SB Financial Group Inc (SBFG) 2025 Q3 法說會逐字稿

Good morning everyone and welcome to the SB Financial 3rd quarter 2025 conference call and webcast.

I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode.

We'll begin with remarks by management and then open the conference up to the investment community for questions and answers.

I would now like to turn the conference call over to Sarah Mekas with SB Financial. Please go ahead, Sarah.

Thank you and good morning everyone. I'd like to remind you that this conference call is being broadcast live over the internet and will be archived and available on our website at ir.yourstatebank.com.

Joining me today are Mark Klein, Chairman, President and CEO.

Tony Casantino, Chief Financial Officer, and Steve Walls, Chief Lending Officer.

Today's presentation may contain forward-looking information, cautionary statements about this information, as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials, as well as our SEC filings.

These materials are available on our website, and we encourage participants to review, to refer to them for a complete discussion of risk factors and forward-looking statements.

These statements speak only as of the date made and SB Financial undertakes no obligation to update them.

I will now turn the call over to Mr. Klein.

Thank you, Sarah, and good morning everyone. Welcome to our third quarter of 2025 conference call on webcast. The third quarter reflected steady execution across our business lines and continued stability in our core markets and concentrated growth and expansions.

I'm pleased to report that the integration of the Marblehead clients was successfully completed this past weekend. We welcome and value them as they are a key ingredient in our strategy to further leverage our community bank brand.

We're also preparing to descend upon a new adjacent market just to our west into Napoleon, Ohio, and Henry County.

We're clearly excited about the potential of this market and especially the $800 million in deposits in the market we intend to aggressively pursue as a result of our new presence.

Throughout the quarter we maintained our focus on discipline lending, core deposit growth, and careful expense management.

While the operating environment remains competitive, we believe our balance sheet, lines of business, credit quality, and a growth mindset position us well for the final quarter of the year.

Some highlights for the quarter include net income of $4 million with diluted earnings per share of $0.64, up $0.29, or approximately 83% compared to the prior year quarter.

When considering the servicing rights impairment, adjusted EPS was $0.68 for the quarter.

This was our 59th consecutive quarter of profitability.

Tangible book value per share ended the quarter at $17.21 up from $16.49 last year, or a 4.4% increase.

Excluding the acquisition payment from Marblehead, tangible book value per share is up 8.9%. Net interest income total of $12.3 million, an increase of over 21% from the $10.2 million in the third quarter of 2024.

From the link quarter net income accelerated at a 30% annualized pace.

Loan growth over the prior year quarter was approximately $80.6 million or 7.8% and now marks the sixth consecutive quarter of sequential loan growth.

Deposits grew by nearly $103 million or 9% inclusive of the $51 million in deposits related to Marblehead.

The deposit base and relationships from Marblehead have remained largely intact since the financial merger in January.

When we excluded the marblehead deposits, overall deposit growth was still healthy at 4.5%. Assets under our care continue to grow and now exceed $3.5 billion.

Consisting of bank assets of $1.5 billion, residential servicing portfolio of $1.5 billion, and now wealth assets of over 600 $563 million.

Once again, this diverse book of assets provides stability across market cycles and continues to position as well for performance enhancement heading into 2026 and beyond.

Mort mortgage originations for the quarter were $67.6 million down from both the prior year and linked-quarters.

However, our pipeline has strengthened a bit with the 30-year rate at or below the 6% level for most of this past month.

We are well positioned to recapture market growth with our 23 lenders positioned all across the Midwest in Cincinnati, Indianapolis, Columbus, and Northwest Ohio as rates decline.

Operating expenses decreased approximately 3% from the length quarter and up slightly compared to the prior year.

Year to day expense growth, excluding the one-time merger cost was 9.5%, well below the 18.5% year-to-date revenue growth.

This acceleration of revenue over line item expenses represents an operating leverage of now 3.5 times this quarter and 1.8 times for the year through three quarters.

Asset quality continues to be one of our competitive advantages.

Charge off returned to more historic levels, and we successfully eliminated nearly $1.3 million in non-performing loans from the Linor by way of payoffs and upgrades.

In Clear sight, we continued the relentless pursuit of our 5 key initiatives, and I'll remind you, growth and diversity of revenue, organic growth for a greater scale to improve efficiency, deepening client relationships for a greater scope, and more services per household.

Excellence in operational activity and of course top tier asset quality.

