Greetings, ladies and gentlemen. Welcome to the Home Bank Shares Incorporated second quarter 2025 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. The company presenters will begin with prepared remarks, then entertain questions. Please know that if you would like to ask a question during the question and answer session, please press star, then one on your touchtone phone. If you decide you want to withdraw your question, please press star then 2 to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary notes regarding the forward-looking statements. You will find this note on page 3 of their form 10K filed with the SEC in February 2025. At this time, all participants are in listen-only mode and this conference is being recorded. If you need operator assistance during the conference, please press star then zero. It is now my pleasure to turn the call over to Donna Townsville, Director of Investor Relations.

Thank you. Good afternoon and welcome to our second quarter conference call. With me for today's discussion is our Chairman John Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Chris Poulton, President of CCFG, and Scott Walter of Shore Premier Finance. Opening remarks today will be from our Chairman, John Allison.

Thank you. Welcome, everyone. I want to thank you for joining today. Today is the 76th quarter that we've had the privilege to report to our shareholders since going public in June of 2006. I have to say that we've come a long way since June of 06, and even a longer way from the day in 1998 when my co-founder, Buddy Adcock, and myself made our original purchase of the $22 million and $3 billion now. From five employees then to 21 small office in Holly Grove, Arkansas, to 217 banking offices in five states. From a pre-tax, this is pre-tax now, income of $400,000 then to an after-tax income of over $400 million now. And from our purchase price of $4.5 million in 1998 to today's New York Stock Exchange market cap of just short of $6 billion, the home bank shares store. Many of you have been with us and enjoyed this amazing ride through the years, and we're extremely appreciative of your long-term loyalty to what has turned into one of America's best. For that money, thank you, and I thank you, and our 2,600 associates. From one of the smallest, it was about 10,000 banks, as I recall, to number 64 in total asset size, U.S. wide. $1.9 billion New York Stock Exchange market cap, our company ranks number 35 in the U.S. in market. I said on the conference, a non-gap number, 26% is what it is, so will one in non-gap and 203 in GAAP.

And congratulations on a strong quarter. Our next report today will come from Stephen Sipton.

Thanks, Donna. As Johnny mentioned, the second quarter was another strong performance, highlighted by strong revenue, adjusted return on assets of 2.02% and an adjusted efficiency ratio of 42.01%. The reported net interest margin came in at 4.44%, in line with prior quarter, even with a lower level of event income. The core margin excluding event income was 4.43% versus 4.42% in Q1, and is up 20 basis points from the same period one year ago. I'm encouraged to see the trajectory of the margin in June as we enter the second half of the year. Deposits ended slightly lower in Q2, down $53 million as a result of seasonal tax payments that occurred in April, but we are pleased to see balances grow in both May and June. As we observed the deposit activity early in the quarter, we hated to see the money go out, but we are comforted to know that we have core customers that are doing well, making money, and operating in dynamic growing states like Arkansas, Texas, Alabama, and Florida. In our other business lines, the trust, wealth management, and mortgage divisions continue to improve and show meaningful additions to the bottom line. I'd like to thank our regional division presidents and all of our bankers on another great quarter. With that, I'll turn it back over to you.

Thank you, Stephen. Next, we will hear from Kevin Hester on the lending portfolio.

Thanks, Donna. We continue to achieve recoveries from the charges taken in the fourth quarter cleanup. This quarter, we recovered a total of $2 million, dollars and we remain on track to achieve the expected 30 million in total recoveries over time. One large non-accrual loan from that group remains very close to being resolved in a positive manner, but that resolution will have to wait another quarter. In addition, the multifamily construction in the north part of the DFW Metroplex is complete and we will begin leasing activities this month. Asset quality metrics were mixed, but none of the changes were material in either direction. The slight increase in NPLs was primarily due to a large yacht for which we are in the middle of the arrest process. We have possession of the vessel, which is in very good condition. We expect a full payoff on this loan once we exit the arrest process. Solid loan growth split evenly between CCFG and the Community Bank complete the results of another impressive quarter. Donna, I'll give it back to you.

Thank you, Kevin. and now Chris Poulsen will provide an update on CCFG.

