Nick: Good morning and welcome to People's Bancorp Inc.'s conference call. My name is Nick and I will be your conference facilitator. Today's call will cover a discussion of the results of operations for the three and six months ended June 30th, 2026. Please be advised that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, simply press star then 1 on your telephone keypad and questions will be taken in the order that they are received. If you would like to withdraw your question, please press star and then 2. This call is also being recorded. If you object to the recording, please disconnect at this time. Please be advised that the commentary in this call will contain projections or other future looking statements regarding people's futures financial performance or future events. These statements are based on management's current expectations. The statements in this call, which are not historical fact, are forward-looking statements and involve a number of risks and uncertainties detailed in people's securities and exchange commission filings. Management believes the forward-looking statements made during this call are based on reasonable assumptions within the bounds of their knowledge of people's business and operations. However, it is possible actual results may differ materially from these forward-looking statements. Peoples disclaims any responsibility to update these forward-looking statements after this call, except as may be required by applicable legal requirements. Peoples' second quarter 2026 earnings release and earnings conference call presentation were issued this morning and are available at peoplesbancorp.com under Investor Relations. A reconciliation of the non-generally accepted accounting principles, or GAAP, financial measures discussed during this call to the most directly comparable GAAP financial measures is included at the end of the earnings release. This call will include about 15 to 20 minutes of prepared commentary, followed by a question and answer period, which I will facilitate. An archived webcast of this call will be available on peoplesbancorp.com in the Investor Relations section for one year. Participants on today's call will be Tyler Wilcox, President and Chief Executive Officer, and Katie Bailey, Chief Financial Officer and Treasurer. And each will be available for questions following opening statements. Mr. Wilcox, you may begin your conference.
Tyler Wilcox: Thank you, Nick. Good morning, everyone, and thank you for joining our call today. Earlier, we reported diluted earnings per share of 78 cents for the second quarter. When adjusted for one-time items, our diluted EPS for the quarter was 96 cents, which exceeded consensus analysts' estimates of 85 cents. These one-time items included an $8.2 million loss, which reduced diluted EPS by 18 cents, related to the strategic sale of investment securities from our portfolio in preparation for the citizens' merger and our current strategic objective to remain below $10 billion in assets. We also recorded acquisition-related expenses of $410,000 during the second quarter, which reduced our diluted EPS by one cent. We recently purchased an energy tax credit, lowering our income tax expense by $480,000 in the second quarter and positively impacting diluted EPS by one cent. We have several highlights for the second quarter. as many of our performance metrics improved compared to the linked quarter. Our net interest income increased 3%, while our net interest margin expanded 7 basis points. De-based income grew over $340,000. Provision for credit losses declined 51%. The efficiency ratio improved to 58.3% compared to 58.6%. Our loans grew $51 million, or 3% annualized. Non-interest-bearing deposits grew $7 million or 2% annualized. Our tangible equity to tangible assets ratio increased 34 basis points to 9.25%. Book value per share increased to $34.41 from $33.85, a 7% annualized growth rate. Our tangible book value per share improved at an 11% annualized rate and all of our regulatory capital ratios improved. Our provision for credit losses totaled $4.7 million for the second quarter, a decline of $5 million or 51% compared to the first quarter. Our allowance for credit losses declined to 1.14% of total loans from 1.16% in March 31st. Our lower provision for credit losses for the quarter was driven by a reduction in net charge-offs, coupled with a stabilization of macroeconomic conditions used within our model. Our annualized quarterly net charge-off rate improved to 31 basis points compared to 40 basis points for the linked quarter. Our indirect consumer loan net charge-offs decreased $751,000 which was driven by lower charge-offs and improved recoveries. We continued to see declines in our small ticket lease charge-offs which were $3.4 million compared to $3.8 million for the first quarter. These charge-offs contributed 20 basis points to the annualized net charge-off rate for the second quarter. We have significantly reduced our position in high balance accounts which totaled $7.2 million at June 30th and we have limited residual risk remaining within this segment of the small ticket leasing portfolio. For additional details on our small ticket leasing business, please refer to the accompanying slides. Our non-performing loans increased slightly and were 0.6% of total loans at quarter end. Criticized loans grew $50 million compared to March 31st, comprising 4.01% of