Operator: Thank you for standing by. And welcome to the First Merchants Corporation Second Quarter 26 Earnings Conference Call. Before we begin, management would like to remind you that today's call contains forward looking statements with respect to the future performance and financial condition of First Merchants Corporation. That involves risks and uncertainties. Further information is contained within the press release which we encourage you to review. Additionally, management would refer to non GAAP measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP and non GAAP measures. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mr. Mark K. Hardwick, CEO. Mr. Hardwick, you may begin.
Mark K. Hardwick: Good morning, and welcome to First Merchants second quarter 26 Conference Call. For the introduction and for covering the forward looking statement on Page 2. We released our earnings yesterday after markets closed and today's presentation materials are available via the link on Page 3 of the earnings release. Turning to Slide 3, you will see today's presenters and members of our executive management team. Joining me on the call are Mike Stewart, our president John J. Martin, chief credit officer Michele Kawiecki, our chief financial officer. Slide 4 highlights our footprint and financial scale. We now operate 126 banking centers reflecting the addition of Southern Indiana following the First Savings acquisition. Total assets stand at $21.3 billion with $15.5 billion in loans and $16.8 billion in deposits. Turning to Slide 5. Second quarter reported net income totaled $43.5 million or $0.70 per diluted share. Second quarter results were negatively impacted by 2 loans that were moved to nonaccrual status with specific reserves taken against them. We are disappointed by these 2 downgrades and we are confident they are not representative of the overall portfolio. We remain confident in our outlook, as John will highlight later in the presentation and we are happy to answer any questions that you might have during the Q&A session. Adjusted pretax pre provision earnings increased to $84.6 million for the quarter an increase of 7.5% over the first quarter of 2020 Net interest margin expanded to 3.38%, and loan and deposit growth returned to more traditional levels. Year to date net income on Slide 6 totaled $71.2 million Excluding the mortgage loan sale from the first quarter and acquisition related expenses from both the first and second quarter adjusted EPS totaled $1.77 per share. The previously announced mortgage loan sale is now complete. Adding $271 million of liquidity to our balance sheet. Our integration and related expense savings are now complete and position us well next quarter. Our balance sheet continues to grow organically reflecting strong production levels. Tangible common equity remains strong at 8.99%, and we continue as we continued our share repurchase activity throughout the first half of this year, All of these factors position us well for improved performance during the second half of 2026. And now Mike Stewart will discuss our line of business momentum.
Michael J. Stewart: Thank you, Mark, and good morning to all. Our business strategy is summarized on Slide 7. As stated on the top of the slide, building our Midwestern strength by growing organically remains our primary objective as a company. Our 4 primary business units work together in delivering financial solutions for businesses and consumers focused primarily on the maps you see starting on Slide 8. Let's turn to slide 8. After a flat first quarter of loan growth, the second quarter picked up the pace with nearly 6% annualized growth both in the commercial and consumer business segments. The increase came within our 3-state footprint and was driven by the community, corporate, asset based, and investment real estate themes working with our current client base and adding new names. Our Midwest economies continue to expand, Our clients' businesses continue to grow. And our bankers continue to win new relationships. The same is true for the consumer teams within small business, mortgage, and private wealth. The full loan portfolio trend is summarized on Page 27 for your reference. We remain confident in our expected mid single digit loan growth through the end of 26. Let's turn to Slide 9. Deposits. Second quarter deposits grew at a 6.5% annualized rate. The robust commercial growth was primarily attributable to public fund increases due to seasonal tax collection, and a large temporary deposit increase from a client's sale of their business. This client is working with our private banking team on investment management and trust service solutions for their family. The large consumer decline was also seasonal and primarily due to consumer tax refund payments being spent. The seasonality of tax payments between public entities and our consumer deposit accounts depository accounts will normalize to the balance of the year. The 3% year-to-date decline in total deposits was due to declines in maturity deposit balances and the balance sheet repositioning of the first savings brokered deposits in the first quarter. On a year to date basis, consumer nonmaturity deposits balances grew 3% with net increases in households. Michele will be reviewing our continued net interest margin improvement which was a direct result of disciplined deposit and loan pricing. Michael?
