SB Financial (SBFG) Q1 2026 Earnings Transcript

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DATE

April 24, 2026 11 a.m. ET

CALL PARTICIPANTS

• Chairman, President, and Chief Executive Officer — Mark A. Klein
• Executive Vice President and Chief Financial Officer — Anthony V. Cosentino
• Executive Vice President and Chief Lending Officer — Steven A. Walz

TAKEAWAYS

• Net Income -- $4.3 million for the quarter, with diluted EPS of $0.90, and adjusted EPS of $0.63 excluding OMSR recapture and Marblehead merger costs.
• Tangible Book Value Per Share -- Ended at $18.45, compared to $15.79 in 2025, and $18 at year end.
• Net Interest Income -- $12.7 million, up $1.4 million, or 12.7%, year over year; flat sequentially from the prior quarter.
• Total Deposits -- $1.37 billion, increasing by $100 million, or nearly 8%, year over year, with $65 million growth during the quarter.
• Noninterest Income -- $4.7 million, up 14.7% year over year, and 27% quarter over quarter; comprised 27% of total revenue.
• Noninterest Expense -- $11.9 million, $500 thousand below prior-year quarter, and up $700 thousand from the linked quarter.
• Net Interest Margin -- 3.49%, compared with 3.41% in the prior-year quarter, and 3.52% last quarter.
• Loan Balances -- $1.18 billion, up approximately $92 million year over year, and $500 thousand sequentially; loans-to-assets ratio of 74% at quarter end.
• Efficiency Ratio -- 68.1%, with the adjusted efficiency ratio improving by over 500 basis points from the prior-year period.
• Allowance for Credit Losses -- 1.39% of total loans, compared to 1.36% in the linked quarter, and 1.41% prior year.
• Nonperforming Assets -- $4.8 million, or 0.3% of total assets; down from $6.1 million, or 0.41%, year over year; modest sequential increase due to a foreclosed property.
• Mortgage Originations -- Approximately $66 million for the quarter, up from $40 million prior-year, but down from $72 million in the previous quarter.
• Pipeline and Guidance -- Mortgage pipeline stabilized at about $35 million; management anticipates 25% sequential volume growth in the next quarter.
• Share Repurchases -- Approximately 29,000 shares bought at an average price of $21.12 during the quarter.
• Dividend -- Announced quarterly dividend of $0.16 per share, representing a 2.8% annualized yield, and 25% payout of earnings.
• New Market Performance -- Angola, Indiana, and Napoleon, Ohio offices closed $19 million in loans, and $17 million in deposits within five months of launch.
• Capital Levels -- Total capital, TCE, and CET1 ratios strengthened during the period.
• Loan-to-Deposit Ratio -- 86% at quarter end; management targets low to mid-90% range long term.
• Asset Quality Metrics -- Criticized and classified loans declined by $25 million, or 35%, year over year to $4.6 million.
• Operating Leverage -- Adjusted operating leverage reported at positive five times for the quarter.

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RISKS

• Anthony V. Cosentino stated, "we are going to have a down quarter in the second quarter on deposits. We already know of some larger relationships that are moving out for normal business reasons."
• CFO Cosentino noted, "if we do another $160 million of asset growth in 2026 like we did in 2025—which I do not anticipate—we would be stressed a bit on regulatory capital."
• Management flagged, "We have sub debt in June we have to think about," indicating a potential near-term capital outlay requirement.
• Management expects an efficiency headwind in 2027 related to core system conversion costs: "We do have a conversion to Fiserv at the end of the year that I think will be a net zero in 2026 and will be a bit of a headwind as we go into."

SUMMARY

SB Financial Group (NASDAQ:SBFG) reported substantial year-over-year increases in net income, adjusted EPS, and tangible book value, driven by continued balance sheet growth and disciplined cost management. The margin remained stable despite heavy deposit inflows, with noninterest income and mortgage banking both contributing meaningfully to revenue diversity. Loan pipeline expectations remain healthy, supported by successful de novo market entries and cross-sell strategies, while asset quality stayed strong amid modestly higher nonperforming assets due to a single foreclosure event. Near-term deposit outflows and upcoming sub debt maturity may pressure capital management and liquidity priorities in the coming quarters.