Thank you Donna and good afternoon. An uptick in originations for Q2 led to portfolio growth for CCFP. For the quarter we closed approximately 500 million dollars in new commitments which brought our year-to-date total just over 800 million dollars which compares favorably to prior years. The portfolio grew by about $122 million during the quarter, taking our total over $1.8 billion and putting us in plus territory for year to date as well. Our unfunded commitments, approximately $1 billion, which has been fairly consistent over the past year. As we look forward, we may see an uptick in payoffs during Q3, but ultimately we expect the portfolio to be stable to up over time.

Donna, that concludes my brief update from ccfg thank you chris johnny before we go to q a do you have any additional comments well i feel like we need to have a slurpee i would have had a slurpee in a while we've had two record quarters back to back and uh i mean i agree let's see if anybody in the crowd wants to send us a go fund me this time i believe that was michael rose i believe it was challenge extended yeah well it was a great uh great start to the year the first six months are outstanding so i'm pretty pleased with what's going on and after the fact that the third quarter will be about like the first and second quarters we've kind of had the wind our back had a little extra income in both the first and the second quarters and we got a shot at having some extra income in the third quarter here too so hopefully uh we'll continue to keep it strong till we find something else we need to find something that makes sense for us that's in our marketplace or close to our marketplace we can be added to the eps of this company so anyway we're working on that and uh i guess we're ready for q a thank you for our q a if you would like to ask a question please press star followed by one telephone keypad if you would like to

withdraw your question please press star followed by two and when preparing to ask your question please ensure your device is unmuted locally first question comes from steven scootin with piper sander your line is open please go ahead hey good afternoon everyone um i wanted to start around loan growth um another really nice quarter both ccfg here and and the community bank and and year to date this is it seems like the best organic loan growth you guys have had and really as long as i can remember um and so i'm just wondering what you're seeing from your customer base um if there's been in kind of an increase in aggressiveness to drive that new loan growth

or really what might be driving the success there hey steven this is kevin oh i mean i johnny says we take what the market you know gives us uh i wouldn't say that we're more aggressive i would say that we've we've got some markets in which you know there's still some really good good things happening and our our folks are hitting on you know all cylinders in in some of those markets um you know it is it is tough we've got some competition that i think is loaned into the the rate cuts that have not occurred yet and tried to reach out and maybe lock some of that in for a little bit so that's made it a challenge really across our footprint all of our presidents are talking about that so that's a challenge but um we just had some you know we're in a lot of really good markets and including what chris does with his group we just got a lot of good markets to loan in and we're that's why we're here so while we're in those markets we had loan committee yesterday and we had a almost 100 million dollar project a couple of 30 million dollar projects it was a pretty good loan committee.

If there wasn't many loans, it was a lot of big loans here today that we've been working on for some time and they just come to fruition. So we're seeing that, but you know, the rest of the market may force us down at some point in time because they're already writing it. You know, they didn't chase us on the way up, but they're leading on the way down. So I mean, the real truth is anybody can give it away. I'm not sure this is over yet. I mean I think we're banking on Trump and Powell having a having a drink together or something and lowering rates so that may happen it may not happen but what we don't need to happen that happened if we take breaks President Trump who as you know I'm a huge supporter of talked about going back to one percent money if we do that again we'll have inflation and again running rapid. So that's the scary part of that. We need a slow premeditated drop in interest rates. We don't need a quick drop in them. That could really kind of screw things up.

Yep, makes sense.

And then maybe going to the M&A side of things, obviously we've seen some more deals in Texas as of late. You noted earlier that you guys are looking at a few things currently.