Michele Kawiecki: Thanks, Mike, and good morning, everyone. Slide 10 covers our second quarter's performance. There was meaningful growth in total revenues during Q2, Net interest income grew $7.6 million and noninterest income grew $1.6 million linked quarter after normalizing for the $29.8 million loss on recorded on mortgage loans sold in the first quarter. Strong revenue growth along with disciplined expense management resulted in overall pretax pre provision earnings of $84.6 million increasing $5.9 million over the prior quarter and generating 2% positive operating leverage. Tangible book value per share of $29.80, increased $0.46 or 1.6%, linked quarter. Slide 11 shows our year to date results. Lines 1 through 3 at the top of the page show that we continue to grow the balance sheet towards a more favorable earning asset mix as we have reduced our lower yielding bond portfolio along with lower yielding mortgage loans during the first 6 months of the year and redeploy the capital into higher yielding loans. Looking at the income statement in the middle of the page, total revenue grew 18% when comparing year to date 2026 on a normalized basis to the same period in 2025 with first savings contributing 12% of that growth. Pretax pre provision earnings totaled $163.3 million, reflecting growth of $25.2 million, or 18.2%, over the same period in the prior year, Year over year tangible book value growth was strong, increasing $1.90, or 6.8%. Slide 12 shows details on our investment portfolio. The bond portfolio declined modestly, as the principal paydowns and maturities were offset by positive changes in portfolio valuation. Expected cash flows from scheduled principal and interest payments throughout the remainder of 2026 totals $156.2 million with a roll off yield of approximately 2.69%. We plan to continue to use cash flows generated from the bond portfolio to fund higher yielding loan growth for the remainder of the year. Slide 13 covers our held for investment loan portfolio. The total loan portfolio yield increased by 2 basis points from the prior quarter to 6.11%. During the quarter, new and renewed loans originated at an average yield of 6.28%, compared to 6.18% in the prior quarter demonstrating strong pricing discipline by our team. The allowance for credit losses is shown on Slide 14. This quarter, we recorded $33 million of provision due to specific reserves of $29.7 million that were established on 2 commercial credits which John J. Martin will cover in more detail in his remarks. Net charge offs totaled $3.9 million for the quarter, As a result, the allowance for credit losses totaled $241.6 million at the end of the quarter representing a coverage ratio of 1.56%. Slide 15 shows details of our deposit portfolio. The rate paid on deposits continue to decline to 2.07% this quarter, and our funding mix improved favorably. We used the proceeds of $271 million from the mortgage loan sale that closed in late June to reduce higher cost brokered deposits and wholesale funding. Next, Slide 16 shows a favorable net interest margin trend. Net interest income on a fully tax equivalent basis of $165.3 million, increased $7.6 million linked quarter and $26.1 million from the same period in prior year. While we have an asset sensitive balance sheet, and endured Fed rate cuts in the fourth quarter of 2 thousand 25, the yield on earning assets shown on line 4 only declined modestly while the cost of funds shown on line 5 has been reduced substantially. The pricing discipline on both sides of our balance sheet has created nice margin expansion through the first half of this year. Next, Slide 17 shows the details of noninterest income which totaled $37.2 million for the quarter. Customer related fees, shown on the bottom right of the page, were strong with notable quarter over quarter growth in gains on sales of loans and derivative hedge fees. Moving to Slide 18, non interest expense for the quarter totaled $115.3 million and included $3.8 million in acquisition related costs. The acquisition costs were primarily incurred in the professional and other outside services and equipment expense categories. The cost synergies we expect to gain from the first savings acquisition are on track. Slide 19 shows our capital ratios. The tangible common equity ratio was 8.99% and stable compared to prior quarter. Since the beginning of the year, we have repurchased just under 1 million shares for $38.3 million year to date. We remain well capitalized and are positioned to support continued balance sheet growth and disciplined capital return. That concludes my remarks, and I will now turn it over to our Chief Credit Officer, John J. Martin, to discuss asset quality.
