Enterprise Financial Services (EFSC) Q3 2026 earnings call transcript

Thank you all very much for joining us this morning, and welcome to our 2026 3rd quarter earnings call. Joining me this morning is Keith Turner, the FSC's Chief Financial Officer and Chief Operating Officer, and Doug Bauke, Chief Banking Officer of Enterprise Bank and Trust.

Before we begin, I would like to remind everybody on the call that a copy of the release and a company presentation can be found on our website. The presentation and earnings release were furnished on SEC Form 8K yesterday. Please refer to slide two of the presentations titled Forward-Looking Statements, and our most recent 10K for reasons why actual results may vary from any forward-looking statements that we make today.

Our financial scorecard begins on slide 3. For the quarter, we are in $42 million or $1.14 per deluded share. This compared to the $1.09 that we earned in the second quarter of this year and $1.19 that we earned during the third quarter of 2025. This level of performance produced a return on average assets of 95 basis points and a pre-provisioned ROAA at 1.67%, while our pre-provision earnings improved from the link quarter, larger than expected presents impacted the offering results for the period.

That interest income expanded by $5.9 million to $175 million, and that interest margin remained stable at 4.30% when compared to the link quarter. Higher loan and investment balances coupled with a steep reveal curve and relatively stable deposit cost contributed to these results. Given the increasingly competitive environment that we find ourselves in, I am pleased with how we are able to grow net interest income through a combination of relationships driven loan and deposit growth coupled with net interest margin defense.

Our well-positioned balance sheet continues to be a strength for our company as it continues to provide great flexibility with respect to capital planning. Capital levels at quarter end moved into our target range. As our tangible common equity to tangible assets ratio came in at 8.13%, return on tangible common equity for the quarter was 10.74%, a slight improvement to the 10.39% ported into the link quarter.

Capital management actions in the quarter included the repurchase of over 525,000 shares, $4 million, and increasing our quarterly dividend by one cents for common share for the turning to slide four, momentum, and loan and deposit growth continued in the third quarter. Building off solid growth in the second quarter, loan balances grew $52 million in the quarter. Doug will get into the specifics where we saw this growth. Other nuances related to diversity of where we received mid to high single-digit growth here in 2026.

With this normalizing back to the mid-single-digit growth, our diversified deposit base continues to be a differentiator for us. Whole deposits exceed $15 billion a quarter and $24 million. Respect it, our geographic markets began to see the normal second half of the year growth, producing 80% of this quarter's production.

Total deposits came in at 33%. Now, loan to deposit ratio is 82%. Our teams have worked extremely hard for many years to garner full relationships, the results of which are the combination of larger, more sophisticated commercial relationships, granular business banking and consumer accounts, expanding national deposit verticals. While we continue to make progress on the Southern California, the $18 million of provision expense driven by loan growth and $11 million in net charge-offs.

During our second quarter call, with our charge-off level, we returned to 18 to 20 bases. This obviously did not occur as a result for the third full set aside reserves, for the other larger charge in the quarter represented the right down of a flag hotel in Southern California that we took into Oreo in the quarter.

Looking closer, $83 million government guarantees five, we will see our priorities for the remainder of the year. While credit is not where it needs to be, we should path to get historical levels over the next few quarters. And great comp, and you can also see that the normalization of credit is slightly above industry expectations in our automation journey, increasing technology framework that we've invested in. The strong, advanced automation tools, benefits of which, in my most recent travels and discussions with clients throughout our footprint, is encouraging to hear, in and around the data center ecosystem, power generation, defense and aerospace continue to have a clear and robust run ahead.

We're also still seeing pockets of industrial and retail demand in faster growing markets throughout our competition for new clients and spheres, but I'm confident that the value-added relationship model that has been our hallmark, but it needs to be a differentiator for us.

Third quarter produce exceptional loan deposit growth amid the planned pricing and controlled expense. I would like to turn the caller to Doug Bauke. Doug?

