Bayfirst Financial (NASDAQ:BAFN) Q2 2026 Earnings Call

0:00 Hello, everyone. Thank you for joining us, and welcome to the BayFirst Financial Corp. Q2 twenty twenty six Conference Call and Webcast. After today's prepared remarks, we will host a question and answer session.

0:22 Will now hand the conference over to Al Rogers, President and CEO. Al, please go ahead. Thank you, Marina. Good morning and thank you for joining our call today. With me is Scott McKim, our CFO and Robin Oliver, our COO. Please remember, today's call will include forward looking statements and non GAAP financial measures. Please refer to our cautionary statement on forward looking statements contained on Page two of the investor presentation. My first full quarter as CEO with BayFirst has been very busy. We set to work on a number of initiatives, both short and longer term.

1:10 The substantial $80,000,000 capital raise at the end of April was the first and was the certainly biggest step for the future of our bank. We completed and deployed our asset resolution plan to address the bank's legacy credit issues predominantly related to unguaranteed balances of the SBA seven loans. During the process of completing the asset resolution plan, our team also identified some material misstatements from prior periods. We have restated financial statements for the years ended 12/31/2024 12/31/2025 and the quarter ended 03/31/2026.

1:57 The amended 10 ks and 10 Q have been filed this week. Scott will elaborate on both in a few minutes. We held a special meeting of shareholders on July 14, where the company obtained shareholder approval to amend BayFirst Financial Corporation's Articles of Incorporation to increase the number of authorized shares of common stock from $15,000,000 to 100,000,000 and exchanged all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series D and all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series E for a total of 22,856,000 shares of common stock.

2:54 Upon conversion, all shares of Series D and Series E preferred stock were retired. The company's Series A and Series B preferred shares were redeemed in July as well. Management also noted a mid August launch as the date for the rights offering we announced back in April.

3:22 Beyond these shareholder actions, we've also moved decisively to strengthen our operating structure and leadership team. Most notably, Trey Korn has joined as BayFirst's Chief Banking Officer. Trey has been a career banker in Tampa for over twenty two years and will lead our retail and commercial banking teams. As a lifelong Tampa resident with deep roots and involvement in several real estate industry and community organizations, Trey brings the local market insight, relationship orientation and proven leadership needed to help us sharpen execution and accelerate growth across our franchise.

4:11 Adam Curtis will continue to lead commercial lending with the organization as Chief Lending Officer. He will report to Trey. The commercial relationship managers and portfolio managers will report to Adam as that team focuses on growing and serving our commercial business customers across our footprint. Adam's steady leadership, strong customer relationships and strong lending expertise remain critical to our ability to serve commercial clients and grow this important line of business with quality and consistency. Samantha Hill has transitioned to Director of Retail Banking with responsibility for production, growth and execution across our retail banking centers.

5:02 She will also report to Trey. All banking center managers now report to Sam, giving us clearer accountability and a more focused retail strategy. Sam brings a strong record of team development, customer experience and branch execution, and her leadership will be important as we expand core relationships across our banking center network. Additionally, we have submitted an application to open a new retail location in South Tampa. This office will bring our total retail branch network back to 12, having closed an office in Sarasota last quarter.

5:49 With that operational foundation in place, I will now turn the call over to Scott, who will discuss the quarter's earnings, including the impact of the asset resolution plan and restatement. Scott? Thank you, Al. Good morning, everyone. We are reporting a net loss of $32,700,000 in the second quarter. This compares to the restated net loss of $5,900,000 we reported for the first quarter. As Al mentioned, the asset resolution plan was deployed during the second quarter and therefore has dominated the earnings results that we will talk about today. The plan was a thorough review of the bank's legacy unguaranteed SBA seven portfolio as well as our other portfolios. We conducted an analysis which provided adjustments to the net amount expected to be collected on over 7,000 individual SBA loans, which resulted in a full or partial charge off on several of those loans.

6:47 We established a specific allowance for credit losses on six loans, increased the overall allowance on unguaranteed SBA seven loan categories and also adjustments to the fair market values on our portfolio of loans that we have measured at fair value. In total, the adjustment amounted to $38,400,000 Provision expense for the quarter was $29,700,000 and the company's total allowance for credit losses on 06/30/2026 was $45,100,000 Additionally, the company booked an impairment of $1,500,000 on a non marketable equity investment in a firm who was a partner of the company's former SBA seven lending business.