John J. Martin: Thanks, Michael, and good morning. My remarks begin on Slide 20. Overall, the portfolio continues to perform within expectations and remains well diversified across commercial, and consumer lending categories. Total loans ended the quarter at $15.5 billion. Commercial real estate concentration levels remain comfortably within regulatory guidelines, and our credit portfolios continue to largely perform in line with expectations. Moving to Slide 21. Second quarter asset quality was impacted by 2 notable credits. The larger of the 2 relationships was a $28.1 million participation in a syndicated credit to an authorized wireless retailer. Subsequent to quarter end, we received new company specific information that led us to place the loan on non accrual. While negotiations with the borrower remain active, the outcome has not yet been finalized. However, we expect to have substantially greater visibility into the likely resolution by the end of the fourth quarter. The second credit was a sponsor-financed $13.7 million loan to a commercial and residential roofing contractor that had been moved to the watch list for 3 quarters. It was placed on nonaccrual in July after the sponsor informed us that they no longer intended to support the company. While meaningful in size, this credit is more representative of the type of periodic CNI migration we see from time to time within the commercial loan portfolio. As a result, nonaccrual loans increased to $118.2 million, and nonperforming assets plus 90 days past due increased to $129.5 million or 0.83% of loans. Classified loans increased to $393.3 million from $357.1 million last quarter. While these metrics moved higher, the increase was driven primarily by a limited number of borrower relationships. Most notably the authorized retailer and roofing contractor credits. Rather than a broad based deterioration across the portfolio. Looking ahead, we expect a meaningful portion of the loss content associated with these 2 nonaccrual relationships to be realized through charge offs during the third and fourth quarters. As a result, while current quarter charge offs remained a modest 10 basis points annualized, we currently anticipate full year 2026 net charge off will trend into the 40- to 45-basis-point range. Importantly, that expectation is largely driven by the resolution of these known credits and should not be interpreted as a change in our view of the broader portfolio. Which continues to perform within expectations. Turning to Slide 22. Nonperforming asset migration increased during the quarter with the new nonaccruals totaling $53.6 million. The 2 relationships discussed described on the prior slide represented the primary drivers of those additions. Offsetting activity included $17.7 million of upgrades and payoffs along with $6.2 million of charge offs and other resolution activity. These actions reflect continued active management of problem assets across the portfolio. In summary, the quarter was impacted by 1 significant relationship specific credit event and another larger more routine migration. We identified the issues, reserved appropriately, and continue to actively work the relationships. Outside of these credits, portfolio performance remains stable, charge offs remain low, and we continue to believe the overall risk profile remains sound. Remain focused on proactive portfolio management, early identification of emerging risks, and maintaining the strong discipline that has consistently differentiated our organization. Thanks for your attention, I will now turn the call back over to Mark K. Hardwick.
Mark K. Hardwick: Thanks, John. Turning to Slide 21. Our long term track record of shareholder value creation remains a key strength and a key priority for this management team. Slide 22 highlights our 11.5% total asset combined annual growth rate over the past decade, reflecting a consistent strategy of organic growth complemented by disciplined value accretive acquisitions that expand our demographic and geographic footprint. We look forward to building on our Midwestern strength throughout the rest of 2026 by focusing on our people, clients, products, and technology investments, or simply running the core bank. Seeing this strength translate into earnings per share and sustainable earnings growth and shareholder value remain our top priority. Thank you for your continued support and investment in First Merchants. And, now we are happy to answer any questions that you may have.
Operator: Certainly. As a reminder, to ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question will come from the line of Daniel Tamayo of Raymond James. Your line is open, Daniel.
Daniel Tamayo: Thank you. Good morning, everyone. Good morning. Maybe just starting kind of I appreciate all the color on the 2 credits. That drove the issues on the on the credit quality side this quarter. But seeing as 1 of them was from the shared national credit book, maybe for you, Mark, just curious, you know, kind of how you are thinking about that business. Line overall that or that portfolio in terms of go forward from a go forward basis? Are you still comfortable with it? Are you still growing that business? And then if you have any maybe details on, reserves of the rest of the book in terms of how that looks relative to the overall portfolio, that would be helpful.