Thank you, Jim, and good morning, everyone. Our banking teams performed well on the third quarter, delivering robust organic loan and deposit growth, while maintaining disciplined pricing and underwriting standards across all of our geographic markets and specialty verticals. Building on the positive momentum we discussed in the prior quarter, we continued to successfully win high-quality business clients, expand existing credit and treasury management relationships, and leverage our differentiated platform to drive sustainable profitability.

Turning to slide six, total loans reached 12.3 billion a quarter end, representing a net quarterly expansion of 453 million or nearly 4% sequentially. Gross loan originations and advances were particularly strong during the quarter of $1.3 billion, outpacing repayment activity of $800 million. Over the last 12 months, total loan outstanding increased $762 million or 6.6%, largely driven by expansion of our CNI, CRE owner-occupied, CRE investor-owned, and life insurance premium finance portfolios.

Court commercial and industrial lending expanded by $79 million, quarter over quarter to $2.7 billion. New CNI production was broad-based, spanning equipment financing and working capital lines to mid-market, privately held manufacturing, wholesale distribution, and specialized commercial service providers across our geographic markets. On a trailing 12-month basis, CNI balances have expanded by $386 million or 17%. Our CRE investor-owned real estate portfolio increased by $138 million during the quarter to just over 3 billion. Similar to what we highlighted in Q2, new investor CRE fundings were centered on well-capitalized, experienced developers and sponsor groups.

Projects funded in Q3 included industrial centers, multi-tenant neighborhood retail complexes, and stabilized logistics assets across our key growth markets, including Phoenix, Dallas, Kansas City, San Diego, and Southern Nevada. Our life insurance premium finance business delivered $100 million in net quarterly growth in 8% sequential expansion, bringing the portfolio's balance to $1.4 billion. We continued to capitalize on our strong national brand recognition, deep partnerships, and high net worth client acquisition network in this low-risk, highly-collateralized asset class.

Within our specialized business channels, SBA 7A, owner-occupied real estate financing, remains stable, ending the quarter of $1.25 billion, maintaining our position as a leading SBA originator nationally. Sponsor finance balances held steady at $714 million, while tax credit lending increased slightly to $750 million due to modest advances on new markets and low-income housing tax credit projects. Overall, line of credit utilization remained steady and controlled at 46.6% compared to 46.7% in the linked quarter.

Slide 7 illustrates the continued balance and diversification of our portfolio across geographic markets and specialty lending divisions. Our primary geographic community banking regions in the Midwest, Southwest, and West represent $7.9 billion, roughly 64% of total loans, while our diverse national lending verticals account for $4.4 billion, or 36% of the total book.

Moving to deposits on slide eight and nine, total deposits increased by $624 million, or 4.3% in the linked quarter, and by $1.5 billion, or 11.5% over the last 12 months, climbing to $15.1 billion. Consistent with our historic seasonal patterns, deposit inflows accelerated during Q3 across both our community banking footprint and our specialized channels, fully recovering the typical tax and distribution-related outflows experienced earlier in the year.

Deposits from our specialty verticals contributed 20% or $123 million of quarterly growth with our core community banking markets driving 80% or $500 million of growth in the quarter. The overall deposit mix remains high-quality, sticky, and relationship-driven. Non-interest bearing, demand accounts total $5 billion, representing a consistent 33% of total bank deposits.

Slide 10 provides additional detail on our differentiated deposit verticals, including property management, community associations, and legal and escrow services, which represented a combined 4.2 billion or 28% of total bank deposits at quarter end. Our property management division includes 1.8 billion of deposits, roughly 43% of total vertical deposits. Our recently announced partnership and investment in technology will enhance system integration and automation and improve efficiency and overall experience for our valued property management firm clients across the country. Through discipline pricing and earnings credit optimizations, the average cost of funds across these three deposit verticals improved by 17 basis points to 2.52% from 2.69% in the linked quarter.

Finally, slide 11 details on our core funding composition. Core commercial deposits account for $5.4 billion of our total deposit base. Demonstrating the operational integration of these corporate clients, approximately 80% utilize our treasury management platform and 60% maintain an active lending relationship with us. This commercial base is complemented by 4.6 billion in highly granular business banking and consumer deposits, contributing average account sizes of 79,000 and 23,000 with attractive weighted average funding costs of 1.17% and 1.46% respectively. Through proactive pricing discipline across all client channels, our total cost of deposits remained well-controlled at 1.54% for the third quarter.