7:32 Finally, the company wrote down the unamortized premiums on the bank's portfolio of purchased fully guaranteed USDA loans, which are at risk of default or early prepayment. I want to be clear, this adjustment is not credit specific. In total, the asset resolution plan impact was $41,500,000 As our new management team has assessed the existing business and started to make updates to the strategic plan, we identified some additional one time charges during the quarter, which amount to $2,200,000 and reflect the write off of vendor contracts, which will no longer be used and also the approval of a change in control payment to prior management. All of these adjustments together equal $43,800,000 of the company's pretax $44,000,000 loss for the quarter.

8:27 We announced on July 15 that we identified $2,800,000 of deferred origination costs and $2,100,000 of accrued interest as of 03/31/2026 relates to loans which had defaulted or was placed into non accrual status in prior periods, which resulted in a material understatement of provision expense and overstatement of net interest income during the affected quarterly period in which the errors were accumulated in 2024, 2025 and the first quarter of twenty twenty six. Subsequent to that announcement, we further identified another $3,400,000 of deferred origination costs, which should have been netted against net gain on sale of government guaranteed loans and resulted in a material overstatement of those net gain on sale of government guaranteed loans during the affected quarterly period in which the error accumulated specifically in the years of 2024 and 2025.

9:29 These errors occurred in periods prior to 2024 as well, but were not material during those periods. Our restatement efforts have correctly restated the company's earnings to date, and we have amended our twenty twenty five ten ks and our first quarter ten Q. Management and the Board of Directors take our obligation to provide accurate and transparent reporting seriously. We moved quickly to investigate what happened and to correct it and to notify our shareholders. We continue to work through internal operational remediation

10:02 activities and will report in future SEC filings on our progress towards resolution and strengthening our internal controls over financial reporting. It is important to note that by exiting the SBA seven lending business, these errors will not recur. Nonetheless, we will ensure that our internal operations are compliant. Please note, as I continue, our prior period metrics, which I will mention, are the restated metrics. Other financial results include loans held for investment decreased by $41,400,000 or 4% during the second quarter of twenty twenty six to $882,800,000 and decreased $237,700,000 or 21% over the past year.

10:49 Most of this decrease year over year reflects the sale of loans and the exit of the SBA seven lending in the fourth quarter of twenty twenty five. Deposits decreased $97,000,000 or 9% during the second quarter of twenty twenty six and decreased 175,000,000 or 15% over the past year to $989,000,000 The decrease in deposits during the quarter was primarily due to reductions in high rate promotional deposits held with non relationship customers and also a decrease in brokered deposits. 80% of the bank's deposits were insured by FDIC on 06/30/2026, and the bank's on balance sheet liquidity ratio as of 06/30/2026, was 14.95% and the bank did not have any wholesale borrowings.

11:41 Shareholders' equity at the end of the quarter was $115,900,000 which is $40,300,000 higher than it was at the end of first quarter. The increase is from the capital raise net of the asset resolution plan. Net accumulated other comprehensive loss increased slightly by 57,000 during the quarter ending at $2,100,000 Tangible book value per share decreased this quarter to $4.82 per share from $14.22 per share at the end of the first quarter. Our net interest margin was 3.48, up four basis points from first quarter. Net interest income was $9,400,000 in the second quarter, virtually unchanged from the first quarter and down $2,700,000 from the year ago quarter.

12:30 On a normalized basis, the net interest margin for the second quarter excluding the one time impact that I mentioned as part of the asset resolution plan was 4.07%, which is driven by positive trends and cost of funds which decreased 24 basis points from the prior quarter to 2.66.

12:52 The bank's cost of funds is now down 49 basis points year to date, reflecting our efforts to exit promotional rate balances and broker deposit balances. Non interest income was negative $6,800,000 in the second quarter of twenty twenty six, which is 7,700,000 worse than the first quarter, a decrease of $17,300,000 from the second quarter of twenty twenty five. Current quarter net interest income includes an $8,000,000 in one time impacts related to the Board approved asset resolution plan. Additionally, year over year decrease is exasperated by exiting the SBA seven lending business as no additional gains on sales of government guaranteed loans will be booked. Non interest expense was $17,700,000 an increase of $2,900,000 compared to the first quarter. Essentially, all of this increase is related to onetime charges that were driven by our actions under the asset resolution plan and the onetime items that I have mentioned.