A closer look at revenue diversity and growth.

Mortgage originations remained fairly consistent during the 3rd quarter and continued to show solid improvement from earlier in the year.

Total production was approximately $68 million as I mentioned, just slightly below the level recorded in the same quarter last year.

While we have been disappointed overall in the residential market this year, our ability to generate residential real estate loans across our footprint still improved by 9% over the year-to-date 2024.

As a result, we have improved our residential loan sale gains now by 13% over the prior year-to-date.

Said we are absent from any meaningful refinanced volume thus far in 2025.

This quarter continued our trend of purchase and construction lines.

Here to date we have completed over 80% of our volume and purchase and approximately 7% from construction.

Throughout 9 months, we have done just $7 million in refinancing our own book.

As a result, our servicing rates have increased by nearly $1 million or 7% and are providing an additional $175,000 in annual revenue for 2025.

Non-com was up 2.9% from the prior year quarter at $4.2 million and down 15.9% from the length quarter.

The increase from the 3rd quarter of 2024 was driven by increased mortgage servicing rates as well as increased title service fees and other fee-based business line revenue.

From the length order, we saw a reduction due to the 460,000 servicing rates impairment that accounted for approximately 60% of the decline.

Peak title has continued to be a bright spot in our feecom suite thus far in 2025. Their revenue contribution is up nearly 400,000 or 32% on a year-to-date basis.

These results are especially meaningful given that our mortgage value is up just 9% year-to-date.

PC has expanded their customer base well beyond state bank, and our commercial lenders have consistently increased their referrals.

In fact, year-to-date, our internal referrals have provided our title company with 28% of their total revenue.

Our wealth group is transitioning to a new strategic partnership with Advisory Alpha that we mentioned in prior quarters.

This will enable us to bring an expanded suite of marketing materials to the table and most importantly, a number of CFP professionals that will be an added benefit to our current and future clients while strengthening our high touch brand.

Over the coming quarters, we intend to expand on the impact this strategic partnership will have on our client base.

On the scale front During the 3rd quarter, we continued to make solid progress integrating the marblehead team into our organization.

Their staff has blended well with our state bank team.

And we've been very encouraged by their continued success in retaining longstanding client relationships and maintaining strong community ties.

We also recently completed the integration of Marblehead's customers into our core system on October 24th, marking the final step in aligning operations and technology across our combined organization.

This acquisition, while small, has enabled us to enter a new market and add nearly 2,500 deposit accounts with a weighted average cost of approximately 1.2%. As I mentioned earlier, deposit growth both with and without Marblehead has been a strong contributor to our earnings in 2025.

We've been able to keep most of our excess deposit liquidity, which has averaged approximately $75 million invested overnight expanding margin revenue.

As rates are expected to further decline in the coming quarter, we will be utilizing this liquidity to fund our solid loan pipelines across our footprint.

Again, we have grown loans now for six consecutive quarters with the annual growth rate of 7.8% well in line with our historical averages of high single-digits.

We understand that the majority of the growth has occurred in the Columbus market and in the commercial real estate product line.

However, even with the impact of that somewhat lopsided growth over the past 4 to 5 quarters, Columbus represents just 40% of our loan balances, and CRE is now less than half our total outstandings.

Additionally, CRE is In our loan portfolio and contributes and constitutes just 203% of regulatory capital, which is well below peer and well within regulatory benchmarks.

Expanding relationships or more scope.

Our focus on relationship banking continues to guide how we serve and grow our franchise. We remain committed to understanding the needs of our customers and delivering the right mix of products and services to support them through very economic conditions.

As part of that commitment, we've continued to refine and expand our hybrid office model that combines personalized in-market service with flexible digital and remote engagement.

This approach has strengthened connectivity with clients while helping to enhance efficiency across our footprint.

We remain dedicated to this model in our new markets of Angola, Indiana, and soon to be Napoleon, Ohio.

And have begun retrofitting several of our existing offices to better align resources with current levels of activity.

As we disclose in prior quarters, our markets have experienced disruption from mergers and acquisitions.

We have been opportunistic in pursuing clients of the disrupted competitors, but most importantly, we've been able to add debt to our business development teams and in our urban markets and in our agricultural lending business lines.

All of these changes have been part of a concerted effort to be present and available in each of our communities.