Mark K. Hardwick: Yeah. Danny, I will start, and then if John or Mike want to add anything, they can. We still like the business and like the balances that we have on our financials. And it is really because we focused on customers that are in our backyard. That happen to be large enough to participate in the SNC market. This particular customer is 1 where we have had a relationship with them. They are in the in the Michigan market, kind of in our backyard. Are involved in a couple of other local businesses that are unrelated. And those are the types of credits where we tend to have great relationships with management and continuous dialogue. And so and I think that is reflective of the entire SNC portfolio We are not just buying credits. To expand the balance sheet from outside of our core markets. And really not even outside of our current markets where we do not have a relationship. Focused on those customers that we are close to. The-- the rest of the portfolio, I do not know that I have specific thoughts on it. it is not an area where we have experienced challenges in the past. And, I would I would open it to these 2 guys if they have anything else to add.
John J. Martin: Yeah. I would echo Mark's comments. This relationship expanded in ancillary businesses beyond the current exposure. That was isolated to this particular borrower. You know, we have got other loans, deposits, and that is how we approach the Shared National Credit portfolio. Borrowers who in aggregate, have more than a $100 million in borrowings and have more than 2 banks make up that category, you can look at the, you know, total outstanding and the average balance and it is relatively granular. So we try to approach it in a granular approach where we do use that as a lever to expand a relationship and that really is our strategy.
Michael J. Stewart: Mike Stewart here. 1 last comment. All what Mark said, John said. That being said, doing a complete portfolio review. Of our shared national credit. We have to. We need to understand better asset coverage versus cash flow lending. So there will be analysis on that. But I wanna reinforce what Mark said. he is we have access to management. There are companies in our backyard. We feel like we have an understanding of how we can work with them beyond just a purchase of a loan. Clearly, disappointing. But we will do a portfolio review and make sure that we feel absolutely comfortable with our approach.
Daniel Tamayo: Thanks for all that color from all of you. Appreciate that. I guess next for Michael, just if you can give us a-- you know, you mentioned that cost savings are on track for savings, but any kind of outlook that you might be able to provide on the expense numbers and maybe still how you are thinking about where that might land post integration efforts. Thanks.
Michele Kawiecki: Yeah. So, you know, our quarterly run rate, I think the guidance that I gave the last quarter was that we thought through the remainder of the year, our total expense run rate would be between $111 million to $114 million per quarter, and I still think that is good guidance. If you strip away some of the noise that we had this quarter, we kind of land in at that $111 million spot. And so clearly, with, you know, some hiring that we are doing and so forth, there will be a little bit more a little bit higher expense balance, but I think that range is still good.
Daniel Tamayo: Alright. Thank you for that. Appreciate it, Michael. I will step back. Thanks, Danny.
Operator: And our next question will be coming from the line of Russell Gunther of Stephens. Your line is open, Russell.
Russell Gunther: Hey, good morning, guys. First, with just a quick follow-up on the expense commentary. Helpful to get the reiteration for the rest of this year. As we think about, you know, the go forward, what is a safe, kind of normalized growth rate to assume based on franchise investment you are considering, hiring initiatives, etcetera?
Michele Kawiecki: Well, this year, just kind of a normal organic growth, it was between 3% and 5%. And that just reflects us investing in the business, investing in talent, We have talked historically about some places like our asset based lending team and other commercial hires that we have had. And I think that range on a go forward basis will still hold true. Just because we will continue to do some hiring, invest in technology, etcetera.
Russell Gunther: Okay. Excellent, Michael. Thank you for taking that 1. And then switching gears, to the margin. It would be helpful to get a sense for how you are thinking about the back half of this year, whether or not you guys are contemplating any Fed hikes in your outlook. And maybe just starting on the loan side where you expect yields to be able to trend? Begin there, please.
Michele Kawiecki: I will start with margin. So we are assuming no fed rate changes through the remainder of the year. And if that is the case, then we would expect margin to increase maybe a couple basis points in the back half of the year. We are seeing some spectacularly high CD specials from competitors in our markets. So pricing deposits is always a variable in terms of being able to maintain our deposit costs and so forth, but we have got some tailwinds. We have got you know, some fixed rate assets both on the loan and the bond side that will be repricing. And so we feel pretty good about being able to achieve stability to up a couple basis points. And so, Mike, I do not know if you want to talk a little bit about loan yield. I mean, our loan yields when you look at our new and renewed loan yield, that is still above our overall yield. And so that is also helping to drive our net interest income.