13:53 In total, approximately $2,500,000 Compensation costs were about $600,000 higher, driven largely by an accrued change in control payment that I mentioned. Also as I mentioned, our provision for credit losses was $29,000,000 in the second quarter compared to $3,400,000 in the first quarter and $7,600,000 in the second quarter of twenty twenty five. Net charge offs were $4,500,000 down $200,000 compared to the first quarter, which was 4,700,000 Total unguaranteed SBA seven loan balances were $142,000,000 on June 30. In comparison, the bank had $159,300,000 of unguaranteed SBA seven loan balances at the end of the first quarter.

14:41 Total annualized charge offs as a percentage of average loans held for investment at amortized cost were 2.08% for the second quarter, a decrease from 2.14% in the first quarter of the year. The ratio of allowance for credit losses on loans to total loans held for investment and amortized cost was 5.37% on June 30 compared to 2.36% on March thirty one, twenty twenty six and two point 43% as of the end of twenty twenty five. The ratio of allowance for credit losses to those loans held for investment at amortized cost and excluding government guaranteed loan balances was 5.82% on 06/30/2026, 2.55% at the end of the first quarter and 2.60% at the end of twenty twenty five.

15:34 The bank's Tier one leverage ratio was 8.3% as of 06/30/2026, compared to 5.89% at 03/31/2026, and 7.73% as of 06/30/2025. The total capital to risk weighted assets ratio was 12.77% as of 06/30/2026, compared to 9% on 03/31/2026, and 10.77 as of 06/30/2025.

16:06 I will now turn the call over to Robin to make some operational and credit comments. Robin? Thank you, Scott. Good morning, everyone. First, I want to provide some further details around the asset resolution plan and the related impacts. As Scott mentioned, the asset resolution plan identified and provided resolution for troubled loans, but it also provides protection from future charge offs.

16:30 Also, as Scott mentioned, our allowance for credit losses divided by total loans held for investment and amortized cost, excluding government guaranteed loans, increased to 5.82 at the end of June. That is up from 1.86% a year ago. Further, the SBA bulk loan portfolio now has 32.8% reserved against unguaranteed balances, and the SBA flash cap portfolio now has a 25%

17:00 reserve. These two small loan portfolios represent $83,000,000 of unguaranteed SBA balances. As these loans season, we continue to learn how they perform, but we believe the actions taken under the asset resolution plan have adequately positioned the bank to manage future charge offs. That being said, we know we must remain diligent in collecting and resolving problem assets.

17:27 And to that end, progress is being made. And at the end of the second quarter, total non performing loans, excluding government guaranteed balances, were $14,400,000 down from $15,900,000 at the end of the first quarter. And the percentage of nonperforming loans, excluding government guaranteed balances compared to total loans held for investment, was also down to 1.72%, which was a 10 basis points drop from 03/31/2026. Although that's up from a year ago, we are still making clear progress.

18:02 I should also note that of the $14,400,000 in nonperforming loans, 3,100,000 of these balances were current and paying as agreed, and we will be evaluating those for potential return to accrual status as time continues. And in addition, as I noted last quarter, although our classified loans are elevated at the moment, 68% of our classified loans were current and performing loans whereby we are working with the borrowers towards resolution. Switching gears from credit, as we look towards the future growth of the bank and work towards a return to profitability, we are also focused on becoming as efficient as possible in our processes while ensuring we provide an excellent experience for our customers to make banking easy with a high level of personal touch.

18:57 Our focus over the last two years has been on growing business deposits and treasury services, but the infusion of capital this past quarter really allows us to get back to lending, which will help the bank grow both loans and deposits to add stable net interest income and fee income instead of transactional earnings. Without adding significant headcount, we've also added leadership and talent in various areas of the bank, which we believe will position us for growth, including Trey, the chief banking officer that Al mentioned, a chief data officer, and retail personnel, including the retail individual to support our new South Tampa location that is scheduled to open in September.

19:43 We are excited about further expanding in Hillsborough County as we seek to round out our presence in the Tampa Bay market. At this time, I will turn the call over to Al to make some final comments. Thank you, Rob. As I complete my first few months at BayFirst, what I've seen only reinforces my belief that we have a significant opportunity ahead. I've spent time with our employees, customers, shareholders, and community leaders. And one thing is clear,

20:13 BayFirst has the people, relationships and market position to become the leading community bank in the Tampa Bay region. Our focus is simple. We're building a high performing community bank centered on relationship banking, disciplined execution, sound credit practices, and exceptional service. We believe local businesses and consumers are best served when decisions are made close to home by bankers who know the market, understand their customers, and are invested in the success of the communities in which they serve. That community banking model starts with strong customer relationships.