total loans at quarter end. while classified loans declined $1 million. The increase in criticized loans was mostly related to two commercial credits, one of which was acquired. We do not currently expect any charge-offs to arise from these relationships. As a reminder, our first quarter criticized loans as a percent of total loans was 3.3%, which was lower than our typical historical run rate of around 4%. Our delinquency levels improved, as 99.1% of our loan portfolio was considered current at June 30th compared to 98.9% at the linked quarter end. Moving on to loan balances, we generated loan growth of $51 million or 3% annualized. Commercial and industrial loans contributed $43 million of growth, followed by increases in premium finance loans of $37 million, construction loans of $25 million, and Home Equity lines of credit of $13 million. Overall, our lease balances grew with our mid-ticket leasing business adding over $15 million in balances, partially offset by declines in our small ticket leasing portfolio. At the same time, our other commercial real estate loan balances declined $58 million as we experienced the elevated first half payoffs we had anticipated. I will now turn the call over to Katie for a discussion of our financial performance.
Katie Bailey: Thanks, Tyler. For the second quarter, we saw improvement in our net interest income, which grew $2.3 million, while our net interest margin expanded seven basis points. A reduction in our deposit costs benefited both net interest income and margin for the second quarter. Accretion income totaled $1.2 million compared to $1.3 million for the first quarter, contributing five basis points and six basis points to net interest margin, respectively. For the first six months of 2026, net interest income improved $10.3 million, or 6%, while net interest margin expanded six basis points. Our deposit cost discipline, along with higher interest income, contributed to the increase. Accretion income totaled $2.4 million compared to $6.1 million for 2025, contributing six basis points and 15 basis points to net interest margin, respectively. As far as our balance sheet structure, at this time, we are positioned to benefit more from a rising rate environment. A falling rate environment would cause a nominal reduction in our net interest income. However, rate uncertainty validates our relatively neutral position. As it relates to our fee-based income, we had growth of over $340,000 compared to the linked quarter. We had improvements in the majority of our fee-based income lines, which more than offset the decline in insurance income driven by the annual performance-based insurance commissions received in the first quarter of each year. For the first six months of 2026, fee-based income grew $3 million mostly due to higher lease income and trust and investment income. Our non-interest expenses were up 2% compared to the linked quarter, which included $410,000 of acquisition-related expenses, the majority of which contributed to the increase in professional fees. For the first six months of 2026, non-interest expenses were up 2%. The growth was driven by higher operating lease expense, which corresponds to our fee-based lease income, as well as salaries and employee benefits costs, and data processing and software expense. For the first half of 2026, we have recorded $426,000 of acquisition-related expenses. Our reported efficiency ratio was 58.3% for the second quarter and 58.6% for the linked quarter. The improvement in our efficiency ratio is driven by higher revenue compared to the first quarter. For the first six months of 2026, our reported efficiency ratio was 58.4% compared to 60% for the prior year and was also driven by higher revenue. Looking at our balance sheet at quarter end, Our loan-to-deposit ratio increased to 91.5% compared to 88.5% at March 31, as we had loan growth for the second quarter, coupled with a reduction in deposits. Our investment portfolio as a percent of total assets declined to 19.1% at June 30, compared to 20.3% at the linked quarter end. The decline was driven by the sale of approximately $135 million of available for sale investment securities, resulting in a loss of $8.2 million for the second quarter. These sales were part of our current plan to stay below $10 billion in total assets and restructure our portfolio in conjunction with the pending citizen's merger. Our core deposit balances, which exclude brokered CDs, declined $155 million compared to March 31. As expected, we had seasonal decreases in our governmental deposits, which were down $87 million. We also had reductions in our interest-bearing demand accounts of $17 million. During the second quarter, we also had reductions of $92 million in retail CDs. However, We improved our deposit costs by six basis points compared to the linked quarter. These declines were partially offset by an increase of $37 million in money markets and $7 million in non-interest-bearing deposits. Our demand deposits as a percent of total deposits grew to 36% at June 30th compared to 35% at the linked quarter end. Our non-interest-bearing deposits to total deposits ratio was flat at 21% for both June 30th and March 31st. As it relates to our capital levels, all of our regulatory capital ratios improved compared to the linked quarter end as earnings outpaced dividends. I will now turn the call back over to Tyler for his closing comments.
