to report that I've finished my treatments and learned last Friday that I am cancer-free and in remission.

Speaker #2: So on that good note, I'd like to turn to our quarterly results. While activity was slow early in the second quarter, momentum accelerated as the quarter progressed, resulting in solid deposit growth, strong CNI loan growth, continued improvement in the adjusted NIM, aggressive buyback activity, and excellent results in our wealth management business.

Speaker #1: The largest one that's been nonperforming?

Speaker #2: Yeah, correct.

Speaker #1: Please go ahead, CEO.

Speaker #1: Finally. Please note that this event is being Right. I recorded. I would like to turn would send the copies over to Jeff the conference over to Jeff Tengel, Tengel, CEO.

Speaker #2: We've released health. We've released an APA an 8-pay in February in February disclosing that I have been disclosing that I have been diagnosed with diagnosed with non-Hodgkin's non-Hodgkin's lymphoma.

Speaker #2: Thank Thank you. Good morning, and thanks for you. Good morning, and thanks for joining us joining us today. I'm going to accompany today. I'm going to accompany this morning you this morning by CFO and Head of by CFO and Head of Consumer Lending, Consumer Lending, Mark Mark Ruggiero.

Speaker #2: These positives were offset by a smaller average balance sheet and lower loan accretion income. Our deposit franchise continued to differentiate itself, producing over $300 million of non-time deposits representing 7% annualized growth, while maintaining a stable cost of deposits of $136.

Speaker #2: I'm happy lymphoma. I'm happy to report that to report that I have finished my I have finished my treatment and treatment and learned last Friday that I am learned last Friday that I am cancer-free and in cancer-free and in remission.

Speaker #2: Before we Ruggiero. Before we discuss our quarterly discuss our quarterly results, I wanted results, I wanted to share an update on to share an update on my my health.

Speaker #2: So, on remission. So on that, good that, good note, I'd like to turn to note, I'd like to turn to our quarterly our quarterly results.

Speaker #2: These results were achieved in an environment of heightened competition and expectations that the Fed will keep rates higher for longer. On the lending front, we experienced robust growth in the CNI and home equity portfolios, offset by heavy loan payoffs within the CRE book.

Speaker #2: While results. While activity was slow early in activity was slow early in the second the second quarter, momentum accelerated quarter, momentum accelerated as the as the quarter progressed, resulting quarter progressed, resulting in solid in solid deposit growth, deposit growth, strong CNI strong CNI loan growth, loan growth, continued improvement in continued improvement in the adjusted the adjusted NIM, NIM, aggressive buyback aggressive buyback activity, and activity, and excellent results in our excellent results in our wealth management wealth management business.

Speaker #2: These business. These positives positives were offset by a smaller were offset by a smaller average average balance sheet and lower balance sheet and lower loan accretion loan accretion income.

Speaker #2: With respect to CNI, excluding the impact of the $37 million decrease in our dealer floor plan business, which we have now largely exited, our CNI loans rose by $116 million, a healthy 10% on an annualized basis.

Speaker #2: This growth was broad-based across all of our market segments. Investment CRE in construction loans conversely declined 176 million during the quarter. Primarily reflecting elevated payoffs due to a variety of factors, including asset sales, refinancing done away from us, and construction loans maturing and going to the permanent market.

Speaker #2: Our income. Our deposit franchise continued to deposit franchise continued to differentiate differentiate itself, producing itself, producing over $300 over $300 million of non-time million of non-time deposits deposits representing representing 7% annualized 7% annualized growth, while growth, while maintaining a stable cost of maintaining a stable cost of deposits of deposits of $136.

Speaker #2: longer. On the lending front, we On the lending front, we experienced robust experienced robust growth in the CNI and growth in the CNI and home equity home equity portfolios, portfolios, offset by heavy offset by heavy loan payoffs within loan payoffs within the CRE the CRE book.

Speaker #2: These $136. These results were achieved in an results were achieved in an environment of environment of heightened competition and heightened competition and expectations expectations that the fund would keep rates that the fund would keep rates higher for higher for longer.

Speaker #2: With respect book. With respect to to CNI, excluding the impact of CNI, excluding the impact of the the $37 million decrease in $37 million decrease in our dealer our dealer floor plan business, which floor plan business, which we have now we have now largely largely exited, our exited, our CNI loans rose by CNI loans rose by $116 million, a $116 million, a healthy healthy 10% on an annualized 10% on an annualized basis.

Speaker #2: We like that CRE asset class and will continue to support our clients in this space the way we always have. This is evidenced by the $203 million in new relationship-based CRE loans we've funded in the quarter, up 11% from the first quarter, and the $300 million of new CRE commitments we added.

Speaker #2: basis. This growth was This growth was broad-based across broad-based across all of our market all of our market segments. Investment segments. Investment CRE in construction CRE and construction loans conversely loans conversely declined declined 176 million during 176 million during the the quarter, primarily quarter, primarily reflecting reflecting elevated payoffs due elevated payoffs due to a variety to a variety of factors, including of factors, including asset asset sales, refinancing sales, refinancing done away from done away from us, and us, and construction loans construction loans maturing and going to the permanent maturing and going to the permanent market.

Speaker #2: Our CRE concentration now stands at 278. On June 30, our approved commercial loan pipeline totaled $510 million, up from $313 million on March 31.

Speaker #2: This strong loan pipeline, together with continued strong origination activity, and an expected normalization of payoff activity, positions us well to return to positive commercial loan growth.

Speaker #2: We liked the market. We liked the CRE asset CRE asset class and will continue to support class and will continue to support our our clients in this space the way we clients in this space the way we always always have.

Speaker #2: This is have. This is evidenced by the evidenced by the $203 $203 million in new million in new relationship-based CRE loans relationship-based CRE loans we funded in we funded in the quarter, up the quarter, up 11% 11% from the first from the first quarter, and the quarter, and the $300 million of $300 million of new CRE new CRE commitments we commitments we added.

Speaker #2: The second quarter also saw continued improvement in the adjusted NIM, which rose by 4 basis points, right in line with our guidance. This reflects pricing discipline across both our loan and deposit portfolios.

Speaker #2: Mark will elaborate on our NIM during his comments. As Mark will also further expand on, we maintained a proactive posture in returning excess capital to shareholders.

Speaker #2: Our added. Our CRE concentration now CRE concentration now stands at stands at 278. On June 278. On June 30, our approved commercial loan 30, our approved commercial loan pipeline pipeline totaled $510 totaled $510 million, up million, up from $313 from $313 million on million on March March 31.

Speaker #2: With expected further improvement in our profitability and moderate balance sheet growth, capital management will remain a key priority for the balance of the year.

Speaker #2: The second growth. The second quarter also quarter also saw continued improvement in saw continued improvement in the adjusted the adjusted NIM, which rose NIM, which rose by 4 basis by 4 basis points, right in line with our points, right in line with our guidance.

Speaker #2: This 31. This strong loan pipeline, strong loan pipeline, together with together with continued strong origination continued strong origination activity and an activity and an expected expected normalization of payoff normalization of payoff activity, activity, positions us well to return positions us well to return to to positive commercial loan positive commercial loan growth.

Speaker #2: Our wealth management business continues to be a key fee-income driver for us. Second quarter results benefited from strength in our traditional asset management business, as well as inroads we have made in the enterprise footprint.

Speaker #2: This guidance. This reflects pricing reflects pricing discipline across both our discipline across both our loan and loan and deposit deposit portfolios. portfolios. Mark will elaborate on our Mark will elaborate on our NIM during NIM during his his comments.

Speaker #2: I would also highlight momentum in our business advisory services segment, where we assist business owners to prepare for and manage the sale of their companies, which has shown early signs of being a real positive catalyst for potential AUM inflows.

Speaker #2: comments. As Mark will also As Mark will also further further expand on, we maintained expand on, we maintained a proactive a proactive posture in returning posture in returning excess capital to excess capital to shareholders.

Speaker #2: shareholders. With With expected further improvement in expected further improvement in our our profitability and profitability and moderate balance sheet moderate balance sheet growth, capital growth, capital management will management will remain a key priority for remain a key priority for the balance of the balance of the the year.

Speaker #2: Second quarter results us. Second quarter results benefited benefited from strength in our from strength in our traditional asset traditional asset management business, as well management business, as well as as inroads we have made in the inroads we have made in the enterprise enterprise footprint.

Speaker #2: Our net charge-offs were just 2 basis points for the second quarter, and have averaged just 9 basis points over the last 5 quarters. Our loan loss provision represented 14 basis points of average loans in the second quarter, and has averaged 13 basis points over the last 5 quarters, excluding the day-one impact of the enterprise acquisition.

Speaker #2: I would footprint. I would also highlight also highlight momentum in our business momentum in our business advisory advisory services segment, where services segment, where we assist we assist business owners to prepare business owners to prepare for and for and manage the sale of their manage the sale of their companies, which has shown early signs of being a real positive catalyst for potential AUM inflows.

Speaker #2: Our year. Our wealth management business continues wealth management business continues to be a to be a key fee income driver for key fee income driver for us.

Speaker #2: Excluding M&A charges and non-recurring core system conversion costs expenses were flat versus the first quarter. Mark will provide a detailed breakdown of the moving parts within our expenses.

Speaker #2: With respect to asset quality, while we continue to see movement in and out of our non-performing loans and criticize and classify loan buckets, the levels are consistent with our historical credit performance: our net charge-offs were performance: our net charge-offs were just 2 basis just 2 basis points for the second points for the second quarter, and have quarter, and have averaged just 9 basis averaged just 9 basis points over the points over the last 5 last 5 quarters.

Speaker #2: We remain vigilant regarding our expense levels, as we have stated in the past, given the investments we have made in people and technology over the past few years, we believe we have the scale to continue to grow without significant additions to our expense base.

Speaker #2: With respect to asset quality, while we continue to see movement in and out of our non-performing loans and criticized and classified loan buckets, the levels are consistent with our historical credit. Early signs are being a real positive catalyst for potential AUM inflows.

Speaker #2: There is a significant amount of work underway as we prepare to transition our core operating platform from Horizon to IBS, both part of the FIS ecosystem.

Speaker #2: Our quarters. Our loan loss provision loan loss provision represented represented 14 basis points of 14 basis points of average loans of average loans of the second quarter, the second quarter, and has averaged and has averaged 13 basis points over the 13 basis points over the last 5 last 5 quarters, excluding the quarters, excluding the day-one impact day-one impact of the enterprise of the enterprise acquisition.

Speaker #2: The conversion is scheduled to take place in October of this year. The IBS platform positions us to improve client service and enhance operating efficiencies, accelerate the introduction of new products and support future growth.

Speaker #2: Mark will quarter. Mark will provide a detailed provide a detailed breakdown of the moving breakdown of the moving parts within our parts within our expenses.

Speaker #2: acquisition. Excluding Excluding M&A charges, M&A charges, non-recurring core non-recurring core system conversion system conversion costs, costs, expenses were flat versus the expenses were flat versus the first first quarter.

Speaker #2: Related, I'd like to take a moment to talk about AI. This is obviously a topic on investors' minds. In the first quarter, we established an Office of Digital Innovation.

Speaker #2: expenses. We remain We remained vigilant regarding our vigilant regarding our expense expense levels, as we have stated in the levels, as we have stated in the past, past, given the investments we have given the investments we have made in people and made in people and technology over the past technology over the past few few years, we believe we have years, we believe we have the scale to continue the scale to continue to grow without to grow without significant additions to significant additions to our expense our expense base.

Speaker #2: There is base. There is a significant a significant amount of work underway as amount of work underway as we prepare we prepare to transition our core to transition our core operating operating platform from platform from Horizon to Horizon to IBS, both IBS, both part of the part of the FIS FIS ecosystem.

Speaker #2: We've stood up a governance framework around our AI activities to ensure we stay within the guardrails of our moderate risk profile and that any actions are consistent with our award-winning culture.

Speaker #2: The conversion is scheduled to ecosystem. The conversion is scheduled to take place take place in October of this in October of this year. The year.

Speaker #2: This governance framework includes a steering committee that will serve as a clearinghouse for AI use cases. This will allow us to make AI investments in those areas that have a meaningful payback and avoid the proverbial boiling the ocean.

Speaker #2: The IBS platform positions us to improve client service, enhance operating efficiencies, accelerate the introduction of new products, and support future growth. Related, I'd like to take a moment to talk about AI.