• Management expects a sequential rise in net interest margin during the next quarter, underpinned by anticipated $15 million to $20 million in additional loan growth, and moderating deposit inflows.
• Full-year mortgage originations are projected between $310 million and $400 million, contingent on stable rates and continued hiring of high-performing loan officers in both legacy and urban markets.
• The company slowed its share repurchase activity in response to current valuation relative to tangible book, and upcoming regulatory capital demands.
• New urban office launches in Angola, Indiana, and Napoleon, Ohio provided outsized early contributions to deposits and loan growth, leveraging local disruption from bank consolidations.
• Operating expense initiatives, and the bulk of technology investments, are largely complete, with only one major upcoming system conversion that will impact future efficiency ratios.

INDUSTRY GLOSSARY

• OMSR: Originated Mortgage Servicing Rights — the fair value assigned to the contractual right to service mortgages originated and sold by the bank.
• OREO: Other Real Estate Owned — property foreclosed and held for sale, not part of the bank’s normal portfolio of earning assets.
• TCE: Tangible Common Equity — a bank capital measure excluding intangibles and preferred equity, reflecting core shareholder value.
• CET1: Common Equity Tier 1 — a regulatory capital ratio reflecting a bank's equity capital compared to its risk-weighted assets.

Full Conference Call Transcript

Mark A. Klein: Thank you, Sarah, and good morning, everyone. Welcome to our first quarter 2026 conference call and webcast. First quarter represented a solid start to the year for SB Financial Group, Inc. and really reinforces the consistency and resilience of our operating model. Results reflected balance sheet performance across the franchise, supported by loan growth, stable net interest income, improved fee-based revenue, disciplined expense management, and sound credit quality. This quarter also marked the first full anniversary of the Marblehead acquisition, and we now view that transaction as a solid contributor to our funding base, expanded presence in Northern Ohio, and overall franchise stability. While the operating environment remains competitive, we continue to feel good about our position.

The balance sheet remains sound. Our credit metrics continue to compare favorably, and our business line provides a healthy mix of margin and fee-based revenue. We believe that combination, along with our disciplined approach to growth and capital deployment, supports our ability to build long-term shareholder value. Briefly, some highlights for the quarter. Net income was $4.3 million with diluted EPS of $0.90 compared to GAAP diluted EPS of $0.33 for 2025. This now marks our 61st consecutive quarter of profitability. Tangible book value per share ended the quarter at $18.45 compared to $15.79 for 2025 and $18 at year end. Adjusted tangible book value per share, excluding AOCI, now comes in at nearly $22.

Our net interest income totaled $12.7 million compared to $113 million in 2025 and $12.7 million in the linked quarter. The year-over-year improvement was driven by higher interest income on loans and a stable funding profile, while the linked-quarter comparison remained relatively consistent. Balances increased by approximately $92 million from the prior-year quarter and approximately $500 thousand from the linked quarter, reflecting continued production across the franchise and extending our trend of sequential quarterly growth. Total deposits in the quarter were $1.37 billion compared to [inaudible] for 2025 and $1.3 billion at year end. On a year-over-year basis, deposits increased $100 million, or nearly 8%, reflecting continued organic deposit growth and stable client relationships across the franchise.

Noninterest income improved to $4.7 million from $4.1 million in the first quarter of the year and $3.7 million from the linked quarter. Percentage of fee income to total revenue of 27% was slightly higher than the prior year and well ahead of the linked quarter. Noninterest expense totaled $11.9 million, and improved from the prior-year quarter while increasing modestly from the linked quarter. The prior-year quarter included acquisition-related expenses and incremental operating costs associated with Marblehead, which elevated that comparison period. Asset quality continues to remain a strength of SB Financial Group, Inc.; nonperforming assets totaled $4.8 million, or 0.3% of total assets, compared to $6.1 million, or 0.41%, in the first quarter.