In summary, it was a very solid and well-balanced growth quarter on both sides of the balance sheet, and our current pipeline suggests this momentum should continue well into the next quarter. Thank you for your time, and with that, I'll turn the call over to King Turner for his comments.

Thanks, Doug, and good morning, everyone. Turning to slide 12, we reported earnings per share of $1.14 in the third quarter on net income of $42 million. Excluding certain non-recurring items, earnings per share on an adjusted basis was $1.17 compared to $1.13 in the linked quarter.

Pre-provision earnings sold $75 million at $6 million increase from the link quarter, primarily due to higher net interest income. On the cost side, non-interest expense decreased compared to the second quarter, primarily driven by a reduction in accrued bonus compensation and efforts to improve pricing in certain deposit verticals.

The link quarter increase in the provision for credit losses was primarily due to the net charge off on two relationships, gym detail, along with reserves for the increase in non-performing loans and $453 million of loan growth in the period.

Turning to slide 13, with more details to follow on 14, net interest income in the third quarter was $175 million, an increase of $6 million or 14% annualized from the second quarter, resulting mainly from higher average loan balances and enhanced investment returns resulting from the investment portfolio or structure in the prior quarter. The total cost of deposits was managed at a stable level, but balanced growth combined with the first full quarter of the $175 million sub-debt issuance increased interest expense.

Interest income increased $9 million in the quarter, including $7 million on increased loan balances and $2 million from cash and investment securities.

Interest expense increased $3 million compared to the link quarter, including an increase of $2 million in deposit expense and $2 million in additional expense related to our most recent sub-debt issuance. These were partially offset by reduced expense on short-term FHLB advances and retired term debt at the holding company. Our net interest margin for the third quarter was stable from the link period at 4.30%, earning asset yields expanded two basis points, mainly due to the securities repositioning trade and an improved earning asset mix.

The rate on loans booked in the quarter was 6.61%, and the average tax equivalent purchase yield on investments was 4.74%, both of which improved the yield on the basis. The cost of interest bearing liabilities increased three basis points, mainly attributable to the additional sub debt, along with the two basis point increase in the cost of interest bearing deposits.

Net interest income remains modestly asset sensitive under parallel interest rate shock simulations, with each quarter point change in rates affecting net interest income $1 to $2 million per quarter or a couple basis points in net interest margin. Recent steepening of the yield curve should reinforce beneficial pricing on loans and investment purchases, and the September federal funds rate increase should prove accretive to net interest income.

Including deposit related non-interest expense in this analysis, we model that we are effectively neutral. However, for the most recent increase, we have largely held non-contractural rates stable in order to regain some profitability in those businesses.

We also added $150 million in additional loan hedges during the third quarter to further stabilize our interest rate risk profile.

With the last Fed increase, we anticipate margin to move a couple basis points higher in the fourth quarter. Discipline pricing and cost of funds management will continue to drive expansion of net interest income. While changes in the yield curve have been favorable, spreads have compressed as the market adjusts. The positive balances should reflect normal seasonal growth.

Slide 15 reflects our credit fund. That charge off total $11 million in the third quarter, down from $13.6 million in the link quarter. The charge offs primarily related to a C&I credit in the St. Louis region and a California hotel that we took possession of in the quarter. The ratio of non-performing assets, the total assets, increased by 11 basis points compared to the link quarter, primarily due to the addition of $18 million in agricultural loans, an $8 million commercial real estate relationship, and a $4 million C&I relationship.

Net charge off total 36 basis points of average loans compared to 46 basis points for the second quarter of 2026. The provision for credit losses was $18.1 million compared to $14.2 million in the link quarter. The provision was attributable to net charge offs, the increase in non-performing loans, and loan growth.

Slide 16 shows the allowance for credit losses. The ratio of allowance total was stable with the link quarter at 1.17%. When adjusting for government guarantee loans, the ratio increases to 1.27% of total loans. On slide 17, third quarter non-interest income was $13 million, relatively stable with the link quarter. A notable item includes lower tax credit income from a decline in projects carried at fair value.

