Note: This is an earnings call transcript. Content may contain errors.

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DATE

Thursday, Oct. 23, 2025, at 5 p.m. ET

CALL PARTICIPANTS

  • President & CEO — Jude Melville
  • Chief Financial Officer — Gregory Robertson

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TAKEAWAYS

  • GAAP Net Income -- $21.5 million for Q3 2025, including $1.6 million in merger and core conversion expenses, a $2 million employee retention tax credit, and a $77,000 gain on sale of securities.
  • Non-GAAP Core Net Income -- $21.2 million, excluding non-core items for the quarter, resulting in non-GAAP core EPS of $0.72 per share available to common shareholders.
  • Core Return on Average Assets (ROAA) -- 1.06% for the quarter.
  • Core Efficiency Ratio -- 60.45% for the quarter, reflecting ongoing expense control.
  • Noninterest Expense -- $49.3 million on a core basis, showing a slight decline from the prior quarter.
  • Loan Portfolio Balances -- Total loans held for investment decreased $26.6 million, or 1.7% annualized on a linked-quarter basis.
  • Loan Production and Paydowns -- $452 million new loan production against $479 million in payoffs and paydowns.
  • Segment Movement -- Residential one-to-four family and construction & development loans increased by $47.6 million and $38.6 million, respectively, on a linked quarter basis, offset by a $71.1 million decline in CRE loans and a $40.2 million decline in C&I loans on a linked quarter basis.
  • Total Deposits -- Increased $87.2 million in total deposits, driven by a $131.4 million net rise in interest-bearing deposits on a linked-quarter basis, partially offset by a $44.2 million decline in noninterest-bearing deposits on a linked-quarter basis.
  • FHLB Borrowings -- Decreased $125.5 million from the prior quarter as part of a deliberate reduction.
  • GAAP Net Interest Margin -- Flat at 3.68% for the quarter.
  • Non-GAAP Core Net Interest Margin -- 3.63% (non-GAAP core), down one basis point from the previous quarter.
  • Cost of Deposits -- Three basis point linked quarter increase to a weighted average of 2.67%; Monthly deposit cost for September 2025 was 2.65%.
  • New and Renewed Loan Yields -- Weighted average at 7.46%.
  • Deposit Betas Guidance -- Management still views 45%-55% overall deposit betas as achievable regarding future rate cuts.
  • CD Retention Rate -- Core CD balance retention rate was 83% in September 2025.
  • Floating and Maturing Fixed Rate Loans -- Approximately $3 billion in floating rate loans at a 7.33% weighted average as of quarter end; about $646 million in fixed rate loans maturing in the next twelve months as of quarter end, currently at a 6.3% average rate, expected to reprice in the mid- to low-7% range over the next twelve months.
  • Noninterest Income -- $11.6 million core for the quarter, with SBA loan sale revenue potentially impacted if the government shutdown continues.
  • Credit Quality -- Loans 30-plus days past due (excluding nonaccruals) declined to 0.27% of loans ($38 million) from 0.89% in the prior quarter.
  • Ratio of Nonperforming Loans -- nonperforming assets as a percentage of total assets rose seven basis points to 0.83% due to some nonaccrual loans moving to other real estate owned.
  • Quarterly Dividend -- Increased by $0.01 per share, marking the ninth consecutive year of annual dividend increases.
  • Oakwood Bank Conversion -- Core conversion completed at the end of the third quarter; expected to realize additional cost savings in Q4 2025.
  • Progressive Bank Acquisition -- On track to close early in the first quarter of 2026, with conversion scheduled for August.
  • Correspondent Banking Revenue -- Management expects over $17 million in annual revenue from this unit in 2025, contributing approximately $5 million to combined net income in 2025.

SUMMARY

Business First Bancshares (BFST +7.12%) reported steady profitability, with linked quarter margin stability and continued efficiency gains supported by firm expense management. Notably, the loan portfolio experienced elevated paydowns, especially from previously past due relationships, while core new loan origination remained strong but was outpaced by paydowns. Deposit inflows were primarily interest-bearing, though noninterest-bearing balances grew approximately 9% annualized since March 31, 2025, with a temporary expected outflow in Q3. Management reaffirmed a near-term emphasis on organic growth, integration execution, and measured capital deployment, rather than pursuing additional M&A. Cost savings from recent conversions are expected to support modest expense growth in Q4 2025, while noninterest income faces government shutdown–related timing risks, particularly with SBA loan sales.