I'm curious, maybe if you could give us an idea of what what size opportunities you might be targeting here in the near term and then would there be anything that you all would pursue right now similar to you know ccfg or marine where you're acquiring um loan assets versus a whole bank deal well when probably not on the whole bank deal i mean we're we looking for a whole line probably not on the subsidiary operation or one of them we're probably not i mean not that we wouldn't do it we just hadn't seen it so uh if we saw it kevin look at it and let us know but we are pursuing a couple of bikes that give us an opportunity to grow and we've seen a couple we're going to talk about a couple next week and then I'm going to see one next week so we we we're trying to find something you know you can't you run call it gap or non-gap 202 to 208 roa you can't ask for much more than that out of your people so we've about milk doll we can get out of this turnip so it's time to find something else for us to buy and we're we're on the path just has to be a creative creative creative makes sense and if somebody out there wants to join a company that's growing and making lots of money and got a strong financial statement we're the one so or we're one of there's we're not the only one there's more more than us but i don't know if that answers your question or not yeah it does and and you kind of led to my last question is just with the way the math works today with with the the marks and the interest rate marks still do you think you can get a triple accretive deal still at this time or do you have to you know take a de minimis amount of dilution to get something across the finish line we haven't taken dilution before interesting you say that i went back and looked at these serial acquirers recently if you go back and look at some of those one of them i look back they outbid me 10 years ago and the stock's the same price today that it was 10 years ago and the dividend's the same price they're paying the same dividend that they did 10 years ago and the people that I mean they they bought the bank but they didn't do anything I mean they nobody got any appreciation out of that trade so you go back and look at those serial looters five and ten years back and if you had to start looking one day at those that beat us on some beds back in those days actually this one is at the same price it was 10 years ago. It was a buck and a half down, but bank stops have risen a little bit lately. So where I don't get into that game, I don't know what people are thinking when they dilute themselves into infinity. We have no intention to do that. We're not going to do that. And I mean, would I do six month dilution? Maybe if it's right deal that was EPS accretive maybe but to go out and dilute myself I mean so many people bought some of these deals that we turned down I mean we saw some of those deals and and we turned down and we saw Veritech Veritech got a nice deal with a good company that's a nice trade for them I congratulated them on that trade so we didn't we were not on that trade but we were on one of the others that got done recently. I don't know. You get me off on that. When I look back how we got outbid on these deals five, six, seven, eight years ago, and the stock's less today than it was then that are still paying the same dividend, then nobody got anything. You know, that's the problem. Do a four-year earn back to tangible.

Yeah, I think I know the deal you're talking about in Florida right there.

I think I remember the one you're talking about there, so I think that's why your stock grades where it goes so i appreciate all the things thanks for the time thank you for thank you for appreciating our patience and our holding power we now turn to matt only with stevens your line is open please go ahead hey guys thanks for taking the question uh probably for tipton uh want to ask about deposit pricing in the footprint saw some good results in 2q but just curious what you're seeing as far as deposit pricing, any incremental pressure you saw during the course of 2Q and some of your peers have talked about seeing some potentially some higher deposit cost in the third quarter, or at least until the Fed makes its next move. Just curious what you're seeing with respect to deposit cost competition in the footprint.

Yeah, good afternoon. About the same as we talked about in the first quarter. I mean, you kind of got some of the same guys running the same uh specials here that that they have been for the last six months or so you know our folks negotiate against those well and we're able to you know price them uh slightly lower than than you know what some some of competitions do and we've got a decent um we've got a decent amount about a billion one or so in cds that mature in the second half of this year um and and hoping that we can, optimistic, that we can get those down just a little bit from where they're maturing at.

Okay, appreciate that, Stephen. And then I guess the other question is more for, I guess, for Johnny. Johnny, you mentioned that buyback yield in the press release and the prepared remarks.

Just curious about, you know, your thoughts on the buyback and the million share pace that you mentioned in 1Q2Q. just trying to appreciate if you if you still have a similar appetite for uh that pace even at these current valuations well that's a good question we we we'll see if we can put some money to work here in the next 30 days some capital to work it uh having the we've continued to buy the stock back it has been diluted to us to buy it back as we know we've had We have, I think your group is running the numbers on that and also DDNF is running those numbers on that on the buyback yield and give us a better understanding of where we need to be. But as of right, we talked about a special dividend to all our shareholders. We actually were looking at how it was seriously considered and still am seriously considered a special dividend to our shareholders. but let's see what we get bought in the next 30 days here and uh we maybe we'll have we got about how much cash at the holding company right now 400 million that's a comfortable side anyway we've got a few things we've got to pay off 140 million 140 million i thought that paid off july 1 it pays off july 31st right right so that we got 140 million on to pay off happy sub debt we'll pay that off when that comes up so we'll probably sit for a little bit but actually we've got so much capital and it's going to reward our shareholders and we may do that anyway it's certainly a thought that's on our mind to do perfect okay thanks guys great quarter all right thank you very much our next question comes from brett rabbiton with hoved group your line is open please go ahead Hey, guys, good afternoon.

I wanted to, I guess, first, Johnny, you mentioned $450 million this year and $500 million next year. Are those just kind of round numbers? Because that would imply a bit of that income atrophy in the back half of this year.