Turning to slide 18, third quarter non-interest expense of $115 million was approximately $1 million lower than the link quarter. Employee compensation and benefits declined by $2.5 million, largely due to lower short-term incentive expense in the quarter. In addition, we have begun refocusing and streamlining operations, which are anticipated to incrementally improve the prospective expense run rate and efficiency ratio.

The positive cost decreased $0.4 million quarter over quarter as we actively managed this line item, but could face rate pressure in the near term. Other expenses increased by $1.8 million from the link quarter, primarily from operating expenses related to OREO properties. The core efficiency was 58.9% for the quarter compared to 61.1% in the link quarter, largely due to the expansion of net interest income.

Our capital metrics are shown on slide 19. Compared to the link, tangible book value for share decreased to $39.45 from $42.30, and our tangible common equity ratio decreased to 8.13% from 9.04%. The decrease in tangible common equity was primarily due to reduction in the fair value of securities and cash flow hedges that was caused by the change in interest rates.

Our capital management actions in the quarter also included the repurchase of 526,000 shares of common stock for approximately $34 million, and an increase to the quarterly dividend of $1.10 per share. Year to date, we returned approximately $122 million to shareholders through common stock repurchases and common stock dividends. Our operating results drove a 1% return on average assets, and an 11% return on average tangible common equity. Our return metrics this year have been impacted by elevated chart drops and non-performing asset levels. As Jim discussed, we are highly focused on improving asset qualities.

The opportunity for earnings improvement from credit losses returning to historical norms and the redeployment of non-performing assets into earning assets is significant. We have also taken steps to optimize certain parts of our business that will further benefit our earnings run rate. The combination of these items on year to date results puts our return on average assets in line with both the prior year and our expectations.

While there is still work to do, we firmly believe that the core business fundamentals remain strong. I appreciate your time today, and we will now open the floor to answer analysts' questions.

Good morning, Jeff.

Keene.

Yeah, sure. As we sit here today, we are still working through a few things in the courts. We had some really positive progress in the quarter. You mentioned those properties being under contract. They represent well over half of the value related to those properties with the other ones with great interest and just waiting for a few things to clear up before those go under full PSAs.

But progress was made, really good progress was made in the quarter. We would think that further progress would be made later this quarter and into the first part of 2027.

So if that's ongoing, I guess just narrowing the next couple quarters is kind of vague and understanding that's going through the courts and otherwise, I guess absent those properties, any other broad-based credit recovery, just trying to get into that normalized comment. It sounds like it's imminent, but yet it's not real tangible. Any other detail you could offer when we get there?

Yeah, Jeff, it's Doug. And Jim made the point that relative to the large proportionate share of a non-performing asset, it is the Laguna portfolio. And we are making good progress there. We don't obviously control the court's timing. But we are optimistic that we're going to be in a position to monetize some of these assets in Q1. As it relates to other normalization of credit, I think this, right? We see our criticized classified levels that are still elevated about 6.3%, consistent really with the prior two quarters, but elevated.

And we would expect, based upon the progress that we're making, to see those numbers come down in CRIT class, more to our normal historical operating percentages of 4.5% and we'll see that through a combination of payoffs and upgrades as well as some of these credits that have been downgraded are showing improving operating trends. So, through the combination of payoffs and upgrades, we should see CRIT class return back to that 4.5% range. And as we get through the Laguna portfolio, obviously we'll see our non-performing assets return back to a much more normalized level of closer to 45 to 50 basis points.

We did have, Jeff, as you heard, Jim and Keene's comments. We did have a hotel project in Southern California, a 284 room flagged hotel that we took into Oreo in the quarter. And we did take it two and a half million dollar right down on that asset.

Yeah, Jeff, this is Keene. We had, you know, roughly $7 million of negative impact there, mostly in the, the tax credit line item. We're working diligently to try to eliminate that from the income statement.