Michael J. Stewart: I think you gave a good sum and all that. I think that will be consistent on a go forward basis.
Russell Gunther: Okay. Great. Thanks for tackling both sides of that margin question for me. I will step back.
Mark K. Hardwick: Yeah. I really was pleased, though, to see the new and renewed. You said last quarter was 6.18% and up to 6.28% this quarter.
Michael J. Stewart: Yeah. And it does create momentum over the portfolio yield at 6.11%.
Operator: And our next question will be coming from the line of Damon Del Monte. Of KBW Damon, your line is open.
Damon Del Monte: Hey. Good morning, everyone. Hope you are all, doing well today. Just wanted to start off with fee income and maybe the outlook there, Michael. You know, I think, mortgage banking, organic loan sales had a solid quarter. Just curious how the pipeline is shaping up here in the third quarter and kind of maybe what you could expect moving off of this quarter's $37.2 million level??
Michele Kawiecki: Yeah. I mean, I think for the full year, we would expect noninterest income to be up 10% over prior year. There was always a little bit of seasonality in the mortgage business, but we did have a really nice solid quarter with gains on sales of mortgages this quarter. I would expect the same next quarter well.
Damon Del Monte: Okay. Great. And then, I guess, with regards to capital management, maybe a question for Mark on kind of your thoughts on continuing with the buyback. Good to see you are active again here in the second quarter and capital levels remain healthy. Did not know if the 2 credits, you know, weighed on your balancing act of how you allocate capital or not and if we could expect more buybacks going forward.
Mark K. Hardwick: Yeah. Right. We expect to continue buyback activity through the remainder of the year. Assuming our stock price stays in this similar range. And, the $100 million approval that we received recently both approval from the Fed and our Board was announced. And just continue to generate capital. I mean, I mean, we have, call it, 30% to 40% of it to support loan growth. Use about a third for dividends, and the rest is available for other purposes. And at least, at this point, we think share repurchase is still a really good use of that capital.
Damon Del Monte: Okay. Great. Okay. I will just leave it at those 2 questions and step back. Thank you. Thanks, Damon.
Operator: And our next question will be coming from the line of Brendan Nosal of Hovde Group. Your line is open, Brendan.
Brendan Nosal: Hey. Good morning, everybody. Hope you are doing well. Maybe to circle back to credit and the syndicated loan. Can you just fill us in on where that credit was risk graded last quarter? Like what changed in their operations that drove the downgrade? And then are if there are any other read throughs from that situation to other commercial credits or other syndicated credits you have?
John J. Martin: Okay. I am sorry. I did not catch your name. that is Brendan. Brendan. Hey, Brendan. Hey, Brendan. Brendan. Yeah. So in the first quarter, we identified really the beginning of the issue, and had moved it to our watch list. In the second quarter, we moved it to, classified. The classified category. So that is a significant portion of you know, that change in the classified numbers. We do have, other exposure in the wireless retail space, but 2 different carriers had different issues. This 1 is specific to the particular carrier. So you know, Mike mentioned we do portfolio reviews in our shared national credits. We continue to do that. And you know, have an understanding of the overall exposure.
Mark K. Hardwick: Yeah. I also just think it is fair to say the carrier has taken a pretty dramatic or made a pretty dramatic shift in their in their retail distribution model. And it is impacting this customer. Directly. And the changes move quickly. The impact of those changes became much more apparent late in the quarter, even subsequent to the quarter. Right. And so, just a little bit more color. And, Brendan, I was just going to add that, it was really in the last week of the quarter that we began it began to be very clear as to what the issues were.
John J. Martin: Having then received additional information and subsequent to the first quarter, that was present in the second quarter.
Brendan Nosal: Okay. that is very helpful color. Thank you. Maybe pivoting, to kind of the first savings acquisition. You are 6 months or so into that deal now. I am just kind of curious as you are on the ground for longer and longer. Anything that you have learned from having that franchise or anything new on kind of their specialty commercial verticals that you have seen on the ground that is changed over the course of the year?