Tyler Wilcox: Thank you, Katie. We continue to make progress with the pending citizens merger and are excited about the opportunity to bring our associates together. We have spent a considerable amount of time within the footprint interacting with associates and hosting meetings to discuss our future. We are coordinating processes between teams, both on the front lines and operationally, to ensure a seamless transition. We are awaiting regulatory and citizen shareholder approvals for the merger, but are anticipating a close date of early in the fourth quarter of 2026. As with recent bank acquisitions, the core system conversion will be at a later date, which we are targeting to take place early in the second quarter of 2027. At the same time, we will continue to be opportunistic about other potential acquisitions. Moving on to our performance expectations for the full year of 2026, excluding the impact of non-core expenses and the planned merger, we expect to achieve positive operating leverage for 2026 compared to 2025, We anticipate our net interest margin will be between 4.1 and 4.3% for the full year of 2026. A 25 basis point increase in rates from the Federal Reserve is expected to result in a 6 to 8 basis point improvement in our net interest margin for the full year. We believe our quarterly fee-based income will range between $28 million and $30 million. We expect quarterly total non-interest expense to be between $73 million and $75 million for the two remaining quarters of 2026. We believe our loan growth will come in towards the low end of our guided range of 3% to 5% due to the continued movement of pay downs from late 2025 to 2026. We anticipate a slight reduction in our net charge-offs for 2026 compared to 2025, which we expect to continue to positively impact provision for credit losses, excluding any changes in the economic forecasts. For the remainder of the year, we will focus on the integration of the citizens merger, along with continuing to develop our core business while closely monitoring our total asset levels in relation to the $10 billion threshold. As we mentioned before, we continue to have diverse and potentially fruitful conversations with other institutions. Our lines of business work together to deliver a client experience unlike many institutions, and we see opportunities arise because of our unique market offerings. For the clients and associates of citizens, we are excited to share our deep bench of experienced professionals who will bring access to our vast array of products and services. This concludes our commentary, and we will open the call for questions. Once again, this is Tyler Wilcox. and joining me for the Q&A session is Katie Bailey, our Chief Financial Officer. I will now turn the call back into the hands of our call facilitator. Thank you.
Nick: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble the roster. The first question will come from Jeff Rulis with DA Davidson. Please go ahead.
Ryan Payne: Good morning. This is Ryan Payne on for Jeff Rulis today. Starting on the margin, does that 410 to 430 for the full year bake in any rate move expectations?
Katie Bailey: It does not. It's a relatively stable rate environment.
Ryan Payne: Got it. Okay. And maybe bigger picture. What would have to happen for the margin to end the year at the higher end of that range?
Katie Bailey: I mean, I think the aggressiveness by which we continue to reprice our CDs and the ability to maintain a sizable deposit book and the non-interest bearing or the interest bearing account, I think that'll be heavily influencing as you saw the outcome in this quarter in the margin. So I think that'll have a heavy influence in the margin going forward.
Ryan Payne: Understood. On, I guess going off on deposits there, some seasonality it sounds like, but how would you describe the competitive environment for funding now? And would you expect to increase rates to maintain or grow deposits this year?