There is still a significant level of business activity in our legacy markets and as client rub heightens, we feel we are well positioned to leverage our mainstream banking model.

With newly acquired talent to drive our acquisition of both loans and deposits higher.

Referrals remain a key element in our quest to deepen existing client relationships.

Due to date, we have now initiated over 1,100 referrals to business partners with 557 closing for approximately $62 million in additional business for our company.

Operational excellence.

A major focus for us throughout this year has been the acquisition and integration of Marblehead clients, employees, and community.

We achieved the financial close of the transaction 5 months after the announcement and customer conversion 9 months after the financial close.

Despite the speed of those transitions, we've had little to no customer attrition and the client facing staff are here today taking care of their long-term clients.

Our integration team has built a process and structure that will allow us to compete and complete future transactions quickly and efficiently.

As we indicated last quarter, we believe that agricultural lending opportunities have begun to expand in our markets.

In fact, we recently added another experienced lender in the egg production sector and will undoubtedly allow us to solicit a number of well-established egg production relationships across the tri-state region.

Our balances have been steadying $65 million for some time.

But our commitment and renewed emphasis are intended to deliver us a $100 million dollar portfolio a year from now.

Finally, asset quality.

We continue to reveal a high level of asset quality metrics as with prior quarters.

As I mentioned, charge offs fell to 0 basis points from just 2 basis points in the second quarter. Non-performing assets total $4.9 million.

We remain focused on maintaining our strong asset quality as demonstrated by the continued management of our criticized and classified loans which stood at $5.8 million, down from $7.2 million in the length quarter.

Our allowance for credit losses remained robust at 1.44% of total loans, not providing 345% coverage of non-performing assets.

We did make real tangible progress to reduce non-performing loans this quarter, but we still have room for improvement.

In fact, our top quartile performing peer group has been consistently 10 to 15 basis points lower than us on this ratio.

We do feel that we have additional opportunities to reduce it further and are targeting 25 basis point level of NPAs in the coming quarters.

Now I'll turn over a call to Tony for additional comments on our quarterly performance, Tony.

Thanks, Mark. Good morning, everyone. Let me outline some additional highlights and details of our third-quarter results. Starting with the income statement: in the third quarter, total operating revenue increased to $16.6 million, a 15.9% rise from $14.3 million in the prior year, though a 3.5% decrease from the previous quarter. Net interest income growth has been the main driver, reaching $12.3 million, up 21%. Loan income topped $16 million for the second consecutive quarter, reflecting our higher level of outstandings and the contractual repricing of the portfolio. Loan yields reached a new high of 5.95%, up 23 basis points, which directly pushed our earning asset yield up 18 basis points to 5.31%. Year-to-date ROA was 90 basis points, up 17%, with our pre-tax, pre-provision ROA at 1.29%, a 28 basis point improvement over the year-to-date performance in Q3 2024. Despite balance sheet growth and the need to fund earning asset expansion, funding costs remained stable. Total interest expense for the quarter was $6.5 million, up just $113,000 or less than 2% from the prior year. Year-to-date interest expense rose $430,000, comparing favorably to the $7.1 million increase in interest income. Our rate on interest-bearing liabilities was 2.33%, down 19 basis points from the prior year, aided by Marblehead’s lower-cost deposits and organic deposit growth across several markets. We believe this quarter likely represents the low point in funding costs and the peak in our net interest margin of 3.48%. While we expect several more quarters of asset repricing and plan to roll off bond balances into higher-yielding assets, rising funding costs may offset margin appreciation. Fee income has remained consistent between $4 and $5 million per quarter, though its percentage of total revenue has trended down to the mid-to-high 20% range due to increased margin revenue. This quarter saw a higher OMSR impairment due to rate improvements, which was more than offset by increased equity from a lower AOCI level. Total mortgage banking contribution was nearly $1.5 million, up over 10% compared to Q3 2024. Our hedging program continues to help maximize gains and minimize rate exposure with an expanding pipeline. The gain-on-sale yield in 2025 is 2.08%, slightly down from 2024, while the sale percentage this quarter was nearly 100%, increasing our year-to-date originated sale percentage to 88%. Operating expenses were well controlled, down 3% from the previous quarter and up just $500,000 or 4.5% from the prior year. This 5% growth includes all operating costs for Marblehead, now fully integrated. Total headcount increased by just 5, with structural changes in mortgage and support offsetting new additions for Marblehead and lending staff. On the balance sheet, loan and deposit growth have been critical to earnings expansion. Looking ahead to 2026, we expect high single-digit loan growth funded by bond portfolio runoff, 4–5% deposit growth, and targeted wholesale borrowings. Our stable deposit franchise has allowed us to self-fund asset growth, with only $35 million in wholesale borrowings at an average coupon in the low fours. Liquidity ratios remain well within policy, with immediate access to over $190 million in FHLV capacity and nearly $500 million in total contingent funding options. Our loan-to-deposit ratio held steady at 88%, with a target range of low to mid-90s to balance profitability and liquidity risk. With an average account balance of $22,000, our deposit betas are predictable and support future funding needs. On capital management, we repurchased 101,000 shares at an average price just under $20, approximately 115% of tangible book and 95% adjusted for AOCI. Year-to-date, we’ve repurchased 252,000 shares for $4.5 million, using 45% of our earnings. Tangible book value per share rose $0.77, driven by a $2.1 million AOCI benefit, higher earnings, and a reduced share count. Lastly, asset quality improved, with total delinquencies slightly lower at 45 basis points, mainly due to reductions in the 90+ day category. Compared to the prior year, delinquent loans are down $1.7 million, and classified loans fell by nearly $1.3 million or 21%. Our allowance for credit losses increased by 1 basis point, remaining consistent with portfolio trends and recent quarterly loss rates. Given improvements in CISO metrics and NPLs, this likely represents the high end of our reserve level going forward. I’ll now turn the call back over to Mark.