While nonperforming assets increased modestly from year end, overall credit performance remained sound, and reserve coverage remained strong. I am especially pleased with the efforts of not only our lenders, but more importantly, our collection team, which drove our total delinquency level down to just 28 basis points at quarter end. As we have revealed in prior quarters, we key on our five strategic initiatives: growing and diversifying revenue; more scale for efficiency; greater share of the client’s wallet for more scope; operational excellence; and, of course, asset quality. Looking a little closer at revenue diversity, mortgage originations totaled approximately $66 million compared to approximately $40 million for 2025, and approximately $72 million in the linked quarter.

The mortgage business remains an important part of our franchise, helping us expand household relationships while also contributing meaningful fee income across the company. While volume was weaker than we anticipated in the quarter, the pipeline has stabilized at approximately $35 million, and we anticipate approximately a 25% increase in volume for the second quarter sequentially from the linked quarter. Big title continued to perform well during the quarter, benefiting from both internal referrals and continued traction of clients outside of the bank. This business remains a valuable part of our product set and an important contributor to fee-income diversification.

On the scale front, the Marblehead acquisition continues to support our funding profile, and we remain pleased with the stability of those client relationships just one year after closing. Deposit growth continued to provide meaningful support to our balance sheet. We remain pleased with the stability of the Marblehead relationships and, more broadly, continue to see opportunities to grow deposits organically through client-calling efforts, treasury management activities, and the broader relationship model that has served us well across our markets, particularly with the current market disruption and consolidation. As we discussed previously, we committed to two nearby markets recently, Angola, Indiana, and Napoleon, Ohio, and these results have exceeded our admittedly aggressive goals.

We have closed nearly $19 million in loans and approximately $17 million in deposits in just five months of operation. These two markets have clearly been at the forefront of the market disruption I just mentioned, and we certainly have seized on that opportunity. Client relationships—more scope—remain focused on serving clients through our relationship-based model that emphasizes responsiveness, local market knowledge, and a full suite of products and services. We continue to believe that approach, combined with our hybrid office model and expanding digital capabilities, positions us well to serve our clients across both legacy and newer urban expansion markets.

Referral activity continues to be an important tool in strengthening household relationships across our business lines, and we continue to view that cross-functional approach as an important part of deepening client relationships across the franchise and delivering more scope and a greater share of the client wallet. On operational excellence, we remain focused on matching growth with disciplined execution. The first quarter reflected that mindset with expense levels improving from the prior-year period and remaining controlled relative to revenue. Plus, we continue to evaluate staffing, technology, and physical presence across the franchise to ensure resources are always aligned with current client activity and long-term market opportunities.

Capital levels remain strong with improvement in total capital and higher ratios for both TCE and CET1 regulatory capital. And finally, before I turn it over to our CFO, Anthony V. Cosentino, criticized and classified loans coverage remains strong and continues to reflect our conservative approach to risk management. The allowance for credit losses at 1.39% remained strong relative to total loans, with criticized and classified loans at just $4.6 million, down $25 million, or 35%, from the prior year. We continue to emphasize disciplined underwriting, proactive management of problem assets, and prudent growth across all markets. We believe that combination remains one of the key differentiators for SB Financial Group, Inc. and an important metric for our long-term performance.

I would like to ask Anthony to give us some more details on our quarterly performance. Anthony?

Anthony V. Cosentino: Thanks, Mark, and good morning again, everyone. Let me outline some highlights and important details of our first quarter results. On the income statement, the first-quarter total operating revenue increased to $17.4 million, representing a 13.2% increase from the $15.4 million in the prior-year period and a 6.1% increase from the linked quarter. As Mark noted, this quarter reflected a balanced revenue performance with stable net interest income and a stronger contribution from our fee-based businesses. Mark also detailed our GAAP EPS earlier in the call, and when we adjust both years for OMSR recapture and the Marblehead merger costs, EPS would be $0.63 for the current period compared to $0.42 in 2025, up over 50% on an adjusted basis.