  • Gregory Robertson stated, "We expect to pick up a couple of bps in the fourth-quarter margin for that to expand again," citing momentum in deposit costs and loan growth normalization.
  • Loan production is expected to return to low- to mid-single-digit growth, aided by successful unfunded line commitments in Q3.
  • Correspondent banking revenue momentum is highlighted, with management asserting, "We're only getting started on this front and believe our investments will lead to even more capital-efficient earnings production."
  • The company remains open to share repurchases as capital ratios strengthen, with Robertson noting, "We are entering a period in which we could contemplate that over the next few years."
  • Oakwood Bank integration has been completed, and Progressive Bank's regulatory approval process is proceeding favorably following a positive shareholder vote.

INDUSTRY GLOSSARY

  • Core Efficiency Ratio: A measure of noninterest expense to total revenue, excluding nonrecurring items, reflecting cost discipline in ongoing operations.
  • Deposit Beta: The sensitivity of deposit costs to changes in underlying interest rates, important for net interest margin management.
  • FHLB Borrowings: Short- to intermediate-term funding provided by the Federal Home Loan Bank to member banks, commonly used for liquidity management.

Full Conference Call Transcript

Jude Melville: Okay. Thanks, Matt. And good afternoon, and thank you all for being with us today. It was another solid work-a-day quarter for our company. Greg will follow my remarks with specific numbers, but I'd like to use my time to highlight three themes on which we are focused. First, we continue to show incremental quality earnings improvement. Importantly, that improvement has been driven in large part by strong expense control. To be specific, three quarters of essentially flat core noninterest expenses. We've made significant investment over the past few years in our effort to reach a meaningful asset size, distributed over what we consider to be an attractive footprint.

Having done so, I've been pivoting our focus to generation of operating leverage and expect it to remain there. As a result, our aggregate earnings, capital ratios, tangible book value levels, and efficiency ratio all showed material improvement over the quarter and year-to-date. Trends we expect to continue.

Second, our team has executed magnificently on the operational challenges we committed to this year, converting our entire core bank at the end of the second quarter to a new processor, and converting Oakwood Bank to the new system at the end of the third quarter. Although this aspect doesn't easily fit into an earnings model, it's critical to our ongoing performance as an institution. Preparing to be better as we get bigger creates value that, unfortunately, may only be recognized over time. I want to congratulate our team on a job excellently done. In addition to system-wide efficiencies, operational excellence allows us to feel confident we can reap the financial potential associated with our two current M&A initiatives.

We expect to see much more of the all-in economic benefit from the Oakwood transaction achieved by 2026. We also remain on pace to close the Progressive Bank transaction early in the first quarter, with a scheduled conversion for August. We're focused on execution as we optimize partnerships and opportunities on our plate.

Third, we've included a new chart in our deck on page 15 illustrating the momentum we are experiencing in revenue generation from our young correspondent banking unit. We have about 175 banks we partner with and expect to generate over $17 million in revenue this year, contributing roughly $5 million towards our combined net income over the year. We're only getting started on this front and believe our investments will lead to even more capital-efficient earnings production. Our job for the next few quarters is straightforward.

Remain committed to effective expense control, fully execute on our recent acquisitions, maintain our historically stable and strong net interest margin, grow within our retained capital, and continue the progress we've been building on through our correspondent banking unit. As we execute these priorities, we're confident the combined effect will equate to steady profitability and tangible book value increases over 2026. With that, I'll turn it over to Greg.

Gregory Robertson: Thank you, Jude, and good afternoon, everyone. As always, I'll spend a few minutes reviewing our results and discuss our updated outlook before we open up to Q&A. Third quarter GAAP net income and EPS available to common shareholders were $21.5 million and $0.73 per share, including $1.6 million merger and core conversion-related expense, $2 million employee retention tax credit, and a $77,000 gain on sale of securities. Excluding these noncore items, non-GAAP core net income and EPS available to common shareholders are $21.2 million and $0.72. From our perspective, third quarter results marked another solid quarter of consistent profitability generating a 106 core ROAA, with our core efficiency ratio falling to 60.45% for the quarter.