Speaker #2: Related, I'd like to take a moment to talk about AI. This is obviously a topic on investors' minds. In the first quarter, we established a governance framework around our AI, and we established an Office of Digital Innovation.

Speaker #2: I expect us to start with some relatively easy use cases as we build muscle memory. Over time, this should enable us to gain confidence in our ability to execute and take on bigger, more impactful applications.

Speaker #2: We've stood up a governance framework around our AI activities to ensure we stay within activities to ensure we stay within the guardrails the guardrails of our moderate risk of our moderate risk profile and that any actions profile and that any actions are consistent with are consistent with our award-winning our award-winning culture.

Speaker #2: Our strategy remains straightforward: organic growth through new and existing relationships, maintained disciplined underwriting, generate positive operating leverage, and deploy our strong capital position to create long-term shareholder value.

Speaker #2: This is obviously a topic on investors' minds. In the first quarter, we established an Office of Digital Innovation. We've stood up a service to enhance operating efficiencies, accelerate the introduction of new products, and support future growth.

Speaker #2: I want to thank all Rockland Trust employees for their tremendous efforts on a daily basis. Every measure of our success is a direct result of their commitment.

Speaker #2: culture. This This governance framework includes a governance framework includes a steering committee steering committee that will serve as a clearinghouse that will serve as a clearinghouse for AI for AI use cases.

Speaker #2: I of. I expect us to start expect us to start with some relatively easy with some relatively easy use cases as use cases as we build muscle we build muscle memory.

Speaker #2: On that note, I'll turn it over to Mark.

Speaker #2: memory. Over time, this should enable Over time, this should enable us to gain us to gain confidence in our ability to confidence in our ability to execute and take execute and take on bigger, more on bigger, more impactful impactful applications.

Speaker #2: use cases. This will This will allow us to make AI allow us to make AI investments in those investments in those areas that have a meaningful areas that have a meaningful payback payback and avoid the and avoid the proverbial boiling proverbial boiling ocean.

Speaker #3: Thanks, Jeff. And to summarize, the quarter results: 2026 second quarter net income was $81.8 million, and diluted EPS was $1.70, resulting in a 1.34% return on assets, a 9.24% return on average common equity, and a 14.05% return on average tangible common equity.

Speaker #2: Our strategy applications. Our strategy remains remains straightforward: organic growth straightforward: organic growth through new and through new and existing existing relationships, relationships, maintained disciplined maintained disciplined underwriting, underwriting, generate positive operating generate positive operating leverage, and leverage, and deploy our strong deploy our strong capital positions to capital positions to create long-term shareholder create long-term shareholder value.

Speaker #2: I want to thank value. I want to thank all Rock & all Rock & Trust employees for their tremendous Trust employees for their tremendous efforts on a efforts on a daily daily basis.

Speaker #3: The second quarter results were a great reflection of the bank's ability to drive strong core profitability and return capital to shareholders despite the highly competitive environment, keeping loan growth relatively flat.

Speaker #2: On that note, I'll turn it over to note, I'll turn it over to Mark. Mark.

Speaker #3: Thanks, Jeff. Thanks, Jeff. And to And to summarize, the quarter results: summarize the quarter results, 2026 second quarter net 2026 second quarter net income was income was $81.8 $81.8 million, and million, and diluted EPS was diluted EPS was $1.70, resulting in a $1.70, resulting in a 1.34% return on 1.34% return on assets and a assets, a 9.24% return 9.24% return on average common on average common equity, and equity, and a a 14.05% return on average 14.05% return on average tangible common tangible common equity.

Speaker #3: Touching first on the capital management aspect, during the quarter we completed the previous year's buyback authorization and in May announced a new $200 million share repurchase plan.

Speaker #2: Every measure basis. Every measure of our success is a of our success is a direct result of direct result of their their commitment. On that commitment.

Speaker #3: During the second quarter, we repurchased 75 million dollars in capital, bringing our capital ratios down slightly, with the CET-1 ratio at June 30 now at 12.8%, and the tangible capital ratio at 9.7%.

Speaker #3: The equity. The second quarter second quarter results were a great reflection results were a great reflection of the bank's of the bank's ability to drive ability to drive strong core strong core profitability and profitability and return capital return capital to shareholders despite to shareholders despite the highly the highly competitive environment, competitive environment, keeping loan keeping loan growth relatively growth relatively flat.

Speaker #3: Going forward, we will continue to leverage the buyback plan as our primary means of returning excess capital to our shareholders. In terms of the core profitability improvement, the main drivers continue to be core net interest margin expansion, coupled with prudent share repurchases.

Speaker #3: Such an first on the flat. Such inference on the capital capital management aspect. management aspect during the During the quarter, we completed the quarter we completed the previous previous year's buyback year's buyback authorization, and authorization and, in May, announced a new in May announced a new $200 $200 million share million share repurchase repurchase plan.

Speaker #3: During plan. During the second the second quarter, we repurchased quarter, we repurchased $75 $75 million in million in capital, bringing our capital, bringing our capital ratios down capital ratios down slightly, slightly, but the CET-1 but the CET-1 ratio at ratio at June 30 is now a June 30 is now a 12.8%, and the 12.8%, and the tangible tangible capital ratio at capital ratio at 9.7%.

Speaker #3: Regarding the margin, though reported loan yields were down 8 basis points in the second quarter, core loan yields increased 3 basis points when adjusted for the exclusion of volatile purchase accounting accretion and other non-core items.

Speaker #3: And although commercial real estate loan growth has been a challenge, we are originating a significant volume of new loans to offset the paydowns and amortization in this portfolio, and that continues to fuel the cash flow and repricing benefit dynamic in our loan yields.

Speaker #3: 9.7%. Going forward, we Going forward, we will continue to leverage the will continue to leverage the buyback buyback plan as our primary plan as our primary means of means of returning excess capital to returning excess capital to our our shareholders.

Speaker #3: Similar characteristics in the securities portfolio drove an increase of 5 basis points for the quarter, with increased amortization and maturities expected in the second half of the year.

Speaker #3: And lastly, as Jeff noted, we are extremely pleased with our ability to hold the line on cost of deposits, keeping that flat at 1.36%.

Regarding the margin, the reported loan yields were down 8 basis points in the second quarter. Core loan yields increased 3 basis points when adjusted for the exclusion of volatile purchase accounting, recreation, and other non-core items.

Regarding the margin though, reported loan yields were down 8 basis points in the second quarter. Core loan yields increased 3 basis points when adjusted for the exclusion of volatile purchase accounting, accretion, and other non-core items.

Speaker #3: With these primary drivers, the core net interest margin increased 4 basis points for the quarter. I mentioned the challenges in the commercial real estate and construction books, but on a positive note, as Jeff mentioned, the second quarter approved commercial pipeline grew nicely to $510 million, a 63% increase from the prior quarter, and reflects a healthy mix of both commercial real estate and C&I.

And although commercial real estate loan growth has been a challenge, we are originating a significant volume of new loans to offset the paydowns and amortization in this portfolio, and that continues to fuel the cash flow and repricing benefit dynamic in our loan yields.

And although commercial real estate, loan growth has been a challenge. We are originating a significant volume of new loans to offset the pay Downs in authorization in this portfolio and that continues to fuel the cash flow and repricing benefit dynamic in our loan yields.

And although commercial real estate loan growth has been a challenge. We are originating a significant volume of new loans to offset the pay downs and authorization in this portfolio and that continues to fuel the cash flow and repricing benefit dynamic in our loan yields.

Similar characteristics in the securities portfolio drove an increase of 5 basis points for the quarter, with increased denomination and maturities expected in the second half of the year.

Speaker #3: On the C&I side, the ability to enhance our combined offerings to both the smaller and mid-market C&I space was highlighted this quarter, as C&I balances increased 10% on an annualized basis when excluding balance runoff from the exited deal of floor plan business.

And lastly, as Jeff noted, we are extremely pleased with our ability to hold the line on COSTA deposits, keeping that flat at 1.36%.

With these primary drivers, the core net interest margin increased 4 basis points for the quarter.

Speaker #3: In addition, consumer home equity balances increased 35 million, or 11% on an annualized basis, while residential mortgage activity reflected a nice balance between increased portfolio balances and mortgage banking gain on sale results.

Speaker #3: On the deposit side, there's no secret in our industry when it comes to how competitive the environment is. We believe the second quarter results are a testament to the amazing deposit franchise that continues to differentiate Rockland Trust.

Speaker #3: Not only did we grow period end balances at a 5.9% annualized rate, we did so while maintaining a flat cost of deposits. Average balances; however, were down for much of the quarter, which created a temporary drag on our cash position and overall average earning assets, but we are encouraged by the rebound of balances late in the quarter in our consistent quarterly trends of attracting new core deposit relationships to the bank.

Balance runoff from the exited deal of floor plan business.

On the CNI side, the ability to enhance our combined offerings to both the smaller and mid-market CNI space was highlighted this quarter. My CNI balances increased 10% on an annualized basis. When excluding balance runoff from the exited dealer floor plan business,

Balance runoff from the exited deal of floor plan business.

On the CNI side, the ability to enhance our combined offerings to both the smaller and mid-market CNI space was highlighted. This quarter, my CNI balance has increased 10% on an annualized basis. When excluding balance runoff from the exited Deal of Floorplan business,

In addition, consumer home equity balances increased $35 million, or 11% on an annualized basis.

Residential mortgage activity reflected a nice balance between increased portfolio balances and mortgage banking gain on sale results.

On the deposit side, there's no secret in our industry when it comes to how competitive the environment is.

Speaker #3: As a result of the strong core deposit growth, we paid down $100 million of maturing FHLB borrowings while increasing our working capital line of credit by only 25 million.

We believe the second quarter results are a testament to the amazing deposit franchise that continues to differentiate Rockland Trust.

Speaker #3: I'll now switch gears to asset quality, and I'll highlight the following notable items for the second quarter. Total non-performing assets increased modestly to $103.8 million, or 56 basis points of total assets.

Not only did we grow period and balances at a 5.29% annualized rate we did. So, while maintaining a flat cost of deposit,

Not only did we grow period-end balances at a 5.9% annualized rate? We did. All while maintaining a flat cost of deposit.

Not only did we grow period in balances at a 5.9% annualized rate? We did so while maintaining a flat cost of deposit,

Not only did we grow period-end balances at a 5.9% annualized rate, we did so while maintaining a flat cost of deposits.

Average balance was, however, lower throughout much of the quarter, which created a temporary drag on our cash position and overall average earning assets.

Average balance is, however, we were down in much of the quarter, which created a temporary drag on our cash position and overall average earning assets.

Average balance is, however, we were down too much of a quarter, which created a temporary drag on our cash position and overall average earning assets.

Average balance is, however, we were down in much of the quarter, which created a temporary drag on our cash position and overall average earning assets.

Speaker #3: The changes reflect some normal ins and outs on the commercial loan side, and a net 4.7 million dollar increase in residential loans. Regarding the latter, though we are seeing some increased volatility in delinquencies and non-performers, and almost all work-out cases to date, there is sufficient equity in the homes and net charge loss remain extremely low in this portfolio.

But we are encouraged by the rebound of balances late in the quarter and our consistent quarterly trends of attracting new core deposit relationships to the bank.

As a result of the strong core deposit growth, we paid down $100 million of maturing FHLB borrowing while increasing our working capital line of credit by only $25 million.

Speaker #3: Along those lines, net charge loss for the quarter were only $911,000, or 2 basis points annualized, with total year-to-date charge loss now at only 6 basis points on an annualized basis.

I'll now use this time to ask about quality, and I'll highlight the following notable ones for the second quarter.

I'll now proceed. Here is a question on quality, and I'll highlight the following notable questions for the second quarter.

I'll now use this time to ask about quality, and I'll highlight the following notable ones for the second quarter.

What I'll now do here is ask about the quality, and I'll highlight the following notable questions for the second quarter.

Total non-performing assets, increased due to the audit, leading to $103.8 million, or 55 to 56 basis points of total assets.

Total non-performing assets, including the audit, increased to $103.8 million, or 556 basis points of total assets.

Total non-performing assets increased on recent audits, leading to $103.8 million, or 55 to 56 basis points of total assets.

Total non-performing assets, including the audit, increased to $103.8 million, or 556 basis points of total assets.

Speaker #3: The second quarter provision of 6.3 million and increase in the allowance for loan loss to 1.06% of loans was primarily driven by modest specific reserves on a couple of commercial loans.