Net interest income was up $1.4 million, or 12.7%, from 2025 and consistent with the linked quarter. The year-over-year increase was driven primarily by continued balance sheet growth, better mix, and the repricing benefits within the portfolio. Total interest expense increased modestly from the prior-year quarter as higher volume-driven deposit costs were partially offset by lower costs across other funding sources. While funding costs remain an important point of focus, the overall funding profile of the company remains well aligned with the asset growth we have achieved over the last year. Net interest margin for the quarter was 3.49% compared to 3.41% in the prior-year quarter and 3.52% in the linked quarter.

Even with net interest income remaining flat sequentially, the company continued to benefit from the larger balance sheet and the repricing of interest-earning assets. Noninterest income increased to $4.7 million; on a percentage basis, that represents an increase of approximately 14.7% from the prior-year period and 27% from the linked quarter. The quarter-over-quarter and year-over-year improvement was driven by higher mortgage loan servicing fees, stronger gains on sale of mortgage loans and OMSR, and improved gains on the sale of SBA loans. The total mortgage banking contribution for the quarter was $1.8 million compared to $1.5 million in the prior-year quarter and $1.5 million in the linked quarter.

We continue to utilize our hedging program, which was in the money for the quarter, as it successfully offset the disruption in the rate markets. Operating expenses totaled $11.9 million in the quarter, down $500 thousand from the prior year and up just $700 thousand from the linked quarter. The year-over-year comparison benefited from the one-time merger-related costs that were present in 2025. The linked-quarter increase was modest and reflects normal quarterly expense variability. Our efficiency ratio for the first quarter was 68.1%, representing a meaningful improvement from the prior-year period and continued stability on a sequential basis.

Our adjusted efficiency ratio was down by over 500 basis points from the prior period and the adjusted operating leverage was a positive five times. Turning to the balance sheet. Loan balances ended the quarter at approximately $1.18 billion, reflecting continued year-over-year growth and a modest increase from year end, with loans-to-assets at a healthy 74%. We remain encouraged by the continued stability in production across the franchise, and we believe the current balance sheet remains well positioned to support additional disciplined loan growth during the year. Our loan-to-deposit ratio at quarter end was 86%.

Although we continue to view the low to mid-90s as a reasonable long-term operating range, the current funding profile gives us flexibility to support loan growth while maintaining strong liquidity and a balanced risk posture. On capital management, during the quarter, the company repurchased approximately 29 thousand shares at an average price of $21.12. We have guided lower on the payback on the buyback for 2026 as prices are at or near our adjusted tangible book value. We are also cognizant of the impending potential call of our sub debt that would require a capital outlay, potentially impacting an aggressive buyback posture moving forward. Turning lastly to asset quality.

While nonperforming assets totaled $4.8 million and were relatively unchanged compared to the linked quarter, we did foreclose on a large property that elevated OREO with a like-size reduction in NPLs. We feel confident in our collateral position and do not anticipate further write-downs from this relationship. The allowance for credit losses as a percentage of total loans is 1.39% compared to 1.36% in the linked quarter and 1.41% in the prior year. Coverage of nonperforming loans was higher than both the linked and prior-year quarters, underscoring the continued strength of the company’s reserve position and disciplined approach to credit risk management.

Total delinquencies were also down substantially for both the linked and prior year, and when we exclude loans on nonaccrual, the delinquency rate is effectively zero. I will now turn the call back over to Mark.