From a corporate perspective, we were active during the quarters with a successful core conversion of Oakwood Bank systems, which occurred in September. Additionally, in conjunction with our third quarter results announcement, we announced an increase in our quarterly common stock dividend by 1¢. Starting on the balance sheet, total loans held for investment declined $26.6 million or 1.7% annualized on a linked quarter basis. Scheduled and nonscheduled pay downs and payoffs accelerated during the third quarter totaling $479 million on new loan production of $452 million. On a linked quarter basis, residential one-to-four family, and C&D loans increased $47.6 million and $38.6 million, respectively.

This was offset by total CRE loans decreasing $71.1 million while total C&I loans declined $40.2 million.

Based on unpaid principal balances, Texas-based loans remain flat at approximately 40% of the overall portfolio as of 09/30/2025. Total deposits increased $87.2 million, mostly due to a net increase in interest-bearing deposits of $131.4 million on a linked quarter basis, somewhat offset by a net decrease in noninterest-bearing deposits of $44.15 million from the prior quarter. The net decrease in noninterest-bearing balances was not unexpected. As you might recall, at the end of the prior quarter, we experienced a large $60 million influx related to a single noninterest-bearing account relationship. This was a temporary deposit and was expected to withdraw in early Q3. This withdrawal did occur, which pressured overall growth during the third quarter.

Despite the Q3 outflow, net growth in noninterest-bearing deposits since March 31, 2025, was $50.582 million. This represents approximately 9% annualized growth in noninterest-bearing deposits.

As of the end of the 2025, noninterest-bearing deposits represent 21% of total deposits, compared to the 20.3% at the end of Q1. Lastly, on the funding side, of the balance sheet, FHLB borrowings decreased $125.5 million from the prior quarter, a deliberate decision to reduce those excess borrowings. Moving over to the margin. Our GAAP reported third quarter net interest margin remained unchanged linked quarter at 3.68%. The non-GAAP core net interest margin, excluding purchase accounting accretion, declined one basis point from 3.64% to 3.63% for the quarter ended September 30.

The margin performance during the third quarter was driven by lower net loan growth and the influx of interest-bearing deposits coupled with the outflow of noninterest-bearing deposits mentioned before. Loan discount accretion during the quarter was slightly elevated at $1.1 million, which we expect to drop back into the $800,000 to $900,000 range going forward. On a linked quarter basis, the cost of total deposits increased three basis points while total loan yields increased five basis points.

Core loan yields excluding loan discount accretion for the third quarter was 6.94%. Total cost of deposits for the month ended September 2025 was 2.65%, compared to the weighted average of the third quarter at 2.67%. We're pleased with our ability to hold the line in new loan yields with the weighted average of new and renewed loan yield at 7.46% for the third quarter. We are equally pleased with our ability to manage funding costs for the quarter with the average weighted average rate on all new accounts during September at 3.32%, down from June's weighted average rate on new accounts at 3.34%.

I'd like to make a note of a few takeaways from Slide 23 in our investor presentation. We continue to see the 45% to 55% overall deposit betas as achievable regarding future rate cuts. I'd also like to point out that the overall core CD balance retention rate was at 83% during September. This impressive statistic reflects our team's continued focus on maintaining and retaining core deposit relationships.

As you will see on Slide 24 in our presentation, we have approximately $3 billion in floating rate loans at approximately 7.33% weighted average rate but also have approximately $646 million in fixed rate loans maturing over the next twelve months at a weighted average of 6.3%. We expect them to reprice in the mid to low 7% range. Lastly, on the topic of net interest margin, I'd like to mention a new slide we created and added to the quarterly presentation on page 22 of our investor presentation. It includes a longer-term look at our GAAP and core net interest margin in the context of Fed funds rate volatility since 2020.