The changes reflect some normal ins and outs on the commercial loan side and a net $4.7 million increase in residential loans.

Speaker #3: And lastly, total criticized and classified loans decreased versus the prior quarter, as we remain hyper-vigilant on effective early identification and development of work-out strategies on problem loans.

Regarding the latter, we are seeing some increased volatility in delinquencies and non-performers in almost all workout cases to date. There is sufficient equity in the homes and net charge loss remains extremely low in this portfolio.

Speaker #3: Moving to non-interest items, fee income of $42.4 million was up over 5% from the prior quarter, the wealth management business continues to lead the way with AUA at 9.5 billion as of June 30, driving higher wealth management fees combined with elevated tax preparation fees of $537,000 during the quarter.

Along those lines. Net charge us for the quarter were only 911,000 or 2 basis points annualized with total year-to-year charge offs. Now, at only 6 basis points on an annualized basis, the second quarter of provision of 6.3 million and increase in the allowance for all of us to 1.06% of loans, was primarily driven by Modest Pacific reserves on a couple of commercial loans.

Along those lines, net charge-offs for the quarter were only $911,000, or 2 basis points annualized. Year-to-date charge-offs are now at only 6 basis points on an annualized basis. The second quarter provision of $6.3 million, and an increase in the allowance for loss to 1.06% of loans, was primarily driven by modest specific reserves on a couple of commercial loans.

Along those lines, net charge-offs for the quarter were only $911,000, or 2 basis points annualized, with total year-to-date charge-offs now at only 6 basis points on an annualized basis. The second quarter provision of $6.3 million and increase in the allowance for loan losses to 1.06% of loans was primarily driven by modest specific reserves on a couple of commercial loans.

Speaker #3: In addition to wealth, we saw solid fee income growth from our deposit and treasury management services, as well as increased swap volume. On the expense side, the quarter-over-quarter results reflect a few moving pieces that I'll highlight.

And lastly, total criticized classified is going to decrease for us in the prior quarter, as we remain hyper-vigilant on effective early identification and development of workout strategies on problem loans.

And lastly, total criticizing classified is going to decrease for us from the prior quarter, as we remained hyper-vigilant on effective early identification and development of workout strategies on problem loans.

And lastly, total criticized classified loans decreased for us compared to the prior quarter, as we remained hyper vigilant on effective, early identification and development of workout strategies for problem loans.

Speaker #3: Specific to quarter-over-quarter trends, the second quarter has zero merger-related expenses versus $3 million recognized in the first quarter. Secondly, we incurred approximately $2.1 million of expenses related to the ongoing preparation of our core conversion project, versus $1.1 million of similar expenses in the first quarter.

Moving to non-interest items: fee income of $42.4 million was up over 5% from the prior quarter.

The wealth management business continues to lead the way, with AUA at $9.5 billion as of June 30th, driving higher wealth management fees, combined with elevated tax preparation fees of $537,000 during the quarter.

The wealth management business continues to lead the way with AUA at $9.5 million as of June 30th, driving higher wealth management fees combined with elevated tax preparation fees of $537,000 during the quarter.

The wealth management business continues to lead the way with AUA at 9.5 million. As of June 30th, driving higher wealth management fees combined with elevated tax preparation, fees of 537,000 during the quarter.

Speaker #3: The majority of these are consulting-related, included in the other non-interest category in our earnings release. After excluding these two items, our remaining core expenses were relatively flat versus the prior quarter, as reductions in incentive expense, payroll taxes, and snow removal will offset by annual merit increases annual director equity compensation grants, and some other miscellaneous increases.

In addition to wealth, we saw solid fee income growth from our deposit and Treasury Management Services, as well as increased swap volume.

On the expense side, the quarter-over-quarter results reflect a few moving pieces that I'll highlight.

Specific to quarter-over-quarter trends, the second quarter has zero merger-related expenses versus $3 million recognized in the first quarter.

Speaker #3: And lastly, as expected, the tax rates stayed relatively consistent at 23.4%. With that, I'll now finish up by revisiting our 2026 folio guidance. First, we reaffirm our two primary profitability targets for the fourth quarter of 2026.

Secondly, we incurred approximately $2.1 million of expenses related to the ongoing preparation of our core conversion project, versus $1.1 million of similar expenses in the first quarter.

The majority of these are consulting-related and are included in the other non-interest category in our earnings release.

Speaker #3: The first is return on average assets of 1.4%, and the second is return on average tangible capital of 15%. Regarding loan growth, given the paydown activity experienced in the second quarter, we update our pre- and construction folio estimates to now be flat to low single-digit percentage decrease.

After excluding these two items, our remaining core expenses were relatively flat for us. The prior quarter, reductions in incentive expense, payroll taxes, and snow removal were offset by annual merit increases, annual director equity compensation grants, and some other miscellaneous increases.

After excluding these two items, our remaining core expenses were relatively flat compared to the prior quarter, as reductions in incentive expense, payroll taxes, and snow removal were offset by annual merit increases, annual director equity compensation grants, and some other miscellaneous increases.

Speaker #3: For C&I growth, with minimal headwinds from the exited floor plan business, we would expect to land on the high end of the mid-single-digit percentage range of the guidance.

And lastly, we expect the tax rate to be relatively consistent at 23.4%.

With that, I'll now finish up by revisiting our 2026 full-year guidance.

Speaker #3: And for total consumer, we now assume a folio increase in the low single-digit percentage range. Our folio deposit growth guidance remains unchanged, and similarly, with the core margin increase as expected for the quarter, we reaffirm our 2026 fourth quarter margin will be in the range of 3.9 to 3.95%, though likely on the low end of that range.

First, we reaffirm our two primary profitability targets for the fourth quarter of 2026.

The first is return on average assets of 1.4%, and the second is return on average tangible capital of 15%.

Single digit percentage decrease.

Low single digit percentage decrease.

Regarding loan growth, given the paydown activity experienced in the second quarter, we update our Q3 and construction full-year estimates to now be flat to a low single-digit percentage decrease.

Speaker #3: I would also point out this range includes a 10 basis point impact assumption from purchase accounting accretion. Our fee income and tax guidance also remains unchanged.

For CNI growth with minimal headwinds from the exit floor plan business.

For CNI growth, with minimal headwinds from the exit of the Exit 4 plan business.

For CNI growth, with minimal headwinds from the exit of the floor plan business.

We would expect to land on the high end of the mid-single-digit percentage range of the guidance.

Speaker #3: And lastly, on the expense side, we anticipate core expenses, which exclude the systems conversion expenses, to be in the $553 to $557 million range, plus the one-time systems conversion expenses to land in the 5 to 6 million dollar total range for the year.

And for total consumer, we now assume a full increase in the low single-digit percentage range.

And for total consumer, we now assume a full-year increase in the low single-digit percentage range.

Our full-year deposit growth guidance remains unchanged.

Speaker #3: And that concludes my comments, and with that, we'll open it up for questions.

Speaker #1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

And, similarly, with the core margin increase as expected for the quarter, we reaffirm our 2026 guidance. Fourth quarter margin will be in the range of 3.90% to 3.95%. So, likely on the low end of that range. I would also point out this range includes a 10 basis point impact assumption from the purchase accounting agreement.

And similarly, with the core margin increased as expected for the quarter, we reaffirm our 2026. Fourth quarter margin will be in the range of 3.90% to 3.95%, so likely on the low end of that range. I would also point out this range includes a 10 basis point impact assumption from the purchase accounting agreement.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality and if you are muted locally, please remember to unmute your device.

Our fee income-to-tax guidance also remains unchanged.

Our fee income for tax guidance also remains unchanged.

Our fee income-to-tax guidance also remains unchanged.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of Justin Crowley from Piper Stanler. Your line is open.

And lastly, on the expense side, we anticipate core expenses, which exclude the systems conversion expenses, to be in the $553 to $557 million range. Plus, the one-time systems conversion expenses are expected to land in the $5 to $6 million total range for the year.

Speaker #1: Please go ahead.

And that concludes my comments. With that, I'll open it up for questions.

And that concludes my comments, and with that, we will open up for questions.

And that concludes my comments. With that, I'll open it up for questions.

And that concludes my comments, and with that, we will open up for questions.

Speaker #3: Hey, good morning, guys.

Thank you.

Speaker #4: Hi, Justin.

Speaker #3: First of all, Jeff, on the health update, congratulations. That's really excellent news and thrilled to hear. I think we all are.

We will now begin the question and answer session.

If you would like to ask,

Speaker #4: Thank you.

Speaker #3: But I wanted to start out on loan growth and maybe just dig into that commercial real estate bucket where the guide was tweaked a bit lower.

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Press star 1 to raise your hand to withdraw your question. Press star 1. Again, we ask that you pick up your handset to ask a question to allow for optimal sound quality. And if you are muted locally, please remember to unmute your device.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking questions to allow for optimal sound quality. If you are muted locally, please remember to unmute your device.

Thank you. We will now begin the question and answer session. If you would like to ask questions, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking questions to allow us to optimize sound quality, and if needed locally with your members, to unmute your device.

Speaker #3: I was wondering if you can give a sense of what else may have gone into that beyond I know you mentioned the payoff activity.

Please stand by.

Please stand by while we compile the Q&A roster.

Please stand by.

Speaker #3: But just maybe some detail just on the evolution of the market uncertainty and competition from where we were 90 days ago, when we talked through this.

Your first question comes from the line of Justin Crowley from Piper Sandler. Your line is open. Go ahead.

Speaker #4: Yeah. I mean, especially in commercial real estate, it feels like the market has continued to get more aggressive as the year has unfolded. Part of that is evidenced by we talked about the elevated paydowns in the second quarter.

Hey, good morning, guys. Um, first of all, Jeff, on the health update, congratulations. That's really excellent news, and we're thrilled to hear it—I think we all are. Um, but...

Hey, good morning, guys. Um, first of all, Jeff, on the health update—congratulations. That's really excellent news, and we're thrilled to hear it. I think we all are. Um, but...

Hey, good morning, guys. Um, first of all, Jeff, on the health update—congratulations. Really, excellent news and thrilled to hear it; I hope we all are. Um, thank you, but...

Hey, good morning, guys. First of all, Jeff, on the health update—congratulations. That's really excellent news, and I'm thrilled to hear it. I think we all are. Thank you.

Speaker #4: We had two loans in the second quarter that accounted for $120 million of those paydowns. So one of both of those loans were refinanced away from us.

Speaker #4: And one of them was refinanced really on terms and conditions that we were very uncomfortable with. And so that's some of the headwinds that we have when we're trying to grow the commercial loan book.

I wanted to, uh, start out on loan growth and maybe just dig into, um, that commercial real estate bucket, where the guide was a bit lower. Um, you know, I was wondering if you could give a sense of, you know, what else went into that. You know, I know you mentioned the payoff activity, but maybe some details on the evolution of the market, uncertainty, and competition from where we were 90 days ago when we talked through this.

Wanted to, uh, sort out on on loan growth that and maybe just take into, um, rest commercial real estate bucket, uh, where we can speak a bit lower. Um, you know, I was wondering if you can give a sense of, you know, what else, we had gone into that, you know, I know you mentioned the payoff activity, um, but just maybe some details on the evolution of the market of certainty and composition from where we were in 90 days ago. Um, when we talk through this

Wanted to, uh, sort out on on growth and maybe just take into, um, the commercial real estate bucket, uh, where the guy speaks a bit lower? Um, you know, I was wondering if you can give a sense of, you know, what else? We have gone into that. You know, I know you mentioned the payoff activity, um, but just maybe some detail that's on the evolution of the market uncertainty and competition from where we were 90 days ago. Um, when we talk through this,

wanted to, uh, start out on on loan growth and maybe just take into, um, the commercial real estate bucket, uh, where the guidance takes a bit lower. Um, you know, I was wondering if you give a sense of, you know, what else, we've gone into that, you know, I know you mentioned the payoff activity, um, but just maybe some details on the evolution of the market uncertainty and competition from where we were 90 days ago when we talked through this.

Speaker #4: Having said that, as Mark pointed out, and I did as well in my comments, we still originated a healthy amount of commercial real estate in the quarter.

Speaker #4: And it feels like we can continue to do that in the back half of the year, and really would expect paydowns to revert back to their more historical levels, which is why we think in the second half of the year, we could see flat to modestly up commercial real estate balances.

Speaker #4: It won't offset the first half of the year headwinds, but we think that is a good signal for us in terms of growing the balance sheet.