Well, we're at $233 million today. That's just about what we're running, right? we're running about 110, 115, 120 million dollars a quarter so that's annualized that that's about where that is. I don't think that's a reach. I think next year's the reach. I think next year's the reach. I mean we may not get 450 this year maybe 440 or we may get 460. Depends on what happens between now and the end of the year but I think 500 million is realistic if we can get some assets undertone. We can get our hands on some assets. That's the key. I was at a bank conference recently and I said, I can't ask our people for any more than a 2% ROI. And Donna said, yeah, but you do. So we'll ask for it, but it's not realistic.

Is that 450? Is that on reported or the core earnings?

It'd be reported earnings. The value of the shareholders.

It'll be better than that, Brad. I think that was just a round number.

Did you hear that? I like what he said. That's the first time I heard him. He voted for the $420 million budget, and I voted against him. Now you're done.

And then it sounds like the loans, You know, loan volumes are still strong, but you're expecting some payoffs in 3Q. Any color on the pipeline, you know, relative to 1Q and then just what the production was this quarter?

Hey, Brett, this is Kevin. The pipeline is still pretty strong. You are right. We had a couple of things that we thought would probably pay off in the second quarter that moved into third quarter. So, you know, last quarter I was saying we had an uphill climb because of what we saw coming to pay off. It's a little bit pushed to third quarter. But, you know, production is good. I think a billion won last quarter. Pipeline is still, you know, still like it was.

And then maybe just last one around the margin, you know, and if the Fed does cut in September perhaps, how do you guys think about the impact to your margin?

Hey, Brett, this is Steven. You know, I think the thought process we've communicated in the past. I mean, we still scream to be a little asset sensitive, but I think in the first, you know, 25 or 50, whatever it is, down scenario, you know, that gives us certainly some cover to lower deposit rates. You know, You know, we've seen a little bit of sensitivity around, you know, 4% or 3% in some of our deposit book and going below there. And so I think, you know, if you see the Fed make a move at some point, that'll give us the news and the ability to be able to lower that and hopefully be able to offset, you know, what occurs on the loan side from the variable rates.

You didn't ask this question, but I have to get it out. our expenses were high this quarter and they were high because of a lawsuit settlement that we had had been going on for several years it was about three and a half million dollars actually expenses when you take the one-timers out according to Stephen is 111 million 500 thousand and I did the numbers myself and that's pretty close when you take the one-timers out so the expenses don't think expenses have run off the rails. They haven't run off the rails. So we'll do a better job next week. But that was something that we've been dealing with for years. We dealt with it and on the expense side, but we actually had something offsetting the income item there. We sold a fintech operation out of Happy Bank that brought us about three and a half million dollars some pre-tax income in so uh anyway the expenses will be back around the 111 12 mark for the next quarter it should be okay good to hear uh congrats on the quarter and hope things cool off a little bit in arkansas yeah they're not gonna cool off here too hot kevin told us well we looked at 10 day advanced weather the the low is today 96 or something right kevin that's correct we now turn

to john offstrom with rbc your line is open please go ahead hey thanks good afternoon everyone hi john hey um stephen maybe for you just to clean up on the margin in your prepared comments you talked about um being optimistic about the june margin can you give us a little bit more detail on that it seems to indicate and think it's going to step up, but just curious your thoughts on that.

Yeah, yeah, so thanks John. The core NIM excluding event income in June was 447, so it was up a handful of basis points from where the quarter averaged.

Some of that was loan yields were up a couple of basis points, deposit costs were flat, and then the investment portfolios performed a little better as of late uh very helpful on that and then um just a couple more smaller ones but can you talk a little bit about the mortgage banking outlook i know it's a small line item but you know maybe it's symbolic of a little better activity in some of your footprints and some of your footprints on housing can you talk about that a little bit hey john this is kevin um Um, yeah, I mean, I think it's been, it's been up and down the, you know, we'll have

a good month of, of locks and then the next month will, will not be good. Um, I don't, I don't know that there's going to be, you know, until there, there are some rate drops that get, get the mortgage rates down, you know, below where they are today.

