the last time we gave guidance if you did a rough calculation of what that efficiency ratio would be it was a range of 52.8 percent to 51.2 percent this new guidance uh keeps that high end it's exactly 52.8 and lowers the the the best case scenario to 50 so it is in line with from an efficiency ratio perspective it actually is improved okay great that's helpful um and then maybe shifting over to credit, you know, MPA has improved.

Again, I was wondering if you could update us on sort of that remaining non-performer bucket, and then should we expect reserves to be, you know, relatively stable from here through the year? Thank you.

Our outlook on the remaining non-performing loans is good. You know, we see some TAS to, you know, reducing that number even further in the coming quarters.

I'll let Courtney comment on the reserve um we've taken the the the write downs as appropriate you know we don't really carry a lot of specific reserves specifically on our real estate portfolio so we feel it's marked um appropriately as based on the information we have okay great that's it for me thanks for taking my questions your next question comes from the line of steve moss with raymond james steve please go ahead good morning uh maybe just starting with uh just the sba uh business here

you know i i you know you guys didn't change your guide on non-interest income but uh definitely turning strong and i really probably nitpicking a little bit but just kind of curious on any updated thoughts you have have there i'm sorry steve you broke up a little bit could you repeat that question? Sorry. Sorry about that. On the SBA, no worries, excuse me my phone today for some reason. On the SBA business here, you know, gains have been trending fairly strong. I realize you guys didn't change the non-interest income guide, but just kind of curious here in terms of, you know, the business activity there and maybe there's just some upside you want to see another quarter of trends before taking things up there?

We intentionally are keeping our SBA production controlled for, you know, we're still retaining a portion of non-SBA guaranteed portions of those loans. So, you know, for risk management purposes, we're going slow and steady. We don't anticipate raising our origination targets there to try to keep up with the other side of the business.

You know it's it's really risk management the new division you know we've only okay been after it for about two and a half years although we've been originating sba for more than 10 uh this this new division is just two and a half years old okay appreciate that color there and then the other thing here just in terms of the health care business just kind of curious you know you just talk about uh the trends you're seeing um you know how are businesses faring you know another some challenges called six to 12 months ago in terms of the ability to to refinance the permanent market and get revenues to where they wanted to be um you know just curious on that aspect of

things and also the competitive landscape for lending into that into that market we're very particular about the states where we originate uh for you know senior housing particularly which is where the those headwinds are largely behind the industry the places where we originate you know we're seeing a lot of strength in cash flows we're growth in revenue you know expenses being controlled you know the expense control is largely due to having enough labor to operate the facilities and not having to go to agency so all of those headwinds seem to be behind the operators for now in the states where we're originating our business. And, you know, we think this is a very good time to be in the business. Other banks have now come to that conclusion as well. And so the lending activity amongst, you know, other banks and non-bank lenders have so many people have come back to the market. So it is more competitive. we're fortunate in the fact that, you know, we're, you know, our customers come to us for our strong execution, um, that, that hasn't changed. And, you know, we still have, you know, as much access as we want to, to the, to the market.

Okay. And just in terms of pricing, is it increasingly more competitive or kind of, you know, spread time, time materially, just kind of curious there.

We don't often compete on price. You know, like I said, execution is the strong driver of our value creation for our clients. And so we keep our spread, you know, where they are. And that hasn't been a problem for us.

Okay, great. I appreciate that. And the rest of my questions and answers here. So thank you very much. Nice quarter here.

Thank you.

Thanks, Steve.

We also have a follow-up from Freddie Strickland of Havdi Group. Freddie your line is open please go ahead.

Two quick follow-ups uh one on expenses um totally understand um you know compensating folks for good production um but you know as I think through the back half 26 I know you haven't given 27 guidance but if we see the expensive step up in the back half on maybe some incentive comp um you know should I expect that to carry through into 27 or is that kind of a one time thing until we get through to 27. A long-winded way of asking, you know, could we maybe see expenses step down a little bit in the first quarter of 27 after maybe a little bit higher expenses in the back half of the year, or is this more salary related?

I would think it's more salary related.

I would think that our run rate will tick up as long as our production continues on the path that it's on right so again as we perform well the the company will compensate accordingly so the expectation would be the expense rate would start to the run rate would start to tick up and now that would be correlated with performance yeah so we'll come back to that number will will grow to reflect comp incentive performance but the only way that's going to happen is if the top line is growing and profit profitability metrics continue to increase so we're not we don't want to be in the business i won't be in the business of increasing expenses

and decreasing our efficiency ratio just want to be clear this is about scale understood so at the end of the day just sounds like i should really pay attention to efficiency um really more than anything because if you've got increased revenue you may have some increased expenses is just to make sure you're compensating folks.

Yes. Right now we would agree with that, yes.

And one more from me, just, you know, in terms of overall profitability, 15% profit fee, you know, 146 ROA really strong. You know, is a 140-ish, you know, 135, 140-ish ROA a good go forward number for you guys? I know you haven't given formal guidance on those profitability metrics, but I'm just trying to think through of whether this quarter's profitability carries forward or kind of what you expect in terms of those metrics?

Well, I think with a little bit of math, and I'm not trying to be a cute confetti, I think if we lay out the expenses and not as you think and the revenue guidance that we've given, you can kind of get to the numbers pretty close. And, yeah, we're not surprised that they increased this quarter and we see no reason for them to decrease unless the world changes.

Fair enough. Thanks for taking my follow-ups. I appreciate it.

Thank you very much.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.