Yeah, especially in commercial real estate. It feels like the the market has continued to get more aggressive as the years has has, um, has unfolded. Um, you know, part of that is evidence by, you know, we talked about the elevated pay Downs in the second quarter. We had 2 loans, uh, in the second quarter that account is for 120 million dollars of those pay Downs. Um, so and what, what are both of those loans are refinanced away from us, uh, and 1 of them was refinanced, uh, really on terms and conditions that we were very uncomfortable with. Um, and so that some of the headwinds that we have

Yeah, especially in commercial real estate. It feels like the the market has continued to get more aggressive as the years has has, um, has unfolded. Um, you know, part of that is evidence by, you know, we we talked about the elevated pay Downs in the second quarter. We had 2 loans, uh, in the second quarter that account is for 120 million dollars of those pay Downs. Um, so and what, what are both of those loans are refinanced away from us, uh, and 1 of them was refinanced, uh, really on terms and conditions that we were very uncomfortable with. Um, and so that some of the headwinds that we have

Have 1. We're trying to to um, to grow the commercial loan. But um having said that uh as as pointed out and and I did as well, my comments.

Yeah, especially in commercial real estate. It feels like the the market has continued to get more aggressive as the year is has um, has unfolded. Um, you know, part of that is evidenced by, you know, we talked about the elevated pay Downs in the second quarter. We had 2 loans, uh, in the second quarter that accounted for 120 million dollars of those pay Downs. Um, so and what are both of those loans are refinanced away from us, uh and 1 of them was recent uh, really on terms and conditions that we were very uncomfortable with. Um, and so that some of the headwinds that we have when we're trying to to, um, to grow the commercial loan. But um, having said that uh as as pointed out and and I did as well, my comments.

1, we're trying to to um, to grow the commercial loan. But um having said that uh as as pointed out and and I did as well, my comments.

Speaker #3: Okay. And then I guess kind of like within commercial real estate, and I know it's still early days here, but what have you been hearing from borrowers in the wake of the decision we got just on Massachusetts rent control?

Uh, we still originated a healthy amount of commercial real estate in the quarter, and, um, feel like we can continue to do that in the back half of the year. Uh, and really would expect, uh, paydowns to—

Speaker #3: I guess any read on how that could impact the commercial real estate market and just the overall level of activity in the state?

Revert back to their more historical levels, which is why we think in the second half of the year.

Speaker #4: I think it's a little too early to say that we've seen a big increase in the demand for multifamily construction. We have seen some asset sales that I think maybe wouldn't have occurred had that news not come out.

We could see flat the modestly up. Commercial real estate balances. Uh, it won't offset the the first half of the year, uh, headwinds. But we we think that uh, is a good signal, uh, for us in terms of growing the balance sheet.

We could see Flats in modesty up, commercial real estate balances. Uh, it won't offset the the first half of the year, uh, headwinds. But we, we think that uh, is a good signal, uh, for us in terms of growing the balance sheet.

Okay.

Speaker #4: But we do expect that there will be more activity as we move through the second half of the year in that in the multifamily construction space.

Speaker #4: And of course, it also impacts the permanent market as well to the extent that there are sponsors looking to sell their multifamily business. The cap rates have likely come in a bit because of the rent control ruling.

And then I guess, kind of like you know, within commercial real estate and you know, I know it's still early days here. But what what have you been hearing tomorrow in the wake of the decision? We got from Massachusetts from control? Um, you know, I guess any read on how that could impact the commercial real estate market and just overall level of activity in the state.

Okay, and, um, I guess kind of like, you know, within commercial real estate and, you know, I know it's still early days here, but what is, even here and tomorrow is, in the wake of the decision we got from Massachusetts from control—um, you know, I guess, any read on how that could impact the commercial real estate market and the overall level of activity in the state?

Okay, and um, I guess kind of like, you know, within commercial real estate, and you know, I know it's still early days here, but what is even here in tomorrow is, in the wake of the decision we got from Massachusetts, front of control. Um, you know, I guess any read on how that could impact the commercial real estate market and the overall level of activity in the state?

And then, um, I guess kind of like, you know, within commercial real estate—and, you know, I know it's still early days here—but what have you been hearing tomorrow in the wake of the decision we got from Massachusetts from control? Um, you know, I guess any read on how that could impact the commercial real estate market and just the overall level of activity in the state?

Speaker #4: So too early to tell, but I do think as we move through the balance of the year that we'll see an increase in activity.

Speaker #3: Okay. Got it. That's helpful. And then maybe just one last one on credit. As you guys pointed out, overall looks like some stabilization if not some improvement in a lot of areas.

I think it's a little too early to, um, to say that we've seen a, you know, a big increase in the demand for multi-family construction. Um, we have seen some asset sales that I think, um, maybe wouldn't have occurred had that news not come out, but, um, we do expect that there will be more access.

I think it's a little too early to um, to say that we've seen a, you know, a a big increase in the demand for multi-family construction. Um, we have seen some asset sales that I think um maybe wouldn't have occurred had had bad news, not not come out but um we do expect that um there will be more activity.

Speaker #3: And I know there's some moving parts. So I guess just in the not-performing bucket, with the growth inflows picking up a bit over the last quarter, curious if you could talk through some of what you saw there and then just some color on the payoffs that kind of help keep a lid on that net increase for the period.

I think as we move through the second half of the year in the multifamily construction space, and, of course, it also impacts the...

I think it's a little too early to um, to say that we've seen a, you know, a big increase in the demand for multi-family construction. Um, we have seen some asset sales that I think um maybe wouldn't have occurred had. Had that news, not not come out, but um we do expect that um, there will be more activity as as we move through the second half of the year in that in the multi family, construction, space. And and of course the it also impacts the

As as we move through the second half of the year in that, in the multifamily construction space. And, and of course, it also impacts the

I think it's a little too early to um to say that we've seen a, you know, a big increase in the demand for multi-family construction. Um we have seen some asset sales that I think um maybe wouldn't have occurred had had bad news, not not come out, but um we do expect that um there will be more activity as as we move through the second half of the year in in that in the multi, family, construction, space. And and of course the it also impacts the

The cap rates of like the uh come in a bit uh because of the the Run control.

Permanent market as well, to the extent that there are sponsors looking to sell their multifamily business. The cap rates have likely come in a bit because of the rent control.

Cap rates are likely to come in a bit, uh, because of the run control.

Permanent market as well, to be said that there are sponsors looking to sell their multifamily business. The cap rates are likely to come in a bit because of the rent control.

Speaker #4: Yeah. I mean, the story on the non-performing asset side on the commercial is fairly benign. I'd say the biggest movers was the actually resolution and paydown of one office non-performer that we were talking about last quarter that was about an $11 million loan that had been charged down to.

Ruling so, uh, too early as hell, but I do think as we move through the balance of the year that we'll see an increase in activity.

Ruling. So, uh, too early to tell, but we, but I do think as we move through the balance of the year, that we'll see an increase in activities.

Speaker #4: That came off. The NPA list and we had one new one go on at about $14 million. And outside of that, it was very little movement within the commercial bucket.

Speaker #4: I did mention in my prepared comments what you're seeing really is the primary driver of the increase is a bit of an uptick on the resy side.

Okay, got it, that's helpful. Um and then maybe just 1 last thing on credit. Um, as you guys know that you know overall looks like some stabilization, you know, if not Improvement in a lot of areas and I know there's some moving Parts but I guess system are not performing bucket. Um you know with the growth being closed picking up a bit over the last quarter. Um you know, curious if you could talk through some of what you saw there, and then uh just some color on on the payoff that kind of helps keep the lid on that net increase uh, for the period.

Okay, got it, that's helpful. Um and then maybe just 1 last thing on Fredette. Um, as you guys know that, you know, overall looks like some stabilization, you know, if not Improvement in a lot of areas. And I know that's a moving parts and I guess just an amount for bucket. Um, you know, with the growth being closed picking up a bit over the last quarter. Um you know, curious if you could possibly do some of what you saw there, and then uh, just some color on on the payoff that kind of helps people live on that net increase, uh, for the period.

Okay, got it, that's helpful. Um, and then maybe just 1 last thing on credit. Um, as you guys know that, you know, overall looks like some stabilization, you know, if not Improvement in a lot of areas. And I know that's moving Parts but I guess just an amount forming bucket. Um, you know, with the growth being closed, picking up a bit over the last quarter. Um, you know, curious if you could possibly do some of what you saw there, and then, uh, just some color, um, on the payoff that kind of helps keep the lid on that net increase, uh, for the period.

Okay, got it, that's helpful. Um and then maybe just 1 last thing on credit. Um, as you guys know that you know overall looks like some stabilization, you know, if not Improvement in a lot of areas and I know there's some moving Parts but I guess system are not performing bucket. Um you know with the growth being closed picking up a bit over the last quarter. Um you know curious if you could possibly do some of what you saw there and then just some color on on the payoff that kind of helps keep the lid on that net increase uh, for the period.

Speaker #4: But it's interesting as you go through each case, you're seeing a dynamic where the consumer will often suggest that the mortgage payment is one that they're willing to delay while still spending in other areas.

Yeah, I mean the the story on the non-performing asset side on the commercial is is fairly benign. Uh, I'd say the biggest movers was the actually resolution and pay down of of 1.

Yeah, I mean the the story on the non-performing asset side on the commercial is is fairly benign. Uh, I'd say the biggest movers was uh, actually resolution and pay down of of 1.

Office. The non-performer that we were talking about last quarter was an $11 million loan that had been charged down; that came off.

Speaker #4: So believe it or not, we have a lot of what we would call chronic non-performers where they make periodic payments throughout, but it's not at a consistent pace where you can establish putting them back on accruing status.

NPA list, and we had one new one go on at about $14 million.

Speaker #4: So in all cases, there's plenty of equity in the homes. We don't see really any emerging loss. Dynamics in that segment, you're just seeing a little bit of payment or payment issues where delays are ticking up a bit in terms of delinquencies and NPAs.

Um, and, you know, outside of that, there was very little movement within the commercial bucket. I did mention in my prepared comments, what you're seeing really is, the primary driver of the increase is a bit of an uptick on the resi side, but...

Speaker #3: One other comment I'd make on our yeah, sorry, Justin. One other comment I'd make on our non-performing bucket is the largest non-performer which we've talked about, multiple quarters, continues to improve.

Um and and you know outside of that it was very little movement within the commercial bucket. I did mention in my prepared comments what you're seeing really is is the primary driver of the increase is a bit of an uptick on the resi side but you know it's it's interesting as you as you go through each case, um, you know you're seeing a dynamic where, you know the consumer will often suggest the the mortgage payment is 1 that they're willing to to delay. Um, I'll still spending in other areas so believe it or not. We

Speaker #3: And we think there's a chance that it could return to performing status by year-end. So we're encouraged by the progress there.

Speaker #4: In fact, it already started to make interest payments in July. So it was an 18-month no payment period that effectively started last January, of last year.

Of a lot of what we would call chronic non-performance where uh they make very out of payments throughout. But it's not at a consistent Pace where it can establish putting back on a crewing status. So in all cases, you know, there's plenty of equity in the homes. Um, we don't see really any emerging loss dynamic in that segment. You just seeing a little bit.

You know, it's, it's interesting as you as you go through each case, um, you know, you're seeing a dynamic where, you know, the consumer will often suggest that the mortgage payment is 1 that they're willing to to delay. Um, I'll still spending in other areas. So believe it or not, we have a lot of what we would call, chronic non-performance where uh, they make periodic payments throughout but it's not at a consistent Pace where you can establish putting them back on a crewing status. So in all cases, you know, there's plenty of equity in the home. Um we don't see really any emerging loss dynamic in that segment. You just seeing a little bit.

You know, it's, it's interesting as you as you go through each case, um, you know, you're seeing a dynamic where, you know, the consumer will often suggest that the mortgage payment is 1 that they're willing to to delay. Um, I'll still spending in other areas. So believe it or not, we have a lot of what we would call, chronic non-performance where uh they make very out of payments throughout but it's not at a consistent Pace where you can establish putting them back on a crewing status. So, in all cases, you know, this plenty of equity in the homes um we don't see really any emerging loss dynamic in that segment if you're seeing a little bit.

Payment, or you know, payment issues where the delays are picking up a bit in terms of delaying delinquencies and NPA.

Payment, uh, you know, or, you know, payment issues where the delays are sticking up with it in terms of delaying delinquencies and NPO.