Mark A. Klein: Thank you, Anthony. We certainly remain encouraged by our positioning as we move through 2026, supported by strong credit fundamentals, a growing balance sheet, and continued discipline in expense control and capital management. We are focused on executing across all of our footprint, optimizing our lenders and lending capacity, and driving cross-sell activity to support core deposit growth while maintaining a balanced approach to risk. We will be announcing a quarterly dividend of $0.16 per share, equating to an annualized yield of approximately 2.8%, representing 25% of our earnings. We continue to believe the current environment presents attractive opportunities to build on our growth trends. Our capital levels provide flexibility.

Our collective experience provides a clear path to a broader footprint. And our continued focus on improvement supports our long-term objective of scaling our franchise toward our $2 billion strategic goal of a balance sheet. We will now open the call for questions.

Operator: Thank you. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, press star then 2. The first question will come from Brian Joseph Martin with Breen Capital. Please go ahead.

Brian Joseph Martin: Hey, good morning, guys. Just maybe a couple things here. You talked a little bit on the call about the success you have had in the newer markets, Mark, that you mentioned. When you look at loan growth and the deposit growth going forward and the benefits from these new markets, can you frame up your outlook on loan growth here? Is there more to come from those new markets, or was that the low-hanging fruit and there is still more upside? Just frame up your outlook on loan growth and the pipeline here.

Mark A. Klein: Sure. As I am sure you know, Brian, Angola was a mortgage production office originally, and when COVID hit, we left it a mortgage production office with some wealth management business. Recently, we knew there were opportunities in Angola to develop it into a full-service office, and it has been really good. We have a great staff and certainly a lot of opportunity. We used to spend some time up in that market, but when COVID hit, we pulled back. Angola is doing well, and we are right on the verge of having black numbers coming out of that with a positive P&L. Napoleon was specifically a result of the disruption in the market from consolidation and mergers.

That has great potential. As I have mentioned before on prior webcasts, there is probably $1 billion in that market that has now become deposits of larger regional banks, whereas before they were deposits of smaller community banks. We feel there is a great opportunity to continue to lever that. We have a great staff, and that will provide not only lending growth but also nice deposit opportunities in a market that is longing for a community bank.

Lastly, we have been in Gahanna for a period of time, generally as a mortgage loan production office, and most likely by the end of the year, we will be having more conversations about opening that as a full-service office in Columbus, because we know there are opportunities there with just the one officer we have in Dublin. That is an update on those offices in terms of opportunities for de novo expansion.

Brian Joseph Martin: Okay. And as far as the pipeline and what you are expecting in the coming quarters?

Mark A. Klein: Yes. Steven can speak to the pipeline.

Steven A. Walz: We have had a few payoffs recently, not because clients wanted to leave us but because they sold one of their projects. Generally, the pipeline is pretty decent. As we have discussed many times, an outsized segment of our growth has come from Columbus and continues to do so. But we also indicated this year we were hoping that our other markets—Fort Wayne, Indianapolis, Toledo, and Findlay—all kick in and provide their portion of our $75 million to $100 million growth. Consistent with that, we continue to focus on expanding the breadth of growth across those markets.

Columbus delivers a lot of growth for us and will continue to do so, but we are committed to expanding that growth story to those other urban markets, and that includes the Angola and Napoleon offices. There is more growth there, and we think our model serves those markets well.

Mark A. Klein: Yes, a lot of disruption in those markets has played well into our hand. We could have gone there before the disruption, but it would not be quite as robust as we are finding it today.

Brian Joseph Martin: Okay. With geopolitical risks out there, we have heard more people say near-term sentiment is not quite as positive on loan growth. It sounds like your pipeline is still good and you are still optimistic about achieving your targeted goals for the year.

Steven A. Walz: Yes, I think that is true, Brian. We have not seen a whole lot of blowback from what is going on in the Middle East. Our ag portfolio, which is not insignificant, has by and large prepurchased supplies that could be impacted, so we would not expect any hit to our ag portfolio this year, and hopefully things do not persist beyond this year.

Mark A. Klein: And I will reiterate our credit culture: we are never going to get enough yield to compensate for an undue amount of risk. We walk away from some deals. I think we could grow in the low double digits if we wanted to, but we stay disciplined. We like credit quality and we know the effect that has on profitability should we lose what we have worked hard to get.