Thank you, Tony.

We remain very encouraged by our potential to deliver a strong performance in the last quarter and full year for 2025.

Anticipated further reductions by the Federal Reserve, potentially expanding mortgage volume coupled with a larger balance sheet and higher margins should provide the tailwind we expect as we close out the final quarter.

We continue to see strong loan pipelines, and the new lenders we have added to our team are anxious to deliver new loan and deposit relationships.

We announced a dividend last week of $15.5 per share equating to a 3.1% yield and just 24% of our earnings.

This will complete our 13th consecutive year of increasing our annual dividend payout to our shareholders. Now we'll open the call up for any questions, sir.

Jamie, we are now ready for questions.

(Operator instruction)

Brian Martin from JD Montgomery.

Hey, good morning, guys Hey, thanks for the update there. Just, I don't know, Mark, maybe just can you hear whomever I guess, just on the on the loan growth, can you just talk about anyone? It sounds like Mark, your last comments about, maybe some recent hires. I don't know if they're recent or just someone you're you know talking about in the last 6 to 12 months you've hired, but just the pipeline and the hires, sounds like the will be a little bit of a focus here given the new addition there, but just how we think about the growth, the pipelines and the growth, the next you know 6 to 12 months and particularly I guess maybe just geographically. It sounds like there's good growth everywhere, but maybe a little bit more in ag here in the short-term.

Yeah, as and as I indicated, we hired a new seasoned egg lender from a from a competitor that has gone through some M&A, and that individual managed over $100 million portfolio, so we're clearly expecting some opportunities there given the disruption in the landscape and the opportunities there.

We've also replaced.

An individual in the northern market with a seasoned individual that has been with some larger banks that clearly managed a larger portfolio as well. So those are a couple of areas that we are pretty optimistic about. And then we've also certainly continue to have good traction from the Columbus, Oh Ohio market under the leadership of Adam Gressel and the two lenders that we have in that market. And as I mentioned, Siri continues to be the focus, but C&I still is on our radar in all of our markets.

Steve Walsh can give a little bit of color on growth in the other markets we have, Steve, which has been a little more limited.

Sure, yeah, thanks, Mark. Yeah, Brian, I think you know you heard discussion in the comments about our expectations about A and what can be delivered there. We do certainly expect that addition to aid our call them legacy markets that have been certainly flatter growth. That being said, it doesn't change our expectation that Columbus will continue to deliver high levels of growth, but also those other growing more urban markets we do expect to play along as well. So while we certainly expect a little pick up and egg, we do have expectations broadly that the additions we made will enter to our benefit.

Broadly.

Gotcha. And can you, I guess, is there, how is the pipeline of, kind of unfunded commitments as far as those funding up here, I guess is there still a pretty healthy balance of what you guys expect to fund up there that's kind of already booked and just, kind of waiting to be funded.

