Central Bancompany, Inc.

Good day, and thank you for standing by. Welcome to the Central Bank Company second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, John Ross, President and CEO. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining us for Central Bank Company's second quarter earnings call. With me in the room today is our Chief Financial Officer, Jim Ciroli, Chief Customer Officer, Dan Westhues, and Chief Credit Officer, Eric Hallgren. As a reminder, I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined on page four of our press release. Today, we plan to again briefly provide some details on second quarter highlights before opening the line for questions. I'd like to begin with some non-financial updates for the second quarter. We opened three new full-service branches during the second quarter, one in St. Louis and two in Colorado. as part of our growth strategy in underpenetrated metro markets. Our Kansas City teammates were also busy welcoming World Cup fans and putting exclusive Soccer Capital of America debit cards in their wallets. But more than anything, I guess you could say it was business as usual here at Central Bank. I'd like to thank the nearly 3,000 full-time employees across our organization for their continued efforts providing legendary service to our clients and communities. I will now turn it over to Jim to cover a few financial highlights.

Thank you, JR. Net income of $113.8 million for the quarter, or 47 cents per share, produced a return on average assets of 2.24%. Relative to the second quarter of 2025, adjusted net income increased by $15.4 million, or 16%. Net interest income increased $17.7 million over the prior year quarter, with average earning assets up $1.1 billion and net interest margin on an FTE basis expanding 13 basis points to 4.43%. Loan yields over the past year have been relatively stable despite a decline in short-term rates and a mixing of the consumer portfolio into lower-yielding but lower-risk mortgage loans and out of the higher-yielding consumer loans where we're being more selective. During the quarter, our cost of deposits declined three basis points due mostly to a lower level of public fund deposits. We expect the public fund deposits will continue to decline seasonally in Q3 before increasing in Q4. Our core fee income ratio was 24.5%, reflecting seasonality and continued growth in non-interest income, a remarkable achievement considering the increase in net interest income. During the quarter, we participated in the Visa Shares Exchange Offer, Converting a portion of our Class B shares and recognizing a gain of $8.4 million. Additionally, we took advantage of higher rates to marginally reduce our asset sensitivity by selling $210 million in shorter duration securities, taking a loss of $7.8 million, and reinvesting the proceeds in medium-term duration securities with a 250 basis point pickup in yield. We posted an FTE efficiency ratio of 46.1%, On a linked quarter basis, we typically experience more of an expense increase moving from Q1 to Q2. The largest component of this increase was salary and benefits. Last year, we had a 4.9% linked quarter increase. This year, we saw a similar increase of 5.3%. While our merit raises drive most of this increase, this quarter, we had the impact of a deferred compensation expense, which totaled $1 million, with an equal offset in other non-interest income, and B, higher performance-related compensation. Mortgage commissions were $1.0 million seasonally higher in Q2. Commissions are recognized when loans close, so one Q commission expense related to the revenue from December through February, the lowest volume part of the year. Our asset quality remained consistent with just 10 basis points of net charge-offs again this quarter. Our NPA ratio ticked up slightly as we downgraded one small commercial loan into non-performing status at the end of the quarter. Delinquencies were only 22 basis points of total loans, a decline from the prior quarter, driven by improvement in commercial loans and consumer credit cards. Lastly, capital levels of the holding company remained well above target with approximately $1.9 billion of excess capital, or $7.98 per share. We announced this morning that our board refreshed our stock buyback authorization to $100 million, which replaces the $11 million remaining on the buyback authorization we announced in February. While we have been pleased to see our stock outperform the market in the second quarter, we still see value at current levels and will continue to be opportunistic with our new authorization. With that, I'd like to open the line for questions. Lisa?