Steven A. Walz: Certainly. The markets we are in would afford that kind of opportunity, but we walk away from deals that do not make sense for our credit culture.

Brian Joseph Martin: Maybe, Anthony, on the margin. The liquidity you have today seems to give you a little cover on potential deposit competition. How do you feel about the margin over the next couple of quarters in a stable rate environment?

Anthony V. Cosentino: We are down, call it, five basis points from the linked quarter, really a function of being very liquid. We had a lot of deposit growth—$65 million in the quarter. We were not terribly aggressive on the rate side, even in the new markets—maybe 25 basis points above market, nothing crazy. I think there has been a little bit of money parking in the markets and we were the benefactor of that. A number of new clients we have gotten via disruption have brought in deposit dollars. I do think liquidity will wane a little in the coming quarters. We have already started to get a little stickier on deposit pricing, not really matching some aggressive rates.

I think we are in a good spot. I think margin at 3.47% is probably going to move up a few basis points in the second quarter because I think we will get back to having, call it, $15 million to $20 million of loan growth in the quarter versus the roughly $1 million we had in the quarter we just finished.

Brian Joseph Martin: And in terms of the cost of deposits, are we trending higher from here than lower as you go into next year with competition?

Anthony V. Cosentino: I had been pretty confident that deposit costs would trend higher, and they have continued to trend a bit lower, so I have missed that so far. But I still believe the market disruption we have had will not continue indefinitely. Competitors are going to become aggressive. They are focused on growing loans and will have to fund it. Also, deviating from CRE a bit to more ag-based C&I brings a deposit base we are very happy about that we did not have prior to six months ago. Not only are we acquiring balances, the full relationship comes with deposits, which has been a real needle mover.

Brian Joseph Martin: In terms of the mortgage outlook, you talked about 20% to 25% production growth next quarter. Bigger picture, where rates are today—what are you seeing for mortgage for the full year?

Mark A. Klein: I have been thinking $350 million, expecting a bit of a play in the 10-year, which has been temporarily disrupted and is a bit of a fly in the ointment. We just hired a couple of new high-producing MLOs in some urban markets and we are gaining traction and more representation in some of our legacy markets. Average production has gone down, which is why we brought on more MLOs. With a larger team, and given the 80/20 rule, I am still optimistic we can deliver something closer to that $350 million to $400 million number, though I am sure Anthony has a different number.

Anthony V. Cosentino: In March, we did 45% of our total first-quarter volume. We did just shy of $30 million in March. Our pipeline is around $35 million. I think we are going to do roughly $90 million in the second quarter and would suspect we repeat that in the third quarter if things stay where they are. Hiring high-performing folks in various markets tells you our model is still working and the volume is out there. That would put you on pace to get to $310 million to $325 million on the high end for the full year. I think rates will be relatively stable.

Mortgage rates have fought back against the increase in the long end of the curve, and as long as we are at 6% to 5.875%, I think we can hang in there. You are starting to see a lot of secondary people get aggressive to try to get volume, and the FHLB is getting aggressive on very low-rate opportunities to sell; we will be participating, which should benefit us.

Mark A. Klein: I am hopeful we will get a play in the 10-year. With a larger balance sheet, monthly contribution keeps compounding; we do not need to do $100 million of mortgages every month. We have the balance sheet size and the operating revenue now.

Brian Joseph Martin: And the mortgage folks you hired—are you still planning to hire more, and were those in metro markets? Which markets did you add people in?

Mark A. Klein: Yes. We have added one in Cincinnati and Indianapolis. We have a couple of individuals considering roles in some of our legacy markets. Findlay has been a gap for us, but we have had enough people to cover those markets. Having people who live, work, and play in the market is more accretive to all business lines, like in Angola. We are currently hunting down somebody in the Angola market. We are committed to the business line. We love the gain on sale, and getting another household with more products and services is a big deal.