Katie Bailey: I would say that the deposit competition remains relatively stable. I think it's competitive, but it's not increasingly so relative to what we've been seeing the last few months. I think we will continue to evaluate the term of rate increases. I don't know that the rack rates on the shorter-term products will move significantly, but I think with Great expectations as they are, and as they evolve over time, we'll continue to evaluate the term at which we're raising rates.
Ryan Payne: Okay. Thanks. That's all from me. Thank you.
Nick: The next question will come from Brendan Nossel with Hobda Group. Please go ahead.
Anira: Hi. This is Anira on for Brendan. First question, kind of looping back to the NIM and looking on slide 15. We can see you increased your sensitivity to a plus 25 increase with the fed funds from three to four basis points previously to six to eight basis points currently. Can you just unpack that change a bit and dig into the drivers behind that?
Katie Bailey: Yeah, so I just want to be clear. The projection or the guidance of 410 to 430 is a steady rate environment. It does not include an increase or a decrease in rates. What we have been doing in the past couple quarters is quantifying if rates do go down by 25 basis points or if the Fed moves by 25 basis points. We've been quantifying what that would do on an annual basis to our margin. And given when we were drafting this, the expectation was more likely for a rate increase than a rate cut we quantified the upside potential of a 25 basis point increase that's not baked into that 410 to 430 that's just telling articulating what the benefit would be if that situation unfolds and so I think it's largely the asset we have a over 50 percent of our loan portfolio is variable rates I think that's a influencing the benefit on the upside. And given our deposit costs, as you can see in the release and in the presentation, there's not as much room to go down in that avenue as there is to go up on the variable rate loan.
Anira: Thank you. And just one follow-up, leaping into credit in your opening remarks, you talked about those two commercial credits. Is there any other color that you can provide on them?
Tyler Wilcox: Sure, this is Tyler. A couple of thoughts. Two completely different credits, first of all, so no commonality between them. One is a larger multifamily project that is in footprint, somewhat anchored to a related kind of large economic project that is somewhat delayed, but we believe will continue. So, you know, hence the comment that we don't expect any kind of Losses over the long term in that project. The other is as in vehicle floor plan finance that we expect to be fully paid off by the end of the year. So again, no losses expected and no pattern there. Just kind of a reversion to the mean is what I would say with respect to the criticized and our kind of historical averages.
Anira: Perfect. Thank you. And that's all my questions. Thank you. Thank you.
Nick: The next question will come from Daniel Tamayo with Raymond James. Please go ahead.
Tim DeLacian: Hey, good morning, Tyler. Good morning, Katie. This is Tim DeLacian for Danny. Hope you're doing well. Hey, Tim. Good to hear from you. Hey, you as well. Hey, so just starting off on loan growth here, you know, loan growth is obviously impacted by the CRE pay down activity, but, you know, otherwise growth is pretty good outside of that. So Just curious if you can help us think about the expectations you guys have for payoff activity in the back half of the year and maybe how loan pipelines are shaping up.
Tyler Wilcox: Sure thing. Thanks for the question. So a couple thoughts on the expected paydowns. We guided last quarter that we expected about $480 million in payoffs for the full year and estimated that we would come in at about two-thirds to three-quarters of that in the first half. where we came out with about $300 million in the first half. We still expect the full year to fall somewhere around that original estimate. So call it anywhere from $150 to $200 million for the remainder of the year. So that certainly is a bit of a headwind. And then you combine that a little bit with a good, I would say, robust pipeline that's kind of competing with that. and a little bit of remixing over the last multiple quarters into the CNI business away from the CRE business because of the increased paydowns in CRE is where we land there at that kind of lower end of the guide because the payoffs, amortization and then the final kind of factor I would add would be that in the consumer lending We're seeing, you know, kind of muted demand. So we expect kind of indirect auto to be largely flat throughout the year and not experience growth as well. So those would be the kind of puts and takes factors that are, you know, getting us out there with respect to the loan growth.