There is, there remains a number of dollars in unfunded commitments. We continue to replace some of those dollars as they roll obviously into the permanent loan structure. We continue to grow in that area as well, and we would expect certainly over the next 6 to 12 months and in this quarter as well to continue to kind of hold serve with where we've been on a growth rate.

Gotcha any additional color on pipeline? Yeah.

I think, as Steve and Mark mentioned, we probably have$ 40 million of unused line commitments that we think we'll fund and call it the next 6 to 12 months. I think most of our lending that's been commercial real estate, especially in the in the Columbus market, has probably been, shorter term, kind of 3 year type transactions, so we're probably 1 year into that process. So we feel like there's still significant potential there to expand that.

I would think Q4 we're probably going to do similar growth level that we did in Q3, call it, $15 to $20 million of growth, and our initial expectations is kind of an $80 to $100 million dollar 2026 number and call that 40% funded by things that we've already booked. And 60% from from new activity I guess if I lay it out at a high level.

Gotcha. Okay. Yeah, and Tony, I guess maybe can you talk about the ability, I heard your comments on the margin, but just, I know you still have a fair amount of liquidity, but you also talked about growing deposits and potentially using some borrowings just.

Frame up, I mean, I guess the the loan growth here, in the next 6 to 12 months in terms of how you fund that, I guess is it primarily going to come from the liquidity or I guess is that is that not the case? Just trying to give you work that down it feels like if you work that down a little bit, it probably, helps the margin a little bit, but then again you also talked about the competitiveness, so I don't know just how you can frame up the margin outlook and just that utilization of that liquidity.

Yeah, I mean, in a perfect world, let's say we've got $50 million of, $50 to $75 million of available liquidity today that we're investing overnight. If I didn't think there was going to be a significant increase in the competitive nature of deposits, I think we'd turn that $50 to $75 million immediately into our loan pipeline, which, we'll probably call that a 300 basis point improvement of what we're earning today. And you know I've just kind of believed on the ground from what I've seen that funding costs and competition is going to get tougher. So I really think, we've had a very stable deposit base that, there's no but there, but I do think that there's going to be some pretty good competitive offerings from competition in 20 in the early part of 2026 and I think our customers will be subject to some of that.

Desire and emphasis about potentially wanting higher rates, which concerns me a little bit that we'll squeeze our margin, but if I think we can hold where we are and just use that $75 million, then I do think margins will increase from where they are today.

Well, unfortunately, Tony, the runoff and the amortization and the securities portfolio certainly adds some inertia and some backing as well, yes.

Okay, and so it's just big picture broadly, Tony, given the competitive pick up here, I guess if your margin peaks this quarter, I guess, you just see it kind of being.

Just a little downward drift given, the the factors you kind of outlined there it doesn't seem like there's a big shift lower. It just doesn't seem like it's going a lot higher. It's like more of the offset with, some of the repricing that you're going to have, and then you're just being offset by maybe the competitive factors of it is that kind of I Think about it because I think

Yeah, I do think, 3.5 is a good solid margin level for us given our asset size and given where we are, I think we're probably going to hold that margin level throughout 2026 because we're going to have repricing on the asset portfolio, bond roll off that'll be higher, reuse of liquidity that'll be a higher number, and a little bit of headwind from funding costs potentially. But, if we have fairly dramatic rate decreases, in the short-term, our prime base call it every 25 basis points cost us, call it $350,000 on an annualized basis from, kind of our prime base he locks, etc. We've probably got 75 basis points of move before we hit our floors. So we're kind of in that window of, how you recover from that if it's a fairly rapid decline in Fed rates.

Gotcha.

Okay, that's.

Helpful and just, that's fine. I think that was it on that. And then how about just you know in terms of the credit quality sounds as though there's opportunity, this is kind of the peak on the reserve coverage I guess can you just kind of frame up? I mean, I guess if credit quality holds and there's no big and you do see a little improvement here it sounds like there's some potential improvement maybe just frame up what that improvement could look like and just, where you're thinking on.

Preserve coverage, over time as you kind of continue to, bring that the credit numbers down a little bit more.

Yeah, I mean, I'm happy to start. I do think, we probably have got, call it, 500,000 to a million of current non-performing that we think we have a better than.