I don't know that we're going to see any kind of real positive, you know, multi-month trend there okay this is steven i mean i would say we're and then just we're committed i'm sorry john i was going to say we're committed to the to the space we brought a team in in dfw area on board kind of late first quarter of this year they had a good second quarter and are profitable already so i mean i think we'll continue to be in that space and continue to try to grow it uh the right way um and then a small one on shore i know you you mentioned the yacht um is there anything else

in there is that that's really substantially all of the change and not accrual loans yeah that was the that was the change for this quarter was that and that's been on our radar for um for a solid six months that the arrest process takes quite a while It takes longer than I would hope, even when it's here in the U.S. And so we think we're in good shape once we're able to do something with it, but right now it's sitting in our possession and working through the legal process.

It's a $9 million yacht with less than $5 million payoff on it. So it's just a matter of getting your hands, when you get your hands on it, get it sold. there's not a loss there's not a loss in this all right maybe if it brings five million we got legal fees maybe some but there should not be a loss let me say that just the process we anticipate to take it the process just can just continues on but i think we're about to get the process is about over right the sheriff arrests it takes it puts it in then the judge gives them X number of days to pay us off and if they don't get us paid off, then we get the boat. So we're at the point of getting the boat, I think, Kevin. We're close. It's close.

Thanks a lot. Nice job. Thank you.

We now turn to Catherine Mela with KBW. Your line is open. Please go ahead.

Thanks. Good afternoon.

Hi, Catherine. How are you?

Most of my questions... I'm great. You had a really nice quarter. And most of my questions were asked and answered, but my one follow-up is just on credit. You mentioned you still have about 30 million leftover of charge-off just from the Texas cleanup a few quarters ago. Any update on the cadence of that 30 million of how we should see that come through over time?

Yeah, just to make sure to be clear there, what I was mentioning was the 30 million recoveries that we think that we would get over time.

On that recovery, excuse me. Yes, I misspoke.

Yeah, so that, largely it's a million and a half a quarter. There's a couple of chunks in there. You know, we could get, if one works out this quarter, we could get a million and a half on top of that.

But from a recurring standpoint, it's a million and a half a quarter on one of the loans that we charged off. okay great and then maybe just one more back on the buyback is i mean is it you've been really active you know in in lieu of not having any m a in the past few quarters is it fair to assume that that holds that if you do announce a deal that you're looking at this quarter that you would probably pull back on the buyback for a period of time just depending on what that looks like or do you think you're you're outside of when you're not able to buy back stock just with a deal pending you're just going to be continually buying back stock you know kind

of alongside mna we have not quit buying back stock and we will probably won't quit if we run into we see i don't see the capital restraints keeping us from doing what we need to do even if we buy four five six seven million dollars worth of assets so i i would we actually steve and i talk about it nearly three or four times a week whether we want to do it or don't want to do it where we are we have a 1010 meeting executive meeting every day and we cover all those items so to say we're going to quit buying back I wouldn't say that but to say we're going to buy a million I can't say that but I'm sure if we'll continue to buy back stock you know I just I have but this non-dilution idea that I don't want to dilute, we don't dilute and then we turn around by the stop back and we actually dilute ourselves by the stop back. And I wondered sometimes if that was the right thing for us to do. And we have a couple of companies running that analysis for us as we speak and go to make presentations to us. I want to see that, you know, but I really wasn't familiar with the buyback yield. we've seen the buyback yield now we started adding it to our chart it does add incremental kick to our shareholders but i said i said to donna i said did you feel that kick last quarter and she said no and i said well if i did a big stock dividend would you feel that kick and she said yeah i would so the answer is we'll probably continue to buy back stock unless we need money for an acquisition that makes sense especially given your capital i mean if you're and if you're

saying you're looking at deals if you say you're looking at adding 400 to 700 million in assets i mean that's just as small given your your capital levels because certainly you'll have plenty of capital still unless you do multiple deals right oh did i bury it and i didn't say did i say man i'm sorry i mean basically four to six hundred billion oh my goodness okay we'd buy four million dollars it was good enough trade for us it takes a lot of work but you and you're also not the kind that would issue cash with an acquisition right it's always stock for

stock given your currency cash in an acquisition would you do cash oh well we haven't done we're it gets diluted right it's really diluted right our dollar bills worth our dollar bills worth two and a quarter so you know it it sure works better to use your currency and do a trade but we throw some cash in the deal we used to throw cash in about every deal we did we put 10 or 20 cash in we're not afraid to do that it does creep right up on the dilution it gets there pretty quick doesn't it brian yeah it does great all right great thank you so much great quarter we're going