You know, as we say, even if just rates calm down and really don't do much, that line item won't have an impact. And to the extent that the RE was a technical timing issue, but I think to Jim and Doug's comments, the overall for the total workout, I think remains positive and optimistic. But, you know, I think for Q, we look at the, you know, the 13 and add seven back and, you know, that's a good run rate for us. And, you know, if we can just continue to repeat that, you know, for the next several quarters, we'll be, we'll be happy.

Yeah, Dan, good morning. So, overall, you know, the, the, the AG portfolio for us is down to less than 50 million bucks today. And there was two credits in that portfolio that we took in the MPAs. And, you know, we did it looking at the collateral that we have, which is largely equipment and farmland and actually some crops in the ground. And we look at it and we feel as if what we have currently on the books, we should be in good shape relative to liquidation.

The other one was a distributor, so it really wasn't even in the, in the farming business, if you will. And that too, we believe through a refinance, we'll be taking care of here in the fourth quarter.

Doug, any more down there? No, I wouldn't. Jim Point, that's two credits. One is really a row crop farmer, and it is largely secured, $13 million, largely secured by farm ground. And the other one, as Jim pointed out, was really a company that's a distributor of seed and fertilizers and chemicals used in farming operations. And it's today, $4.5 million, and we would expect to exit that credit quickly. So other movements, though, Daniel, that you're mentioning, $7 million into non-performing loans in, in the quarter. One is an owner-occupied commercial industrial building in Southern California that was the front end of an SBA 504 structure, so extremely well secured there.

And the other one, a materiality, about a $5 million CNI credit to a metal fabrication and installation company in Southern Nevada.

Yeah, I think we would share that concern in terms of defaults in the portfolio, Daniel. It's, listen, not only higher rates, but overall higher inflationary pressures are causing, you know, challenges for some of the smaller, less capitalized businesses. So we do experience defaults to increase in the SBA space, but as a reminder of our position and what we do there on the owner-occupied first mortgage real estate side, our history has been exceptionally low, loss given defaults in the portfolio. So average loan sizes in our book are about 1.2, 1.3.

King showed me $1.5 million average loan size, so these are owner-occupied commercial real estate buildings. And while defaults will be up, loss given default should be minimal as we go forward.

Yeah, I'm maybe going to say a step back from timing, but I'm happy to talk about the level. So in the quarter, if you normalize out, really the non-interest income stuff and maybe some of the carrying costs for the ORE properties, your PP&R is about 180 basis points. And just from a range perspective, if you get even net charge off down from the current level to around 25 basis points, you're knocking down a 130 ROA.

Okay, so, you know, I think timing on that, you know, we need to get those ORE properties moved so that we can return those to earning assets and get the operating costs and legal expenses out of the run rate.

But I think the underlying fundamentals, you know, the PP&R is growing. And, you know, it would have been even with the credit where it is, it would have been a pretty good quarter if you didn't have, you know, in and of itself. So we're obviously not happy with that. But, you know, I think we're happy with the trajectory of the profitability. And I think we feel like in the next few quarters we're going to see some progress here and we're going to return to a level that we're proud of.

Sure. My first maybe just on capital with the change in AOCI, the TC ratio is kind of more towards the bottom end of the target range. Now I'm just curious as that, have an impact on your expectations for buybacks near term. Should we anticipate that those may moderate a bit?

So I would say that while we're at the bottom of our range, I think we continue to be optimistic and we continue to expect it and plan that we're going to, you know, net accrete capital. We had a pretty good growth quarter this quarter. I think we expect that will continue. But I think we'll continue to be active in the buyback. Maybe not quite as, quite as assertive as when we were at 913, you know, being down at 813. But I think we'll still see some buyback activity here in 4Q.

Yeah. So I would expect that, you know, X deposit costs 4Q run rates relatively level to where 3Q is. And then I expect that deposit ECR line item with growth and what happened with the fed fund hike and what was, you know, contractually tied to fed funds, we expect that line to move up a million and a half to $2 million sequentially.

Well, I don't know that there's necessarily acceleration there. I think it's fairly linear on that book. There is lag because of when the change goes into effect and how it, you know, goes through the statements. So there's really a month lag there. So you didn't really see much this quarter, but you'll see it, you know, more in the in the full quarter.