Payment, uh, you know, or, you know, payment issues where the delays are picking up a bit in terms of delaying delinquencies and NPO.

payment, um, you know, or, or, you know, payment issues where the delays are sticking up again in terms of delaying delinquencies and NPO,

Speaker #4: So that 18 months has come due and they are starting to make the interest payment.

What other?

What?

Speaker #3: And one other comment on the rent control that you asked about, Justin. And just to be clear, the organization that was putting that forward, they can come back in two years.

Speaker #3: So that's the I'm not sure what the legalese is around that, but they'll have the ability in two years to reintroduce that as a ballot measure.

Comment I make on our non-performance, like it is, is the largest non-performer uh which we've talked about multiple quarters. Um, continues to improve and uh and we think there's a chance um that it could return to performing status by year end.

Are the time I make on our non-performing bucket is is the largest non-performer uh which we've talked about uh multiple quarters um continues to improve and uh we think there's a chance um that it could return to performing status by year end.

Got it. Yeah. Sorry what other time I make on our non-performing bucket is is the largest non-performer uh, which we've talked about uh multiple quarters. Um continues to improve and uh we think there's a chance um, that it could return to performing status by year end.

Got it. Yeah sorry just for 1 of the comments I make in our nonpf performing bucket is is the largest non-performer uh which we've talked about uh multiple quarters um continues to improve and uh we think there's a chance um that it could return to performing status by year end.

So we're encouraged by the progress there. Contracted out, and you started to make interest payments in July.

Uh, so we're encouraged by the progress there. We tracked it out, and he started to make interest payments in July.

Uh, so we're encouraged by the progress there. They're contracted out, and he started to make interest payments in July.

So there's an 18-month, um,

So, there was an 18-month, um,

So there was an 18-month, um,

So, there was an 18-month, um,

Speaker #4: Okay.

Speaker #3: That's helpful. I guess just on that one large non-performer that you called out, do you have what is the balance of that right now?

Speaker #3: I'm not sure if you have it handy.

No payment period that respectively started last January of last year. So that 18 months has come due, and they are starting to make the interest payments.

No payment period that respectively started last January of last year. So that 18 months has come to an end, and they are starting to make the interest payments.

Low payment period that respectively started last January of last year. So that 18 months has come to an end, and they are starting to make the interest payments.

No payment period that respectively started last January of last year. So that 18 months has come to an end, and they are starting to make the interest payments.

Speaker #4: The largest one that's been on non-performing?

Speaker #2: About, Justin? And just to be clear, the organization. Justin? And just to be clear, the organization.

And one other comment on the rest control.

Speaker #3: Yeah. Correct.

Speaker #4: Yeah. That's a $22 million large syndicated loan. We had taken a fairly sizable charge off on that down to that balance. So it's staying on the book now at about $22 million.

Speaker #3: Okay. Perfect. I will leave it there. Thank you so much, guys. Thank you.

Speaker #2: Your next question comes from the line of David Conrad from KVW. Please go ahead.

Speaker #5: Hey, good morning. And I'd also like to say, Jeff, congrats on your help. It's great news.

Speaker #4: Thank you, David.

Speaker #5: You bet. Mark, some questions for you. I mean, I think the quarter really isn't about the NIM, but it's about the balance sheet. And because of the volatility in deposits, I'm looking at cash balances around $730 million EOP last quarter.

Speaker #5: $530 average. And then now we're up to a billion EOP. In cash, with kind of flat securities. So kind of when we think about the guidance and the back half of the year, I guess my key question is, how quickly what do you think cash and securities that mix shift, what will that end up do you think by the end of the year?

Okay, perfect. I will leave it there. Thank you so much, guys.

Your next question comes from the line of David Conrad from KVEW. Please go ahead.

Hey, good morning. And I'd also like to say, Jeff, congrats on your help. It's great news.

Speaker #5: How quickly can you kind of remix that?

Speaker #4: Yeah. No, it's a great question. And we're already remixing that into securities right now. I mean, ideally, we'd like to see that obviously get redeployed into loan growth, but we absolutely will be more aggressive in putting more of that cash balance into the securities bucket.

Thank you, dude. Um, you bet. Um, Mark, um, some questions for you. I mean, I think the quarter really isn't about the NIM, but it's about the balance sheet.

And could develop between deposits. I'm looking—you know, cash balances were at $730 million EOP last quarter.

530 average. And now we're up to $1 billion EOP.

Speaker #4: So ideally, I would say targeting earning cash in the four to five hundred million dollar range over the second half. We'll be a bit we'll monitor the pipeline and see how much of that we are comfortable should get redeployed into loan growth.

In cash, which was kind of a flat security. So, kind of, when we think about the guidance in the back half of the year, I guess my key question is...

You know, how quickly—what do you think—cash and securities?

That mix shift—what will that end up? Do you think by the end of the year? How quickly can you kind of remix that?

Speaker #4: But I would expect you'll see us certainly put more of that back into higher-yielding securities.

Speaker #5: And then you also have what about a half a billion or so rolling off in the second half, like sub 2%, right? So it's another.

Speaker #5: Benefit. Yeah. So I guess yeah. Sorry. Go ahead.

Speaker #4: No, no. You're fine. It's interesting. In the second quarter, you only saw about 70 million of runoff in the securities portfolio, 45 million of it happened literally on the last day of the quarter.

Yeah, no, it's a great question and, and we're already remixing that into Securities right now. I mean, ideally we'd like to see that obviously get redeployed into loan growth but we absolutely will be more aggressive and and putting more of that cash balance into the Securities bucket. Um, so ideally, I I I would say targeting earning cash in the 4 to 500 million dollar range over the second half.

Speaker #4: We had a treasury security mature at 87 basis points. So the five basis point lift, you're seeing in the securities book for the second quarter, very, very comfortable suggesting that's a low point in terms of a quarterly increase.

Will be a bit, you know, will will monitor the pipeline and see how much of that we get comfortable with to get redeployed into loan growth. But you'll I would expect you'll see us. You'll certainly put put more of that back into higher yielding securities.

Speaker #4: The 200 million in the third quarter, 200 million in the fourth quarter, give or take. At 2% coupon, that should create more like a 15 basis point lift each quarter.

And then, and then you also have, what, about a half a billion or so rolling off in the second half, like sub-2%, right? That's another, that's right, benefit. Yeah. Yeah. So what, I guess—yeah, but all right. Good.

No, no, you're fine. It's interesting in the second quarter.

Speaker #4: All other things being equal and I would think we can go even more. North of that, if we're putting more purchases into the book as well.

Speaker #5: Got it. And what yields are you looking at now with the improved yield curve?

You only saw about $70 million of runoff in the securities portfolio. $45 million of it happened literally on the last day of the quarter. We had a Treasury security mature at 87 basis points, so—

Speaker #4: Yeah. I mean, we're still looking mostly at deep discounted MBS that give us sort of down rate protection. But as the rate environment and expectations are starting to shift more, we're more comfortable taking on a little bit more duration.

You know, the 5 basis point lift you're seeing in the securities book for the second quarter—I'm very, very comfortable suggesting that's a low point in terms of a quarterly increase.

Speaker #4: So call it high fours, 5% on new purchases.

Speaker #5: Perfect. Thank you. Appreciate it.

Speaker #4: You're welcome.

Speaker #2: Your next question comes from the line of Steve Moss from Raymond James. Please go ahead.

To, you know, the $200 million in the third quarter, $200 million in the fourth quarter, give or take at a 2% coupon—you know, that should create more like a 15-basis-point lift each quarter, all other things being equal. And I would think we can go even more north of that if we're putting more purchases into the book as well.

Speaker #5: Good morning, guys.

Speaker #4: Good morning.

Speaker #5: Jeff, just to echo what's already been said, congratulations on your health here. Great news there.

Speaker #4: Yep. Thank you.

Speaker #5: Definitely glad to hear it. In terms of just the going back to the loan pipeline here, just kind of curious on the as the mix shifted to more CNI in the pipeline on that 510 million number, or is it kind of similar to what you guys disclosed in there in terms of what was originated for Q2?

Got it. And what yields are you looking at now with the improved yield, Church? Yeah, I mean we're still looking mostly at deep discounted MBS that give us sort of down-rate protection, but as the rate environment and expectations are starting to shift more, we're more comfortable taking on a little bit more duration. So, call it high 4s, 5% on new purchases.

Perfect. Thank you. Appreciate it.

You're welcome.

Speaker #5: And just one other thing to throw in there, just curious on where you've seen loan pricing these days.

Your next question comes from the line of Steve Moss from Raymond James. Please go ahead.

Good morning, guys.

Speaker #4: Yeah. The mix is, I would say, has shifted to CNI slightly. In the pipeline, part of that is we had a number of approved loans that honestly, we thought we were going to close in the second quarter, and they didn't.

Jeff, just to echo what's already been said—congratulations on your health. Great news there.

Um, thank you.

Speaker #4: They slipped into the third quarter. So that's one of the reasons why I think the CNI pipeline is a little bit higher as a percentage of the overall than maybe it was in the first quarter.

Speaker #4: But I think we expect to see good originations in both asset classes, CNI and three, as we move through the second half of the year.

Definitely glad to hear it. Um, in terms of just the, you know, going back to the loan pipeline here, just kind of curious on the—you know, has the mix shifted more C&I in the pipeline on that $510 million number, or is it kind of similar to what you guys disclosed in there in terms of what was originated for '22? And just one of the things that's grown there. Just curious on where you've seen loan pricing these days.

Speaker #5: I'll add on, and the good news is, as more of that pipeline has shifted to CNI, it's primarily more floating rates. So we've seen new originations on the commercial space move up into the mid-6% range.

Speaker #5: In the pipeline, I have the data. It's about 50/50 crease CNI today. I can't recall off the top of my head last quarter. If it was materially different than that, but to just point, it probably continues to tick a bit more up CNI versus crease from a mixed standpoint.

Speaker #5: Okay. Great. Appreciate that color there. And then in terms of capital deployment, you guys bought back 2% of shares outstanding here. Just kind of curious how and capital ratio has barely moved.

Speaker #5: Just kind of curious as to how you guys are thinking about the payout ratio here going forward on combined basis. Do we think about it as 100% of quarterly earnings, or maybe a bit more than that, just given where your capital ratios are at the moment?

But I think we're we expect to see good originations in in both asset classes. Cni and 3, as we move through the second, half of the Year, I'll add on in the good news is as, as more of that pipeline is shifted to cni. It's it's primarily more floating rate. So we've seen new originations on the commercial space move up into the the mid 6% range.

Speaker #4: Yeah. Yeah. I'd say 100% is the minimum, Steve. And I think ability to do more I talked about this in the past, but we're a lot of that, I would like to fund via earnings in a bank holding company structure, dividend funding up from the bank to the holding company allows us to execute buybacks in a much more economic efficient way.

And the pipeline. I, I have the data. It's about 5050. Cni today. I can't recall off the top of my head last quarter. If it was materially different than that but to just point it probably it probably continues to tick a bit more up, cni versus Creep from a mixed standpoint.

Speaker #4: I'm not against borrowing to execute more buyback than that, but that's the calculus we'll go through each quarter to see how aggressive we want to get in terms of returning over 100% of profits.

Okay, great, appreciate that color there. And then in terms of, you know, Capital deployment, you know, you guys bought back 2% of of shares outstanding here. Um, just kind of curious how and, and you know, Capital rations, barely moved, just kind of curious as to, you know, how you guys are thinking about the the payout ratio here going forward on combined basis. You know, do we think about it as a 100% of quarterly earnings or maybe a bit more than that. Just giving where your Capital ratios are, uh, at the moment. Yeah.

Speaker #4: But it's appropriate question to ask. Obviously, the growth has been challenged. So we are definitely committed to executing the buyback in an aggressive manner.

Yeah, I'd say 100% is the minimum, Steve. Um, and I think there is the ability to do more. I've talked about this in the past, but you know, where—

Speaker #5: Okay. Appreciate that. And then on expenses here, just kind of curious, obviously, you got the conversion coming up in October. But it kind of seems like your underlying core expense run rate would be fairly stable.

Speaker #5: Call it 138, 139-ish. As we kind of look at going forward, I know you guys have been looking to hire people and add more talent.

A lot of that, I would like to fund via earnings, um, in a bank holding company, structure dividend funding up from the bank to the holding company allows us to to execute Buybacks in a much more economic efficient way. I'm not against borrowing, um, to to execute more by back than that. But you know, that's

Speaker #5: How do you think about the your investments and maybe your expense growth rate a little further out here?