We're proud of our ability to maintain a margin with a relatively tight range with a core margin peaking at 3.99% at the 2020 and bottoming out at 3.27% in 2024.

Moving on to the income statement. GAAP, noninterest expense was $48.9 million and included $1.16 million acquisition-related expense and $439,000 in conversion-related expenses, and $2 million in employee retention tax benefit, which ran through payroll taxes and employee salaries. Core noninterest expense for the third quarter of $49.3 million was down slightly from the prior quarter. We do expect this to increase modestly in Q4 primarily due to the timing of various investments hitting in Q4. We do expect to recognize partial quarters' impact of the Oakwood cost saves. Third quarter GAAP and core noninterest income was $11.7 million and $11.6 million, respectively. GAAP results included a 77,000 gain on the sale of securities.

Noninterest income results for the third quarter were relatively in line with our expectations. Over the long run, we continue to expect to build on our trends in core noninterest income.

Lastly, I'd like to provide some context to credit migration from the second quarter. Total loans past due thirty days or more, excluding nonaccruals, as a percentage of total loans held for investment decreased from 0.89% to 0.27%, roughly $38 million at 09/30/2025. The ratio of nonperforming loans compared to loans held for investment decreased 15 basis points from 0.82% on September 30. While the ratio of nonperforming assets compared to total assets slightly increased seven basis points to 0.83% compared to the linked quarter. The increase in the nonperforming assets ratio over the linked quarter was attributable to the transfer of some nonaccrual loans to other real estate owned. That concludes my prepared remarks for today.

I'll hand it back over to you, Jude, for anything you'd like to add before opening up to Q&A.

Jude Melville: I think I’m good. We'll go ahead and answer your questions. I will mention real quick that Greg mentioned the 1¢ dividend increase and will mention that we started paying a dividend in 2015. So, this marks our ninth year in a row of increasing the dividend. We have a strong retail shareholder base, about fifty-fifty retail versus institutional with a diverse set of interests and reasons for being partners with us. The steady increase of that dividend over the years has been important, and we remain committed to trying to keep doing that. With that, I'll be ready to answer any questions we might have in the queue.

Operator: We will now begin the question and answer session. If you would like to withdraw your question, press 1 again. Your first question comes from the line of Matthew Olney with Stephens Inc. Matthew, please go ahead.

Matthew Olney: Hey, great. Thanks for taking the question, guys. I want to ask about expectations around the core margin for the fourth quarter. In light of the recent September Fed cut and your expectations of any impact from additional Fed cuts that we could see as well in coming weeks. On the deposit cost side, Greg, you disclosed that September's interest-bearing deposit cost. I appreciate that. It sounds like there's some good momentum there. Just any other general commentary you can share with us within your marketplace with respect to deposit pricing competition?

Gregory Robertson: I'll answer your first question first on the margin. We expect to pick up a couple of bps in the fourth-quarter margin for that to expand again, primarily because of the momentum on the deposit side, but we also think that the loan growth will come back and normalize. I think it's worth pointing out I mentioned in the remarks that the pay downs were about $479 million against originations of $452 million for the quarter. So, the origination for the third quarter is very strong, and it was about an elevated pay-off paydown quarter of about $100 million more from the previous two quarters.

So, we feel like that with the normalization of loan growth and our management of deposit cost, we feel like we'll have a little margin expansion. We're seeing, you know, deposit cost is still competitive in the markets and all of the markets we're in. So, I would think we can continue to be nimble and be aware of the competition set out there. We do a pretty deep dive on evaluating competition in our markets every week.

Matthew Olney: Appreciate that, Greg. And then on loan growth, it sounds like you just mentioned that you think loan growth will rebound in the fourth quarter. Are you seeing some evidence of this in the first few weeks of the fourth quarter, or trying to appreciate what you're seeing that gives you the conviction?

Gregory Robertson: I think a little bit of both. As I mentioned, we had a steady clip of originations that's slightly built over the years. I think page 25 on our investor presentation highlights that. But, we had a little bit of early success in the quarter that leads us to believe we'll be back to the low to mid-single-digit loan growth in the fourth quarter. We also had some success with unfunded lines commitments in the third quarter that wouldn't shown up in our net numbers, so we will have the opportunity to see some of that come to fruition in the fourth quarter.