20:59 Our deposit mix and cost of funds remain a top priority.

21:04 We are working to deepen existing relationships and improve the mix from higher cost transactional accounts to relationships that value service, responsiveness and long term partnerships.

21:20 On the lending side, loan growth has already begun. While we continue to manage payoffs and charge offs associated with the legacy SBA portfolio, our focus has shifted toward growing traditional, commercial and consumer lending with borrowers located in the markets we serve. Our loan pipeline is strong, and we are seeing encouraging opportunities across our footprint. We're also investing in technology and process improvements that enhance efficiency, improve customer experience and position us to scale responsibly as we grow.

22:03 The capital we raised earlier this year provides us with strength and flexibility as we execute this strategy. We intend to deploy that capital thoughtfully, focusing on opportunities that strengthen the franchise, improve profitability, and support sustainable growth.

22:24 While there is still work to do, I'm encouraged by the progress we've made and the momentum we are building. Our priorities are clear: grow core relationships, strengthen performance, expand our presence in Tampa Bay, and deliver consistent long term value for our shareholders.

22:45 I want to thank our employees for their dedication, our customers for their trust, and our shareholders for their continued support. I am optimistic about our future and excited about what lies ahead. Marina, I'll turn the call back over to you for some questions. Thank

23:11 If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

23:42 Your first question comes from the line of Ross Haberman with RLH Investments. Your line is open. Please go ahead. Good morning. Thank you for taking my call. Just two or three quick questions. Al, could you talk about this new branch you're going to open? How big could it be? And how quickly do you think you will hit a breakeven on it? How long will that take?

24:10 Location is in South Tampa, a very prosperous area in the market that we do not have a significant location. We do have an office that's four miles away but in a significantly different demographic and market. We've already started opening accounts in this area, and we expect that

24:39 ability would come quickly as this is initially a leased location in that market. Will it be a two year breakeven or hopefully something less than that? Or what's your guess?

24:59 I would say given our investment, it would be sooner than that. And just a question or two for Scott. Scott, the $142,000,000 of unguaranteed SBA loans, I think you broke that out into a piece of $82,000,000 and then another 60,000,000

25:22 Could you go over the reserves on each of those parts?

25:27 And how quickly are the do you think they'll be paying down? I think you said in the last quarter they paid down a total of $17,000,000 is that correct?

25:39 Hi, Ross. Yes. So we went from 159,000,000 down to 142,000,000 That's a pretty quick drop. But also keep in mind, some part of that was also related to the asset resolution plan. So it was a little bit higher than what what I would consider to be a true run rate for it. I will tell you that the you know, I'll I'll start to break the pieces down as far as what's in the portfolio for you. The, the bulk portfolio is the largest part of Ross, I need a little feedback on there if you can mute me real quick.

26:17 Sorry, is that better?

26:20 That's all right. Okay. Here we go. So the bulk portfolio and this is all the loans that are booked to amortized cost. This excludes the fair value portfolio. We ended the quarter with $60,000,000 in the bolt and that has a 33% reserve against that. So that's a little over almost $9,100,000 The flash cap portfolio, and this is the one that really is amortizing a little bit quicker, that had $29,000,000 in balances and has a 25% reserve against it, which is 3,200,000

26:57 And then the core, what we call the core C and I, so this is some of the larger loans that have collateral other than real estate at $45,000,000 in balances in it, that has a 23% reserve against it or $1,500,000 Now there's another component of the SBA portfolio that has that is all real estate backed. It has $53,000,000 in balances and there's a relatively small reserve of about 1% against that, that part of the portfolio performs as expected. It is not a big loss driver for us. So you roll all those bits and pieces together and on the riskier parts of the portfolio, were reserved in the high 20%. Thank you. And just one final question. Could you be a little more specific on the timing of the rights offering? You said mid August we're basically here.

27:52 Is it going be this week or next week? What's your timing on the execution of the rights offering for the shareholders?

28:01 Ross. Thanks for asking that question. I was kind of expecting that one this morning. Just for you and everybody else that's listening, the the the rates offering is coming. There was, because of the restatement, we wanted to make sure that we had updated reliable financials in all prior periods and current periods available to all investors so that you have a complete package of information for consideration before we launch the rights offering.