You know, that's the calculus. We'll go through each quarter to see how aggressive we want to get in terms of returning over 100% of profits. But—

Speaker #4: Yeah. I mean, I think, as Jeff said in his comment, the mentality here is sort of a hold the line type mentality. Meaning, we can't take our foot off the pedal in terms of thinking about AI and technology investments and that's part of what you're seeing even in the last couple of quarters is increased IT spend and talent in those areas to help develop some of the technologies that we know we'll need to deploy throughout the bank internally.

You know, it's an appropriate question to ask. Obviously, the growth has been challenged, so we are definitely committed to executing the buyback in an aggressive manner.

Okay, appreciate that. And then, you know, on on expenses here, just kind of curious, obviously you got the conversion coming up in October, um, you know, but it kind of seems like your underlying core experience around. It would be fairly stable, we'll call it 1:30 at 1:39.

Speaker #4: So it's looking for opportunities to find areas to reduce or get smarter on and other spend across the bank. So I think it's still supporting the infrastructure that we think we need to be a bank that continues to grow in this space, but we need to find the offsets to make sure the expenses are held in check.

You know, as we kind of look at going forward, I know you guys have been looking to hire people and add more talent. How do you think about your investments and maybe your expense growth rate a little further out here?

Yeah, I mean, I I I think as Jeff said in his comment um you know the mentality here is is sort of a hold in the line type mentality. Meaning we we we can't

Speaker #5: Okay. Great. Appreciate all the call there. I'll step back and let you hear. Thanks, guys.

Speaker #4: Okay. Thank you.

Speaker #2: Your next question comes from the line of Lori Hunziker from Seaport Research Partners. Please go ahead.

we can't take our foot off the pedal in terms of thinking about Ai and Technology Investments and, you know, that's part of what you're seeing, you know, even in the last couple of quarters is increased it spend, um, and, and talent in those areas to help develop

Speaker #3: Yeah. Hi. Thanks. Good morning, Jeff. Messengery. Jeff?

Speaker #4: Hello.

Speaker #3: Yes.

Speaker #2: Congratulations. I'm so, so happy to hear that news.

You know, some of the technologies that we know we'll need to deploy throughout the bank internally. So, you know, it's looking for opportunities to, you know, find areas to reduce or get smarter on, and, and other spend in the bank. So...

Speaker #4: Thank you.

Speaker #3: Just wanted to maybe start over with Margin and Deposit, just want to make sure I'm thinking about this right. So as I look link quarter, you guys actually had a jump in your money market.

you know, I think it's it's still supporting the infrastructure that we think we need to, to be a bank that continues to grow in this space, but we need to find, you know, the offsets to to make sure the expenses are held in check

Speaker #3: I mean, the line held flat on an average basis, but I'm talking about the rate, right? So the rate went from 206 to 210.

Okay, great. Appreciate all the comments there. I'll step back in here. Thanks, guys.

Okay, thank you.

Speaker #3: So directionally a little different than what we're seeing. Is it just so competitive? You're paying up, or was that a special, or how do we think about that?

Your next question comes from the line of Lori Hunziker from Seaport Research Partners. Please go ahead.

Speaker #4: Yes. It is we have a money market special that we introduced into the market. I'd say halfway through the second quarter. And that is a 4% sort of short-term money market rate.

Yeah, hi, thanks. Good morning, Jeff and Jerry. Yes, congratulations. I'm so, so happy to hear that news. Thank you. Just wanted to maybe start over.

Speaker #4: So it's not surprising, Lori. We're seeing some of the new money come in on that special. So it's been pretty equally balanced between DDA, low-cost deposits, and higher-rate promo money.

With margin and deposit, I just want to make sure I'm thinking about this right. As I look, in the quarter you guys actually had a jump in your money market.

You know, I mean, the line held flat on an average basis. I'm talking about the rate, right? So the rate went from 2.06 to 2.10, so directionally a little different.

Speaker #4: But I'll be fully candid. We would expect the cost of deposits to tick up a bit in the second half. I'm still comfortable with the fourth quarter guidance range that we gave with the margin in the 390, 395 range.

Than what we're seeing. Is it just so competitive that you're paying up, or was that a special, or how should we think about that?

Speaker #4: But I spot cost of deposits in June was at 1.38%. So I think you'll see a little bit of pressure on the cost of deposits in the second half.

Yes, it is. Um, we have a money market special that we introduced into the market, you know, I'd say halfway through the second quarter.

Speaker #3: Okay. That's helpful. And then what was your spot margin?

And that, that is a 4% sort of short-term money market rate. So it's not surprising, Lori, we're seeing some of the new money come in on that special.

Speaker #4: It was so spot margin for June stayed at 376, which is what the full quarter was despite that cost of deposit increase I just mentioned.

Great promo money.

Speaker #4: So we're still seeing the asset side reprice to offset that.

Speaker #3: Great. Okay. So 376, and that's obviously excluding the accretion.

Speaker #4: Exactly. That's a core number. Correct.

Speaker #3: Core. Okay. Okay. Great. And then just going over back over to office, so you're down to you've got the two office non-performers. Obviously, the 22 million, which you've talked about for some time.

But, you know, I I I'll be fully candid. You know, we would expect the cost of deposits to tick up a bit in the second half. I'm still comfortable with the fourth quarter, guidance range that we gave with the the margin in the 39395 range. But um, you know, I spot cost of deposits in June was at 1.38%. So I I think you'll see a little bit of pressure on the cost of deposits in the second half.

Okay, that's helpful. And then, what was your spot margin?

Speaker #3: And I just want to make sure I heard that potentially goes current in the fourth quarter.

Speaker #4: By year-end, potentially.

Speaker #3: By year-end. Okay. Okay. And then the 18 million office that remains, that's the life sciences loan?

Spot margin for June stayed at 3.76%, which is what the full quarter was, despite that cost of deposit increase I just mentioned. So we're still seeing the asset side repriced to offset that.

Great. Okay, so $376, and that's obviously excluding the accretion.

Speaker #4: In classified? I think in non-performing. In our non-performing?

Uh, exactly. That's a core number, correct?

Speaker #3: In non-performing.

Speaker #4: No. The 18 million is the that's a loan that had moved into non-performing last quarter. We had taken a reserve on it. We're in the process of brokering that for sale.

Course okay, okay, okay great. Um, and then just going over um back over to office. Um so you're down to you've got the 2 office, non-performers obviously, the 22 million which you talked about for some time and I just want to make sure I heard that potentially um goes current in the fourth quarter.

Speaker #4: Based on some updated BOVs, that's one of the two properties we actually put a bit more reserve on. So we're hoping to get that resolved in the second half of the year.

Uh, by year-end, potentially. Okay, okay. And then the $18 million office that remains—that's the life sciences loan?

Speaker #4: That's a 17.4 million dollar balance. But that has a full reserve on it based on our updated BOVs.

Um, and classified, I think. Oh, in our performance.

Speaker #3: Okay. But that one is that one, the life sciences? That's the one where you had a large tenant, or am I is that a?

No, the $18 million is the, um,

Speaker #4: Single tenant life sciences. It's a single tenant. It's not the lab space that has been built up and now has new tenants in it.

Speaker #4: This is another life science single tenant facility.

That's a loan that had moved into non-performing. Uh, last quarter we had taken a reserve on it. Um, we're in the process of brokering that for sale.

Speaker #3: Gotcha. Gotcha. Okay. And then next quarter, I'm just looking at page 10, and they love all of your details here. But and this certainly was unchanged from last quarter.

Um, based on some updated BAVs, that's one of the two properties. We actually put a bit more reserved on—

Speaker #3: But the 20 million dollars, it's criticized that matures and that their quarter is there anything that we should be thinking about there, or how are you looking at that?

So we're hoping to get that resolved in the second half of the year. That's a $17.4 million balance, but that has a full reserve on it, based on our updated BHAVs.

Okay, but that one—is that one the life sciences?

Speaker #4: So the third quarter criticized levels is primarily two loans. Give me one sec here. Let me just make sure I'm getting you the right data here.

That's the longer one. You had a large tenant, or am I— is that a single tenant? It's a single tenant. Like, it's not the labs that have been built up and now have new tenants in them. This is another life science single-tenant facility.

Speaker #4: Yes. Give me one second here, Lori. Yeah. So the classified. So we have basically the classified is the loan we just talked about. Within the other criticized, the 26.8 million, it's two loans.

Gotcha. Gotcha. Okay. And then next quarter, I'm just looking at page 10 and I love all of your details here but um, in in this certainly was unchanged from last quarter, but the the 20 million dollars is criticized that matures and that their quarter is there anything that we should be thinking about their, or, how are you looking at that?

Speaker #4: One's 17 million. The other is 10. We're both we're working through on both of those for resolution. We think one of them would likely either refinance out as that becomes reaching maturity.

Um, so the third quarter criticized levels, um,

Is primarily too loans.

Um,

Give me one second here. Let me just make sure I'm getting you.

The right data here.

Speaker #4: And the other I believe is likely on track to see sort of a short-term extension. So both of those right now, based on the data we have, we don't see any imminent loss exposure on them.

Yes. Uh, okay. One second here.

Yes, so the classified—so we have basically, um,

Speaker #4: But we are looking for either short-term extension or hopefully refinance out on both.

Speaker #3: Okay. Yeah. So that's helpful. Okay. So that's the 27 and the 17. Before we talk about and sorry. The one that comes up in the third quarter, the 19.9 million, criticized its maturing in the third quarter.

Speaker #4: The third quarter is also two loans. Yeah. So sorry. Third quarter is also two loans. One of them is 14 million. The other is about 5.

Speaker #4: I'd say the 14 million dollar loan, we're also working with a broker to sell that property. Based on data now, we do expect full payment.

The classified is is the loan. We just talked about, within the other criticized, the 26.8 million, it's too long, 1 17 million, the other is 10. Um, you know, we're both, you know, we're working through on both of those for a resolution. We think 1 of them would likely, you know, refinance out. Um, is that becomes, uh, reaching maturity and the other, um, I believe is, is likely on, on track to see sort of a short-term extension. So, um, both of those right now based on the data we have, we we don't see any imminent loss exposure on them. Um, but we are

Speaker #4: So we hope to get out of that here in the second half. The 5 million dollar loan, that one's a little bit of a different situation.

We're looking for either a short-term extension or, hopefully, to refinance out on both.

Speaker #4: It's anchored by one primary tenant. Who is indicating they may be leaving the space. So if that ends up happening, we would expect that we'll have maybe a modest impact on the valuation.

Okay. Yes, that's helpful. Okay. So that's the 27 and the 174 we talked about, and, sorry, the one that comes up in the third quarter—the 19.93.

Speaker #4: So right now, there's no loss reserve on that.

Speaker #3: Super helpful. Okay. And then Jeff, you've now held, I think, for at least a quarter, maybe two quarters that were seventh inning on office.

Third quarter is also too long. Yeah, so sorry. Third quarter is also too long. One of them is $14 million; the other is about $5 million.

I'd say the $14 million loan—we're also working with the broker to sell that property. Based on the data, we do expect full payment.

Speaker #3: Would you still say long seventh inning, or are we close to the eighth? How are you thinking about it?

Speaker #4: Yes. It still feels like we're in kind of a this long seventh inning. I am encouraged, though, by the amount of work that we're doing that I think is going to over the next couple of quarters hopefully bring down the office loans in our criticized and classified buckets.

Um, so we hope to get out of that here in the second half, the million-dollar loan. Um, you know, that one a little bit of a different situation. It's anchored by one primary tenant.

Um, you know, it's indicating they may be leaving the space. So if that ends up happening, we would expect that will have maybe a modest impact on the valuation. So right now, there's no loss reserve on that. And then—

Speaker #4: We have an awful lot of energy around moving as many of those out as we can. So hopefully, we can get into the eighth and ninth inning before too long.

Jeff, you, um, you've now held, I think for at least a quarter, maybe two quarters, that we're seventh inning on office, which is still long—seventh inning—or were we supposed to be eight? How are you thinking about it?

Speaker #4: But we still have a lot of work to do, but we're doing the work. And I think we'll have some positive outcomes over the second half of the year.

Speaker #3: Okay. Okay. Great. And then just income statement, just two questions here. Non-interest income, it looks like outsized fully debt benefits and sort of outsized loan level derivative income.