Brian Joseph Martin: Last two for me. On expenses, big picture—how you are thinking about the full year and ebbs and flows? Any initiatives to take it off the current run rate, or is the current run rate a decent level to think about in the coming quarters?

Anthony V. Cosentino: I think the run rate is in pretty good shape. We have consolidated some areas in our operational sections and made efficiencies, which will continue to help us. The bulk of our technology spend on new things is largely in the rearview mirror. We do have a conversion to Fiserv at the end of the year that I think will be a net zero in 2026 and will be a bit of a headwind as we go into 2027 as we try to find opportunities. I am very hopeful on the expense side. As we have gotten bigger, we have found ways to do more with less, which is what we need to get to continually.

Brian Joseph Martin: And capital—you said the buyback is a little bit lower. Near term, you talked about sub debt and maybe potentially M&A. Is that how to think about capital deployment today?

Anthony V. Cosentino: Yes. We have been very aggressive on the buyback and I still think it is a great use of internally generated capital, but at the price where it is today, we can afford to slow down a bit. We have sub debt in June we have to think about. We also have a lot of opportunities to deploy, and if we do another $160 million of asset growth in 2026 like we did in 2025—which I do not anticipate—we would be stressed a bit on regulatory capital. We have to be cognizant of that.

Mark A. Klein: On M&A, we continue to keep our ear to the ground—downstream as well as midstream and everything in between—but nothing transformative at this point. We know organic is great, but clearly M&A is divine. We continue to look at opportunities in the region.

Brian Joseph Martin: And credit all sounds good. Continued success on the credit front—nothing really causing problems in terms of risks you are seeing?

Mark A. Klein: From a high level, when you have a downturn, you get a good idea of underwriting and administration, and we have not had much of a downturn. Our clients’ balance sheets are pretty liquid. We get personal guarantees, rely on makers, and have good projects in urban markets. Generally, all is good, but as we all know, you have it until you do not. We are precautious on the risk we take and the deals we do. If we wanted to really light it up, the opportunities are there—17 different lenders out there trying to find deals—but our job is to pull back on the reins to keep this measured and on the tracks. Steven, any more perspective?

Steven A. Walz: Yes. The stability of our asset quality continues. The credits we are working through are not a function of turnover and new credits coming into nonaccrual. It is largely the same ones we have talked about in the past. The wheels of justice grind a little more slowly than we might like. As Anthony referenced, we did get control of one piece of collateral, and we are very confident in our position. On those credits, we think we are going to get out where we ultimately belong.

Brian Joseph Martin: And lastly, deposits and liquidity—you had good growth. Do deposits tail off a bit here? How are you thinking about deposit growth from here?

Anthony V. Cosentino: I think we are going to have a down quarter in the second quarter on deposits. We already know of some larger relationships that are moving out for normal business reasons. I do not think we will have enough on the retail side to overcome that. I think we will probably be at a 90% loan-to-deposit ratio for the rest of the year, and that is a comfort level for us. We do not need to be overly priced on deposits to get there. We are only nervous about liquidity if the loan pipeline gets to the upper end of our range. We are comfortable at mid- to high-single-digit growth and funding that.

If we get above that level is when we might have some stress.

Mark A. Klein: I would not downplay the market disruption, which has been wonderful for us. We have garnered relationships we might not have been able to bring over otherwise. That has just begun. We are nine months into our plan to find more of disrupted companies’ assets, and we are at that $100 million to $110 million number. We are cruising along to our strategic goal of a few hundred million—lots of opportunities and a bigger job to be done.

Brian Joseph Martin: Gotcha. Okay. Well, thanks for taking the questions, guys. I appreciate it.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Mark A. Klein for any closing remarks.

Mark A. Klein: Thank you, and thanks for joining us this morning. We look forward to having you join us in July for our second quarter 2026 results. Thanks for joining us. Goodbye.

Steven A. Walz: Have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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