Matthew Olney: Okay. Alright, guys. Thank you. I'll step back.

Jude Melville: Thank you. Good, thanks, Matt.

Operator: Your next question comes from the line of Fadi Strickland with Hovde Group. Fadi, please go ahead.

Feddie Justin Strickland: Hey. Good afternoon, guys.

Jude Melville: Hey, Frederick.

Feddie Justin Strickland: Just wanted to touch back on the noninterest income piece real quick. It sounds like you've still got some momentum there from the various businesses. It sounds like it’s still going to grow, but Greg, I think you said it will be a little bumpy. As we think about the fourth quarter, do you think you can kind of grow quarter over quarter? And it sounds like you definitely think you can grow it year over year in 2026, considering you also have the deal in there as well, right?

Gregory Robertson: Yep. I'll take you back to slide 15 in our presentation to give you a little bit more insight into that. Specifically, on the fourth quarter, we feel like the momentum is building with a little bit of caveat. The government shutdown greatly impacts the ability to sell the guaranteed portion of SBA loans. So there could be some influence on our performance in the fourth quarter with that. Outside of that, we feel comfortable that our performance will continue to grow in those other areas, but I just want to note that. So, because of that, it might be more realistic to think that the noninterest income quarter over quarter may be flat.

We’re approaching quickly the midway point of the quarter and the government still hasn't resolved their issues.

Jude Melville: Which still gives us an annual number that's over 20% above last year and no reason to think at this point that we wouldn't be able to achieve a similar level of accelerated growth over the course of next year. Just a little harder to predict on a quarter-by-quarter basis than the than the spread businesses.

Feddie Justin Strickland: Understood. That makes sense. And then just shifting gears to more strategic perspective, now you have Oakland behind you, Progressive on the horizon. Do you still anticipate doing additional M&A near term next twelve to however many months, or do you really feel like organic growth and integrating these is maybe a little bit more of a priority? And a follow-on to that is, is there the opportunity to maybe do share repurchases down the road if the stock price doesn't pick up as much?

Jude Melville: That was essentially the point that I was attempting to make in my opening comments that I feel like we have a pretty exciting path just executing on what we already have on the table and making sure that we're focused on not only following through on the acquisitions but also our organic opportunities, which I think are only growing as others do M&A. In a number of our markets, particularly Dallas, there's been a lot of M&A, and I think that provides opportunity for us from a recruitment standpoint and from a production standpoint. I think our priority will be to let that play out.

I'm not saying never would we consider just a perfect acquisition that gets us some core deposits in the market low-risk, but we're not aggressively looking for anything. Like, we're not even looking for anything, so we'll see what opportunities just come to our door, but we believe we have great opportunities in front of us just to do what it is that we do, and to keep seeking operating leverage, and to make sure that we're more focused on profitability than we are on growth for just for growth's sake. That’ll be our priority for the next for the foreseeable future.

We like our footprint. We want to be deeper in our footprint, and we want to be more productive in our footprint.

Gregory Robertson: As far as capital allocation decisions go, we are pleased that we've been able to increase our capital ratios at a pretty good clip over the past year, really a couple of years. If you think about the last time we raised capital back in February 2022, we have since then put on a little over $2 billion worth of assets, and we'll actually have higher capital ratios than we did at the end of that last capital raise. We feel good about the accretion of capital that we've been able to prioritize, and that ultimately gives us more optionality on how to deploy that capital, more freedom to consider options, including potentially buybacks.

So, I do think that we are entering a period in which we could contemplate that over the next few years, and that's certainly been one of our goals as an organization to get our capital levels back up to a spot at which we have maximum optionality, and that'll be one of the options. So, I would say we are open to considering that as we continue to think about organic growth within the construct of our retained earnings, which should lead to further capital accretion over the next few quarters.

Feddie Justin Strickland: Alright. Great. How would all appreciate your time?