Average chance that we're going to be able to either upgrade or get those paid off in the next call at 6 months and then I think that'll be as we talked about kind of that 25 basis point level of NPAs, which I think is probably the low point that we'll see. So I think that adds some some downward pressure in the current world of Cecil about where a reserve is, if you look at any comparison we have relative to peer or relative to. Where we are, our reserve level at 144 is at the high end, which is fantastic, but I do think we're going to have some pressure that, potentially we're not going to take reserve back, but we may not be putting as much in as we have this year. I mean we put in, almost a million dollars this year through through 9 months. So a pretty strong level of provision we've set aside in what has been a great credit quality year.

Yeah, Brian, I'd just add, we've talked about it in prior quarters here. We've got a very robust loan review process and have been confident that that we understand where where the weaknesses are, so.

The The pace of improving that ratio has been a function of the time it takes to get control of collateral in some instances just being a little longer than we expected. It's not really a result of, well, one troubled credit fell off and was replaced by another. Again, we remain confident. We know our portfolio well. It's really just been the pace at which we thought we could clean some of those up that has frustrated us.

Yeah, no, I understood.

And that reserve ratio, Tony, I mean, maybe it's maybe it gets down to the 125, 130 type of level is that could over time you could see it go as things progress or is that, do you have kind of a target as far as where you're thinking that ends up, down the road.

Well, before Tony answers, I've got to tell you, Brian that he and I are kind of bookings on that strategy.

If we grow 1$50 or $200 million, I can see it going down to that, but I don't see it going down to that just because, we have charge-offs or, less reserve.

This is not going to happen.

I think more is always better in that arena.

Yeah, totally.

I would say I worry less about the percentage than kind of the full dollar amount. I would guess if we're here next time, this time next year, we're probably in the range of call it $16 million on a reserve level from our 153 that we're at today, and then, where that reserve percentage is, if we grow, $80 to $100 million, it's probably at 139, 140, something like that. So it's not terribly out. But our coverage of NPAs at that point, if we get to where we think we are, is probably over 40%, so we feel pretty good about where it is.

Yeah, okay, that makes sense. I mean, you guys have done a great job on credit and like you said, the reserves are, as Mark said, bigger or stronger or better, bigger is always better, but certainly you have to understand the modeling as well and what the credit picture looks like. But okay, and then maybe just one of the last two here just on the expense outlook.

Can you talk about, kind of where we're at today, I guess I know that could change a lot with mortgage production and whatnot. There's some, volatility with that, but you guys have done a great job on the expense side and just kind of, trying to get my arms around, what that looks like, in the coming quarters or just next 12 months, however you want to frame it up, just kind of the trajectory from kind of the current expense run rate, how should we should think about it.

Well, Brian, just a couple of comments, and Tony can certainly clean this up, but as you well know, technology has become a big factor in the expense side, and we continue to work hard to remain relevant in that space, but that certainly is going to continue to accelerate on into the next foreseeable future. And then obviously from a people perspective we're seeing a lot of Pressure, if you will, in various markets to identify and attract the talent that we need. So pressure is clear on the expense side, which certainly adds fuel to the fire when we talk about a balance sheet expansion and stabilize or widening margins, but it's going to get a little more difficult as we move forward, which again is so critical to expand the balance sheet and Tony, I know you probably have some additional.

Ideas on that. Yeah.

I mean, I think Q4, we did 115 in total expense in Q3. I think Q4 will be in a similar number. I do think mortgage volume will be up, call it 15% versus where it was in the late quarter, probably somewhere around $80 million. So that'll drive a little bit higher expense, but call it, 115 in Q4. Which would give us a, call it 46 and some change, for all of 2025, I mean, I hate to say I feel good about it where expenses are, but I do. I mean, we've added some staff and some things, but we made some structural changes on support and mortgage, and we continue to find those kind of opportunities of people doing more jobs, kind of linking things together and doing some of those kind of things. I do think our hybrid strategy on branches will allow us to retrofit some that will reduce some headcount. So I feel pretty good that, a 3 or 4% pace in 2026 would be okay at this point.

Gotcha.

Okay, yeah, it makes sense. The, like you say, the hybrid and some of the other, like what you've done on the mortgage side has really helped and we'll see what happens with the volume, which is kind of maybe the last thing I want to ask Tony just or Mark, just in terms of, Mark's comment about the 30 year being below 6 and really no refinancing done this year, I guess, how do you think about Just the mortgage volume for for next year. I mean, I think I don't know what you talk a little bit about 4th quarter this front and center, but just in terms of what you're thinking in terms of you know where rates are today and the people you have on the ground, what should be, kind of big picture outlook.