Speaker #3: I mean, if we're looking at your projected numbers of increase, do you exclude that fully debt benefit or maybe a better way to ask this?

Speaker #3: If we're thinking sort of about a core number of 41 and a half, 41.6 million, would be a closer number. It's a quarterly run rate.

Uh, I yes, it still feels like we're in like kind of the this long seventh inning. Um, I I am encouraged though by the amount of of, um, work that we're doing, um, that I think is going to over the next couple of quarters. Uh, hopefully bring down the, the the office loans in our criticizing classified buckets, we have an awful lot of of energy around uh, around moving. As many of those out as we can. Um, so hopefully we can, we can get into the eighth and ninth inning before too long. But um, but we still have we still have a lot of work to do but we're we're we're doing the work uh and and I think we'll have some positive outcomes over the second half of the year.

Speaker #4: Yeah. I mean, I think you'll lose a little bit of tax prep fees in the third quarter, obviously, off of the second quarter numbers.

Okay, great. And then, just, um, income statement—just two questions here. Um, not interesting. Come, it looks like, you know, outside,

Speaker #4: But I think a lot of the other major components, whether it's deposit-related fees, interchange, ATM, those all should be pretty consistent and continuing to increase modestly.

Outside, bully.

BOLI death benefits and sort of outside loan-level derivative. I mean, if we're looking at your

Speaker #4: So I think I would expect to see us pretty consistent with Q2 results all in. If.

Projected numbers of increase. Do you exclude that BOLI death benefit?

Speaker #3: Okay. And then when you talk about.

Or maybe a better way to ask this, you know, for thinking sort of about a core number—401 and a half.

Speaker #4: On the fully side, it's pretty modest, right? So I think yeah. I think even with or without that, you should stay in that 42 million dollar plus range.

$41.6 million would be a closer number as the quarterly run rate.

Speaker #3: Okay. Okay. And then last question for me. On your expenses, so the course systems upgrade was a million, and then you mentioned another million.

Speaker #3: That was non-recurring in the quarter. I guess just what was that? And then if we look at the course systems upgrade relative, it looks like you sort of upticked your spend a little bit there.

Um, yeah, I mean, I think you'll lose a little bit of tax prep fees in the third quarter, obviously off of the second quarter numbers, but I think a lot of the other major components—whether it's deposit-related fees, interchange, ATMs—those all should be, you know, pretty consistent and continuing to increase modestly. So,

Speaker #3: We're going to have maybe a $4 million charge in the third quarter. Thing into that. Right? Or are you still going to take some of that in the fourth quarter because it's in October event?

I think I would expect to see us, you know, pretty consistent with Q2 results, all in.

Okay, and then when you talk about it on the fully side, it's pretty modest, right? So I think—

Speaker #3: How should we think about that?

Speaker #4: Yeah. So just to be clear, we had 1.1 million of core charges in the first quarter. That increased to 2.1 million in the second quarter.

Yeah, I think even with or without that, you should stay in that, you know, $42 million-plus range.

Speaker #4: So we're at 3.2 million all in already year to date. So the $1 million reference is the increase quarter over quarter. But both quarter had meaningful charges in there.

Speaker #4: In terms of the remaining so call it 2 to 3 million dollars, I would expect most of it to be in the third quarter or because the conversion date is in October.

Okay. Okay. And then last question for me, um, on your expenses. So the core systems upgrade was $1 million, and then you mentioned another $1 million that was nonrecurring in the quarter. I guess just what was that? And then if we look at the core systems upgrade relative, it looks like you sort of upticked your spend a little bit there—we're going to have maybe a $1 million charge.

Speaker #4: You may see some added consulting expense in the fourth quarter to help with whether it's call center or other sort of customer-facing work that we would expect post-conversion.

And the third quarter, everything goes into that, right? Or are you still going to take some of that in the fourth quarter, because it's an October event? How should we think about that?

Yeah, yeah, so just to be clear, we had $1.1 million of core charges in the first quarter.

Speaker #4: But I would imagine the bulk of that will be in the third quarter.

Speaker #3: Okay. Great. Thanks for taking my questions.

That increased to $2.1 million in the second quarter. So we're at $3.2 million all-in already year to date.

Speaker #4: Thank you.

Speaker #1: Your next question comes from the line of Matthew Breeze from Stevens Incorporated. Hold on, please.

Speaker #4: Good morning, everybody. Jeff, I'd be remiss if I, too, didn't congratulate you on the health news. Feels a little out of tune to Hopscotch to NIM and loan growth dynamics, but very glad to hear the news.

Um so the 1 million dollar reference is the increase quarter over quarter, but both quarter had had meaningful charges in there, um, in terms of the remaining. So, call it 3 million, you know, 2 to 3 million dollars. I would expect most of it to be in the third quarter or because the Octo, you know, the the conversion date is in October. You may see some

Speaker #4: Everything else I suppose is secondary. Mark, you touched on a little bit deposit competition. I guess I'm curious you had mentioned the spot rate, I think, is 138.

Added consulting expense in the fourth quarter to help with, you know, whether it's call center or other sort of customer-facing work that we would expect post-conversion, but I would imagine the bulk of that will be in the third quarter.

Okay, great. Thanks for taking my questions.

Thank you.

Speaker #4: Should we expect that kind of cadence, maybe one or two bifs of deposit cost increases through the end of the year? And then as we think about because you're also growing DDAs, as we think about kind of the all-in new money rate for deposits, what is that relative to where you're at?

Your next question comes from the line of Matthew Breeze from Stevens Incorporated.

Hold on, please

Good morning, everybody. Jeff, I'd be remiss if I too didn't congratulate you on that. It's health news.

Speaker #2: Yeah. Yeah. I think your first question is spot on there, Matt. I would expect I mean, we're already talking about two basis points in terms of that spot rate number I gave.

Feels like there's a little attitude—the hopscotch to NIM and long goes dynamics. But very glad to hear the news.

Everything else? I suppose secondary.

Um,

Speaker #2: But I'd like to see us counter that a bit and kind of keep that in check through the third quarter. And probably even a little bit more pressure heading into the fourth quarter.

Speaker #2: So when I look out into the margin guidance and reaffirming the 390 to 395 range, I'm comfortable suggesting that with an expectation you could see cost of deposits tick up towards 1.40%.

Mark, you touched on a little bit, uh, deposit competition. Um, I guess I'm curious. You'd mentioned the spot rate I think is 1.38. Should we expect that kind of cadence, maybe one or two bits of deposit cost increases through to the end of the year?

And then as we think about—because you're also growing DDAs—as we think about the all-in, new money rates for deposits.

At.

Speaker #2: I think there's still enough asset repricing benefit in with some growth, hopefully, on the commercial side. I think you land in the low end of that range even with some of that cost of deposit pressure.

Yeah, yeah, I think that your first question is spot on, um, there, Matt. I would expect...

Speaker #2: And the reason we're seeing that pressure, you hit on it in the second part of your question, we're seeing basically almost a 50/50 kind of DDA plus promo money driving those new deposit results.

Speaker #2: So that's going to create sort of an all-in weighted average cost on new deposits, call it, around 2%. So as the deposit environment our deposit situation has stabilized significantly through June, I think it's prudent for us to revisit sort of the promo strategy and make sure we're finding the right sort of marketing and, I I guess, new sales efforts to keep that new cost of deposit in check.

Speaker #2: So I don't want to promise anything quite yet out of the gate, but we recognize the more that comes in on that promo money, the more pressure that puts on cost of deposits.

You know, I mean, we're already talking about 2 basis points in in terms of that spot rate number I gave. But, you know, I I'd like to see us, you know, counter that a bit and and kind of keep that in check through the third quarter and and probably even a little bit more pressure heading into the fourth quarter. So when I look out into the margin guidance and and reaffirming the 390 to 395 range, I'm comfortable suggesting that with an expectation, you could see cost of deposits, you know, pick up towards 1.4 0%. I think there's still enough asset repricing benefit in, you know, with some growth, hopefully, on the commercial side, you know, I think you, you land in the low end of that range, even with some of that cost of deposit pressure, and, and the reason we're seeing that pressure, you hit on it in the second part of your question, you know? Well, we're we're seeing basically almost a 50/50 kind of DDA Plus promo money, um, you know, driving those those new deposit results. So that's going to create

Speaker #2: So with the modest growth and the nice lift we got through June, I think it gives us the opportunity to get a bit more tactical on that front in the second half.

Sort of an all-in weighted average cost on new deposits—call it around 2%.

Speaker #3: Great. Okay. And then just a follow-up, Mark, on the NIM. When you model it out, how much longer might we see the fixed asset repricing benefits flow through to the NIM?

So, as to the deposit environment, our deposit situation has stabilized significantly through June. I think it's prudent for us to revisit the promo strategy and make sure we're finding the right—

Speaker #3: When do you think it starts to peter out? And I'm particularly focused on 2028 as loan yields kind of spiked in 2023 and just my gut is that we start to see some of those benefits from '23 roll off in '28.

So, the marketing and, um, you know, I guess new sales efforts to keep that new cost of deposit in check. Um, so, you know, I don't want to promise anything quite yet out of the gate, but we recognize, you know, the more that comes in on that promo money, the more pressure that puts on cost of deposit. So, with—

Speaker #3: And I'm curious if that kind of aligns with what you're seeing.

Speaker #2: It does. It does. I think there's a there's certainly additional repricing benefit both on the securities and the loans through 2027. And I would suggest early '28 is when you start to see most of that really low coupon not impacting as much.

With the, you know, the modest growth and the nice lift we got through June, I think it gives us the opportunity to get, you know, a bit more tactical on that front in the second half.

Great. Okay, and then just a follow-up, Mark, on the new—

Speaker #3: Okay. Jeff, one for you. Kind of marrying two ideas together and considering your background and the continued disruption in Connecticut with Webster being sold.

You know, when you model it out, how much longer might we see the, the fixed asset repricing benefits flow through to the NIM? When do you think it starts to peter out? And I'm particularly focused on 2028 as—

Speaker #3: Is there an opportunity for you all to kind of expand the geography, start to hire, or de novo in Connecticut considering how many folks you're close to there?

Speaker #3: I would also throw in hiring and/or M&A, but I think I know what the M&A answer is going to be.

You know, loan yields kind of spiked in 2023, and just my gut is that we start to see some of those benefits from '23 roll off in '28. And I'm curious if that kind of aligns with what you're seeing. It does, it does. I think there's certainly additional re-pricing benefits, both on the securities and the loans, through 2027, and I would suggest early '28 is when you start to see...

Speaker #4: Yeah. So the M&A answer would be the same as it's been in past quarters. And I think de novo, branching would probably be a ways off.

You know, most of that really low coupon is, um, not impacting as much.

Okay.

Speaker #4: But having said that, we were having active dialogue with some of the people that are in Connecticut that I know. And honestly, we've done this in the past.

Um Jeff 1 for you you know kind of mirroring to 2 ideas together and considering your background.

Um, and continued disruption in Connecticut with Webster being sold. Is there an opportunity for you all to expand the geography as you start to hire?

Speaker #4: Our head of commercial banking, Jim Rizzo, I don't know, Mark, how many years ago this was, that we established effectively an LPO in Providence.

Speaker #4: And experienced a lot of success there. And so we're having conversations as we speak about thinking about doing the same thing in Connecticut, which, again, we have confidence we can do because we've done it before.

Or de novo in Connecticut, considering how many folks you're close to there. Um, I would also throw in hiring in-door M&A, but I think I know what the M&A answer is going to be.

Speaker #4: But it's all about the people. We wouldn't do it if we couldn't get the right people on the ground that we felt confident could build a business.

Speaker #3: Would that be a Hartford play or more Northern Connecticut?

Speaker #4: Could be Hartford. It could be New Haven, Fairfield County, at this point, I'm we've been open-minded about it as we've been having discussions with various people.

Speaker #4: Our preference would probably be Hartford just because it's closer. But not exclusively.

Speaker #3: Okay. And then last one for me. Wealth management, good quarter, nice CAUM tick up as well, but as I measure kind of fees to AUM, that ratio has started to creep up in recent quarters.