Tim DeLacian: I appreciate all that color, Tyler. Katie, maybe one for you. Just a point of clarification on the prepositioning during the quarter. you know hoping you can help us out you know tell us when those securities were sold during the quarter and you know kind of what the yields were on the securities that were sold yes they were sold in early May and the yields were about 275 okay I appreciate that and then Tyler maybe one last one for you you know as you've gotten deeper you know here into integration planning with Citizens You know, just curious, you know, if there are any aspects of the franchise that stood out to you or, you know, any incremental areas where you believe, like, see people, you know, kind of, you know, enhance the franchise further, you know, since we last spoke in April.
Tyler Wilcox: Yeah, since we last spoke, the story is really, it is what we thought it was. And that's why we're very excited about adding it. You know, the strong deposit base, you know, good, loyal clients and communities that we do well in. on an opportunity. We've added, for example, some wealth management professional capabilities in those markets and are already seeing some benefits there. We are very strong in insurance in eastern Kentucky and bringing to bear those introductions to our clients and kind of the beginnings of the cross-pollination that will take place over the coming You know, months and years. And so we're very excited about those two core businesses of ours, particularly the investments and insurance and the opportunity to provide those to the citizens' clients. And, you know, everything is according to plan. I will note, just since you asked about citizens and a couple of the early reaction notes, I think, commented that the Expected closing was delayed. We don't view it as delayed, and if we gave that impression, I just wanted to clear that up. I think we had guided second half in last quarter's call, and we are still right on schedule, and everything, of course, is pending regulatory approval and shareholder approval, but we believe we're right on track with where we expect it to be.
Tim DeLacian: Okay, terrific. Well, thanks for that point of clarification and color there, Tyler. I'll step back now. Thank you.
Nick: The next question will come from Tim Switzer with KBW. Please go ahead.
Tim Switzer: Hey, good morning. Thank you for taking my questions. Good morning, Tim. I have a follow-up on the balance sheet restructuring. I think you guys previously talked about selling about $560 million of balances, including the citizen's portfolio. Should we expect More sales to occur before the deal closes, and if it's after the deal closes, what's the timing we should expect for that?
Katie Bailey: Yeah, so just as a reminder, about half of that was the sale of what we would be acquiring from citizens in their investment portfolio, and then about half of it was selling some of our portfolio, and you've seen us sell about half of our contribution of that. We would anticipate selling the citizens portion and as close to close as possible. And we will continue to evaluate the sale of the remaining component of our portfolio. We may do something in the third, but it likely wouldn't be until the fourth, and it'll all just be dependent on where we are from an asset size and where the rate environment is at the time.
Tim Switzer: Okay. And do you still see a way for that to be accretive to NII by pairing it with the offloading of, I assume, brokered deposits, kind of like what we saw this quarter?
Katie Bailey: Yes, I think that's right, and an overnight position as well, once brokered's completely eliminated, reduced.
Tim Switzer: Okay, that's helpful. And putting citizens aside for a minute, how do you see the trajectory of the margin over the rest of this year and early 27, assuming there's no rate movements at all? Do you think you can continue to squeeze out a little bit of margin improvement going forward?
Katie Bailey: Yeah, I think there continues to be some mix shift in the deposit portfolio, so I think there's upward potential.
Tyler Wilcox: The only thing I would add that adds some potential upside as well is we've been decreasing the small ticket leasing portfolio, and we expect kind of in early 2027 for that to begin to turn around and see growth there and higher yielding assets there have the potential to impact NIM as well.
Tim Switzer: Okay, okay. And how do you see the rate environment, especially with the rates moving higher over the last few months, how do you see that impacting the credit performance of the leasing portfolio?
Tyler Wilcox: Yeah, you know, I think it depends. I think more impact potentially is, you know, we've weathered, I would say we've weathered the, you know, tariff, you know, kind of questions We've seemed to have weathered the kind of fuel price increases, which this portfolio specifically is a little bit more small business oriented. Now, recall that these are fixed rate leases in this business, but the term is also not incredibly long. So we think there's limited credit risk there overall. And depending on, I don't think a quarter or a couple of rate increases will be meaningfully a meaningful change. And recall that that portfolio is already kind of at a gross origination yield of between 18 and 20%. So they're not particularly rate sensitive given the originations being where they are. Okay, got it. That's super helpful. Thank you, guys.