Michael J. Stewart: Yeah. Mike Stewart here. that is a good question. I appreciate you asking because I did not speak a lot to it. Our local commercial team down in Jeffersonville, led by Eric Howard, is off to a great start, I think we have done a wonderful job. He and his team working with our existing clients and our commercial activity is good. it is actually grown in the quarter with their ability to continue to work with them. Our consumer book of business down there is doing, reasonably well too. You see some attrition that is happening there in some units. But the overall balances are well within our model on what we think they should be post legal close in February and post integration in May. And we have got a really nice marketing campaign, and we are opening new accounts down there and managing through I consider to be normal attrition. Then our verticals, the SBA business, continue to do well on that national level. Their originations were when you look at how they do the originations, originations were basically flat to the first quarter and we sell the guaranteed portion on a quarterly basis, and that activity is good. And that team is now working with the rest of the first merchants footprint to be the fulfillment source for SBA Solutions in Indiana, Michigan, Ohio. And that is connectivity is good. The first lien HELOC business actually showed originations up about 10%. And that is a process where we mainly do originate and sell. So that activity is good And then the triple net lease business actually had robust growth in the quarter. As the individual that runs that has got some good activity there. So I feel like the overall, the specialty verticals are doing what I want them to do, being stable providers of opportunity for balance sheet and or fee income. The team is pretty stable, and then the opportunities for us to grow in Southern Indiana in a core commercial bank, Midwestern focused approach is off to a good start.
Brendan Nosal: Awesome. that is super helpful color, Mike. All right. Thanks for taking my questions.
Operator: And our next question will be coming from the line of Nathan Race of Piper Sandler. Your line is open.
Analyst: Yes. Hi, everyone. Good morning. Thanks for taking the questions. Just going back to credit for a second. John, when you just look at classified loans and how they have turned up by roughly a $100 million over the last couple of years. I am curious if you can just kinda shed some light in terms of what is driving that increase? Are you guys just being tougher graders these days, or is it just, you know, some changes in the complexion portfolio overall? And just kinda any thoughts on, you know, when we can maybe start to see a classified loans start to trend lower?
John J. Martin: Yeah. You know, it is interesting. You look over the last couple of years, a couple of things that I think about. 1, we are a large organization at some level. We have added overall balances. So with those, at a percentage basis, you know, it has increased the absolute dollar figure. If you look at Q2 25, were at $2.80. Today, we sit at $2.53. So we are actually down year over year. Now having said that, higher interest rates in the investment real estate construction portfolio had an impact when that first kind of occurred. So there is a lot of dynamics there. I think we are consistent with our grading. And, you know, we have a methodology for it. And it derives the results that you are seeing. I would argue that we are tougher with our grading than know, some of our peers, but, but I am a little biased.
Analyst: Okay. that is helpful. And, Mark, I think you have been pretty consistent the last couple of quarters that, you know, you are not really interested in other acquisition opportunities, and you guys are really internally focused. But just curious to get some updated thoughts on kind of the M&A app appetite these days in terms of some additional smaller opportunities or maybe anything more transformational along those lines?
Mark K. Hardwick: Yeah. Our focus is the same. We have a bank that we are proud of that has a powerful earnings engine behind it. And we are focused, like I said in my comments, about just executing. Taking care of our employees and our customers and our communities and driving shareholder return. The activity's pretty quiet. I would say, in terms of just institutions in our 3-state footprint that are that are looking or that are interested in doing something And the I guess, if there was anything that, like, piques our attention, it is just if it is easy to digest and has a great deposit base, and a low loan to deposit ratio. And I think every bank in the country is searching for those Right.
Analyst: Makes sense. And Michelle, I apologize if I did not catch it, but just any thoughts on the tax rate going forward Yeah.
Michele Kawiecki: I think 13% would be a good effective tax rate to use. that is what we are expecting.
Analyst: Okay. Great. I appreciate all the color. everyone. Thanks.
Operator: And our last question will be coming from the line of Brian Martin of Bryn Mawr Capital. Your line is open, Brian.