to see what you've got for us over the next few months thank you for such as another reminder if you'd like to ask a question please press star one on your telephone keypad now we now turn to michael rose with raymond james your line is open please go ahead hey thanks uh good afternoon everyone um just uh just a question on you know hiring um we've seen a lot of banks uh disclose hiring plans, some formal, some informal. Just wanted to get a sense from you guys what the hiring plans were for you if you plan to accelerate then. I know the expense run rate will come down next quarter, like you said earlier, but is there an opportunity here? Is it a little too rich for what you guys are looking at at this point? Thanks.

I'm saying hiring plans? Well, we don't...

Yes, hiring of lenders is what I was referring to.

We don't do that. That's not our style. I think that's chicken shit. Pardon my expression. I really do. I don't like that. And we've had, I don't know, over the years, seven or eight teams in here, people wanting to walk out of their company. some of my i don't know how you face those ceos michael i walk in we just had them here in our office one time and we i went to a meeting in dallas and i walked right into the ceo of the company they were leaving and i just something that bothers me you take a young loan officer you bring him up through the ranks and you help him build his his book and his portfolio and then someone offers him another 200 000 and a bonus and they walk out the door that's not our style we don't do that we'll be not to say we won't hire somebody for somebody for another company

but that's just not our style we don't we don't do that we don't plan on doing it that's not going to be a focus for us all right then um uh maybe just just one more separately for uh maybe for chris um you know obviously devastating what happened out in california you guys have an office out there there's going to be some some rebuilding um how much of an opportunity is that for for you all and um is that something that we should uh consider as we're thinking about uh growth potential over the next couple years thanks yeah thanks michael um uh i think it remains to be seen in terms of you know in terms of what kind of opportunities can be it's a long

term opportunity if it's an opportunity um i think i read the other day i was talking to somebody they've issued 50 building permits total since then um i find it very hard to believe california will start rebuilding in the near term all right thanks for taking my questions yep we now turn to brian martin with johnny montgomery your line is open please go ahead hey good afternoon good afternoon maybe hey johnny maybe just one back on the mna um i think last quarter you talked about

maybe preferring some smaller deals as opposed to bigger deals but you know depending on what's available and what you're looking at I mean any any change in your outlook or just you know thoughts on just the you know the sizing of you know things you're looking at near-term here what they look like or you know geographically any little bit more color on that no they're in the two to six billion dollar range and they're in our united states they're either in our footprint does that help you yeah so two to six billion in the u.s and your preference in terms of multiple multiple deals versus uh one deal is it uh any any preference there still in terms how you're thinking about that i didn't it doesn't matter you know it's uh that's probably what will happen.

We'll sign up a deal and then there'll be another one pop right behind it. But if it is a good deal and it works, we'll go ahead with it. Providing regulators will do that. I assume they will. Gotcha.

Okay. That's fine. And then how about just one for Stephen on the margin? Stephen, I think the – it sounds like the margin, you know, in the – I guess where it exited versus worth that today it's up a little bit this quarter to date or this you know this quarter to date but on top of that you've also got the the sub debt coming off i guess so just the benefit uh i mean is your expectation then that i guess what's the impact of that sub debt on the on the margin uh as you get into 3q sure so brian and i were talking before the call it's about five or six basis points uh that it will benefit from them when it goes away again it's it's going to go away into this month or first of august so you know you'll have two-thirds of the benefit this

quarter um and then the full benefit in q4 but you know absent that i mean i still say you know pleased with with where june ended but if we can hold in this you know 4 45 range and then you know layer a little benefit uh from the sub debt I think we'd be pleased uh for for that in Q3. I mean we talked a little earlier about what you're seeing on loan pricing and some of those things and you know we'll see where that goes but uh very pleased.

I think we have just short of a billion dollars root price between now and the end of the year Stephen.

Yeah we got a little a little less than 800 million in loans, fixed rate loans that mature in the second half of this year. Those are coming off at 546. So there'll be an opportunity to get those up some. We've got about a billion one next year that's at 599. So who knows what happens with interest rates between now and then. But certainly in the second half of this year, I think there's an opportunity to give them a little extra yield on what's maturing. Gotcha.