Nick: Thank you. Thanks, Tim. The next question will come from Nathan Race with Piper Sandler. Please go ahead.
Adam Kroll: Hey, this is Adam Kroll on for Nate. Good morning, Tyler and Katie, and thanks for my questions. No problem. Maybe a question for Katie. So just going back to the margin, I think last quarter's call, you mentioned an additional 15 to 20 basis points opportunity, still in potential NIM expansion for 2027, post the security sale and borrowings pay down. So I guess, is that still the right way to think about it for 2027 and just any additional color there?
Katie Bailey: Yes, I think so. And that was in conjunction with the citizens acquisition, I think collectively, which was inclusive of this securities trade that we've been talking about. We just preemptively did a portion of our sale in the second quarter. But yes, that's still accurate.
Adam Kroll: Got it. And then could you remind us what you have in terms of fixed rate loans that would be set to reprice higher over the next 12 months or so?
spk04: I mean, our fixed rate book is about 46, 48% of the portfolio. Average three to five.
Katie Bailey: I think average life three to five years, so yeah.
Adam Kroll: Okay. Maybe moving to the charge off guide for a slight reduction for 26. I was wondering if you could quantify this slight reduction guide a bit further and, you know, is the expectation that charge offs remain around this 30 to 40 basis point range for the backup of the year?
Tyler Wilcox: Yeah, I think you're slight maybe a little bit understating it at this point. You know, we were pleased with moving to, you know, kind of an annualized rate of 31 basis points. And I think you'll see consistency. You know, we talked for a while about the, you know, the major component of that being the small ticket leasing. And that is, you know, 20 basis points of our 31 for this quarter. and we talked about for the last year kind of the plateau in the second half kind of coming down and we still expect that and maybe are seeing that happen a little bit earlier than we had expected which is a good sign. So I think when you compare us year over year we expect this trend to continue for the remainder of the year. Continued strength in the commercial which doesn't really have much charge off to speak of. You saw consumer come down because the first quarter is generally historically our larger charge off quarter in that space. And small ticket leasing continues to decline. So we are optimistic.
Adam Kroll: Got it. Thanks for that, Tyler. And on Northstar, I was wondering if you had the contribution, the charge off contribution from the high balance accounts during the quarter?
Tyler Wilcox: High balance accounts specifically, if you give me one sec to shuffle some papers, I can get that for you. First of all, the high balance accounts at this point comprise about 7% of the total portfolio, and so their contribution to the losses was about 1.3, 1.4 million of the 9 million in charge-offs or so, excuse me, of the year-to-date charge-offs.
Adam Kroll: not quarterly charge us. Okay, got it. Thanks for taking my questions. Thank you.
Nick: The next question will come from Daniel Cardenas with Breen Capital. Please go ahead.
Daniel Cardenas: Morning, guys. Morning, Dan. Hey, Dan. Thanks for all the color so far on the margin and all the moving pieces. So it sounds like deposit competition is still relatively sane are all kind of stable-ish. But can you provide some color on the lending side? What's competition for the better quality loans looking like? And would you say that the market is still or competition is still rational coming here into 3Q?
Tyler Wilcox: Thanks, Dan. I would say it's largely rational. I would say there is a small element of the pressure on balances of particularly in the commercial real estate space of increased competition. And as we've said on this call before, we are not inclined to chase stupid and we'll be happy to trade slightly lower balances for sticking to our knitting on pricing. But it is competitive for quality assets. We're not seeing the lemmings going over the cliff to any degree, just to be very clear. But we are Scrutinizing deals that we want being competitive where we are. And there are also maybe a bit fewer projects in general out there. But again, not any major trends that I would identify at this point. I don't know if that helps. Very helpful. Thank you.