28:28 Obviously, that pushed the timing out on that a little bit, but now that we have everything filed or we'll have the second quarter 10 Q will be filed later today, that kind of frees us up to move on to the rights offering component. So what we'll end up doing is preparing the communication that goes out to all of the shareholders of record as of May 12. And those communications we should have in hand or be ready to mail those next week. Coincidentally, we also have the full proxy, which will be going out. Our Annual Shareholder Meeting is scheduled for September 22. So really we're going to have a full population of all important documents in hand for investors to look at

29:11 before they make a decision around the rights offer. So it is coming. I know it's taking a little bit longer than what we had initially wanted to do, but we wanted to make sure that we were checking all the boxes for everyone. So you're saying it's going to be pushed off to September? Is that what you're implying? No. Rates are we'll launch that in August. I just wanted to mention when the shareholder meeting was, and that's in September.

29:35 Got it. Thank you for your help, Thank you very much. Sure. Thanks for the question, Ross. Your next question comes from the line of Julien Casarino, Sycamore Analytics. Your line is open. Please go ahead. Hi, good morning. Julien. Good morning. Good morning. Hi. I'm just trying to cut through a lot of the noise in the quarter. On the call, you just said that of the $44,000,000 pretax loss, 43,800,000 came from the restructuring and nonrecurring.

30:21 So that implies still a loss for the quarter excluding all onetime? Or what was the core earnings power in the quarter? I think if I understand your question, the onetime items in the asset resolution component was $43,800,000 total So loss was 44,000,000 the remaining operating loss to think about was about $200,000 for the quarter. And that was just a regular recurring operating loss, right? Was there was is that correct? Yes. I think you can refer to that as being core, Julian. Okay. So there so there's so we're really the the core earnings power that we're starting with is kind of zero right now, right? Or is there anything masking that? Is there any core earnings power on the nonresolution piece?

31:26 I will tell you this. As we look forward, essentially the things that we talked about, if you recall, I mentioned on the net interest margin really on a core basis was 4.07%. So there's a lot more in terms of overall earnings revenue that we are expecting going forward, plus all of the components that Al talked about in terms of growth in the balance sheet combined with continued efforts to reduce the bank's overall cost of funds. So I'd like to think about it from the standpoint that core earnings in the second quarter was just below breakeven. But now that we have a clear path ahead, a lot of strength, a lot of good focus as far as what's coming, the bank is positioned for profitable earnings going forward.

32:13 Okay. With operating leverage and stuff. What about the tax rate? So is there a deferred tax is there a DTA valuation allowance that's been set up or no? No. There's no valuation allowance against the deferred tax asset. Truthfully and these are conversations that obviously we've had internally, The bank is positioned for a profitable growth going forward. And a new leadership team, a lot of strength that's coming in. We believe that we will have no issues whatsoever in terms of reacquiring that asset in the future. There is no valuation allowance at this time. Like I said, we continue to look at it, but at this time, it is zero.

32:59 Okay. So does that mean what tax rate to use going forward? Tax rate for the quarter is about 25%. Okay. Okay. And so the quarter end, did that include the redemption payments of, I think, almost $10,000,000 right, the $9,700,000 payments to redeem the forgive me if I get the names wrong, but basically the preferred holders. Did that is that 9,700,000 included yet that payment? And is that pretax or after tax?

33:45 Like, should we be adjusting the TCE for that? Or The payout for the Series A and Series B, which I think you're referring to, actually concluded this week. So that will actually be a Q3 event. That's a Q3. So is that that's totaled $9,700,000 right? Is that pretax or after? It's a redemption. It's not really an income statement component, so it's not, not an earnings hit. Oh, so but is it a TC? Does it come out of tangible common equity or no? Because it's just based on one bucket to another. Yes. Okay. So no Correct.

34:37 No impact on TC from that. No impact on shares either, right, the share count? Correct. So the redemption payment is kind of going from one bucket to another, don't need to adjust for that. What about the exchange too? Nothing to adjust for that. You mentioned 22,900,000 shares from an exchange, but that's already like we don't have to adjust for that? Or is that a third quarter adjustment that we should make? Yeah. It's it's a third quarter event, but that moves you prefer to common. And, obviously, the share count is going to go up accordingly as well. Yeah. So that if you're asking the tangible book value already has that dilution component baked into it.

35:28 That's what I was asking. Okay. Now so the only thing to adjust in the third quarter for tangible book per share is the rights offering. Is that correct? That is correct. And obviously, we would like to maximize that for shareholders, but we're not sure how much we will get. We'll report that when it's done. So let's just assume everyone exercise. That everyone who could exercises at 03:50, I believe it is. So what would be that what would be that impact on TCE and share count if everyone were to exercise? Is that something I can calculate or? Yes, $3.50 at 4,100,000 shares. 4,100,000?