Okay, that's perfect. I was going to ask on the loan yield, so that's something you addressed. And then just on the, I think Johnny said, or yeah, I think Johnny on the expense number, you know, the core number, just in reconciling that $111 million, I guess the, when you get down kind of that level this quarter, Stephen, outside of the $3.3 million, you know, if you're 116 million in reported expenses absent the 3-3, you know, what else comes out of that to kind of, you know, get down to that 111 million, this type of number, it's more court.

Yeah, we had a million three, a little over a million three in legal expenses related to our West Texas lawsuit, and you talked a little bit about that last quarter. I think we had one fairly large invoice in April that was from the prior month, those invoices have gone down to a nominal number now. So assuming we get that settled in the near future, I would expect those legal expenses go away and that kind of gets you down into the 111.5 range.

One thing we do need to add back to the numbers that we had that special assessment reduction and so that was our FDIC number was down one and a half million dollars.

Yeah and if you look at if you look at where salary expenses landed for for Q2 they were they were a little elevated just from fee income particularly at CTFG incentive comp and then you know kind of same on mortgage mortgage had a good quarter so you know i'm i'm holistically saying that you know incentive comp was up a similar number to what we had um offset from the fdic credit so there's about okay you know those those cancel each other out there's about four and a half million that i would not expect to reoccur okay so that extra the extra that's in there is in the salary line

And that's how to think about that to kind of get to the core number.

Yeah.

Yeah. And then, Stephen, just the – I think last quarter, and maybe Kevin talked about this, but the payoffs versus originations, you guys had expected some payoffs. It sounds like those maybe are going to roll into the next quarter. But just what were the payoffs and the originations this quarter?

Yeah payoffs this quarter were 756 million and you're right there are a handful of those that that we expected to occur in Q2 that slid you know may slide into early Q3.

So 755 there were about 650 last quarter and then origination Kevin mentioned origination volume was about a billion one um typically about half of that's funded uh at quarter end gotcha um okay and then maybe just one for kevin on on the credit quality it sounds like you know i guess the uh expectation was that the credit you know i guess there was maybe one large credit i thought was going to kind of come off or maybe a couple they're going to come off this quarter is that kind of the one you're referring to i guess at least when we think about third quarter kind of what the you know that improvement that was kind of expected this quarter would you

are you suggesting that that's likely and i thought it was in the 10 or 12 million dollar range um that maybe we see that type of improvement in non-performings in in the third quarter here or just some benefit there yeah you're on your own point the it is around 12 and and i really was hoping to be able to announce that that we had it moved in the second quarter but it looks like it'll be third quarter and then we got another one in oreo that you know i don't i don't think it's quite time yet uh but we will be we'll start leasing uh the apartments this quarter we'll see how that that takes off well then it'll generate activity with somebody coming in wanting to buy it

so we're making making progress gotcha okay in the in just the uh the reserve level you know kind of you know drifted down a little bit this quarter just this kind of this level is where you're comfortable for now and just it kind of hangs around where it's at is that how you're thinking about it given the current you know credit outlook yeah we're comfortable we're comfortable with extremely comfortable with reserves we have an opportunity we'll build it we'll build it at some point in time so I still like a two percent reserve I just like it you know I just always run a two percent reserve and if I get a chance to build it to two percent

I'll take it to two percent I just sleep better at night you should too but I sleep pretty good at 186 to 185.

All right well I uh congratulations on the quarter and and thanks for taking the questions guys.

You bet. Thank you for such your support.

This concludes our Q&A. I'm gonna hand back to Mr. Allison for any final remarks.

Good quarter. Thanks everybody for your participation. I hope you enjoyed the earnings release and I guess next quarter will be 77. Is that right, Dominic? Next one will be 77. So Bunny, Bunny's in here. with us you got anything to say to the folks no just um fantastic quarter that's what i would say i could say on behalf of all the other board members we're very very very proud of this group sitting in this room today and all that you've done thank you appreciate it uh brian yes sir got anything that you want to say or anything we left out you think we need to cover no i think but pretty much covered it all. Steven, anything else? No, good quarter. I'm good, sir.

Not here.

Not here? All right, well, we're going to be gone. We'll see you and talk to you in 90 days.

Ladies and gentlemen, space call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.