Daniel Cardenas: And then just... Looking at your margin here for the quarter and accretion was about five basis points contribution to the margin. Absent citizens is the expectation that yield accretion continues to give you about five basis points for the next couple of quarters.
Katie Bailey: I think that it starts to come down a basis point, a quarter roughly. I mean, it's able to down a basis point, I would say, but it's in the range of five basis points, yes.
Daniel Cardenas: Okay. All right. All my other questions have been asked and answered. Thank you, guys. Thanks, Dan.
Nick: Again, if you have a question, please press star and then one. The next question will come from Matthew Brees with Stevens, Inc. Please go ahead. Hey, good morning. Good morning.
Matthew Brees: Gordon. First for me, this topic has been talked about a couple times, but Katie, just curious, what was the spot cost of deposits and the spot NIM at the end of the quarter? And I guess I'm curious, I'm going to ask it a different way, how you feel about your ability to maintain or further lower deposit costs from here? Is that realistic?
Katie Bailey: I think it is. I think we were, you know, right around the 420 range for, you know, the spot at the end of June. There is some nuance in each month, as you might expect, but I do think, you know, maybe not as much expansion per quarter, but I think there continues to be some room to reprice some of our CDs downward as we proceed through the year.
Matthew Brees: Okay, so we're not done yet on deposit costs.
Katie Bailey: I don't think so.
Matthew Brees: And then Tyler, you had mentioned some of the dynamics within commercial real estate. Do you think that that's been down for three quarters in a row? Do you think we can start to see some commercial real estate balance stabilization by the end of the year? And what is your expectation on when you might be able to show some growth there?
Tyler Wilcox: Yeah, first of all, I don't mind, as I mentioned earlier, I don't mind our kind of mixed shift towards C&I. As you're aware, we've kind of been proud of our, you know, kind of ability to be selective in the commercial real estate space and in our lower portion of CRE to risk-based capital that, you know, I think is now around 178%. So, That's kind of been a strategic goal. The pipeline is strong in that area. You'll recall part of what is driving these payoff pressures is largely two things. One, earlier sales of many of these properties. So it shows there's still high demand in the space. And then two, kind of the permanent market refinancing opportunities. But as I look at our pipeline and as we evaluate that, we do think there is still strong demand. and I could see us going into the 2027 with stabilized to potentially increasing over the coming year. But I am very comfortable with where we are at and where that mix shift is and it gives us the ability to be very competitive and price right and select the deals that make the most sense for our credit philosophy, which is to be highly selective.
Matthew Brees: Got it, okay. Last one for me is obviously there's a lot on your plate with the upcoming deal close, but given the balance sheet size dynamics, I would imagine that you remain engaged in additional M&A conversations and would just love to hear about how those conversations are going and whether or not you see opportunity on that front in kind of the near to medium term. Thank you.
Tyler Wilcox: Absolutely. Thank you. And one, we remain ready, willing, and able to do additional deals and would feel very comfortable, and I'm not announcing an announcement, but just to say we would be very comfortable in making an announcement should something materialize that we find strategically compelling. Engaged in a lot of discussions, and I hope they are fruitful, and I believe that there are counterparties out there that are interested in the story and in the upside of a better future together. and we continue to engage in those conversations and hope that some of them will bear some fruit here. So in the meantime, as we have for, call it three years plus now, exercising strategic patience and focusing on executing in the core, which I think this quarter really demonstrates as this year as a whole. So we are ready to go and optimistic.
Matthew Brees: I'll leave it there. Thank you so much.
Nick: At this time, there are no further questions. Sir, do you have any closing remarks?
Tyler Wilcox: Yes. I want to thank everyone for joining our call this morning. Please remember that our earnings release and a webcast of this call, including our earnings conference call presentation, will be archived at peoplesbancorp.com under the investor relations section. Thank you for your time and have a great day.
Nick: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