Jude Melville: Thanks. And the thing that also makes it attractive is it makes that worthwhile thinking about is that we feel like we're trading at a very attractive price. One of the things that you have to consider when it comes to M&A is pricing. You think about M&A opportunities at certain prices versus the price that we find ourselves trading at. I like where we are, and that certainly, I shouldn't say I like where we are. I like the attractiveness of the price if I'm considering buybacks over time. And so, that certainly heightens the need to give that some serious consideration over the coming quarters.

Feddie Justin Strickland: Fair enough. Thanks, Steve. K. Thank you.

Operator: Your next question comes from the line of Christopher Marinac with Janney Montgomery Scott. Christopher, please go ahead.

Christopher William Marinac: Hey. Thanks, Greg and Jude and team. I just wanted to ask a little bit more about pricing new loans. And from your standpoint, as interest rates fall in months ahead, can you still get pricing for risk? Do you have to look at that differently as we move along?

Gregory Robertson: Yeah. I think we have a pricing model we stick to that values our risk-adjusted capital. Pricing for risk is part of the equation. So, I think as rates continue to move, we'll have to be competitive, and we'll have to understand pricing relative to the type of credits we want. It's logical that's gonna move down from the mid-sevens where we are today into the lower sevens, the higher sixes as the rate environment moves and the competition set moves as well.

Christopher William Marinac: Have you had any feedback from your customers just in recent weeks? Are they feeling more bullish about the next few quarters, or is there more caution maybe? Perhaps just a little bit of a temperature check comparing now with earlier in the year?

Gregory Robertson: Yeah. I would say that the feedback we're getting from our markets is the customers, I think, with interest rates moving downward, it gives them a little bit of hope. I don't know that they're bullish, should be the right word, but maybe more optimistic with the lower rate environment or the prospects of rates continuing to fall.

Jude Melville: They remain active. I mean, we're seeing a lot of forward planning from the client base as they forecast their own interest rate environment.

Christopher William Marinac: Okay. Great. Thanks for taking my questions.

Operator: Your next question comes from the line of Michael Rose with Raymond James. Michael, please go ahead.

Michael Edward Rose: Hey, good afternoon, guys. Thanks for taking my questions. Wanted to touch on expenses. Core expenses, flat, really good expense control this quarter. I believe last quarter, you guys had talked about kind of somewhere in the low 50s. So, just trying to better appreciate the delta there. And then, more broadly, if you can discuss hiring plans. It seems like a lot of banks are out there trying to hire lenders. Just wanted to see if there's been any shift in your strategy at this point and how that could maybe translate into an early rate on expenses for next year?

Gregory Robertson: Yeah. In the first part of the question, Michael, Jude mentioned in his opening remarks, I think this year, we have really made a concerted effort as a company to evaluate our expense base. The largest part of that in this business is personnel. Being thoughtful about those positions is something we've done all year. The third quarter was a continuation of being mindful when we talk about employees, roles, and efficiency in those roles. I think the fourth quarter will be slightly increased. But, I do think that, we'll continue to look at investments in ways to bolster production.

As far as '26 goes, with the disruption in the markets mainly in Texas, I think it's easy to understand that if the opportunity presented itself, we would want to hire good bankers.

Jude Melville: Having discipline along the way means that hopefully, we don't ever reach a point where we have to think of expenses as being on the edge of a cliff. If we make good decisions along the way, whether it be not hiring as much or just automatically replacing people or thinking about the lifecycle of branches—We've shown a good record of closing branches over time—even outside the timeframe of an acquisition, we can keep doing that, then we don't have to make drastic cuts. On the flip side, it gives us the opportunity to be poised to take advantage of opportunities when they show up.

We've had a lot of disruption, particularly in the Texas market where we now have a solid footprint and foundation. Dallas is our largest market, so we feel that we'll get our fair shot at opportunities in some of the aftermath of M&A taking place there. So, we'll be ready for that, but it's possible because we’re showing discipline along the way, and we'll continue to do that. Those kinds of decisions won't be kind of knee-jerk reactions but normal taking care of business and type investments. But we certainly want to position ourselves to take advantage of the organic opportunities that'll be out there in the next few years, and we think they are.