We have been working hard to make sure that our pricing in the ones that are not contractual that they're appropriate. That pricing has crept up on us a little bit over the last couple of years. And with some of the liquidity stress in the industry, and we're working diligently to try to improve upon that. And I think that that's sort of baked into, you know, the third quarter results here. And I think we expect that that'll continue, but we're still expecting growth, you know, in those balances to continue to help fund, you know, the long growth that Jim and Doug both talked about.

Yes. I couldn't have said it better myself. You know, September margin was up, you know, handful basis points over what the quarter was already. So we're working into four queue here with, you know, call it a mid 430s margin. And we do expect that that's got some, you know, upward, upward buoyancy and with additional rate, you know, rate improvement, so to speak. That would just, that would just add to that. But, you know, when we've got some growth going, the positive remixing helps as well, just, just earning asset proportions are helping to drive that higher. So we're pretty bullish on net interest income growth and net interest margin growth over the next several quarters.

Yeah, I would say nothing has really changed in terms of provisioning for new loan growth. I think we're emphasizing businesses that have a lower risk profile. We have very good life insurance growth. You know, SBA has been good. Both of those are low, you know, provision requirements and have had really tremendous loss history and performance. And then, you know, so we're, you know, 100 basis points, 115 basis points kind of on new growth. And then, you know, we tend to think about net charge off as a spectrum. We're at the high end of that right now. You know, the 25 basis points isn't where we necessarily want to land, but given where we've been, that would feel like a victory in the short term.

So, you know, that's, that's how we're thinking about it. And, you know, we need to, to deliver it, not just say it, but, you know, that's how we're thinking about provisioning.

Great. Thanks, David.

I would say yes. The next quarter or two is a reasonable expectation for how we're working it. We've been working on it for a long time. And I would say that we're not exiting the business. We're just changing the way we participate in it. You know, we're going to continue to be an active lender in that business. That's what we do best.

We don't, as a public company, this line item while has life to date driven good economics is just too volatile to live with. Given what it is, we spend way too much time talking to you all about it and every investor we meet with, we talk about it. So we're looking to make steps there, ideally exit that. It's already marked at Fair Valley every month, every quarter.

So we're hopeful that we can get that moved out.

I'll add to that. Sorry. I'll add to that. We've also looked at other businesses in our company and areas and markets and that were sub-scale. And we've already taken that out of our run rate of expenses. If you think about what we call business banking, we're in it in our markets where we have great density and concentration, but in other markets where we're much more prolific commercial banks. If you think about our newer markets out west for our brand for granular micro businesses, isn't it great? We've exited that in those markets. We also recently announced that we don't, we're editing the mortgage business as it relates to an originator.

So we're taking expenses out where we're not adding a great deal of value and really can scale.

No, the tax rate will continue to be sort of where it is today. Roughly 22% is the number that's top of mind for me.

And we will use some of those in the planning, but we'll still have access. It's not like we were stacking that up and we were really using it to drive down the tax rate. So we use it in nits and math, but it's not really going to have a big impact there.

I'll tell you what, I'll tell you what, I'll tell you what I'll tell you for the margin. Yeah.

Let me start with just maybe the overall outlook and tenor within the markets and then we can talk about where we're originating and things of that nature. Overall, we feel as if the empty year will be strong. You know, I said in my comments, it's going to be mid to higher single digits and I believe in that wholeheartedly as I look at the pipeline. As we turn the corner in the 27, you know, it feels if we'll settle in in that mid single, but remember as you build the plan, it starts off in the first quarters a little bit slower for us and picks up during throughout the year just due to some idiosyncrasies of our portfolio.

But overall, you know, as I go around and spend time with the teams and with clients, very bullish about their businesses and making the investments and things of that nature. Certainly, there are some segments that aren't as bullish. You can think about small trucking companies, which we have very little exposure to and then those businesses in and around housing and things of that nature. But it's remarkable and very optimistic in terms of what our clients are thinking and doing.