Analyst: Good morning, everyone. Good morning, Brian. Hey. Just 1 or 2 for me. I think someone just got answered there, but the Michele, that fixed rate asset repricing, can you just remind me what that is? I know you mentioned in the call. I do not know if you mentioned the amount or maybe I missed it if you did.
Michele Kawiecki: Yeah. So on the loan side, we have about $385 million over the next 12 months. And those are sitting at about, well, maybe about a 4.5% to 4.6% rate. So we definitely got some upside there.
Analyst: Okay. And then maybe just remind me on the I just mean I did not-- I joined late. So if it is something I can go back and listen to transcript or if Mike can comment again, on the pipeline, and just to the question earlier about you know, the acquisition and kind of what that brings to the loan pipeline. Just can you just comment about where the pipeline is today in terms of loans at a high level and just kind of where you are seeing strength or where you expect to see continued strength?
Michael J. Stewart: Yeah. Sure. Absolutely. On the consumer side, which includes our mortgage pipeline, that is really where the strength still is. Interest rate environment aside, it is up substantively over this time last year. it is a seasonal book of business, but we have got some great connectivity in Michigan, Indiana, Ohio. We have been investing in producers. Those producers are doing that, adding units in there. And the ability of our team to leverage a really efficient back allows us to continue to grow in the units of that. So the pipeline of mortgage is really strong going to third quarter. Our commercial team pipeline, I view it as stable to where we were at the end of the first quarter, and you saw we had really nice growth in the second quarter after a flat first quarter. And inside that, the book of business there, that pipeline is pretty evenly dispersed amongst our geographies. We are seeing really good growth in our Michigan market as those 2 continue to take advantage of maybe some of the noise of the Fifth Third Comerica integration, but commercial clients being a little confused in what ideas from us. And then with what Eric's been able to do in Southern Indiana, the pipeline is nice in the Southern Indiana franchise. it is also evenly dispersed amongst, our investment real estate and our C&I portfolios. That a year ago, you might remember us talking about the, addition of a new team of our asset based group. And their pipelines their production has been tremendous, and their pipelines also remain strong. As we go into the third quarter. So I view that the commercial pipeline is stable. that is why I made my comment that I feel good about that mid single digit growth to this third and maybe fourth quarter as well.
Analyst: Gotcha. that is super helpful, Mike. Thank you. And Michele, just maybe 1 back on the securities portfolio. You commented that it is still the runoff is still going into to fund the loan growth, so a little bit of mix improvement there. What how much on the I guess, where do you see the kind of longer term? Where do you see the securities portfolio? Kind of size that up and where you would like it to be as you draw it down a bit.
Michele Kawiecki: Yeah. I mean, generally, our bond portfolio is about 15% of our total assets, which is really about where we are today. Of course, that fair value is getting impacted by rate movement. And so we will just continue to monitor it. We do still plan at least through the remainder of this year to use the cash flows to fund loan growth. Yeah. Okay. And the and those the roll off yields, did you give what those roll off yields are on the securities portfolio? Yeah. I believe it is 2.69%. 2.69%.
Analyst: Okay. And those are going into the up high fours or mid to high fours? Well, no. Because we are not we are not buying bonds with that. We are putting it into the loan. Sorry. Yeah. Yeah. I am sorry. I apologize. Okay. Yep. Yeah. that is all I do. Thank you for taking the questions.
Operator: Alright. Thank you, Brian. And I would now like to turn the call back to Mark for closing remarks.
Mark K. Hardwick: Yeah. Thanks, everyone, and we appreciate your investment in First Merchants and your interest. The first half of the year has been a little noisy. Some things that we are excited about, some that we are disappointed by. But, to have our acquisition complete, and fully integrated to have our loan sale complete and to put that liquidity back to use at a much higher yield has been great for the business. Obviously, we are disappointed by the 2 commercial credits that really challenged the second quarter. But I am really enthusiastic and excited about what the second half of 2 thousand and 26 should represent for our company. And really look forward to talking to you, about a great second half or a great quarter in 90 days. So again, we appreciate your time and your attention, and I look forward to talking to you in a few months. Thank you.
Operator: And this concludes today's conference. Thank you for your participation and have a great day. You may now disconnect.