Yeah, um, so so the m&a answer would be the same as it's been in past quarters. Um, and I think tovo, uh, branching would probably, um, be a ways off. But having said that we were, uh, having active dialogue with with, um, some of the people that that are in Connecticut, that that I know. Um, and honestly, um, you know, we've done this in the past, um, our head of Commercial Bank and Jim Rizzo. Um, I don't know, Mark how many years ago this was that, um, we established, you know, effectively an lpo and Providence and, um, experience a lot of success there. And, um, and so we're having conversations, uh, as we speak about, uh, thinking about doing the same thing in Connecticut, which, um, again, which we have confidence. We can do because we've done it before, but it's, it's all about the people. We

Wouldn't do it if we couldn't get the right people on the ground that we felt confident could build a business.

Would that be a, um,

Speaker #3: It's now at 63 basis points versus 59 just a few quarters ago. Anything to that? What's going on behind the scenes to drive a higher level of profitability there?

Uh, like a Hartford play, or more Northern Connecticut.

Speaker #3: And do you expect it to continue?

Speaker #2: Yeah. I'm not sure, Matt. If you're using from an income perspective, if you have just what I would call managed money or if some other ancillary businesses might be in that revenue number you're using.

Uh, could be Hartford. Um, it could be, you know, New Haven, Fairfield County. Uh, at this point, I'm, I'm—we've been open-minded about it as we've been having discussions with various people. Um, our preference would probably be Hartford, just because it's—

Uh, closer, but not exclusively.

Speaker #2: But we've seen our fee ratios stay relatively flat, to be honest. Over the last couple of quarters. So I wouldn't suggest we're seeing any dynamic that is driving an increase in fee ratios.

As well, but as I measure kind of fees to AUM, that ratio has started to creep up in recent quarters. It's now at 63 basis points versus—

Speaker #2: I think it just might be other services that we've put into the wealth business that are also giving us some nice lift on the revenue side.

Fifty-nine, um, just a few quarters ago—anything to add to that? What's going on behind the scenes to drive a higher level of profitability there, and do you expect it to continue?

Speaker #2: I can help maybe break that down.

Speaker #3: 5961. Yeah. I'll follow up with you there. Okay. I'll leave it there. Thank you very much for taking my questions.

Speaker #2: Yeah. The 14/9, just so you know, that's all an all-in number. If you look at the slide deck, we include in the slide we include in the earnings deck, we try and break out what is really tied to the AUA versus what's either tax prep.

Yeah, I'm not sure. I mean, if you're using, from an income perspective, if you have just what I would call managed money, or if some of our other ancillary businesses might be in that revenue number you're using. But we've seen our fee ratio stay relatively flat, to be honest, over the last couple of quarters.

Speaker #2: We have a state planning. We have a business advisory fee services. All that is in that 14.9 number.

Speaker #3: Helpful. Thank you.

Um, I wouldn't suggest we're seeing any dynamic that is driving an increase in fee ratios. I think it just might be other services that we've put into the wealth business that are also giving us some nice lift on the revenue side.

Speaker #2: Okay.

Speaker #1: A reminder, if you would like to ask a question, to please press star one to raise your hand. Your next question comes from the line of Jared Shaw from Barclays.

Okay, I can help maybe break that down: 5,961.

Yeah, I'll follow up with you there, okay?

See you there. Thank you very much for taking my questions.

Speaker #1: Please go ahead.

Yeah, the 149—just so you know, that's an all-in number. Um...

Speaker #4: Thanks. Good morning. And congratulations, Jeff, as well. That's great news.

Speaker #2: Thank you.

Speaker #4: Yeah. So I think a lot has been addressed. I guess just on the loan side, what's giving you confidence that the pace of prepayments on the CRE side is going to slow down?

If you look at the slide deck, we include in the, uh, the slide we include in the earnings deck, we try and break out what is, you know, really tied to the AUA versus what's—

We offer tax prep, estate planning, business advisory fee services—all of that is included in that $14.9 million number.

Helpful. Thank you.

Okay.

Speaker #4: And the second half, is that just more of a willingness on your part to engage, or are you just looking at sort of the pipeline of what's coming down?

A reminder: If you would like to ask a question, please press star 1 to raise your hand.

Your next question comes from the line of Jared Shaw from Barclays.

Speaker #2: I think it's both of those things. And then I would add one, a third, which was I mentioned in my comments, a little bit earlier.

Please go ahead.

Speaker #2: We had two rather large loans. And one of them wasn't one loan. It was two or three different loans. But to one sponsor. But the two I'll call it the two relationships totaled $120 million.

Thanks. Good morning, and uh, congratulations, Chef, as well. That's great news.

Thank you. Um,

Yeah, so I think a lot has been addressed. I guess just on the loan side, um,

Speaker #2: Incredibly lumpy a bit unusual in terms of our normal paydown activity. So it would be a combination of those three things, Jared. We don't expect that kind of lumpiness of size in the second half.

You know, what's what's giving you confidence that that that the pace of prepayments on the CRA side is going to, to slow down and the second half is that, uh, you know, just more of a willingness on your part too to engage or you just, you know, are looking at sort of the pipeline of of what's uh, what's coming down.

And then I would add one.

Speaker #2: And we think we're going to get a good originations as we move through the second half of the year. And we're going to continue to defend our existing clients when they're refinancing.

Speaker #2: And be as aggressive as we think is appropriate without doing something stupid. But I guess is that so a combination of those factors is what gives us confidence.

Third, which was I I mentioned in my comments uh a little bit earlier. We had 2 rather large loans and and and 1 of them wasn't 1 loan. It was a it was 2 or 3 different loans but to 1 sponsor. But um, the 2, I'll call it the 2 relationships, uh total, the 120 million dollars of uh of pay Downs. Incredibly lumpy uh a bit unusual. Uh, in terms of our normal pay down activities

Speaker #4: Yeah. We have very few $50 million exposures in the book at all. So to have two of them pay off is pretty unusual.

Speaker #3: Yeah. Okay. I guess if we just sort of look at the expectations for the second half of the year, and some of those trends, I mean, when we look at '27, is that the type of thing where we could be mid to high single-digit loan growth overall?

Speaker #4: I would think mid single-digits overall if we can get some traction in CRE. I feel very confident we'll continue to generate the kind of loan growth that we've had on the C&I side.

So so it would be a combination of those 3 things. Uh, Jared be, we don't expect that kind of lumpiness of size uh, in the second half and um, and and and we think we're going to get, you know, uh, good originations, uh, as we move through the the second half of the year. And, and we're going to, we're going to continue to, to defend, uh, our existing clients when they're refinancing, um, and and B as aggressive as we think is appropriate, um, without doing something stupid.

Speaker #4: And we're just talking commercial here. Not consumer. But I think we could get back to the mid single digits.

Um, but I guess, is, is that, you know, so a combination of those factors is what gives us confidence. You know, we have very few $15 million exposures in the book at all. So to have two of them pay off is pretty unusual.

Speaker #3: Okay. And then what's the new loan yields going on right now on the commercial on the C&I and the CRE side for you?

Yeah, okay, so I guess, you know, if we just sort of look at the expectations for the second half of the year and some of those trends, I mean—

Speaker #2: Yeah. On the commercial side, C&I is mid to high sixes. CRE probably low sixes. So all-in, if it's trending around six and a half percent for the second quarter.

You know, when we look at '27, is that the type of thing where we could be mid to high single digits, uh,

Loan growth overall.

Speaker #2: So it's up nicely quarter over quarter. On the consumer side, home equity is typically prime minus 50, give or take, on average. And then on the mortgage side, we're still only putting into portfolio both five or seven one-arm product.

I would think mid single digits overall, if we can get some Traction in, uh, in Creed. I feel very confident we'll we'll continue to to generate the kind of loan growth that we've had on the cni, uh, side and and we're just talking in commercial here, um, not consumer. But um, but I think we could get back to the, the mid single digits.

Speaker #2: We have not opened up 30-year fixed to the balance sheet. So that's pricing we're staying fairly competitive on in kind of the high fives, call it 6% range.

Okay. And then, um, what's the—what's the new loan yields going on right now on the commercial, on the C&I, and the CRA side for you?

Speaker #3: Okay. All right. Thanks. And then on the DDA side, good trends on growth there. Is that just getting a bigger wallet share from existing customers, or maybe you could break down what's sort of new to bank versus existing customers doing a little bit more?

Yeah, and the commercial side. Um cni's mid to high sixes um C probably low sixes. So all in it, it was trending, you know around 6 and a half percent for the second quarter so its up nicely quarter over quarter.

On the consumer side, you know, home equity is—

Speaker #2: Yeah. It is both, Jared. We see a lot of seasonality in the second quarter. And this is probably the biggest drop in rebound that I've seen here since I've been at the bank.

Speaker #2: I think to give that perspective, we got probably as low as like 19.6 billion during the quarter. So significant rebound. A lot of that is existing relationships and just kind of we have a lot of activity on the Cape and the islands.

Portfolio both 5 or 71 arm product. We have we have not opened up, 30-year fixed to the, to the balance sheet. Um, so you know, that's pricing. We're, we're staying fairly competitive on in kind of the high fives call it 6% range.

Okay, all right. Thanks and then um on the DDA side, good, good Trends on on growth there. Um,

Speaker #2: That's more seasonal. Tax time period always creates some drops and then rebounds. So a lot of it was rebounding on existing relationships. On the new money, we're still very much on the consumer side.

Is that— is that just, you know, getting a bigger wallet here from existing customers? Or, you know, maybe you could break down what's, you know, sort of new-to-bank versus existing customers doing a little bit more.

Speaker #2: Community bank driven with a free checking product that doesn't bring in a lot of big single deposit relationships, but it brings in a lot of units.

Speaker #2: And it adds up in dollars over time. So that continues to be a big driver of new money. And on the business side, it's word of mouth.

Yeah, it is both Jarrett. Um, you know, we see a lot of seasonality in the second quarter and and this is probably the biggest drop in rebound that I've seen here since I've been at the bank. Um, you know, I think to give that perspective we we got probably as low as like 19.6 billion during the quarter. So significant rebound, a lot of that is existing relationships.

Speaker #2: Treasury management, some of the C&I activity that we're doing, that's going to lead to better full wallet deposit relationships on the commercial side. Munis is always a bit volatile.

Um, and just kind of, you know, we have a lot of activity on the Cape and the Islands. That's more seasonal, um, tax.

Speaker #2: We had a big uptick on municipal in June as well, but that's an area that we have a good team on and is sourcing some new wins as well.

Speaker #3: Okay. All right. Good. Thanks. And then just finally, I know it's a relatively small part of the overall number, but good growth in the interchange and ATM fees.

Time period, always create some some drops. And then rebounds so a lot of it was re rebounding on existing relationships on the new money. Um, you know, we're we're still very much on the consumer side, um, you know, Community Bank driven with, you know, a free checking product that doesn't bring in a lot of big single deposit related.

Speaker #3: Is that anything to call out there? Is that the impact of enterprise or is that just sort of seasonality?

relationships. But it brings in a lot of units, and it adds up in dollars over time. So that continues to be a big driver of new money. And on the business side, it's

Speaker #2: I think a little bit of seasonality. I wouldn't say there's anything unique to call out there. But yeah, it's a focus on operating accounts that continues to put that debit card in their hand and drive interchange.

Word of Mouth treasury management. You know, some of the cni activity that we're doing that. That's going to lead to, you know, better full wallet deposit relationships, um, on the commercial side.

Speaker #2: So that's nice to see that lift play out.

Munn is always a bit volatile. We had, you know, a big uptick on Municipal in June as well. But, you know, that's an area that we have a good team on and is sourcing some new wins as well.

Speaker #3: Great. Thanks a lot.

Speaker #2: Thank you.

Speaker #1: At this time, there are no further questions. I will now pass the call back to Jeff Tangle for closing remarks.

Okay, all right, good, thanks. And then just finally, you know, I know it's a relatively small part of the overall number, but good growth in the Interchange and ATM fees. Is that anything to call out there? Is that, uh,

Speaker #5: Thank you. We appreciate everybody's interest in independent bancorp. Have a great rest of the day.

You know, is the impact of Enterprise, or is that just sort of seasonality?

I think a little bit of seasonality, I wouldn't say there's anything unique to call out there. Um, but you know, it's it's, you know, it's the focus on operating accounts that continues to put that debit card in their hand and and drive into change. So that's, you know, it's nice to see that lifts play out.

Great. Thanks a lot.

Thank you.

At this time, there are no further questions. I will now pass the call back to Jeff Tengel for closing remarks.

Thank you. We appreciate everybody's interest in Independent Bank Corp. Have a great rest of the day.

This concludes today's call.

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