But Doug, maybe you can talk about how we're originating and rates and things of that.

Well, Jim mentioned too, obviously it's highly competitive out there and we do see some compression in terms of credit spreads. But that's why discipline on the liability side of the balance sheet is so impressed as well. And we've done a good job of controlling those to combat the compression of spreads on the origination side. But listen, we price for a holistic relationship.

And as you can see in our margin, we continue to protect it and defend it well. Keena pointed out too, I think where we're originating now is probably lower risk categories. We saw great production in the life insurance premium finance space were 100 million in the quarter, up 150 year to date. And that typically is a back-ended growth business as well. And so we'll see contribution from that in the fourth quarter.

But listen, we were down 100 in Q1. We were up 200 in Q2. Then we had 450 here in Q3. We're not going to continue that 450 growth rate, right? But even if we settle back in at that 200 to 250 growth rate per quarter on the loan side, as Keen pointed out earlier, we'll have adequate deposit growth as well to fund that. So I think that's kind of the outlook and we just feel good about the diversification. It's coming from all of our geographic markets. We got good momentum in North Texas and Southern Nevada and Arizona will contribute significantly here in the fourth quarter.

And Doug, you bring up a good point. It really is the beauty of the strategy and the way we built the business is that it doesn't require us to get all the growth out of any one market, right? We've got seven great markets and many national businesses to find the growth. So the charge to the team is bringing the very best and then we'll continue to do that.

You've got to have a great day. Thanks, Dean.

So, Andrew, I would look at it this way. As Doug mentioned, the first quarter, we were, you know, flat to negative and then we picked up growth. Really, we're running at that run rate now for a full year at that mid-single digit pace. Okay. So to me, we don't want to run the machine too hot. Additionally, going back to our credit discussion, we're very focused on making sure that we resolve the NBA's well, we resolve those that are also on the criticized list well.

And so that will level us out. That will require us if we're going to grow in that 6%, 5% to 6% range, you know, we're going to have to be close to, you know, 900 to a billion net in order to achieve that rate.

And I'm confident we can do it in a balanced way without any type of, you know, ridiculous focus and or concentration anyone market or business to do so.

Yeah. It's a million to $2 million if all of our betas come through, but you know, we're pretty focused on the deposit pricing front and we've done a good job. So my expectation is that will be slightly better there.

Yeah. We've modeled 55%, but again, we expect to perform better than that. Yeah.

It's mostly the loss on ORE and then there's a couple miscellaneous line items, but you got a million and a half on ORE. Yeah. And then there's another, there's an other, other item of a million dollars.

Okay. That gets you there. Okay.

Yeah. No, I think the one, Brian, that I had mentioned that I expected to exit more so in the fourth quarter would be one of the ag credits that we had. As well as a non-performing loan, the owner occupied real estate loan, the front end of that 504. So $7 million real estate loan and a $5 million C and I credit, I think we would expect to probably exit here in the fourth quarter. The timing of the Laguna portfolio, trust me, there's no one more anxious to exit that than I, but we just don't control all of that. But we've reiterated just kind of where we are in terms of our confidence with the market and our buyers that are lined up on this.

We'll get there. It's just a matter of timing with the courts. But I think realistically we're saying that's Q1 of next year before we really start seeing the monetization of sales occur in that Laguna portfolio.

Yeah. I mean, it's going to be a daily fight. And, and, but I do think we are focused on the key drivers there. We have made some, some moves. And again, with, with some more growth in the loan portfolio, we're attacking it on both fronts. So, you know, the, the being in the 60% efficiency, below 60% efficiency is great. And again, if you, you just have kind of a normal quarter on fees, that gets a little bit better. So, we are optimistic that we're going to make some progress there. And I think it's pretty clear we're focused on it. And, you know, we're focused on returns and, and all those, those, those fronts. So, again, nothing happens quickly.

We're methodical. We're deliberate. And we're going to continue to make progress.

Thank you, Brian.

Kristen, thank you. And thank you all very much for joining us this morning and your interest in our company. Have a great day. And we'll speak to you again at the end of the fourth quarter, not sooner. Take care.