Well, as Brian, we're geared up for and structured for that $450 to $500 million number that we've talked about forever. We're still structured like that. We've improved marginally, but we're looking for a sub 6, much like everyone's looking for a sub 6, and something, with that 5.5 kind of a number or 5.25% would be a great boost to that level of volume. But this year certainly has been better than the one before, but we have the capacity and 23 different producers that are highly incentive to find additional volume. I would certainly like to think that we would get Tony's got his number, I'm sure, but I'd certainly like to think we'd get back into the 400 range, as rates decline, particularly in the 10 year. Now I know I bumped back up here recently, but that would be a welcome.

A boost to our earnings, if you will, if we could get something in that 5 range comments on.

Yeah, I think like I said, we'll likely do $80 million in the in the 4th quarter, which, be a nice solid improvement from, the $68 million we did this quarter.

I do think mortgage volume will tend higher, we're now in, call it the 4th year of this kind of tough rate environment and there becomes a point where you do have a kind of a backlog of things. I looked at the pipeline this morning of $37 million, and there were an awful lot of refinances on there, probably, call it $12 million of that, so, about 30%, which would be a big number.

So you get this initial move when you get the rate below 6%. And then I think if you see that for an extended period, you might get back to a 20% refinance level, and if that's the case, then, I think, the $320 to $350 million dollar range is probably pretty solid and you have an outside chance to get to the, kind of a 4 handle in 2026. We'll see how this quarter goes.

Just short of my number 400.

Opp optimistic CEO.

A round up to the 4 handle something.

North of 4. How about that would be good.

There you go.

I want to ask for best on rates because it'll drive a lot of it too. So, I guess everything good with the the Marvelhead transaction in terms of the integration, I guess no.

I guess Mark, you talked a little bit about the opportunity, anything you're seeing in that market that you know is is something we should you know hear about in terms of any initiatives you've got there. I know there's opportunity there, but just trying to frame up the integration went well and those cost savings are all, I guess, effectively in the numbers now in terms of when we look at next quarter.

Yeah, they generally had a smaller staff and you know we're getting back in the game up there. They were basically on the sidelines for at least a couple of years, given their capital positions. So we've got some work to do, but clearly there's opportunities up there, and we intend to pursue those. The staff that was there is still there and we're leveraging that that brand that's 117 plus years old into ours, so you know we have high expectations. And that coupled with it wasn't your question, but you know you couple that with the new market we're going into in Hender County that collectively has, as I mentioned, $800 million in deposits there that strangely enough, $700 million of that $800 million rested in community banks that I would say below, $2 to $3 billion. Now it's like $300 million. So there's a lot of deposits that have gone to regional players, and our intent is to pursue those aggressively so.

Everything to the north and to the east, I guess, of us, which would be, the Henry County thing that's where our focus is going to be in addition to that Columbus market that we all know is on fire.

Yeah, okay, and I guess in terms of, capital.

Balancing, potential, M&A versus, the continued repurchase of shares, what's the What's the mindset today, in terms of how you're thinking about that, how we should think about it, in the coming quarters.

Yeah, I think, I think we're getting to the point, obviously our dividend, shareholder dividend is, going to be above $4 million, next year based upon where we are, so that, that's getting to be meaningful, we obviously are fine on a regulatory capital basis, but you know I would say we're probably going to probably slow down the buyback a little bit just so we can retain a little bit of capital for potential. Transactions if they come together, although we still have, a tremendous amount of excess earnings, we, obviously our debt reprices next year, mid-year, so we've got some things we got to think about their whether we, refinance or, expand or do some things there. So, I think on the capital front we have a lot of opportunities and options as we sit today.

Got you.

Okay, well, I appreciate the, I'll take all the questions and the update guys.

That's all right, thanks.

Have have a good one.

And once again if you would like to ask a question, please press star and then 1 to withdraw your questions you may press star and 2.

And it's showing no questions at this time. We'll end today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

Once again, thank you for joining us this morning, and we certainly look forward to bringing you up to date on our full year results in January. Thanks for joining. Goodbye.

And with that, ladies and gentlemen, we'll conclude today's conference call and presentation. We do thank you for joining. You may not disconnect your lines.