36:15 Dollars Yes. Okay. All right. All right. Very good. It was the 4,100,000 I think I needed to have. Okay. And then just to ask about the deposit franchise. So you mentioned that you've gone through the loan book pretty completely by now the deposit franchise. Is there have you finished the review of deposit or you mentioned in the press release, I think, like the earnings release, non relationship customers. Are there about what percent of the deposit franchise right now would you estimate is non relationship customers approximately? It's Julian, it's very small. We have Okay. We are strictly focused on relationship based, I guess, depositors.

37:08 And when I say relationship, it's not just the deposit side. In a lot of cases, we also have lending relationships. That's something that we have really been focused on, and I think Al did a really nice job of explaining how we will go about that in the future. The the key thing is in the past, we had some relatively large, what I'll call well, I'll I'll just say it. I mean, they they were more of a, you know, a place for, you know, for for entities to park money, we're paying them a very attractive rate to do it because it was funding business, funding loan growth around the SBA business. That's not what we're doing any longer. So, you know, we had conversations with those people. We said, look. We're not gonna pay these rates anymore. They're out of market. Most of that money has left, and that was by design, as well as the runoff of the broker deposits that we have, and that was that was also part of our strategy.

37:58 Right. So you'd say this this quarter's or this quarter end deposit franchise is is what there's no more transition to be done. You know, looking at the the interest free and the broker, you know, that this is a good base to to go forward. Like, there's no more Excluding mhmm. Yeah. There there's still some brokered in there that's gonna run off, but, you know, really, what's what's there, I'm gonna call, you know, core deposits, I suppose. Right. And is it all local? Is it a 100% local? Or about how much would you say is out of market just excluding the broker? So excluding broker, is it all predominantly local customers? It's local. It's local. Yes. Yeah.

38:44 These are people we know that you can drive for about an hour to go visit them. Yep. Okay. Great. Great. And is there is any one customer more than, or any one customer, 5% to 10% or more of total deposits? No. Okay, great. Thank you so much. Thank you. You got it. Sure. Your next question comes from the line of Ian Green with Pendragon Capital Management. Your line is open. Please go ahead. Hi, thank you. Lots of great questions here. I just wanted to kind of come back a little bit to some of the new initiatives like your treasury business and some other incentives to or initiatives to grow fee income.

39:35 Do you have the systems in place to do that? Is this going to require any significant capital expenditures in technology and so forth? And I guess, it's a very crowded space, a lot of those businesses. Where do you think you have the edge to compete? Hi, Ian. This is Robin. I'll take that one. We do already have the systems in place that we need. I think we have all the all the tools to be successful here. And if you look at, you know, our growth in '25 over '24, our treasury fee revenue grew about 75% year over year, and we're continuing to be on track, to continue that increase this this year. I think, really, what it is is we move up market a bit. You know, we are now, you know, really, targeting our commercial business customers, and, you know, we are going to be banking some larger, businesses than we have in the past. And those customers have more sophisticated needs.

40:48 And, you know, they if we're gonna do their loan, we're gonna get their operating account, and those operating accounts are just by the nature of the the business gonna come with with treasury. So, I really think there's a strong opportunity there, and, we have two different treasury platforms, one for very, small businesses, and another that is more sophisticated. So I think we're well positioned. Yeah. Ian, I'll add to that. Okay. This is Al. Talk about the edge. Our bankers know their customers. They're accessible. At 05:00, they don't turn their cell phones off.

41:34 So it's it's true relationships, solving problems, being accessible, being local, not outsourcing or offshoring customer support. And generally speaking, banking professional executives and small businesses and and investors and and companies, they generally have larger average balances, and their cost of funds is generally lower. So that comes with our initiative to act as a commercial bank serving commercial customers in our community so that it comes all together.

42:25 Okay. Thanks. So we shouldn't so in the end, we shouldn't see a a significant There won't be a significant investment. I mean, we will need to continue to expand the treasury team. You know, it it's a small team today. They're a small but mighty team, but, certainly, you know, the opportunities that this will provide will have need some additions to the team. But we did we don't have investments in software or other things, and and certainly the the revenue that we get from it, you know, should balance off the additional costs that we may have. There are no more questions at this time.

43:14 This concludes today's call. Thank you for attending. You may now disconnect.