Michael Edward Rose: Really appreciate all that color; it really frames it out. Maybe just a follow-up. It did look like of the paydown activity did happen in Dallas and Houston. If I look at the beginning of slides versus last quarter, obviously, loan production was up a little bit Q on Q, about 4.5%. Any sort of competitive dynamics there that maybe drove those paydowns? Just trying to get more color on the quarter's paydowns.

Gregory Robertson: I think, Michael, the biggest driver of the paydowns in the quarter is a big portion of the paydowns. It also had a correlation to past dues at the end of the second quarter. It was a fairly large relationship that was past due that we commented on last time we talked. That did effectively pay down during the quarter. So, that was an outsized example of that. I wouldn't say that we've lost much in either of those markets or any of our markets through competitive pressures. I think it's been more of the natural lifecycle of the good credits.

You often want them to pay off eventually because it means they've been successful, and the bad credit wants them to pay off because it means we don't have to deal with it anymore. So it's more of that than any kind of material competitive posture, I would say.

Jude Melville: It's a high-class problem when a good credit pays off.

Michael Edward Rose: Appreciate the color, guys. Thank you.

Jude Melville: Thank you, Michael.

Operator: Your next question comes from the line again with Matthew Olney with Stephens Inc. Matt, please go ahead.

Matthew Olney: Yeah. Hey. Thanks for the follow-up. Greg, I think it was your comment around the SBA sales that could potentially slow in the fourth quarter should this government shutdown be extended. I'm looking at that slide deck, and it looks like the SBA sales have been around just over $3 million so far this year. So call it a million dollars per quarter. Is it the right way to think about the risk under this scenario of a government shutdown for most of the quarter? And then, if that's the case, help us appreciate, is this just delaying the SBA sales?

So, it's more of a delayed income into the first quarter, or is that not the right way to think about that?

Gregory Robertson: No. You're exactly right. That delays the income stream into potentially the first quarter. Those are loans that are closed and really waiting to be sold, so it just delays the revenue opportunity. Matt, we've got a pretty good pipeline of loans that can't get approved until they open back up. Right? So, there's some demand for sure.

Christopher William Marinac: Then, one other thing to point out on this slide, that $3.3 million is annualized through nine months through the three quarters. It's a little bit, not exactly a million per quarter. That's just the annualized figure.

Matthew Olney: Oh, okay. I see that now. Thanks for clarifying that.

Jude Melville: Okay.

Matthew Olney: And then, I just want to ask about Progressive Bank. Any updates on recent trends you're seeing or hearing there? And update on the M&A application process and expectations of deal closing.

Jude Melville: I think all positive. They've been doing what they said they would do in terms of continuing to incrementally improve profitability over the course of the year, in line with their budgets and our projections. So, I feel very good about that. And, good about the people interaction. We've spent a lot of time with them, and we're more excited today than we were originally, and it's all going well. They did achieve a positive shareholder vote last week, which is a hurdle you have to get over for a deal. So, we're excited about the positive reception by Progressive's shareholders and the trust in the management team's judgment.

We're in the process of having our regulatory application reviewed and feel good about that. We're confident about a positive outcome in the next few weeks as well. We feel like we're still on pace to close early in January, as we've been projecting.

Matthew Olney: Okay. Great. Thanks, guys.

Jude Melville: Okay. Thanks, Matt. We also think I mentioned in my opening remarks that we have a conversion date of August for Progressive Bank. So, as we think about projecting out the economic benefits, that might be valuable information to you as well.

Operator: There's no further questions at this time. I will now turn the call back over to Jude Melville for closing remarks. Jude?

Jude Melville: Okay. We appreciate all the questions, and we appreciate everybody's time. As I started off by saying, it was just a good solid grounded out quarter, and by the way, those are the ones that you're proudest of and most excited about. We're taking care of business daily, and one of our core values is built around incremental improvement. We certainly are doing that and look to continue that and believe we have a clear track to significantly increase profitability over the next few quarters as we capitalize on and optimize some opportunities that we have in front of us. So, thanks again to all of you and thanks to all of our partners.

Look forward to seeing you and talking to you in a few months.

Operator: This concludes today's call. You may now disconnect.